2nd Edition: The Romanian Business Environment 2011

OVERVIEW ON THE ROMANIAN BUSINESS ENVIRONMENT

November 2011

AIMS Executive Search & Consulting I 2011 www.aims.ro

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EXECUTIVE SUMMARY

1. ROMANIA – GENERAL BUSINESS ENVIRONMENT……………………………………………………….. 3

Information about the general business environment in Romania. The development of the

Romanian economy after 2000. The most important direct foreign investments in Romania.

Taxation and legal frame. The Romanian economy after integration in the EU. Migration process

of Romanian workforce in EU countries. Major risks for business development in the future:

weak infrastructure, corruption, bureaucracy.

2. THE IMPACT OF THE GLOBAL ECONOMIC DOWNTURN ON THE LABOR MARKET….........7

Labor market trends before 2008. The impact of the economic downturn upon Romanian

economy: GDP, budget deficit, rising unemployment. 2010, a difficult year for local companies.

Cost cutting measures taken by the Romanian Government. Taxes and legal frame after the VAT

increase. The new Labor Code from May 2011.

3. EDUCATION IN ROMANIA……………………………………..…………………………………………………..11

A general overview of the local education system. Higher education in Romania. Major

University Centers. Competiveness of the Romanian Educational System.

4. POST-GRADUATE EDUCATION IN ROMANIA ……………..……………….……………………………….15

MBA and MA programs available in Romania.

5. FOREIGN LANGUAGE SKILLS IN ROMANIA………………………………………………………………….16

Foreign language skills by percentage. National minorities in Romania. Difference between

urban and rural areas. Foreign language skills in different geographical areas of Romania.

6. KEY ROMANIAN LABOR CODE INFORMATION………………………….................................18

Individual labor contract. Collective labor agreement. Increased flexibility of the Romanian legal

frame concerning labor relations. Temporary work. Mass lay-offs. Performance appraisal

according to new labor regulations. Salary negotiation process. Most common benefits and

compensations. The salary structure. Taxes paid by the employer.

7. INSIGHT INTO ROMANIAN WORK MENTALITIES…………………………….............................26


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An analysis of work mentalities evolution in Romania. The most relevant aspects that, in time,

have become “specific” to Romanians. Romanian leadership inventory. Core values and

personal beliefs. The productivity of Romanian employees.

8. ROMANIAN MEDIA AND HUMAN CAPITAL RECRUITMENT ……….……….........................29

The most important Romanian newspapers and magazines. The benefits of advertisements in

various media. Alternatives to traditional recruitment practices (web recruitment, social

networks).

9. BRIEF SALARY AND BENEFITS INFORMATION FOR KEY POSITIONS …............................32

General guidelines that need to be considered when recruiting for middle and top management

positions (General Manager, Finance Manager, Marketing Manager, Sales Manager etc.). Most

valuable competencies, motivational patterns and last, but not least, typical packages.

10. FURTHER PERSPECTIVES ON THE ROMANIAN ECONOMY…………………………………………..42

The end of the economical downturn in 2011. Growth of exports. Main economical strengths

and weaknesses. Romania and the Schengen area. Future perspectives on Romanian currency

11. BIBLIOGRAPHY…………………………………………………..……………………………………………………..44


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1. ROMANIA – GENERAL BUSINESS ENVIRONMENT

After a long and painful transition from centralized economy to capitalism, Romania is one of

the emerging markets from Central and Eastern Europe. With a population over 22 million

inhabitants and a GDP of 251.741 billion USD in 2009, the 11th largest in the European Union

by total nominal GDP and the 8th largest based on purchasing power parity, Romania stands

beside Poland, Hungary and Czech Republic among the most important economies in Eastern

Europe.

The recent evolution of the Romanian economy took the same path as other countries in the

region; Romania began the transition from communism to a free market economy in 1989. The

country’s industrial base was largely obsolete and the output was unsuited to the nation’s

needs. After years of deep recession, Romania emerged as a stronger country in 2000, aided by

a strong demand in the EU export markets.

With the main objective of the foreign policy being the integration in NATO and the European

Union, Romania received the support and assistance of International Institutions and

Organizations. Financial and technical assistance continued to flow in from the U.S., the

European Union, other industrial nations, and international financial institutions facilitating

Romania's reintegration into the world economy. The International Monetary Fund (IMF), World

Bank (IBRD), the European Bank for Reconstruction and Development (EBRD), and the U.S.

Agency for International Development (USAID), all had programs and resident representatives in

Romania.

One of the most important targets of the monetary policy at the beginning of 2000 was to

fight against high inflation and provide a balanced currency. In 2005 Romania underwent a

currency reform, switching from the previous Leu (ROL) to a new Leu (RON). 1 RON equals

10,000 ROL. Since 2004, the annual inflation has been under 10% (8,60% in 2006, 6,57% in

2007, 6,30% in 2008 and 4,37 in 2009) in comparison with 15% in 2003. The currency exchange

rate remained stable over the following years (3,5 – 4 RON/EUR on average).

Romania’s investment attractiveness was fueled by the enforcement of the single tax rate (16%)

in 2004, the constant low cost of local labor (after Albania, Bulgaria and some countries in

former Yugoslavia, Romanian average labor cost is still the lowest among European countries),

and by successful privatization of most important state-owned companies.

Until the end of 2005, the Romanian Government had privatized most economy sectors. The

largest privatization deals concluded are: BCR (sold to Erste Bank in 2005), Petrom (sold to OMV

in 2004), The Agricultural Bank (sold to Raiffeisen Bank in 2001), Sidex (sold to LNM Ispat in

2000), BRD (sold to Société Générale in 1998), and Dacia (sold to Renault in 1997).

http://en.wikipedia.org/wiki/International_Monetary_Fund

http://en.wikipedia.org/wiki/World_Bank


http://en.wikipedia.org/wiki/European_Bank_for_Reconstruction_and_Development

http://en.wikipedia.org/wiki/U.S._Agency_for_International_Development

http://en.wikipedia.org/wiki/U.S._Agency_for_International_Development


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The privatization of the largest Romanian bank, BCR, finalized at the end of 2005, is by far the

largest ever done in Romania. The amount obtained by the Romanian state, approximately 3.75

billion EUR for 61.88% of shares, is so large, that it is about equal to the value of all other

privatizations of the last 15 years. Another successful major privatization was done also with an

Austrian investor – Petrom, the national oil company. The deal was concluded in 2004, when

OMV acquired 33% of the company, for about 700 million EUR. Petrom is now the largest

company in Romania, with a turnover of about 2,5 billion EUR.

Romania has experienced growth in foreign investment with a cumulative FDI totaling more

than 95 billion EUR since 1989 until 2011; over 90% of this figure was made after 2004.

Among the most important foreign investors in Romania are EU countries. The first place is held

by Austria (Erste Bank, OMV, Strabag, Raiffeisen Bank, Vienna Insurance Group, Billa) followed

by the Netherlands (Unilever, ING Bank, Heineken, Friesland, KPMG), Germany (Continental

Automotive, Bosch, Siemens AG, Hella Electronics, Metro, Lidl & Schwarz, E.ON), France

(Renault, Societe Generale, Alcatel, Michelin, Valeo) and Italy (ENEL, Pirelli, Unicredit, Natuzzi,

Zoppas Industries). Last but not least, when talking about major investors, one should also

mention American investments (Ford, Smithfield, Citibank, Procter & Gamble, Coca Cola, IBM,

Delphi Packard and Emerson). However, most foreign investments came from Europe – over

75% of the total.

Besides multinational players, a new generation of local businesses starts to emerge: RCS-RDS

(telecommunication), Scandia, Argus, Transavia (food industry), Dedeman (DYI Retail), MIC.ro

(retail) UTI Systems (IT), Interbrands (FMCG Distribution), Transilvania Bank (Financial Services),

Edy Spedition (transport), Rompetrol (oil & gas).

The newly-acquired EU membership status in 2007 provides a boost in economic

development, but also in the commitment of the Romanian political establishment to adopt

important reforms in major areas, such as public administration, finance, security and legal

system. Among the most significant effects of this process were the new ability to attract large

investments – such as Nokia and Ford, but also the increasing mobility and migration of

Romanian workforce to EU countries. Right now, it is estimated that over 2,2 million Romanian

citizens (over 20% of the active population) are working and living in the Schengen area –

especially in countries such as Italy and Spain. However, the extremely surprising exit of Nokia

from Romania in the autumn of 2011 (after only 3 years of operation), when the Finnish

company announced the closing down of the Jucu plant, proves that the investment flow is

moving in both directions and that Romania isn’t a “safe ground” for foreign investments

anymore.

http://en.wikipedia.org/wiki/Foreign_direct_investment


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Between 2003 and 2009, Romanian economic growth was among the fastest in Europe

(officially 8.4% in 2008 and more than three times the EU average), and has been referred to as

a "Tiger" due to its high growth rates and rapid development.

During that time, the unemployment rate fell from 9,5% to less than 4%. Among the sectors

with the highest development rates were: the automotive industry, research and development,

real estate, banking & financial services and retail. However, there is still a major unexploited

potential in agriculture, tourism and energy.

This newly-found wealth has improved the standard of living for a significant part of the

population. Romania has growing middle and upper classes with relatively high per capita

incomes. World Bank estimated that in 2002 99% of the urban and 94% of the rural population

had access to electricity. In 2004, 91% of the urban and only 16% of the rural population had

access to improved water supply and 94% of the urban population had access to improved

sanitation. In 2007 there were about 19.5 million mobile phone users in Romania and about 7

million internet users.

Besides exports, domestic consumption and investment also fueled the country’s GDP growth in

recent years, but led also to huge current account imbalances. The country saw a rise in

inflation in 2007-2008, driven by consumer demand and impressive wage growth, rising energy

costs, high food prices and relaxation of fiscal discipline. Inflation abated again in 2009, as

Romania's GDP growth contracted due to the global recession.

The Romanian economic development is, however, unequal and there are still huge gaps

between different regions. In general, the Capital and its surrounding county Ilfov are described

as better developed, followed by Transylvania and Banat (the Western part of Transylvania

along the Hungarian-Serbian border). The North-East of the country especially and its South-

West are considered the least developed. The economic development of Romania is

asymmetrically driven by FDI-flows, which follow the main traffic roads.

