The European Commission Explains Long-Term Unemployment in Romania: Skills Deficit and Share

The European Commission has published a detailed country analysis in the field of employment, skills and social inclusion for Romania, Bulgaria, Estonia, Spain, Italy, Lithuania and Hungary, presenting in detail the results of the social convergence framework.

The current analysis will now be the subject of in-depth multilateral discussions with Member States, both in the Employment Committee and in the Social Protection Committee, before the upcoming adoption of the Spring Package of the European Semester.

The European Semester is the European Union’s framework for the coordination and supervision of economic, social and employment policies.

Challenges in skills development need to be addressed to support a fair transition to a digital and green economy, according to EC analysis, with less than a third of 16-74 year olds having at least basic digital skills in 2023 (27.7% compared to 55.5% in the EU). This gap has been extended since 2021.

Low employment rate on the labor market

“The quantitative and qualitative evidence available in this second stage of analysis indicates the challenges related to high risks of poverty or social exclusion, especially for children, for people living in rural areas, women and vulnerable groups, including people with disabilities and Roma. Even if these risks have decreased in the last decade, the impact of social transfers (other than pensions) on poverty reduction remains far below the EU average and ensuring effective national access to services, social protection and social adequacy remain important challenges. Children’s participation in early care and education is low, unmet health care needs are high and meeting long-term care needs remains a challenge,” according to the European Commission’s report.

Also, high early school leaving rates, especially in rural areas and among marginalized communities, accompanied by a high incidence of young people not included in education, employment and training, widespread underperformance in skills basic skills, as well as a very low level of basic digital skills, indicate a significant margin to improve the quality, accessibility and labor market relevance of education and training.

On the labor market, despite important improvements, the employment rate remains low, especially for women, people with disabilities, young people, low-skilled people and Roma, and the risks of working poverty among the working population are significant. At the same time, the long-term unemployment rate is slightly above the EU average, but the share of long-term unemployment is improving. The lack of skills is reported, and the capacity of the Public Employment Services and the effectiveness of active policies on the labor market are limited, the EC analysis also indicates.

“The measures adopted so far – the reforms and investments in social protection and inclusion, the adoption of new education laws and the implementation of the national program to reduce school dropouts, as well as the actions regarding active labor market policies – are expected to help Romania to points in the right direction in relation to the identified risks. Despite the progress made, there is room for further efforts in health, long-term care, education, social services and the labor market to give everyone a fair chance to reach their full potential,” he added. cited source.

Employment rate among the lowest in the EU

In the context of the first stage analysis presented in the Joint Report on Employment of 2024 (JER 2024), it was found that Romania faces potential risks to a social convergence towards a higher level, based on 11 main indicators of the Social Dashboard. These relate in particular to social protection and inclusion, regarding people at risk of poverty or social exclusion rate (including for children), the effectiveness of social transfers (excluding pensions) on poverty reduction and unmet needs in the field of health care. In addition, in the area of ​​education and skills, the participation of children under three in formal care systems, the rate of early dropout from education and training systems and the share of people who have at least basic digital skills were also identified as critical points .

While the labor market is improving, it was considered necessary to further examine the employment rate and long-term unemployment, as well as the situation of certain vulnerable groups, especially young people who do not have a job, and do not participate nor in education and training (NEET) and people with disabilities. In order to develop a better understanding of the potential risks identified in the first stage, this second analysis refers to the quantitative and qualitative evidence available and the relevant or planned policy responses by Romania.

Although the situation on the labor market is improving, important difficulties still appear. In the last decade, the employment rate had an upward trend. However, it remains among the lowest in the EU (68.7% in 2023 compared to 75.4% in the EU), with large regional disparities. The employment deficit between regions (the highest in Bucharest-Ilfov, 79.9% and the lowest in South-West-Oltenia, 61.8%) was 18.1 pps in 2022.

The employment rate in Bucharest-Ilfov and in the Center region has improved in recent years also due to foreign investments. However, the employment rate either stagnated or decreased in other regions, especially in the Northeast region (69.4% in 2022). In 2023, the unemployment rate (5.6% compared to 6% in the EU) was below the EU average. The long-term unemployment rate (2.2% vs. 2.1% in the EU) was slightly above the EU average and has deteriorated since 2020 after years of improvements, while the share of long-term unemployment improved to 38, 6% in 2023 (in line with the EU average).

The participation of adults (25-64 years) in learning in the last 12 months stood at 19.1% in 2022, 13.3 percentage points higher than in 2016, but well below the EU average of 39.5%. In addition, participation in learning activities among adults is highly unequal, with those who have not completed high school and training being 10 times less likely to participate in learning compared to those with higher education in 2022 (3 .9% compared to 41.2%). At the same time, those with the lowest qualifications face a worsening of employment results, with challenges in terms of skills that endanger competitiveness, but also equity and social convergence.

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