Aimed at highlighting the issue of labor mobility in the local market, the EY Romania survey was conducted among leaders of HR departments of local companies, revealing that the problem of the Romanian legislation would be the first and biggest challenge to attracting foreign talent. Figures show that it can take an average of eight months to hire a foreign national in Romania because of red tape.
When asked what they consider to be the biggest barrier to recruiting talent from abroad, almost half of the respondents (46.2%) mentioned the lack of specific legislation in Romania, 20.5% pointed to inflation and economic instability, 11.5% mentioned social reasons, on a par with the lack of adaptation to the organizational culture, and 6.4% emphasized the lack of diversity within companies.
According to reports, over the last decade, more than 100,000 non-EU citizens have come to work in Romania in the textiles, hospitality and construction industries. However, there are still sectors facing a labor shortage, such as the IT&C. This is a paradox because the IT&C is a field that has increasingly developed in Romania, but the Romanian university environment fails to provide manpower to cope with the market demand for this sector. Other areas to consider are the Business Process Outsourcing (BPO) and support services (back office and customer support) and retail.
Regarding the BPO and support services, both the private and public sectors in Romania need to come up with a strategy as soon as possible considering that Romania has been nominated as the second most selected location for foreign investment in support services at European level, according to the EY Attractiveness Survey Romania 2022.
Also, 40.5% of respondents believe the future of international employee mobility is closely linked to digitalization, 19% think it is linked to business strategy, 17.7% to operational efficiency, 15.2% to new capabilities and 2.5% of respondents mentioned tax compliance.
Remote working has started to gain ground compared to traditional ways of working, as we see more and more countries offering visas to digital nomads and trying to attract talent from other countries through various tax incentives. The novelty of remote work today lies not so much in employees’ desire to work while traveling, but rather comes from the breadth of expectations, the duration of remote work, and the strategies that are pushing companies to set locations for their workforce and the time allocated to it. This, coupled with increased competition for talent, is driving employers to seek talent from new locations. According to the survey, 55% of respondents to the EY Tax and Finance Operations Survey believe that companies with a permanent location risk and many employees working remotely (from other countries) will face tax risks in the future.
More than half of respondents to EY’s survey on international labor mobility said their companies do not work remotely (56.4%) and only 11.5% said their companies’ businesses and operations are completely remote.
In addition to the risks outlined above, there are also challenges regarding the management of employee data. Romania is taking important steps towards a digital cloud to manage the logistics of international mobility, but more time is needed. There is a need for a well-planned and realistic infrastructure that takes care of the physical security of people and assets of the organization, as well as cyber security.
Almost 79% of respondents believe that attracting talent from abroad is an advantage for the Romanian business environment, which reinforces the idea that organizations can no longer rely solely on their domestic workforce. Romania started attracting foreign talent with the arrival of multinationals in the late 1990s, and today there are an estimated 30,000 foreign nationals working in Romania.
When asked which business sector in Romania is most in need of recruiting foreign talent, 16% of respondents mentioned healthcare, followed by tourism and hospitality – 9.3%, and professional services 8%.
“While some Romanian employers are still reluctant to implement remote working policies abroad, other trends are gaining speed. For example, some multinationals have implemented ‘workation’ (‘work’+’vacation’) policies. Also, the ‘gig economy’ that took off before the pandemic is now a reality, not even a trend in my view. Organizations will look across borders, and across continents to identify and recruit talent, and if they can do this in the right way, they will have access to a diverse pool of labor. It remains to be seen over time whether employers will indeed go large-scale in this direction, but for now, as well as soon, both employers and employees see more benefits in pursuing work in a hybrid fashion”, said Corina Mîndoiu, Partner People Advisory Services EY Romania.