The Southern and Eastern parts were always more rural, while handicraft-oriented trades are

characteristic for the Central and Western parts. The economic profile of the early 21th century

Romania is still influenced by the historical and cultural main provinces: Transylvania,

traditionally better developed and focused on manufacturing and extraction of raw materials,

both Muntenia and Moldova focused on agriculture and trade, but also featuring some

industrialized cities and on the other hand, Oltenia and Dobrudja, more dependent on

agriculture, light industry and tourism.

However, in nowadays Romania there are some major issues that have not been solved yet, the

lack of a modern transport infrastructure being one of them.

http://en.wikipedia.org/wiki/Tiger_Economy



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The Romanian GDP more than doubled in the last 6 years, economists estimate, but the nation

could develop even faster if travel and transport were easier. With more than 22 million people

living in a territory the size of UK, Romania has less than 120 miles of high-speed highway, by

some estimates.

Romania's infrastructure is fairly extensive, with 103,671 kilometers (64,276 miles) of road,

11,385 kilometers (7,058 miles) of rail, and 3.84 million main telephone lines. But most of it is in

a poor state of repair, due to decades of underinvestment. This is a situation that successive

governments are eager to rectify, though they have had difficulty finding the necessary funding.

Most hopes rest on foreign aid, particularly from the EU, and on attracting foreign investment.

The country has 12 international airports, but most of them are small and needing urgent

upgrading.

Another reason for discontent is the failure of the public authorities to effectively fight against

the current level of bureaucracy and corruption. After the collapse of communism, bureaucracy

and corruption have dramatically increased in Eastern Europe and the former Soviet Union.

Since both of them are "symptoms of fundamental institutional weakness", their extent may be

attributed to the specificity of the process of institutional change in a transition economy.

In 2008, Romania was once again rated by Transparency International among the most corrupt

nations in the EU – 27, with a Corruption Perception Index (CPI) score of 3,8, meaning that the

country has a serious corruption problem. According to a Euro-Barometer from April 2008, 75%

of the Romanian respondents consider corruption a major problem in their country (European

Commission, 2008). At the same time, the Governance Indicators released last year by the

World Bank point out that Romania scores last among EU members, equal to Trinidad Tobago

when it comes to Control of Corruption and to Guyana if we take into consideration the score

for Government Effectiveness (Kaufmann et al., 2008).

The Romanian bureaucratic system is still driving away not only Romanian entrepreneurs, but

also many foreign investors and EU funding opportunities. According to Romania's President

Traian Basescu, from a total of 9 billion EUR funded by the EU, a total of 5,5 billion has not been

used, covering the years 2007, 2008 and 2009 (according to Romania News Watch, 13 March,

2009). Unfortunately, the Romanian authorities managed to attract less than 10% of the

European funds available; this poor result is a clear indicator of the lack of performance and

efficiency in the administrative process and represents a redundant issue in public debates.


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2. THE IMPACT OF THE GLOBAL ECONOMIC DOWNTURN ON THE LABOR MARKET

High economic growth and a vast labor exodus to Western Europe have created a labor

shortage in many sectors of Romania's economy. As a result, growing wage pressures have a

negative impact on foreign direct investments, threatening the country's economic long-term

growth. Businesses in some sectors have difficulties in finding skilled workers, while facing rising

labor costs.

As another side effect, mounting wages and remittances from abroad have led to rising

consumer demand and inflation. After 7 years of GDP increases, 2008 was the best year for

Romanian employees. The unemployment rate fell under 4% on average (under 1% in

Bucharest and under 2% in the Western part of Romania) and the average salary rose to a

monthly 456 EUR/GROSS in 2008 (from 100 EUR GROSS/month in 2001). Between 2006 and

2008 Romanians witnessed one of the biggest and most rapid salary increases in Eastern Europe

– with an average of 15% up to 18% per year.

In Romania, as many as 73% of employers say they have difficulties in filling available positions,

compared to 12% in the UK, 18% in Italy, 26% in Belgium, 31% in France, 34% in Germany, 47%

in Greece and 49% in Poland. For other continents the figures range from 12% in India to 22%

for the USA, or 28% for Mexico and 38% for South Africa. HR specialists describe the labor

market in 2008 as an Employee Market.

First time acknowledged in Romania in the summer of 2008, the global economic downturn hit

Romania hard, as well as the other countries from emerging markets. With capital inflows to the

CEE economies slowing to a trickle in Eastern Europe, a sharp correction was underway in most

countries' external imbalances and in particular in their current-account deficits. For the CEE-6

(Poland, Czech Republic, Hungary, Romania, Bulgaria, Turkey), net private capital flows started

to slow down in the early part of 2009 and 2010.

In Romania, for instance, the FDI volume started to drop dramatically from the record of 9

billion EUR in 2008 to 4,8 billion in 2009 and 3 billion EUR in 2010, and the value of the

Romanian stock market fell with over 70% in a couple of months. At the same time, less money

came in from Romanians working abroad. Around 1 billion EUR (1.187 billion US$) of

remittances entered Romania for the first two months of the year, compared with 1.49 billion

EUR (2.02 billion US$) in the same period in 2009.

Due to the lesser demand for exports of goods and services (the main foreign trade partners of

Romania are mainly other EU countries such as Germany, Italy, Spain) and a shortage of financial

support for the banking system, the main industries started the cost -cutting process: the


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unemployment rate increase dramatically from 4,8% in 2008 to a record of 8% in 2010, mainly in

the private sector.

After 7 years of growth, the country GDP dropped with 7,1% in 2009, a European record (after

Ukraine, Greece and Baltic countries – Romania had the biggest GDP fall in Europe), leaving the

government with a public budget deficit over 6%. To avoid the default risk, the Romanian

Government and the Romanian National Bank decided to ask for IMF assistance. The

International Monetary Fund (IMF) and other lenders have agreed to provide Romania 20bn

EUR (£18.4bn; $27bn) in aid in the spring of 2009.

As in most countries, the construction, real estate and trade sectors were drastically affected.

The construction field plummeted from a positive 30% increase at the peak level to a 16-17%

compared to prior quarters. For instance, retail fell with over 9%, the banking system with

15%, the automotive sales with over 30% and real estate business with 50% in 2009. The

National Institute of Statistics, that regularly publishes the figures presented in the graph below,

collects more and more figures in the effort to prepare a more complex and up-to-date

radiography of the Romanian economy. With all these figures, it is clear that most of the

economic sectors were simply trying to survive. Heavily dependent on loans and investments,

the major Romanian companies were harshly put to trial in 2010. Last year was the bankruptcy

year, especially for retail companies such as Leonardo, Trident or PIC, but also some real estate

developers and manufacturing companies. On the other hand, the banking system has remained

intact without any financial aid from the Central Bank.

As a direct effect of lesser foreign currency in the country, there was additional pressure on the

national currency, that devalued with almost 15% in a couple of weeks (from 3,81 Lei/EUR in

October 2008 to 4,28 Lei/EUR in January 2009).

As part of a reform package, IMF officials discussed about tax reform and cost cutting. The

measures included a VAT growth from 19% to 24%, other excises increasing (for gasoline,

tobacco, luxury goods), with a regressive impact on growth and social equality, and potential

future raises of other taxes. With unemployment rate at about 8 % and inflation running way

ahead of earnings growth, the Finance Minister was under pressure from employee

representatives to abandon the flat tax and restore progressive income taxes.

After a very difficult year in 2009, the Romanian authorities were forced to take other drastic

measures in 2010. In the summer of 2010 the Romanian Government announced a salary cut

of 25% for all public sector employees and important reforms in the public pension system. This

strategy led to a wave of public protests and heated the political debates on current

government policies and middle-term strategy. The cutting cost policies aimed at balancing the

public deficit, but the side effects of this approach (lesser governmental investments, increasing

inflation, decrease of internal consumption) brought another year of recession. It was estimated


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that the Romanian GDP dropped with 1,3% in 2010. The year 2011 is the starting point of a

slow and weak recovery process- the official IMF estimation for economical growth for this year

are around 1,5%.

Due to the devaluation of the national currency, cost cutting in the public sector, rising

unemployment levels in the private sector and tax increases, the income and standard of living

for over 90% of the Romanian active population declined in 2009 and 2010. In terms of human

capital, this means that the labor market of 2011 became an Employers’ market. The national

average salary decreased with 12% to the amount of 411 EUR/gross/month.

In the spring of 2010 a report of the National Institute of Statistics presented the average

income for different areas of the economy, which can be found below:

February 2010

EUR – 4.11 LEI

Gross

Salary

Net

Salary

EUR EUR

Agriculture 338 243

Manufacturing Industry 384 285

Food and Beverage Industry 302 224

Textile Industry 339 255

Chemical Industry 517 380

Machines and Equipment Industry 452 336

Energy Industry 786 565

Construction 367 271

Trade 375 274

Hotels and Restaurants 252 188

Transportation – on land 440 318

Transportation – on water 630 460

Transportation – by air 1091 771

Telecommunication and Postal Services 972 692

Financial Services 1051 749

Education 556 397

OVERALL 472 343

To cover the debt caused by the economic crisis in Romania, the government has fired over 80,000 employees; in the private sector over 150,000 workers were fired in 2009 and 2010. Unemployment was high in Romania in 2010 – over 7,2% at the end of the year, but dropped in the first part of 2011 mostly due to export-related industries. The official figure for October 2011 is close to 5%.


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The most affected areas are still the Southern (Oltenia region) and Eastern part of the country

(Moldova), where the highest unemployment rate is in Vaslui county (9,12%), more than 4 times

higher than the figure for Bucharest area, where the unemployment is low – under 2%. Other

counties with high unemployment rates are in the Southern part of Romania – Mehedinti county

– 9%, Dolj – 8,76% and Teleorman – 8,05%.

