Procedia Economics and Finance 3 ( 2012 ) 1196 1201 [616086]

Procedia Economics and Finance 3 ( 2012 ) 1196 – 1201
2212-6716 © 2012 The Authors. Published by Elsevier Ltd.
Selection and peer review under responsibility of Emerging Markets Queries in Finance and Business local organization.doi: 10.1016/S2212-5671(12)00296-1

Emerging Markets Queries in Finance and Business
Youth Unemployment in Romania and Measures to Combat It
Adina Popovici Barbulescua,*
aWest University of Timisoara, Faculty of Economics and Business Administration, Department of Economics and Economic Modelling,
16, J. H. Pestalozzi Street, 300 115 Timisoara, Romania

Abstract
The objective of our paper is to highlight and analyse impor tant aspects related to the youth unemployment in Romania and
the measures to combat it. It starts by pointing out the chal lenge for the labour market represented by the issue of youth
unemployment. It continues with a presentation of some of th e most important Romanian lab our market institutions and
their roles. It then focuses on the youth unemployment in Roma nia and the measures to combat it. We conclude that the
youth unemployment in Romania represents a major challenge for the Romanian labour market and that the measures to
combat it, although diverse, must improve their efficiency.

© 2012 Published by Elsevier Ltd. Selection and pe er-review under responsibility of the Emerging
Markets Queries in Finance and Business local organization

Keywords : labour market; labour market institutions; unemployment; youth unemployment; measures against youth unemployment;
1. Introduction
that is: smart, through more effective investments in education, research and innovation; sustainable, thanks to
a decisive move towards a low-carbon economy; and in clusive, with a strong emphasis on job creation and

* Corresponding author. Tel.: +40-256-592562 ; fax: +40-256-592500 .
E-mail address: [anonimizat] .
Available online at www.sciencedirect.com
© 2012 The Authors. Published by Elsevier Ltd.
Selection and peer review under responsibility of Emerging Markets Queries in Finance and Business local organization.Open access under CC BY-NC-ND license.
Open access under CC BY-NC-ND license.

1197 Adina Popovici Barbulescu / Procedia Economics and Finance 3 ( 2012 ) 1196 – 1201
The results of a statistical-economic analysis conducted under a research made by Herman, 2012, based on
the data recorded in Romania between 2000 and 2010, reveal the positive influence that the level of education,
especially higher education, has on the labour market and confirm that a better-educated population, with a
qualification corresponding to the needs of the labour market, is characterized by higher employment rates and
implicitly lower unemployment ones. The study also underlines the fact that the lowest level of the
population with tertiary education per 100 population aged 25- 64 is recorded in Romania compared to other EU
countries, fact that requires taking some measures fo r increasing the level of education of the population in
Romania.
Popovici, 2011 points out that, according to the data supplied by the National Institute of Statistics, there is a
decreasing trend with regard to the evolution of young population until 2025. This evolution may be explained
emancipation. Regarding youth unemployment rate in Roma nia, it was of 22.1% in 2010, a little higher than
the average unemployment rate in the European Union. This situation can be explained, on one hand, by the
inexistence of a correspondence between the too much th eoretical educational level and the requirements of the
unemployment rate among youth with higher education, in comparison with other categories, as well as the fact
that the smaller the necessary period for finding a work place, the higher the educational level is, brings an
increasing importance to the diplom a at the beginning of the career.
and Chivu, 2011, Increased interest in higher education is determined by the existence of
a higher degree of labour market absorption of highly skilled labor and a lower risk of unemployment for

Florea and Oprean, 2010, also ntly challenged to the core
and two of the most frequently invoked underlying reasons are unadjusted curricula to job market demands,

2. Romanian Labour Market Institutions
As a result of the new conditions and requirements of the economy and simultaneously with the
development of the appropriate legislative framework, th e labour market institutional system has diversified
and improved. Currently, there is a new institutional system which, as will be further strengthened, will be able to meet the present and future needs of labour market development and functioning.
The labour market institutions, according to the areas they cover and the roles they play, can be grouped into
several categories:
Institutions of the labour demand: the economic agents, the county labour agencies, employers and others;
Institutions of the labour supply: family, school, the county employment agencies, the Ministry of Education, Research, Youth and Sport and so on;
the institutions of the labour market equilibrium: governm ent, unions, employers, or ganizations involved in
the field of active and passive employment policies;
social protection institutions: government, businesses, the county labour and social protection agencies, etc. A major principle behind the development of the labour market institutional system was decentralization. In
this regard, the Ministry of Labour, Family and Social Pr otection is the institution that develops strategies and
policies for employment, training and social protection of th e unemployed, according to the official website of
this institution.
It accomplishes its tasks by the county labour agencies and public institutions, of national interest, which
apply and/or control the application of the legislation in the field: the National Employment Agency NEA, the National Council for Adults Training NCAT, the Labour Inspection LI.

