Profile picture for user mariana.ganea.2012
Mariana Ganea
Trainer & Guest writer

Mariana holds a PhD in Economics and she has been working in banking since 1991. Now, she is senior training consultant in banking and she is also freelancer authorized trainer in soft skills and financial banking techniques. She studied banking techniques, communication, sales, NPL, coaching and transactional analysis. She is passionate about education, travel, history, politics, music, reading, movies, cultural events and photography.

Comment: Authorities must sell Romania to investors on more than low wages

Reading the recent comment Salaries in Romania. Is Mr.Ponta right? I thought that the Romanian employees’ financial motivation is a complex and unsolved problem that has gone on many, many years. It is also a tough topic taking into account the privatization policies used by the Romanian authorities. Our government authorities used to present potential foreign investors coming to take advantage of low wages as almost the only competitive advantage Romania had, which, in my opinion, was one of the key problems in the bad privatization agreements.

I believe that trying to persuade investors that they can win big profits only because of the low wages generated a very particular way of seeing the Romanian employee, which had many negative results, not only for employees, but for the Romanian state and the investors themselves. Foreign investors could think that Romanians accept the misery wages because they are unskilled, lazy, they don’t have any choice or they don’t have the entrepreneurial abilities and determination. Any of these interpretations can lead to new foreign owners and/or managers having an improper attitude towards Romanian employees.

In my opinion, these attitudes don’t really come from investors or general views of the Romanian people, instead the real roots are in the attitudes and the so called vision and professionalism of our authorities as the “negotiators” for the privatization.
The Romanian isn’t the least skilled or the laziest employee in the world, but I think that many times the mentality from the Communist period makes us accept badly paid jobs because we have the fear of and/or lack of confidence in our abilities to set up our own business.

If we add the huge bureaucracy, the extreme volatility of the rules and regulations, the bad investment loans policies and, above all the corruption, we have many more explanations for this acceptance of the low wages. The issue is more social collective psychology and history than the employee's professional qualities.

The Romanian employee, as any employee in the world mustn’t be disregarded, because he or she doesn’t have a viable alternative to live or isn’t prepared from a psychological perspective to start a business. Actually, we, the Romanians must understand that investors/businesspeople, no matter the nationality, aren’t charitable types, they are here to make profits and as any beginner student in Economics knows the main ways to make profits are: to reduce costs (especially costs that have a large weight), to increase the returns or more theoretically to increase the returns faster than the increase in costs.

During a crisis, when consumers tend to spend less, reducing need for production and services and consequently, the returns, profits tend to be achieved by decreasing costs. How can costs be reduced? The reality of the last few years demonstrated lower human resources costs through outsourcing unprofitable or administrative activities, massive layoffs and maintaining a low level of wages. In that everlasting chase for profit, the investors search markets where the level of those types of costs is low and, to buy a company in Romania can be attractive from this perspective. So, our authorities, characterized by their lack of imagination, often with a poor understanding of the negotiation process or simply because of corruption, were not firm on wage levels when considering privatization proposals.

Looking more attentively at what happened after the privatization of many Romanian companies I tried to identify a few consequences:

  • low prices for the companies sold
  • tough human resources policies put in practice by the new owners/managers based mostly on the lack of any social clauses in the privatization agreements
  • unmotivated and terrified employees who cannot focus on their tasks, leading to low productivity and poor performance
  • very low training investment and consequently a depreciation of the professional quality of the employees
  • huge staff turnovers causing volatility in the labor force and, above all a decrease of the professional expertise and the fidelity to the employer
  • only an apparent decrease of the administrative costs (wages including) because of the outsourcing policies
  • the development of the black/grey labor force market
  • a reduced level of the tax collection
  • pressure on the state budged (social security, pensions) because the massive layoffs were not accompanied by new job creation policies
  • a lack of balance between pensioners and the active population
  • an “exodus” of Romanian employees to countries with better wages, which it generating social effects upon families, children education and urban/rural development across Romania

Of course all these consequences have more causes, but, the obsession with low wages had one of the most important roles.
I think that the Romanian authorities must look more carefully at all these results and try to present in a way more professional and realistic the competitive advantages of Romanian companies that are sold in future. If they do not, the argument of low wages will speedily disappear because the Asian countries have cheaper labor forces and Romania will lose its single competitive advantage.