Another report of NIS emphasizes the difficulties of young people to become integrated on the

labor market. The survey results indicate that about 2.590.000 young graduates aged 15–34

years (66.4% in all) failed to find salaried employment for at least three consecutive months,

more than one year after leaving the educational system. Of these people, 9.8% held an

academic degree, 54.1% of them had completed secondary and post-secondary education, and

36.1% had a low level of education. The large number of young people aged 15–34 years who

failed to find significant employment proves the lack of employment opportunities on the

Romanian labor market. On the other hand, it is necessary to establish a better match between

the focus of school curricula and labor market developments and demands.

The unemployment is much higher in rural areas, but from other reasons. Romania has the

largest share of rural population among Central and Eastern Europe countries and its rural

areas are poor, with deteriorating infrastructure and inadequate water and sanitation services.

Studies suggest that social passivity, a common problem in post-socialist communities, is a

hurdle to development in rural areas.

The Romanian Government is trying to attract new investments with a package of regulations

and incentives for foreign investments. The new Labor Code, adopted in May 2011, increased

the labor market flexibility – employees are easier to recruit and dismiss. Moreover, there is a

legislative stimulation for temporary work, and the notice period for resignations or dismissals

has been prolonged to two months, so that the employee can find a new job and the employer a

replacement.

The new regulations favor the employers. The dissolution of the individual contract at national

level means the loss of some guarantees offered to employees, concerning salary or labor time.

This contract stipulates certain rules that employee and employer must consider during the

negotiation of an individual labor contract, which would mean that, once the national-level

contract is eliminated, the minimum standards established on the labor market would also

disappear.

However, there are some positive facts regarding Romania’s economy in 2011. The total exports

figure increased with 28% in the first half of this year, and there are signs that the internal

consumption will start a slow recovery at the end of the year. Romania is registering a slow

start of the economic recovery in 2011 after a 1,3% decrease in 2010; it will also have to deal

with tough austerity measures and any opposition to them might produce instability.


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The year 2011 has been called by authorities „the beginning of economic recovery”, with an

estimated GDP increase of 1,5%. However, the recent UE debt crisis has put additional pressure

on the Romanian economic recovery; international assessments dropped dramatically from 3-

3,5% in the spring of 2011 to 1-2% in October. Many analysts point out that, due to the general

elections in 2012, the political determination in dealing with the crisis and implementing other

necessary cost-cutting measures in the public sector will soften.

3. EDUCATION IN ROMANIA

The education-related requirements of the society and economy have been radically changed by

the transition to democracy and market economy, which began in 1990, after the fall of the

communist regime.

The education reform was marked by three major stages.

During the first stage, which lasted from 1990 to 1995, the education system was organized on

the basis of Constitution provisions adopted in 1991 and Government decisions, emitted for

each school/academic year. The reform measures applied during this stage envisaged mainly

the content and finalities of education, as well as the support to improve the access to

education for all. Facing the requirements for curricula revision and improvement of access to

basic education, compulsory education was reduced from 10 to 8 years.

The administration of education remained highly centralized, with almost no involvement of

the local public authorities and high dependence of the schools on the County School

Inspectorates. By the end of this first stage it became more and more evident that a new

legislative framework was urgently needed.

Based on assessments of the various aspects of the education system, carried out at national

and international level (World Bank), the Romanian Government launched, at the beginning of

1994, for a 5-year period, the Pre-tertiary Education Reform Project. In order to ensure financing

of the project, the Romanian Government signed, in 1994, a 50 million USD loan agreement with

the World Bank. During this stage, the implementation of the Pre-tertiary Education Reform,

financed from the state budget and the loan from the World Bank, led to important major

changes in curricula, teacher training, pupils’ assessment and evaluation, occupational

standards, school textbooks, management and financing of education, education conditions in

rural areas etc.


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Involvement of local authorities in the administration of education became more important,

internal and external consultations in the decision-making process at all levels became

compulsory and autonomy of the schools increased significantly.

The current stage of the education reform began in 2002, with the commitment to participate in

the Lisbon Process. Based on the evaluation of progresses achieved in education reform and

considering the common European objectives established through "Education & Training 2010”

program, the education policy focused on the following priorities: facilitating the access to

education, developing human resources for the knowledge society and adjustment of vocational

education and training to labor market requirements, in order to ensure economic and social

cohesion.

Today, the Romanian educational system has the following structure:

Pre-school education;

Primary education (compulsory);

Secondary education (high-school, apprenticeship school, post high-school education);

Higher education – undergraduate studies;

Graduate studies (MA – Master’s degree, Ph.D).

Higher education is provided in Universities, Institutions, Academies, colleges and post-

university studies schools. The higher education sector in Romania comprises 56 public

Universities with 511 faculties and other 28 private Universities. Public education remains the

core of the system, with better quality standards.

General information about the Romanian higher education system:

The first Romanian universities were established by Alexandru Ioan Cuza: the University

of Iasi (1860) and the University of Bucharest (1864).

Higher education is organized in short-term (3 years) and long-term education, the

duration of the last varies according to the specialization: 3 years for sciences,

humanities, economic, political or social sciences, arts, sports, law, 4 years for

engineering, technical, pharmacy studies and 5 years for medicine and architecture.

The academic year runs from the 1st of October till June and it is commonly divided into

2 semesters.

The Romanian grading system is from 1 (minimum) to 10 (highest mark), 5 being the

minimum pass mark.

There are several types of institutions in the higher education system: Universities

(including a large number of faculties with different specializations), Academies

(focusing on a single general field), Polytechnic Universities (technical field of study),

Institutes (limited specializations), postgraduate schools (other than those included in

the Universities) and colleges (offering 2-3 years of studies).


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UNIVERSITY CENTERS

Bucharest, the capital city, attracts almost one-third of all public University students, the most

prestigious public Universities being the Bucharest University, the Academy of Economic

Studies, the Polytechnic University, the Academy of Arts, University of Agronomy and the

University of Medicine and Pharmacy.

Bucharest University is generally considered the leading educational institution in Romania,

mostly because it provides a large variety of courses: short and long-duration programs,

distance learning programs, Master’s degree and Ph.D programs, advanced postgraduate

studies and research programs.

The University consists of 21 faculties, each with several specializations, training thousands new

students each year. The educational program covers mostly sciences: Biology, Chemistry,

Physics, Mathematics, Geography, Geology, History, Psychology etc.

The Academy of Economic Studies is the most significant institution for economy and

administration education in the country due to the content of its courses and the constant

involvement in the national and international economic field. The Academy consists of 10

faculties and 4 colleges, covering several specializations and enrolling over 42.000 students.

Some of the specific economic areas covered are Marketing, Management, Commerce,

Accounting, Cybernetics, Statistics, Finance and Banking.

The Polytechnic University of Bucharest is the largest and oldest technical University in

Romania, being the main source of technical specialists in our country. The major fields of study

are Electrical Engineering, Industrial Engineering and Management and Applied Engineering

Studies covered in 12 faculties (some being the Faculty of Electrical Engineering, Faculty of

Automation and Computer Science, Faculty of Electronics, Telecommunication and Information

Technology, Faculty of Mechanical Engineering, Faculty of Aerospace Engineering) and 2

Technical Colleges.

The University of Medicine and Pharmacy “Carol Davila” is among the best medical Universities

in the country. Students are trained on General Medicine, Dental Medicine, Pharmacy and

Nursing. Other prestigious medical Universities in Romania are the University of Medicine and

Pharmacy “Iuliu Hatieganu” located in Cluj-Napoca and the University of Medicine and

Pharmacy located in Targu-Mures.

Representing the Western part of the country, Timisoara is an important educational centre,

gathering thousands of students each year, not only Romanians, but from abroad as well.

The most prestigious public institution is The West University of Timisoara. Undergraduate

courses are offered in 11 faculties with more than 80 specializations. Students can choose from


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a large variety of courses: Mathematics and Computer Science, Physics, Chemistry, Biology,

Geography, Sociology, Economic Science, Law, Political Science, etc.

The Polytechnic University of Timisoara is one of the largest technical Universities in Romania,

the academic studies being delivered in its 10 faculties (Automation and Computer Science,

Electronics and Telecommunication Engineering, Civil Engineering and Architecture etc.).

One of the most important universities in Transylvania (located in Cluj-Napoca) is "Babes-

Bolyai" University, an educational institution that provides services for more than 45.500

students in the 21 faculties. The University offers study programs in three languages (Romanian,

Hungarian and German) for several specializations: Mathematics and Computer Science, Physics,

Chemistry and Chemical Engineering, Biology and Geology, Geography, but also Law, History,

Philosophy, Sociology, Social Assistance, Political Science and Economics.

Through its 140 years of activity, as well as the 25.000 students and over 1000 academic staff,

"Alexandru Ioan Cuza" University is a prestigious institution in the Eastern part of Romania,

located in Iasi. At present, the University has 16 faculties, ensuring training for over 40 fields of

specialization, such as: Computer Science, Economics and Business Administration, Biology,

Chemistry, Physics, Law, Philosophy etc.

Other higher education centers in Romania are Craiova, Brasov, Constanta, Arad, Oradea, Targu-

Mures and Sibiu.

One of the visible effects of Romania’s EU accession is the acknowledgement and recognition of

Romanian educational degrees in other member countries. This will inevitably challenge the

local educational system as competitiveness on a European market will probably dictate an

adequate update of curricula and a modification of teaching approach.

However, there are many concerns regarding the competiveness of Romanian educational

systems in comparison with the most prestigious University centers worldwide.

In an international classification of University centers on various quality criteria, the Romanian

institutions were not present in top 500 in 2009. The Polytechnic University of Bucharest was on

the 778th place, “Alexandru Ioan Cuza” University of Iasi was on the 935th place, “Gheorghe

Asachi” Technical University of Iasi held the 989th place. The other Romanian Universities did not

even qualify in the first 1000. The Romanian educational system still has a long way to go in

order to reach its potential.


15

4. POST-GRADUATE EDUCATION IN ROMANIA

Similar to other European countries, Romania has developed post-graduate education as an

extension of higher education provided in Universities, Academies and Institutes.

The local graduate study programs include:

Master studies, with a duration of 1 up to 2 years, the certification being a Master’s

Diploma or a Diploma of Advanced Studies.

