Romania's employment up 4.2% over past three years, GDP surges three times faster by 14.1%

The number of employees in Romania increased to 5.135 million at the end of November 2023, 206,700, or 4.2%, more compared to the base level reached in the same month of the Covid year 2020, according to data published by the statistics office INS.

During the toughest Covid period, from November 2019 to November 2020, Romania's employment dropped by 1.2%; therefore, in November 2023, we were 2.9% above the pre-Covid peak in terms of employment.

The actual involvement of the workforce in the economy was even smaller than +4.2%, as a large number of employees previously on the grey market in construction and HoReCa got normal labour contracts.

In the meantime, over the past three years, the country's GDP has advanced by 14.1% in Q3 2023 compared to Q3 2020, and +7.5% compared to Q3 2019. This translated into an overall advance of labour productivity – which, however, was not equally spread among sectors. While the productivity in the IT services sector has improved amid buoyant expansion, that of industrial activities diminished amid shrinking activity.

The sectors that added the most massive number of new employees are those of IT services - +40,200 employees, or +37.2% – but this might be an effect of the migration to labour contracts from other forms of employment for fiscal optimisation. The gross value added generated by the sector advanced proportionally by 40% over the past three years - +52% versus 2019.

The employment in HoReCa increased by 33,000 persons, or +16.3%, on base effects and in constructions by 30,100 persons, or +7.2%, on a combination of thinner shadow economy and genuine advance of the industry. Notably, both sectors marked marginal advances in terms of gross value added over the past three years and the higher employment rather reflects a lower shadow economy.

Pretty close was the 27,900 advance of employment in the healthcare system, +6.7%, probably in both private and public sectors.

The manufacturing sector saw a marginal -0.2% decline in employment, to 1.084 million at the end of November 2023, and migration of workforce from light industries and even automobile production to manufacturing of slightly more value-added items such as electronic and optic devices, or rubber and plastic items – most of them car parts.

Notably, the industrial production volume contracted 7.1% in November 2023 compared to November 2020. The food manufacturing - +14,300 employees, or +9.0% - marked the steepest increase in absolute terms.

In the industry as a whole, employment decreased by 0.4% since November 2020 while the gross value added by 2.3%, resulting in lower productivity despite the workforce shift towards more value-added segments.