Knowledge Sharing Programme * Facts and policy aspects on fostering employment and HR development

1. Knowledge Sharing Programme*Facts and policy aspects on fostering employment and HR development Cristina Mereuta Employment Expert, Romania

2. Key aspects on fostering employment and HR development • With rather inactive and low quality employment, Romania faces important challenges in choosing the right combination of policy priorities to support economic growth, human resources development and poverty combating. • The recent crisis augmented the shortcomings and challenges in certain fields. • The investments and participation in active labour market programmes is below European Union average affecting the efforts to: • increase participation on the labour market, • combat long term unemployment and early retirement , • ensuring a smooth transition from school to work. • In spite of priority given to training programmes, the participation in further education and training is one of the lowest in Europe. The main labour market features and trends, coupled with ageing and low participation in further education and training, cause additionally pressures on the real capacity of Romania to achieve the economic competitiveness and social development.

3. Unemployment rates – EU average and Romania (2002-2011), Eurostat

4. Economic crisis impact and response • to intensify the monitoring of enterprises lay-offs (information on lay-offs and redundancies updated daily by NAE) and to expand pre-redundancy services (labour market information, training opportunities and social protection provisions). • the social component of the anti-crisis package aimed at ensuring income-replacement for groups affected by the crisis and at supporting enterprises. In particular, the unemployment benefit was extended by three months and a minimum social pension was adopted. • a temporary exemption from the payment of the social contribution owed by employers was available for jobs under crisis threat. • due to budgetary restrictions and very tight funding conditions, a sharp decrease in ALMP allocations can be noticed in the last years, including in crisis period.

5. Participation in activation and support measures • the number of participants to activation measures (categories 2-7) is lower than the number of those receiving LMP supports (passive measures; categories 8-9), with a sharp decrease during crisis years (2009-2010) due to high inflows in registered unemployed, prolongation of statutory unemployment benefit granting period and ALMP funding cuts especially. • the youth participation in LMP measures (23.5%), this is higher than the proportion of youth in the total registered unemployed (around 16.4%.). Similarly to the general trend, there is a sharp drop in the number of youth participating in LMP measures in 2009 – 2010, although the economic crisis worsened the employment opportunities for young persons. • in terms of job-placement, out of total outflow from the registered unemployment database, the reason “by employment” represent 39%, on average during 2006-2011. A sharp drop between 2008-2009 (from 44% to 36%) due to tight conditions on labour market was registered.

6. ALMP and PES assessments – main findings • most studies and analyzes show positive results for employment stimulation measures (ESM) related to up-skilling, mobility and entrepreneurship, while negative employment outcomes are registered for subsidizing measure - temporary employment for community interest works (National Scientific Research Institute for Labour and Social Protection; Planas and Benus). • recognition of the negative impact of crisis and high inflow of unemployed upon PES performance (tightened budgetary conditions; lower staff availability); need to target activation programmes for registered unemployed, jobseekers and inactive rural residents; lack of labour market forecasting capacity and adequate performance management information affects better matching between PES services and labour market needs and also the proper assessment of PES services cost-effectiveness (Interim evaluation of SOP-HRD; PA 4).

7. Main Recommendations • Analytical capability • Systematic assessment of labour market programmes implementation, especially evaluation of their effectiveness; • Regular collection and dissemination of data and information current and future labour market trends and forecasts; • Expanded dissemination on current policies implementation and closer links to connected policies (fiscal, economic development, education and training); • Strategic planning • Multi-annual strategic planning at national and regional/local level; • Increase the profile of employment policy planning among other policy lines; • Policy innovation • Based on thoroughly analyzes of all employment and training measures implemented in Romania (regardless funding sources – unemployment insurance budget or ESF) to update the content, target groups and manner of implementation to better tailor labour market measures to client needs and to avoid pitfalls; • Expanded involvement of local public authorities and stakeholders in employment and training programmes implementation to better reach persons at risk of labour market exclusion and inactive. • A performing Public Employment Service and efficient and well-funded ALMP set represent a pre-requisite for promoting economic and social development. • The ALMPS evaluations mainly concentrated on activation measures based on individual employability support and less on subsidizing measures. It is recommendable to also assess the context, methods and results of employment stimulation measures relying on providing financial support to employers to hire unemployed and certain vulnerable categories and on granting employment bonuses to those unemployed to take-up jobs before expiry of unemployment benefit granting period. This should be a priority as a large proportion of LMS budget is allocated to employment subsidizing and bonuses.