Doctoral studies, with a duration of 4 up to 6 years, organized by universities. The title

of doctor (Ph.D.) granted by the institution is validated by the National Council for the

Attestation of Academic Titles, University Diplomas and Certificates. The Doctoral

Diploma is the highest academic degree awarded after extensive study and research and

requires the submission of an original thesis.

MBA (Master of Business Administration) is a professional degree that aims at training

those who work in the business and management environment.

Graduate education in Romania has several forms: regular courses, low frequency courses and

open distance learning.

MASTER STUDIES:

Bucharest University offers over 180 Master’s degrees and advanced study programs, over 50

doctoral programs, advanced postgraduate programs, and programs of professional conversion

and development. The Master’s Programs train students in several areas of specialization:

Biology, Mathematics, Chemistry, Law, Physics, and History.

The Bucharest Academy of Economic Studies offers in its 10 faculties 86 Master’s courses, with

different economic specializations: Accounting, Finance, Trade, Marketing, Management, etc.

One of the largest public universities offering postgraduate courses is the National School of

Political and Administrative Studies, located in Bucharest. The main study areas are:

Administration, Communication and Public Relations, Political Sciences, Management and

European Integration.

Prestigious Universities all over the country include in their educational programs several post-

graduate courses, covering a large area of specializations.

MBA PROGRAMS:


16

In a survey of the best MBA programs in Romania (made by the daily newspaper Ziarul Financiar

in the summer of 2009) the first place is held by ASEBUSS (Romanian-American Business School)

together with Kennesaw State University – Atlanta, Georgia, SUA. Its aim is to develop a pool of

leaders able to communicate with their partners across the world. It was inaugurated in 1993

and it has a continuous focus on improving teaching methodologies and providing an increased

exposure of students to issues such as Customer Relationship Management, Change

Management, General Business Processes, Communication, etc. There were 71 MBA graduates

in 2008 and 75 in 2009 of this program.

Bucharest School of Management MBA program is on the second place, with 50 graduates in

2008 and 35 in 2009. On the third place there is the MBA program of City University of Seattle

(CityU), with 35 graduates in 2008 and 50 in 2009. Another player in the top 4 is Vienna

University of Economics and Business with 15 graduates in 2009. Other important MBA

programs on the Romanian Market are offered by DeSales University Pennsylvania, University

of Sheffield, CERISS (European Center of International Relationships).

The Bucharest Academy of Economic Studies, along with two well-known universities from

Canada, offers The Romanian-Canadian Master of Business Administration, training on basic

management disciplines and skills: Economics, Ethics, Finance, Financial and Management

Accounting, Human Resources Management and Organizational Behavior, Marketing,

Management Information Systems, Operations Management, Statistics, Strategic Management

and Policy. Most of the programs are delivered in English.

Recently, the education sector has been hit by a series of strikes and protests. The longest

conflict took place in November 2005, when a general strike lasted for three weeks and ended

with the government promising to increase teachers’ salaries by approx. 12 %. One-day strikes

in 2008 and 2009 were followed by an attempt to initiate a new reform of the education system.

Eventually, this reform was annulled by the Constitutional Court.

5. FOREIGN LANGUAGE SKILLS IN ROMANIA

All schools in Romania have foreign language programs. Students must study at least one

language to an advanced level and a second one at a more basic level. In other cases there are

more than two foreign languages available to study and the student can choose from several.

Many schools also offer bilingual courses.


17

During the communist period, the main language taught was Russian and German was the

second most common. Nowadays things have changed and the school curriculum is very

different.

According to the results of 2008’s “Key Data on Teaching Languages in Schools in Europe”

published by The Education, Audiovisual and Culture Executive Agency (EACEA), the top

language taught in Romania nowadays is English. Some children start learning it in

kindergarten, but usually public schools have a language program which starts in the 2nd grade.

The explanation is simple: as we can see on the World Language Map, English is very popular all

around the world and nowadays it is necessary to have at least a basic command of the

language. In an EU report on foreign language skills it is estimated that over 29% of Romanian

natives speak English at an average level (and 10% fluent).

The level of English language knowledge is probably higher in urban areas with a higher

concentration of University graduates and foreign investments. Proficiency, however, is most

likely to be defined as comprehension capacity with an ability to render ideas in an

understandable manner. As far as the active labor force is concerned, the level of knowledge of

foreign languages, and especially English, has typically improved among employees of

international/multinational companies, without being more specifically related to a hierarchical

level within the organizational structure.

According to the cited study, the second most popular language is French. It is estimated that

less than 24% can use French (especially older generations). French is less popular for the vast

majority of the active population.

The third foreign language is German, with 6% of the population speaking it. Most people who

speak German are to be found in Western Romania, Central Transylvania (Sibiu-Brasov), and

Banat region (Timisoara and Arad areas).

Italian and Spanish are the next most commonly taught languages in the educational system.

However, after the intense immigration process of Romanian workforce in EU after 2005, a large

portion of the 2.5 million Romanians that live abroad has developed Spain and Italian language

skills.

There are a wide variety of options available and many children choose a specialized public

school or high-school because they want to study a certain language and they continue to learn

it throughout the curriculum.

In the areas highly populated with minority groups, languages like Hungarian, Ukrainian,

Serbian, Slovak, Czech or Croatian are taught too (especially in Transylvania). They do not

necessarily classify as foreign languages in these circumstances, as they are taught as a result of

the structure of society.

http://eacea.ec.europa.eu/index_en.php

http://www.lexiophiles.com/topic/top-foreign-languages-taught-in-schools

http://www.lexiophiles.com/topic/top-foreign-languages-taught-in-schools

http://en.bab.la/news/world-languages.html


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The challenge of finding experienced professionals in their field of activity field with a good level

of French is a bit less difficult than identifying speakers of German, Italian or Spanish.

The past years have undoubtedly educated generations into a more flexible and internationally

oriented mentality. Thus, it is more and more probable for fresh graduates to have better

language skills than already established professionals, thus providing a fresh influx of

competencies and enthusiasm in the local business world.

It seems that all changes in society lead to changes in the learning process. If you were to ask a

young Romanian something in English, you would definitely get an answer. This is less likely to

happen amongst the older generation, as English was not so much an integral part of the

curriculum when they were in formal education.

6. KEY ROMANIAN LABOUR CODE INFORMATION

In 2003 the Romanian Parliament approved the first post-communist Labor Code. The Labor

Code from 2003 was still heavily unbalanced in favor of the employees’ rights. For instance,

the Labor Code acknowledges 304 legal rights – 248 for the employees and 56 for the

employers. As a direct result, the number of civil cases grew with 32% in the first year.

Another Romanian Labor legislation reform came into being during the year 2005, with the

major purpose to adapt the Romanian regulations to the new economical environment, in a

more flexible and business oriented manner. The 2005 Labor Code was described as a step

further in the right direction – the development of labor relations on new economical bases (the

market-driven economy). However, there was much criticism regarding the lack of flexibility

and more importantly, the lack of alternatives regarding the contractual relationships between

employers and employees.

In 2007 and 2008, the Foreign Investors Council pleaded for amending the old Labor Code on

various legislative aspects. The request for the Labor Code amendments to include, first of all,

labor market flexibility – people should be easier to recruit and dismiss. Also, companies want

a legislative stimulation for temporary work, and the notice period for resignations or dismissals

to be raised to two months, so that the employee could find a new job and the employer a

replacement. Foreign investors want to eliminate collective labor agreements at branch or

national level, when there’s already an existing individual labor agreement. They also want the

law to include performance expectations, so as to be able to keep efficient employees and not

the ones with seniority.


19

After virulent public debates and struggles, the new Romanian Labor Code came into effect on

the 1st of May 2011, aiming to increase the flexibility of working relations and combat illegal

work. The latest changes in employment regulations are aimed at more flexible working

relations and their adjustment to the dynamics of the labor market, ensuring the conditions

for development of the business environment and also the adaptation of the Romanian

legislation to that of the European Community.

With the new Labor Code, the quality of work plays a more important role. Thus, the employer

is assigned an explicit right to set individual performance goals. Furthermore, employers are

required to establish criteria and procedures for the evaluation of their workers’ activity. This

provision can, for example, play a role in mass lay-offs. The selection of employees to be

dismissed will be first done according to the criteria of goal achievement and only afterwards

will the collective agreement regarding specific social criteria be applied.

The Individual Labor Contract – Under Romanian law, all employment relations are governed

by a contract, which must be in writing, concluded in Romanian and agreed prior to the

commencement of employment. At a minimum, the contract must spell out key terms such as

salary, required job duties, entitlement to annual leave (generally 20 days), the duration of the

agreement, and whether there are any specific risks associated with the performance of job

duties. Pursuant to law, the work week is generally limited to no more than five eight-hour

days, and a maximum of 48 hours per week.

Part-time workers must work a minimum of ten hours per week, two hours per day. Other

negotiable terms may be included in the contract, but employees may not contract away any

rights provided under Romanian law.

Employers who fail to have a written contract in place within 30 days after the employment

relationship has begun may be sued for damages. All contracts must be registered with the

Local Labor Inspectorate within 20 days of execution, and any amendments to the contract must

be filed within five days of amendment.

Non-competition provisions may be included in the contract, but to be enforceable, the

employee must receive a monthly non-competition benefit as part of his / her compensation.

The non-competition agreement is limited to a maximum of two years and the geographic

scope must be specified. The contract should also provide a list of prohibited competitive

activities, the third parties for whom the employee may not work, and the amount of the

monthly non-competition compensation.

The contract may be lawfully cancelled at the date when the employee’s authorization, permit,

license or certificate required for the exercise of his/her profession expires, unless the employee


20

renews it within six months of the expiry date of such authorization, permit, license or

certificate.

An individual labor contract may be terminated only through “lawful” dismissal or

resignation. Dismissals are generally “lawful” only in the following circumstances:

The employee has repeatedly violated a work rule or committed a serious violation of a

work rule;

The employee has been shown (by a competent medical examiner) to have a physical or

mental disability that prevents him / her from carrying out assigned job duties;

The employee is “unfit” for his / her job;

The employee has been taken into police custody for more than 30 days pursuant to the

Code of Criminal Procedure;

The dissolution of the employee’s position based on financial reasons, reorganization,

etc.