1198 Adina Popovici Barbulescu / Procedia Economics and Finance 3 ( 2012 ) 1196 – 1201
On the county level, the County Employment Agencies CEA and Local Employment Units LEU correspond
to the NEA.
Other principles behind the development of the institutional system of the labour market were:
development of social partnership at national, terr itorial and sectorial level regarding employment and
unemployment fund management;
public employment service gratuity;
non-discrimination and equality of chances in terms of labour market opportunities and treatment;
social protection of the unemployed etc.
The NEA has the following objectives, as highlighted on its official website:
institutionalizing social dialogue on employment and training;
applying strategies in employment and training;
applying social protection measures. Together with its territorial structures, it has expertise in the organization, management and implementation of the
policy regarding the employment and social protection of those searching for a job.
By law, the main tasks of the NEA are:
organizing employment-related services;
providing and financing training services in accordance with the employment policy and labour market trends, with the aim of facilitating employment;
supporting partnerships and co-creation of new jobs, especially in areas where the labour market is tensed;
guiding the unemployed and mediating between them and employers to achieve the balance between the labour supply and the labour demand;
elaborating and submitting the draft budget of the fund for the payment of the unemployment allowance;
administering the fund for the payment of the unemployment allowance;
proposing to the Ministry of Labour, Family and Social Protection draft laws in the field of employment and vocational training and social protection of the unemployed persons etc.
As can be seen, the law assigns to NEA the role of im plementing both the active employment measures, to
stimulate job creation and the passive employment measures, i.e. social protection of the unemployed.
The administrative capacity regards firstly NEA, established under Law no. 145/1998, amended and
completed by Government Emergency Ordinance no. 249/2000.
According to its official website, The Ministry of Labour, Family and Social Protection has overall
responsibility to develop employment policies and labour market programs and national plans. It also has a
responsibility to prepare budget reports to the unemploy ment insurance budget based on proposals made by the
National Agency for Employment, to control their ex ecution and implementation of employment policies,
strategies, plans and programs conducted by the National Employment and the National Training Council.
The labour market institutional system includes many other labour market institutions, with specific roles,
according to the areas they cover.
3. Unemployment and youth unemployment in Romania in figures
Force in Romania: Employment and Unemployment in the Second Quarter of
, National Institute of Statistics, 2010, in the second quarter of 2010, the active population was of 10,185
thousand persons, among which 9,488 thousand employed persons and 697 thousand unemployed persons,
defined according to the criteria of the ILO International Labour Organization, www.ilo.org.
In the second quarter of 2010, the ILO unemployment rate was of 6.8%. The difference between the
unemployment rate for men and women was 1.1%: 7.3% for men, compared to 6.2% for women and the difference between the unemployment rate for the urban environment and the rural environment was 3.9%: 8.6% for the urban environment, compared to 4.7% for the rural environment.

1199 Adina Popovici Barbulescu / Procedia Economics and Finance 3 ( 2012 ) 1196 – 1201
With regard to the situation of young graduates and their extent of absorption on the labour market in
Romania, the situation is not so good according to stati stical indicators. In the second quarter of 2010 the ILO
unemployment rate was the highest: 20.5% for youth 15-24 years. Unemployment affected to a lesser extent
higher education graduates, for whom the unemployment rate was of 4.1% and 5.7%, respectively, compared
with the 8.0% rate recorded for the unemployed with secondary education.
According to Fig. 1, presented in a study made by Multi Consulting Group SRL, 2010, the highest number
of the ILO unemployed for the age group 25-34 years was recorded in the first quar ter of 2010, this period
being unfavourable for those aged 35-44 years and those aged 45-54 years, too, the number of the unemployed
being the highest, compared with the analysed periods.

Fig. 1. Evolution of the ILO unemployed number by age groups. Source: www.via-consiliere.ro
Fig. 2. Evolution of the unemployment rate by levels of education. Source: www.via-consiliere.ro
As highlighted by Fig. 2, presented in the above-mentioned study, the unemployment rate for people with
higher education was higher in the first quarter of 2010, the same trend being recorded for people with
secondary education. For the low educ ational level, the unemployment rate registered the highest value in 2009
compared to the analysed periods.

