Challenges facing the business sector

The labor force crisis remains the biggest challenge facing the Romanian business sector in 2020, a recent survey shows

Mihai Pelin, 06.01.2020, 13:50

The labor force crisis, soaring
inflation, the negative prospects of the exchange rate and the prolonged
financial deadlock will be the biggest challenges facing the business sector in
Romania in 2020, reads a recent survey conducted by a consultancy firm. Whereas
inflation and the depreciation of the national currency were the biggest
concerns for investors in the previous survey conducted in July, 2019, in 2020
the labor force crisis holds the spotlight, with over 60% of companies pointing
to this problem. 53% of companies that took part in the survey said the
prolonged financial deadlock could be a problem, 49% rated inflation as the
biggest problem while 36% referred to the negative evolution of the exchange
rate.

The shortage of workers worsened in 2019, while the import of foreign
workers offset under 10% of the needed workforce. Moreover, business people
believe that, beyond boosting consumption, the salary increases in the public
sector have spiked imbalances on the labor market. In 2020 the development
plans of several companies are on standby due to the shortage of workers, which
unfortunately the state is unable to solve. Most investors have called for a
slash in tax incomes as well as for measures to encourage Romanians to come
home, especially the youth. The spike in prices adding to the depreciation of
the national currency has had a significant impact on the economy in 2019, and
the trend is likely to continue in 2020.

Considering 2020 will see both
legislative and local elections, this year could bring about a change of
government. Reforms will unfortunately be stalled and postponed for 2021, when
we will witness a new rise in taxes, business people say. Asked what measures
they deem necessary to develop a stable economic framework, over 73% referred
to fiscal predictability. A Fiscal Code that should not be modified overnight
is what business people have been demanding for years, much to the authorities’
disinterest. The digitization of public administration, investment in
infrastructure, shrinking the public sector and a national plan for vocational
requalification are some of the top measures investors mentioned. The survey
was conducted on a sample of 450 companies from various fields of activity,
from trade to financial services, agriculture, energy, textiles and IT.

(Translated by V. Palcu)