Please note that prior to a dismissal based on an alleged violation of work rules, the employee is

entitled to take part in a preliminary hearing regarding the alleged violation. Where the

employee will be dismissed for a physical or mental disability or general lack of fitness for a

position, the employer must first consult with an occupational medicine physician to determine

whether there are other, more suitable positions within the company, given the employee’s

disabilities or limitations.

For dismissals based on company reorganization or financial reasons, the employer is liable for

damages if the reorganization or financial reasons are determined to be groundless or contrary

to law.

Fixed-term Labor Contracts – Fixed-term employment contracts have hardly played any role in

Romania so far. First of all, before the crisis that began in 2008, there was already a great

shortage of workers, so that employers did not necessarily have a great interest in fixed-term

labor contracts. On the other hand, the statutory regulations regarding fixed-term contracts

were also rather strict.

The new Labor Code relaxes the previously strict requirements, at least partially. The

maximum duration of a fixed-term employment contract has been extended, for example

from 24 to 36 months, and two more consecutive contracts, which may not exceed one year,

may be completed after the expiration of the first fixed-term employment contract (article 82,

paragraph 5 of the Labor Code).

It should be noted, however, that this limitation in time concerning the period for which a fixed-

term employment contract can be concluded is an "innovation" of the Romanian Law, being

able to restrict the application of such a contract. Thus, the EU fixed-term work directive


21

(hereinafter: Directive 1999/70/EC) provides that the end of the contract or employment

relationship is determined by objective conditions such as reaching a specific date, fulfilling a

specific task or the occurrence of a specific event (paragraph 3 section 1 Directive 1999/70/EC).

Temporary Employment – The subject of temporary employment, similar to fixed-term work,

previously played hardly any role in Romania, particularly because of the rather inflexible

regulations. However, temporary employment is a matter of interest for companies, since it is

able to satisfy a temporary staffing need, e.g. during temporary heavy workload or a

temporary need for specialists.

Temporary employees are only entitled to the statutory minimum wage of currently RON 670

(approximately EUR 160) and not the usual salary of the company where they are deployed.

Herewith, the principle of equal treatment is, however in our judgment, grossly violated. The

provision under article 5, paragraph 2 of Directive 2008/104/EC , which was conceived as a

deviation in wage matters, has been implemented by the Romanian legislator rather as a basic

rule.

Reduction of normal working time – Under the old law, a temporary interruption of work with a

corresponding pay cut had been possible, in case of economic or technical difficulties. Under the

new Labor Code, the employer also has the option of unilaterally introducing a four-day week

with a simultaneous reduction in salary, in case of economic or technical problems and requires

a consultation with the union or with the employee representatives. This should be an attractive

option for employers, especially after the experience of the financial and economic crisis, which

was associated with a significant drop in orders and numerous redundancies in Romania.

Other amendments to the Labor Code refer particularly to the provisions regarding the trial

period, employment contracts concluded for a limited period of time, work done through a

temporary work agency, extra pay for work at night, Internal Regulation, sanctions applicable

for infringement of legal provisions.

Establishment of assessment criteria – The individual selected for employment or the

employee, as the case may be, shall be informed of the criteria for the assessment of his/her

professional activity, which are applicable at employer’s level.

Amendment of any of the elements contained in the Employment Contract – Any amendment

of the elements provided under Art.17 (2) of the employment contract shall be subject to an

additional act to the contract, which should be concluded within 20 working days of the date on

which the amendment has occurred, except for the cases in which such amendment is

specifically provided under law.

Request for information from former employers – Any employer may request information

regarding the individual applying for employment from such individual’s former employers only


22

in respect to his/her fulfillment of employment duties and employment period, as well as only

after informing that individual thereof.

Trial period – Trial periods have been extended. In order to test the employee’s abilities, when

an employment contract is concluded, the trial period may be set at 90 calendar days, at the

most, for operational functions and 120 calendar days, at the most, for executive functions.

Individuals with disabilities shall be tested for a maximum period of 30 calendar days.

The first six months of employment of any fresh graduate of a higher learning institution shall be

deemed trial period, excepting the professions for which the trial period is regulated by special

laws.

At the end of the trial period, the employer shall release a certificate which should be endorsed

by the Labor Inspectorate in the territory in which such employer has its registered office

located. The manner in which the trial period should be organized will be regulated by special

law. The period during which several individuals may be employed and tested for the same job /

position may not be longer than twelve (12) months.

Lay-offs – The legal provision referring to the employer’s restriction to perform new

employments over a period of nine (9) months from the layoff date has been amended. Thus,

within 45 calendar days of the layoff date, any employee who has been dismissed following the

layoff procedure may be re-employed with priority in the same position, if such position has

been re-introduced for the same activity, without any further examination, contest or trial

period.

Prior notification term in case of resignation – The prior notification term shall be the one

agreed by the parties in the employment contract or the term provided under the applicable

Collective Bargaining Agreements, but it may not be longer than 20 working days in the case of

employees with operational functions or than 45 working days in the case of employees

occupying executive offices.

Work done through a temporary work agency – Temporary work assignment shall be

established for a period which may not be longer than 24 months. However, it may be extended

by successive periods which, added to the initial term, shall not exceed 36 months.

Extra pay for work at night – The salary raise for work done at night has been set at 25% from

15% if the time thus worked represents three (3) night hours out of the normal working time.

Disciplinary sanction – Any disciplinary sanction shall be lawfully erased, upon employer’s

written decision, within 12 months of the date on which it has been applied to the employee

unless another disciplinary sanction is applied to the employee within this time interval.


23

The employer that repeatedly establishes salaries below the minimum gross salary guaranteed

under law shall be deemed an offence for which such employer shall be punished with

imprisonment from six (6) months to one (1) year or with a fine as stipulated by the penal law.

Collective Bargaining Agreement – Collective Bargaining Agreements and Additional Acts

thereto which have been concluded in the time interval from the date of entry into force of this

Law and 31st of December 2011 may not provide for a valid duration which exceeds the 31st of

December 2011. Collective Bargaining Agreements shall come into full force and effect at the

date on which this Law commences to produce effects, being valid until their expiry date.

Foreign Employees – Romania has been a member of the European Union since January 2007,

which has led to a loosening of restrictions on foreign workers in Romania. However, foreign

citizens (who are not EU citizens) may only work in Romania based on a work authorization

permit issued by the Romanian Office for Immigration. The work authorization is usually issued

for a one-year period, and may be extended as long as the individual labor contract was also

extended.

Illegal work – Recent changes to the Romanian Labor Code mean that illegal work will now be

treated as both a civil and criminal offence. Act 40/2011 makes substantive amendments to the

Labor Code provisions for the control of illegal (undeclared) work.

Under civil law, both employer and employee are now considered liable.

Employers who use the services of up to five persons without a valid individual

employment contract are liable for fines of between RON 10,000 and RON 20,000

(about €2,350 to €4,700 as of 10 August 2011) for each person illegally hired. This is

around five times higher than the fines imposed by previous regulations.

Individuals found working without a valid individual employment contract are liable for

fines of RON 500 to RON 1,000 (€117 to €235).

Under criminal law, employers are liable for using illegal/undeclared workers. The new

regulations provide for:

jail sentences of one up to two years or a criminal fine for the use, without a valid

employment contract, of more than five individuals, irrespective of their citizenship;

the same penalties for hiring an individual illegally staying in Romania, while knowing

that the person is a victim of human trafficking, and where the type of work they are

performing is of a nature that could jeopardize their life or health, the jail sentence may

go up to three years;

jail sentences of six to 12 months, or a fine, for repeated denial of access to company

premises for labor inspectors, or the refusal to produce company records on request.

For any of these offences, a court may also impose one of the following punishments:

http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/UNDECLAREDWORK.htm


24

total or partial forfeiture by the employer of the right to receive public services, aid, or

subsidies, including European Union (EU) funding managed by the Romanian

authorities, for a period of up to five years;

loss, by the employer, of the right to take part in public procurement tenders, for a

period of up to five years;

total or partial payback by the employer of public services, aid or subsidies, including EU

funding managed by the Romanian authorities, paid to the employer over a period of up

to 12 months prior to the offence;

temporary or final closure of the outlet(s) where the offence was committed, or the

temporary or final withdrawal of a license for the scope of business concerned, if the

seriousness of the offence so recommends.

In addition, the employer is required to pay:

any outstanding wages owed to the illegal workers (presumed to be equivalent to the

gross national average salary);

all charges, taxes and social insurance contributions that the employer would have paid

if the persons had been hired legally, including surcharges for overdue payment;

any related administrative fines.

If the offence(s) were perpetrated by a subcontractor, the contractor may be held liable jointly

with the subcontractor. Employers are also committing a criminal offence, punishable by

imprisonment or fine, if they repeatedly pay workers below the gross national minimum wage

as set by law.

Salary negotiation – The Labor Code does not stipulate any particular clauses related to salary

negotiation. The only constraint is for the negotiated salary not to be lower than the minimum

agreed salary, currently at the level of 670 LEI gross/month. In case of employees with higher

education, the minimum agreed salary is 1.204 LEI gross/ month. As far as the benefits package

is concerned, this is a relatively new notion that has only lately imposed itself on the labor

market. The way in which benefits are granted to various employee categories is primarily a

direct consequence of internal company policies and is not regulated by the labor code in terms

of absolute necessity for certain positions.

According to the labor code, salary-related incomes cover all the benefits of a financial nature

obtained by an employee working under the conditions of a labor contract, irrespective of the

way in which the income is defined and the form under which they are transferred to the

employee.

The incomes falling under the “salary” category are:

base salaries

bonuses of any kind

http://europa.eu/


25

any sums representing annual bonuses and incentives, percentage of profit participation

etc.

payment for the annual holiday

legal payment in case of temporary work incapacity

Other benefits might include full-time company car, company mobile phone (including

expenses), insurance of any kind (apart from the compulsory ones), traveling permits of any kind

(used for personal purposes), use of a company flat and payment by the company of the

subsequent facilities, presents of any kind.