1200 Adina Popovici Barbulescu / Procedia Economics and Finance 3 ( 2012 ) 1196 – 1201
The ILO long-term unemployment rate, unemployed for at least a year, was 2.4%. The percentage of
persons unemployed for at least a year in the total number of unemployed was 34.9%. Long-term
unemployment manifested with greater intensity for men: 39.2% versus 28.6% for women and among people in the urban areas: 35.3% compared to 34.1% for the people in the rural areas. Regarding youth 15-24 years, long-
term unemployment rate, unemployed for at least six mo nths, was 13.3% and the incidence of long-term
unemployment among the youth was of 64.9%, as pointed out by Multi Consulting Group SRL, 2010.
4. Measures to combat unemployment and youth unemployment in Romania
According to the official website of the National Employme nt Agency, in order to create as many jobs as
possible, the NEA conducts an accreditation program for small and medium enterprises SMEs, through
county agencies for employment, together with Bucharest. Credits are awarded on the basis of feasibility projects, proportional to the number of jobs to be cr eated for a period of at least 3 years, for investment,
including the grace period not exceeding 6 months and, respectively, a year, to ensure production.
Borrowers must meet the following conditions:
have maximum 250 employees and / or cooperating members with labour or service relationships;
the basic activity to be carried out in manufacturing, services or tourism;
staff from the unemployed people registered with em ployment agencies to be employed on at least 50% of
the newly created jobs;
the staff coming from the unemployed people to be kept in business for at least three years;
the jobs considered when granting loans not to be th e vacancies resulting from staff layoffs in the last 12
months prior to the conclusion of the work contract. Regarding jobs subsidizing, it is granted to employers, for a period of maxim 12 months, for each person
among the unemployed being employed with individual labour contract, and the amount of the subsidy is 70%
of the gross national minimum wage in force. Law no. 76/2002 regarding the unempl oyment insurance system
and employment stimulation with subsequent amen dments, among the last ones being Law no. 233/2010
amending and supplementing Law no . 76/2002, stipulates the legal facilities which employers who hire
graduates of educational institutions receive, as well as the facilities which graduates are given at employment,
as we shall further emphasize. So, employers who employ on an indefinite term graduates of educational institutions receive for each graduate, during a 12 -month period, a monthly amount representing a gross
national minimum wage in force. As we can see, the state is taking a number of measures to facilitate young gra
labour market, encouraging in this way employers to provide as many jobs for youth,
despite the fact that most of them have no experien ce. Regarding the natural or legal persons employing
graduates in these conditions, they are required to maintain their labour or service relations for at least 3 years after their conclusion. Unfortunately, this measure only partially achieves its purpose for which it was introduced, because the amount of subsidy is the sa me, no matter which category is addressed to, and then
businesses will prefer hiring graduates of higher educa tion, better prepared, being discriminated against those
who did not complete another form of education. In this case there is a form of disguised unemployment, or
employment of these young people in inadequate jobs, under their education, with low productivity and low
wage levels. The conclusion is that the expected so cial efficiency, of reducing youth unemployment, is very
low, and many of them, by entering the labour market, will not take up a job related to their education. The Romanian Government, through its empowered institutions, continually develops measures aimed at training youth and adults, all of them being designed in accordance with the current requirements of the Romanian market, all being designed to improve the employability and extend active life on the labour market. The state offers a range of financial incentives to integrate graduates on the labour market.
Also, when employing graduates, regardless of their form of education, graduates are given a host of
facilities at employment. The legislation in force provides that education institutions graduates and graduates of

1201 Adina Popovici Barbulescu / Procedia Economics and Finance 3 ( 2012 ) 1196 – 1201
special schools, aged 16 or over, registered at employ ment agencies, when getting a job with a normal work
schedule for more than 12 months, benefit from the unem ployment insurance budget of a premium equal to the
reference social indicator value in force on their employ ment day, %, as pointed out by Multi Consulting Group
SRL, 2010. In 2012, the reference social indicator value is 500 lei. In the current legislation, the unemployed
who take up a job while entitled to compensation, receive a payment of 30% of the monthly allowance, or the
full amount of its, and if graduates for the period they would have been entitled to allowance. Amounts shall be paid only if the employment is maintained for at least one year; otherwise they will need to be returned.
Another way of financial incentive to hire graduates is that employers who hire graduates on indefinite term, no longer to have to pay for 12 months their due contri bution to the unemployment insurance, related to the
employed graduates, and receive monthly for every you ng up to 750 lei, depending on the educational level of
the graduate employee.
5. Conclusions
Our paper reveals that, despite the diversity of the measures to combat the youth unemployment in Romania,
it continues to represent a severe issue and a major challenge for the Romanian labour market. Therefore, the
measures to combat it adopted by the institutions which compose the Romanian labour market institutional system must improve their efficiency. In the same time, the Ministry of Education, Research, Youth and Sport and the Ministry of Labour, Family and Social Protection should intensify their efforts for creating a correspondence
between the youth educational level and the increasing requirements of the labour market.
Acknowledgements
This work was cofinanced from the European Social Fund through Sectoral Operational Programme Human
Resources Development 2007-

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