By Mariana Ganea, Guest Writer

Normal
Profile picture for user mariana.ganea.2012
Mariana Ganea
Trainer & Guest writer

Mariana holds a PhD in Economics and she has been working in banking since 1991. Now, she is senior training consultant in banking and she is also freelancer authorized trainer in soft skills and financial banking techniques. She studied banking techniques, communication, sales, NPL, coaching and transactional analysis. She is passionate about education, travel, history, politics, music, reading, movies, cultural events and photography.

Comment: Authorities must sell Romania to investors on more than low wages

Reading the recent comment Salaries in Romania. Is Mr.Ponta right? I thought that the Romanian employees’ financial motivation is a complex and unsolved problem that has gone on many, many years. It is also a tough topic taking into account the privatization policies used by the Romanian authorities. Our government authorities used to present potential foreign investors coming to take advantage of low wages as almost the only competitive advantage Romania had, which, in my opinion, was one of the key problems in the bad privatization agreements.

I believe that trying to persuade investors that they can win big profits only because of the low wages generated a very particular way of seeing the Romanian employee, which had many negative results, not only for employees, but for the Romanian state and the investors themselves. Foreign investors could think that Romanians accept the misery wages because they are unskilled, lazy, they don’t have any choice or they don’t have the entrepreneurial abilities and determination. Any of these interpretations can lead to new foreign owners and/or managers having an improper attitude towards Romanian employees.

In my opinion, these attitudes don’t really come from investors or general views of the Romanian people, instead the real roots are in the attitudes and the so called vision and professionalism of our authorities as the “negotiators” for the privatization.
The Romanian isn’t the least skilled or the laziest employee in the world, but I think that many times the mentality from the Communist period makes us accept badly paid jobs because we have the fear of and/or lack of confidence in our abilities to set up our own business.

If we add the huge bureaucracy, the extreme volatility of the rules and regulations, the bad investment loans policies and, above all the corruption, we have many more explanations for this acceptance of the low wages. The issue is more social collective psychology and history than the employee's professional qualities.

The Romanian employee, as any employee in the world mustn’t be disregarded, because he or she doesn’t have a viable alternative to live or isn’t prepared from a psychological perspective to start a business. Actually, we, the Romanians must understand that investors/businesspeople, no matter the nationality, aren’t charitable types, they are here to make profits and as any beginner student in Economics knows the main ways to make profits are: to reduce costs (especially costs that have a large weight), to increase the returns or more theoretically to increase the returns faster than the increase in costs.

During a crisis, when consumers tend to spend less, reducing need for production and services and consequently, the returns, profits tend to be achieved by decreasing costs. How can costs be reduced? The reality of the last few years demonstrated lower human resources costs through outsourcing unprofitable or administrative activities, massive layoffs and maintaining a low level of wages. In that everlasting chase for profit, the investors search markets where the level of those types of costs is low and, to buy a company in Romania can be attractive from this perspective. So, our authorities, characterized by their lack of imagination, often with a poor understanding of the negotiation process or simply because of corruption, were not firm on wage levels when considering privatization proposals.

Looking more attentively at what happened after the privatization of many Romanian companies I tried to identify a few consequences:

  • low prices for the companies sold
  • tough human resources policies put in practice by the new owners/managers based mostly on the lack of any social clauses in the privatization agreements
  • unmotivated and terrified employees who cannot focus on their tasks, leading to low productivity and poor performance
  • very low training investment and consequently a depreciation of the professional quality of the employees
  • huge staff turnovers causing volatility in the labor force and, above all a decrease of the professional expertise and the fidelity to the employer
  • only an apparent decrease of the administrative costs (wages including) because of the outsourcing policies
  • the development of the black/grey labor force market
  • a reduced level of the tax collection
  • pressure on the state budged (social security, pensions) because the massive layoffs were not accompanied by new job creation policies
  • a lack of balance between pensioners and the active population
  • an “exodus” of Romanian employees to countries with better wages, which it generating social effects upon families, children education and urban/rural development across Romania

Of course all these consequences have more causes, but, the obsession with low wages had one of the most important roles.
I think that the Romanian authorities must look more carefully at all these results and try to present in a way more professional and realistic the competitive advantages of Romanian companies that are sold in future. If they do not, the argument of low wages will speedily disappear because the Asian countries have cheaper labor forces and Romania will lose its single competitive advantage.

By Mariana Ganea, Guest Writer

Normal
 

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