Please note that according to the labor code financial or other benefits fall under heavy taxation

constraints.

GROSS SALARY STRUCTURE

Taxes paid by the EMPLOYER in 2011:

Title Percentage of the gross

salary Comments

CAS (contribution to social

insurance)

20.80%

Cannot be higher than 5 times the

national gross average salary; goes

to the state budget.

Unemployment fund 0.5% Goes to the national unemployment

insurance budget.

Health Insurance 5.20% Goes to the National Health

Insurance budget.

Health contribution

0.15% or 0,85% (depending

on the risk level of the labor

conditions)

For work-related accidents or

professional illnesses.

Taxes paid by the EMPLOYEE in 2011:

Title Percentage of the gross

salary Comments

Unemployment fund 0.5% Goes to the national unemployment

insurance budget.

Health Insurance 5.5 % (starting with 1st July

2008)

Goes to the National Health

Insurance budget.

CAS (contribution to social

insurance)

10.5% (from which 2%

represents the private

pension fund)

Cannot be higher than 5 times the

national gross average salary; goes

to the state budget.

Salary tax 16% Goes to the state budget.


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7. INSIGHT INTO ROMANIAN WORK MENTALITIES

From many points of view, Romanians are seen as obedient to more powerful levels of

authority. Romanian employees prefer to have a strong relationship with a single manager, in

order to benefit from protection, thus avoiding to manifest opinions that are different from

those of the higher power. Generally, they follow the directions of their managers without

questioning or asking for further explanations. There is fear of exposure and failure; failure can

be viewed as a personal short-coming and can cause long-term loss of confidence by the

individual as well as by the group. This attitude proves that Romania needs powerful leaders,

centralized decisions, and that the population prefers to follow the rules established by its

leaders.

In Romania, as in other hierarchical societies, managers may take a somewhat paternalistic

attitude towards their employees. They may demonstrate a concern for employees that goes

beyond the workplace and strictly professional concerns. This may include involvement in their

family, health, and other practical life issues. Most of the times, the employees of Romanian

companies do not have perspective on their work. The high level of uncertainty in the social,

political and economic environment generated a focus on short-term issues, rather than on

taking the long-term view. This is one of the reasons why the saving rate is very low in Romania

and most people choose to apply for loans.

The managerial style practiced in Romania is a combination of a familiar management style

which emphasizes the welfare and personal interests of employees and an autocratic German

management style where honor, company’s interests and reputation are the main values.

Generally, Romanian employees prefer the type of manager who takes risks and

responsibilities and consider that the best leaders are the ones who protect them and provide

advantages.

In “Business in CEE 20 years after the fall of the Iron Curtain” – a survey conducted by TARGET

International Executive Search and Henley Business School, there were some very interesting

findings regarding Romanian work mentalities. Many of the items where Romania was ranked

first or second relate to the energy and dynamism of the people. For example: active and

dynamic business environment; ambition is admired; managers tend to be excellent at selling;

there is a strong entrepreneurial spirit. By contrast, some negative features were underlined as

well: business is not well organized and efficient; deadlines and timetables are not always

taken seriously; teamwork is poor; managers do not prefer to work in a planned way.

In post-communist countries, there is a tradition of teamwork inherited from the communal

aspects of the previous era where groups and work units commonly met together to discuss

ideas and create plans. However, those plans seldom resulted in implementation or results,

leading to apathy and cynicism among the workers. Today, the after-effects are still evident


27

among much of the older generation resulting in a lack of drive and energy. However, there is

vibrancy among the younger generation, who seem to be eager to tackle many of the

challenges and take the opportunities presented. They will participate in teams and share ideas,

but intercultural sensitivity will be needed and it should be understood that they will need to be

coached in the process.

In order to achieve successful cross-cultural management in Romania it is important to

understand that there is still a great deal of bureaucracy. Business moves somehow at a slow

pace, and patience will be a necessary cross-cultural attribute; therefore, personal relationships

are crucial if you want to cut through the red tape. Business is hierarchical and the decision-

making power is held at the top of the company. Most decisions require several layers of

approval. At times it may appear that no one wants to accept responsibility for making the

decision.

Formality was part of the country’s work ethic for a long time. Thus, the “first name” fashion

has only managed to contaminate the environment in a gradual manner. Again, the

multinational environment is a champion in this respect, as the culture disseminated is one

more oriented towards a more relaxed approach (without affecting efficiency and

professionalism). Formality is also manifested in what the dress code is concerned. Romanians

have a tendency to dress in such a way as to reflect their position (social and professional

status). Though the dress code for business is a very strict one, “casual Fridays” and less formal

attire tend to gain more ground in industries/fields where creativity and innovation are more

praised than rigidity and structure.

Although the collective type of culture prevails in Romania, specialists estimate that in the

future the level of individualism will grow and the individual type of culture will predominate.

The main factors that contribute to the process of cultural change towards individualism are the

presence of the multinational companies on the Romanian market and external financing. The

two factors essentially determined the socio-economic development of Romania.

Still, the work mentalities have undergone significant changes during the past years, the private

sector being less and less indebted to the former paradigms. Romanians’ interest in working for

multinational companies has increased consistently during the transition years and maintains a

healthy percentage of growth these days as well. Multinational organizations have cultivated an

employer image interested in their employees’ development and professional enrichment.

Furthermore, they are expected to bring about systems and procedures, the exactness and

correctness of which encourages and acknowledges professionalism and quality work.

The concept of “corporate culture” is no longer a novelty among Romanian professionals and is

lately supported by a concern for human resources policies that ensure personal and

professional development in an environment oriented towards transparent opportunities rather

than political merit. However, it is important to notice the fact that as far as interest towards


28

working with multinational companies is concerned, the change as compared to the beginning

of the 90’s is to be found in the way in which potential employees analyze the exact

characteristics of the opportunities offered, their market awareness level increasing and

reputations of companies being more or less established. To conclude, the status of

multinational does not necessarily guarantee the professionals’ interest, reputation however

does.

Relocation availability is probably one of the signs of normality of the Western work force.

When analyzing this value upon the background of the current Romanian work environment,

one easily notices an increasing openness towards this, especially as far as the local managerial

elite is concerned. Still, stability (defined as strong bonding with a certain place) remains a

Romanian trait and family-related issues may still have preeminence over career opportunities.

When relocation is considered, Romanians have also increased their awareness of its financial

implications and may be expected to negotiate substantial packages in this respect.

The message here is clear – Romanians must apply their undoubted energy and entrepreneurial

spirit to clearing up the mess – planning, structuring, strategizing and, most importantly,

learning to work in teams.

The good news is that Romanian labor force can compete with other countries with success.

After 3 years of stagnation (2007/2009) the current productivity of the average Romanian

employee is growing again. Each Romanian employee in a multinational generated an annual

gross profit of 5,898 EUR in 2009 to foreign investors, surprisingly nearly 8% higher than that

generated by a Western European employee, shows a survey conducted by the audit and

consulting firm PricewaterhouseCoopers (PwC) Romania. In the preceding year, the annual

gross profit per employee had been 2.910 EUR, but the redundancies led to a profit increase.

The results are unexpected, considering that the GDP per capita in Germany, for instance, is four

times higher as in Romania.

Return on human capital in Romania went up 20% against 2008 because labor costs are over

50% lower than the European average. Each Romanian employee in a multinational generated

a 102% higher gross profit against 2008. The survey involved 58 companies of which 76% were

private foreign companies. Nearly half of them had at least 1,000 employees and revenues

above 100 million EUR.


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8. ROMANIAN MEDIA AND HUMAN CAPITAL RECRUITMENT

Most recruitment advertisements refer to entry-level and specialist positions; when it comes to

hiring middle and top management candidates, employers tend to use other recruitment

channels such as executive search or networking. Generally, through media search only 10-15%

of the initial applications are taken into consideration at the end of the screening process.

Situations when the job advertisement does not mention the name of the employer were quite

frequent before 2008, mostly for confidentiality reasons, but now this has changed. In these

cases, employers prefer to “hide” under a vague description (i.e. multinational company active

in the industrial field) in order to receive applications from candidates motivated by the job

description, not by the company name. The ads usually inform potential candidates about the

main responsibilities of the advertised job, the requirements, but the salary or benefits are

rarely mentioned.

The most important Romanian business publications are:

BIZ is a bi-monthly business magazine. Its circulation reaches a monthly average of

10,000 copies and targets young urban career-oriented professionals, 92% being

University graduates. The Biz mission is to provide business leaders with information

and stories that anticipate major trends and identify new opportunities.

BUSINESS REVIEW, a weekly magazine with a circulation of 10,000 copies per issue,

distributed in Bucharest, mainly in business centers, leading hotels, newsstands and

trade shows. Over two thirds of BR readers are senior executives and decision makers.

The 48-page English language magazine offers to its readers news, interviews, analyses,

IT, media, banking, real estate, after hours, events, people on the move, etc.

CAPITAL is a weekly magazine distributed nationally in over 44,200 copies per issue. It

targets readers from the business sector, offering comprehensive information on

investment, services, industry, finance and banking. Every year the magazine promotes

interesting supplements (The 100 most successful business people in Romania).

CARIERE is the first Romanian human capital magazine, a monthly business resource

that targets active managers, leaders and professionals involved in all fields of economy.

The 64-colour page newspaper is printed in 8.500 copies on each issue and it is

distributed nationally. Through its articles, analyses and studies, the magazine offers

solutions to career challenges: training needs, competences assessment, psychological

tests, labor legislation etc.


30

ROMANIA LIBERA is a daily newspaper, distributed nationally, with over 50,000 copies

per issue. The publication brings to readers’ attention numerous subjects from

economy, social, politics area. Of high interest for companies and potential candidates is

the special section with job openings, attached each Monday to the newspaper.

ZIARUL FINANCIAR is a popular daily business newspaper, distributed nationally in over

18,000 copies per issue. The 16-page newspaper has a constantly improved content and

by its numerous weekly, monthly, quarterly and annual supplements (such as

DESCOPERA, GO4IT!, PRO MOTOR) has an audience of over 160,000 readers per issue.

