Despite a booming labour market in the years preceding the COVID-19 crisis, employment and labour force participation in Romania are low in comparison to OECD countries. The employment rate in Romania, at 63% in 2023, was substantially lower than the average across OECD countries. The gender employment gap is large and significantly increased over the last decades, because the employment rate of men in Romania increased faster than that of women. Low employment among youth and older workers drags down aggregate employment. While in many OECD countries employment has shifted towards high‑skilled jobs, in Romania, employment increased faster in low-skill than in high-skill jobs. Informality remains very high compared to OECD countries, and labour market outcomes differ substantially across regions, reflecting disparities in urbanisation, the presence of vulnerable communities in certain areas, and varying average levels of educational attainment. In addition, Romania’s working-age population is shrinking rapidly, driven mainly by low past fertility and high emigration, making it even more essential for Romania to effectively use the employment potential of its population.
Large-scale emigration – at higher levels than in any OECD country – has contributed to a contraction of the population, with almost one in five working-age Romanian-born people resident abroad – and to labour shortages. Diaspora engagement has not yet been directed towards drawing on this potential labour supply. Meanwhile, labour migration, benefiting from an open policy relative to most OECD countries, has seen a spike as Asian workers enter to perform low-skill low-wage jobs. Oversight and regulation of recruitment could be strengthened, and there are vulnerabilities both for migrant workers and for the integrity of the system.
Household incomes have improved substantially over the past decade as wages have grown rapidly in Romania, but wages are still about one-third lower than on average across OECD countries, and earnings inequality is high. Poverty has declined substantially, but both income poverty and material deprivation remain much more widespread in Romania than in most OECD countries. Poverty rates in rural areas and cities differ more strongly than in any other EU country. Romania’s large Roma community is particularly vulnerable, though the poverty rate is similar to that in other countries with a large Roma minority. Societal tolerance, in particular of ethnic and sexual minorities, is much lower than in many other EU countries. While the underdeveloped monitoring of gender-based violence and violence against women is improving, existing data indicate that violence against women is more widespread in Romania than in most EU countries. In 2016, Romania ratified the Council of Europe Convention on Preventing and Combating Violence Against Women and Domestic Violence, the so-called Istanbul convention.
In light of Romania’s rapidly shrinking working-age population and low employment rates, particularly among young people and the low-educated, policies to promote training, upskilling and reskilling must be a policy priority. However, too many young people fail to acquire the basic and vocational skills they need to gain a foothold in the labour market, and participation rates in adult learning are lower than in most OECD countries. Spending on active labour market support is also very low and largely focused on subsidising employment for low-educated workers. Romania has taken substantial action to reduce school drop-out, modernise the vocational education and training system, and re-connect out‑of‑work young people. Greater efforts are needed to shore up participation in adult learning, by encouraging workers to participate in training, strengthening and better monitoring training requirements for employers, and substantially expanding jobseeker training. Social dialogue in Romania remains weak and ineffective despite a solid institutional framework. Collective bargaining coverage is low, but a major recent reform lowered the hurdles to unionisation and considerably strengthened collective bargaining rights, reversing parts of a controversial reform carried out a decade earlier.
Romania has also taken significant steps to improve social support and pensions.
In 2024, Romania reformed minimum-income benefits, increasing them from very low levels. As a result, more people are covered and total spending more than tripled.
Strategies for long-term care, people with disabilities, homelessness and Roma people envisage increasing central government co-financing to local authorities, improving institutional co‑ordination, making provisions more effective, e.g. through digitalisation, as well as improving prevention and activation measures.
To reduce the labour market impact of long leave periods for women with caring responsibilities, Romania implemented the EU Directive on work-life balance for parents and carers in 2023, and doubled the parental leave ascribed solely to fathers, from one to two months.
To improve access to good-quality early childhood education, the government lowered the starting age for compulsory education to include the last two years of pre-school (ages 4 and 5), issued new curricula and reference standards for the early education system and increased central‑government co-financing.
In 2023, a substantial pension reform was approved, equalising the retirement age between men and women and linking it to life expectancy increases. The reform raised current and future pensions, increased the progressivity of benefits, and simplified their calculation without worsening the long-term financial sustainability of pensions.
Romania has undertaken a comprehensive policy approach to tackle substantial social challenges faced by the Roma community, the National Roma Integration Strategy 2022-2027. The strategy includes various actions supporting the Roma community, including in the areas of education, housing and social services. However, further efforts may be needed to substantially improve the situation.