The publication informs its readers about events in Marketing, Management, IT &

Telecommunication, Banking, etc. Advertising a vacancy represents a challenge in order

to save time and reduce the cost of the selection process.

BUSINESS STANDARD claims to be the first newspaper dedicated to a European

business community, with 16.000 copies. Business Standard is a complete media

product that provides quick and high quality information every day. Its target audience

is business people – entrepreneurs, investors, managers, bankers, but also professionals

in the middle class, interested in starting their own business or investment.

As far as the most efficient way to post job ads is concerned, apart from business publications,

the specialized Internet sites have become a useful recruitment tool in the last years. Among the

numerous HR sites on the Internet today, the most popular, both for employers and candidates,

are www.BestJobs.ro and www.ejobs.ro.

BestJobs/Neogen holds over 1,580,000 potential candidates (CVs) and 37,000 employers in the

database. The process of finding qualified candidates with specific experience is simple and the

costs and time for recruitment are reduced. Posting an ad costs over 69 EUR and it is displayed

for 30 days. CVs are received shortly after posting the ad and the system offers you multiple

tools for CVs sorting/listing, communication with the applicants and administration of the whole

recruiting process.

eJobs was the first Romanian HR website, at present being visited by over 1.200,000 visitors

each month. There are over 2,000,000 CVs in the database. Vacancies are posted for 30 days,

the company being able to choose from several types of concepts, forms, dimensions and price

ranges.

Various vacancies are being advertised in the media, but the general trend is to post ads for

entry-level and specialist level.

When recruiting for middle, top management and very specialized positions, one should

consider other methodologies than the classical advertisement. The Romanian market has

witnessed the development of a pool of companies active in the field of recruitment and human

http://www.bestjobs.ro/

http://www.ejobs.ro/


31

resources consulting services. However, the process of selecting the best provider needs to

take into consideration aspects such as: experience on the market, validity of contact network,

exposure to similar projects, specific knowledge of the market, accuracy of information offered,

length of recruitment process, guarantee period and costs.

Last but not least, when choosing a service provider in this field, one should also consider

further personnel-related needs. While recruitment assignments can be considered a good start

in establishing a fruitful collaboration with a sub-contractor, its capacity to provide integrated

Human Resources services in this competitive market cannot be underestimated. Training

services have undergone significant development during the transition years, local companies

now providing a wide range of tailored programs and professing flexibility to client needs as one

of their main business drivers. Last but not least, such concepts as outplacement, leasing and

payroll are no longer a novelty among human resources services providers. Competency in

these areas is also to be evaluated on the basis of exposure to similar projects, level of

complexity and, necessarily, seniority of the consultants involved.

Currently (November 2011) there are over 30.000 positions available for entry, middle and

specialist levels on job sites, 45% more than in 2008.

In February 2011, according to E-jobs, the largest number of job ads was for positions in the

following functional areas:

Sales 5.600 positions

Marketing, Public Relations and Advertising 3.500 positions

Customer Service 3.094 positions

IT 3.000 positions

Engineering, Production 1.500 positions

Social networks (LinkedIn, Xing, Twitter and Facebook) and other channels are also used for

recruitment projects, especially for middle management and management positions. It is

estimated that over 320.000 Romanian professionals have LinkedIn accounts, 800% more than

in 2009.


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9. BRIEF SALARY AND BENEFITS INFORMATION FOR KEY POSITIONS

Note: The information below is intended to provide an overview of specifics of the mentioned

positions and does not claim to be an exhaustive salary and benefits analysis.

Position Title GENERAL MANAGER

Equivalent titles (depending

on the type of company and

industry sectors)

Managing Director

Chief Operating Officer

Chief Executive Officer

How the position has

evolved over time

General Manager positions occupied by locals are still not very wide spread

in Romania as far as international/multinational companies are concerned.

However, there is an obvious increase in the level of trust granted to local

competencies for these strategic positions.

While there are companies in which the percentage of administrative and

coordination roles of this position take pre-eminence over the strategic

planning part, local General Managers might in time prove their ability not

only to implement policies, but also to develop and adapt them to market

specifics. This actually represents the added value of a local professional in

this role and cannot be underestimated.

Professionals that have reached this position usually have a background in

sales with well-known multinational companies. It is only rarely that such

positions are occupied by previous Finance or Marketing Managers. Most

often than not, the educational background of these professionals will

include graduation of an MBA (either with a local school or abroad) as well

as of other high-quality training sessions.

Their competencies are necessarily multi-functional, comprising an

understanding of the financial implications of business decisions, but not

being limited to this.

Their personality profile is usually that of a risk taker with a constant

orientation towards results and an innovative thinking pattern in terms of

strategic design.

As far as the motivational patterns of candidates accessing these positions

are concerned, one should expect a particular interest in the size of the

business, strategic investment plans and image on the international

market. Last but not least, these candidates are particularly motivated by

the degree of freedom in making decisions and by the level of trust with

which they are invested, becoming increasingly frustrated should the

environment prove to be a limiting and excessively controlling one.

Typical Key Responsibility Organizational goals development (establish organizational goals


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Position Title GENERAL MANAGER

Areas in accordance with group interests)

Strategy and policy formulation (define strategies and formulate

policies to ensure organizational objectives are met)

Operational management

Public relations (representation of the company)

Typical subordinate areas

(usually specific, depending

on the industry sector)

Finance

Sales/ Business Development, Marketing

Production, IT, Logistics

Salary ranges

Small organizations: 2.000 – 4.000 EUR net/month

Medium organizations: 3.500 – 6.000 EUR net/month

Large organizations: over 6.000 EUR net/month

Specific benefits

Company car, mobile phone, laptop

Insurance (life + medical)

Performance related bonuses

Company shares


34

Position Title FINANCE MANAGER



industry sectors)

Finance Director

Chief Financial Officer


evolved over time

Finance Managers continue to be highly valued in the Romanian business

environment. Thus, this has led in the past years to the creation of a

professional elite in this field, with an analytical approach to career

changes.

While at the beginning of the 90’s local finance professionals were mainly

dealing with the administration of the documents according to active legal

constraints, the increasing number of multinational companies with

complicated reporting structures as well as the settling in Romania of well-

known audit companies have changed the ways in which the finance

profession is viewed and acknowledged.

Finance professionals have increased their role in the strategic

management of the business, in development of risk analysis and adequate

subsequent planning. Responsibilities now include reporting according to

international standards, strategic investment coordination and

implementation of efficient financial procedures according to new market

realities.

While a significant number of finance professionals have embarked upon

ACCA courses, those that have not yet finished the program might consider

support from the company in this respect as a motivational issue.

Furthermore, finance professionals might now be more motivated than

ever to acquire a strategic position within a well-established company (or

one under a solid growth pattern).

Interestingly, many of them confess an active interest in being part of a

start-up company, thus being given the possibility of a fresh start in terms

of policies, procedures and strategies. Last but not least, their interest in

regional responsibilities is not to be overlooked.

Typical Key Responsibility

Areas

Management of accounting and financial departments

Consolidated reporting according to group/company standards

Development and implementation of specific procedures in areas

such as: accounting, revenue control and investments, budget,

contract administration. etc.

Interaction with internal and external audit staff


35

Position Title FINANCE MANAGER

Typical subordinate

areas (usually specific,

depending on the industry

sector)

Accounting

Financial Analysis

Reporting and cost controlling

Possible:

Payroll

IT

Security

Human resources

Legal

Salary ranges



Large organizations: over 4.000 EUR net/month

Specific benefits Company car, mobile phone, laptop;

Insurance (life, health etc.)


36

Position Title HUMAN RESOURCES MANAGER



industry sectors)

Human Resources Coordinator/ Supervisor/ Responsible


evolved over time

Professionals in this field have mainly been formed in multinational

companies, but due to an inertia in mentalities they have been going a

long way without their importance being properly recognized. When

looking for an HR manager, one should consider evaluating professionals

based on their exposure to concrete areas of practice and not just

theoretical knowledge. In spite of the relatively low positioning of this

function within organizations during the 90’s, the environment has

managed to create an elite of professionals in this field as well

(competence not being necessarily related to the graduation of specific

courses).

The current role of the Human Resources Manager necessarily includes

participation in strategic development planning, implementation of HR

policies and strategies consistent with the company’s culture and local

market environment. The shift in this case will be from administrator to

trusted advisor.


Areas

Human Resources planning within an agreed budget

Develop staffing plans, coordinate recruitment and selection

Intermediate work relations between employees and company

management

Ensure the development of adequate HR instruments

(performance management, training and development, payroll

etc.)

Ensure the legal compliance of all personnel related documents

Maintain the relation with the Trade Union, participate in the

negotiation of the collective work agreement (if applicable)




Training, Recruitment, Payroll

Possible:

Health& Safety, Legal, Office assistant

Salary ranges

Small organizations: 1000 – 1500 EUR net/month

Medium organizations: 1500 – 3000 EUR net/month

Large organizations: 3.000-5.000 EUR net/month

Specific benefits Company car, mobile, laptop

Insurance (health, life)


37

Position Title MARKETING MANAGER



industry sectors)

Marketing Coordinator/ Responsible


evolved over time

While at the beginning of the 90’s the concept of “locally developed

brand” was almost non-existent and the marketing profession was more

limited to the implementation and adaptation of international strategies

into an immature market, with the further development of multinational

organizations and the take-over of production facilities, marketing

professionals have in time moved from a position of execution to one of

conception, playing a major strategic role in the development of the

business as such. Market research has also gained significant ground, as

well as the active interest in trade marketing initiatives (in order to better

bridge the forever existing gap between marketing objectives and sales

strategies).

Thus, nowadays, a marketing professional is expected to possess a varied

range of competencies that would help him/ her project marketing relates

decisions into such areas as finance and sales. Top professionals in this

field will also have a background of achievement in product development

(coupled therefore with an understanding of production restraints) with

such specific areas as labeling and packaging design, as well as

development of price strategies.

The motivation of such professionals comes from the opportunity of being

exposed to the rigors of an international environment while also being

offered the possibility to manifest creativity and innovation in an

increasingly competitive market. When considering accepting a position,

they will be extensively concerned with the future development plans,

with the size of the allocated budget and last but not least with the driving

force of the business.


Areas

Development of the marketing strategy, advertising/ promotion

campaigns, launch campaigns

Forecasting profitability rates and market share performance

New brand/product development

Managing/Coordinating marketing mix

Monitoring brand performance

Price strategy recommendations


38

Position Title MARKETING MANAGER




Brand Managers

Market research analysts

Trade Marketing

Events

Promotion

Salary ranges



Big organizations: 3.000 – 5.000 EUR net/month

Specific benefits

Insurance

Specific training

Performance related bonuses


39

Position Title SALES MANAGER



industry sectors)

National Sales Manager

Country Sales Manager

Business Development Manager


evolved over time

The sales profession has been one of the areas attracting the highest

level of interest from the beginning of the transition period. Entering

sales was one of the most inspired decisions of many graduates of

Technical Universities at the start of the 90’s. Being mostly engaged in a

growth period, companies were at the moment open towards employing

candidates with potential rather than experience and supporting them in

the development process. This is the generation that has currently

reached the level of National Sales Manager and even General Manager.

The competencies that this professional elite has developed were to a

large extent related to a thorough understanding of the Western concept

of commerce, the management of complex distribution systems, the

understanding and practice of the merchandising techniques, sales

planning and routing, etc. In time, these specific skills were enriched with

openness towards the other sides of the business that implied a better

understanding of the marketing and financial aspects.

A significant number of Sales Managers considered at some time the

necessity of enrolling in specialized MBA courses in order to further

qualify their knowledge and help position their expertise upon a more

valuable level.

These days, the notion of sales as such is more often than not surpassed

by the idea of business development as a concept which accommodates

a larger understanding of sales in terms of strategic planning in

organizations the activity of which aims at internationalization of

endeavors and ultimately recognition of products on an international

scale.

The motivation of professionals in this field, while still significantly

related to the financial side, has lately undergone some changes. Sales

Managers will be concerned about company image and reputation,

autonomy of decision-making processes and coherent career

development opportunities.

Typical Key Responsibility Strategic sales plan development


40

Position Title SALES MANAGER

Areas Objective establishing

Progress evaluation and monitoring

Distribution and volume targets forecasting

Negotiations

Team management and development

Typical subordinate

areas (usually specific,

depending on the industry

sector)

Field sales

Distribution

Sales support

Possible

Supply chain

Marketing

Customer care

Salary ranges



Big organizations: over 4.000 EUR net/month

Specific benefits

Company car, mobile, laptop

Insurance

Specific training

Performance related bonus.

Note: the salary usually includes fixed and variable pay (the percentage

being 70% - 30% most of the time).


41

Position Title PRODUCTION MANAGER

Equivalent titles

(depending on the type of

company and industry

sectors)

Manufacturing Manager

Plant Manager

Operations Manager

Technical Manager

How the position

has evolved over

time

One of the main challenges for professionals in this field of activity has

been a widening and enrichment of their understanding of production

flow and related managerial responsibilities. The necessity to

accommodate within their everyday activities such initiatives as

efficiency and effectiveness improvement prompted them into enriching

their knowledge and implementing novel systems and solutions.

The production professional’s profile is now seen as strategic within the

organization’s structure. His responsibilities are now strongly related to

the management of quality-related initiatives, as well as to the provision

of an efficient interaction with other key business areas, such as finance,

sales and marketing.

While traditionally the production-related positions were considered less

flexible in terms of relocation or undertaking of a more varied range of

activities, the late trends indicate an openness towards positions not

necessarily within the comfort related geographical areas. However,

financial packages have also adjusted themselves in order to

accommodate this flexibility and provide a necessary balance.


Areas

Production

Maintenance

Facility management

Volume, quality and cost objectives

Investments

Ensure the transfer of new projects




Production, Maintenance, Production planning

Possible

Process & Engineering, Quality Assurance, Warehouse

Salary ranges

Small organizations: 800 – 1200 EUR net/month

Medium organizations: 1400 – 2500 EUR net/month

Big organizations: over 3000 EUR net/month

Specific benefits Company car, mobile, laptop

Insurance


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10. FURTHER PERSPECTIVES ON THE ROMANIAN ECONOMY

Romania started to emerge from global recession later than other East-European countries –

in the first quarter of 2011 – after “ending an extremely difficult year, with harsh austerity

measures, which were necessary and which give reason for a moderate optimism for this year”,

according to Romanian Prime Minister Emil Boc.

The recent international economic turmoil and the national debt crisis of Greece and other EU

countries put additional pressure on Romanian economy, which is heavily interconnected with

the EU area. However, in the long run, there are some positive signs and many financial analysts

estimate that, even if another wave of economic crisis would hit back, the Romanian economy

is now better prepared to deal with it, after the heavy reforms and cost-cutting from last years.

Romanian export-oriented manufacturing industries continue to grow in 2011, further

supporting economic recovery, whereas sectors such as retail and construction will be

negatively influenced by low consumer confidence.

Among the most competitive and dynamic sectors are R&D, Automotive Industry, Energetic

sector, Telecommunication, Wood Industry, Transport & Logistic and BPO Centers. Romania is

one of the strongest markets in Europe for technology investment and trade, with a highly

skilled technology workforce, competitive costs, top-tier investors and a friendly business

environment. As the fastest growing and top IT market in Europe, Romanian companies serve

the world's most demanding offshore customers in IT outsourcing, business process

outsourcing, call center support, and product development. The Romanian IT market follows

that of Poland, the second largest market in Central and Eastern Europe.

According to a technical study made by Vesta Wind Systems at the beginning of 2011, Romania

has the greatest potential for growth in the wind energy industry in Eastern Europe in the next

five years. Romania may produce as much as 14,000 megawatts of wind energy and may

develop into a sustainable market. Romania is attracting investors in wind power because of its

location along the Western shore of the Black Sea, where the average wind speed is about 25.2

kilometers per hour. The local industry has the potential to generate as much as 30.7 billion

kilowatt-hours a year, powering the equivalent of Ireland, Serbia and Peru and giving

Romania an edge against other East-European nations.

In terms of risks, we believe that the ongoing political fragility, corruption, population decline

and the eventual adoption of the EUR could be significant drawbacks to growth.

Romania's entry in the Schengen Area, within which borderless travel is possible, has been

postponed. The European Commission refused to present progress reports on Romania's and

http://topics.bloomberg.com/wind-energy/

http://topics.bloomberg.com/europe/

http://topics.bloomberg.com/black-sea/

http://topics.bloomberg.com/romania/


43

Bulgaria's progress toward accession to the European Parliament, and gave no reason for its

decision, meaning that the two countries were unable to join as originally planned in March

2011 and all discussions about a new term were postponed for 2012. Several Western Europe

countries' hesitance to allow Romania and Bulgaria into the Schengen Area results from their

poor progress in tackling corruption since their EU accession.

Another potential risk for the future is the demographic decrease and the ageing process of the

population. The low birth rate, associated with a total fertility rate fewer than 2 after 1990,

caused a decrease in the youth proportion. The 1st of January 2000 was the first time when the

young population was exceeded in number and percent by the elderly. The children aged 0-14

years were 3% less than the population of 60 years and over. As in other countries in Europe,

this phenomenon will put additional pressure on the Public Pension System and human

resources labor after the year 2025.

The process of preparation and adoption of the European single currency is one of the most

important challenges that Romania has to face in the first decade as a full member of the

European Union. This process will test both the political and the administrative capacity,

requiring very clear programs for the adaptation of European regulations and directives that

will ensure real and nominal convergence. This process will surely prove to be a difficult one

and it will bring a high degree of pressure upon the economic system in general. The

worldwide financial crisis is making the process of single European currency adoption even more

difficult for Romania. Although its effects are not directly felt in Romania, the disorder created

within international markets can easily transform the management of economic and currency

politics into an insecure and extremely difficult task.

With the salary costs levels well beyond the EU average and a good position on the geopolitical

map (near the Black Sea and Danube, close to Central Europe countries, part of EU area, full

member of NATO security treaty), some areas such as Agriculture and Tourism with current

performance way beyond their potential, which will improve in the future, Romania has positive

perspectives for development in the future.


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11. BIBLIOGRAPHY

1. STUDIES:

Human Resources Management in Romania – Virgil Cristian Marinaş

Business in CEE 20 years after the fall of the Iron Curtain – a study by TARGET International Executive Search and Henley Business School

Foreign direct investments attracted by Romania during 2003-2009 – ARIS

Impact of direct foreign investments on Romanian economy – Gianina Dragota, Adriana Horablaga

Organization of the education system in Romania – European Commission Report, 2009

Changes occurring on the labor market in the context of Romania’s EU accession –Tiberiu Cristian Avrămescu, 2009

Demographic changes and the labor market in Romania – Dr. Valentina Vasile

Youth insertion on the Romanian Labor Market – Carmen Ionescu, 2009

IMF Report for Romania – 2008, 2009

External competitiveness of the Romanian regions and counties – Mihaela Nona Chilian

Productivity and the regional employment in services. Econometric estimations for Romania – Doina Jula, Nicoleta Jula

Program for economic growth – Foreign Investors Council, Bucharest, 2010

Forecast on the stability of the Romanian financial system using a stochastic simulation model – Claudiu Tiberiu Albulescu, 2008

IT Sectorial Report – Romanian Government, 2010

Cross Border Employers- Overview of Romanian Employment Law- Danielle Urban, October 2011

2. LEGAL FRAME – Romanian Labour Code (2011) 3. MEDIA:

Ziarul Financiar – 2008/2011

Business Magazin – 2009, 2010

Bloomberg – 2011

Capital – 2010, 2011

Romanian Business Week – 2008

Biz – 2009

Adevarul – 2011

http://www.crossborderemployer.com/post/2011/10/04/Overview-of-Romanian-Employment-Law.aspx

2nd Edition: The Romanian Business Environment 2011

Documents

Transcript of 2nd Edition: The Romanian Business Environment 2011