With the amplification of effects on the economy, over 2 million people in Romania will be losing their jobs and the country’s economy will be facing a severe recession. Romania risks losing the race for competitiveness to other countries in the region, such as Poland, Hungary and Bulgaria, which come up with concrete economic measures meant to ensure the business continuity beyond the period of the state of emergency, as per the survey.
“The business environment sends signals that more and more companies are suspending their activity and that the financial deadlock is accentuating. The supplier credit, which has been feeding the bulk of businesses in Romania, has frozen and many companies are on the brink of bankruptcy, which means they will either put their employees on furlough or sack them this month. At this pace, Romania will have 2 million jobless people at the end of the state of emergency period”, according to Frames analysts.
“25% of SMEs have closed their doors or will be shut down in the coming period. Over 1 million people were put on furlough and at least 1 million Romanians returned to their home country from abroad. How will the labor market absorb them and how will they become taxpayers and not rely on social welfare benefits? The country needs a plan to support SMEs”, stated ACDA manager Cristian Lungu.
The survey also shows Romania needs concrete measures to support businesses, on a medium and long term, as well as a real “Marshall Plan’’, beyond the plans involving the state of emergency.
So far, the Romanian Government has pledged, but not yet paid a dime of the planned RON10 billion for furlough-related measures and RON15 billion in guarantees meant to support lending for small and medium-sized enterprises (SMEs).
“The State can function with 50% of employees, if we were to consider the salary cut measures announced by the government. All it takes is political will and the will to finally carry out the reforms the Romanian economy and the public sector need”, Lungu also said.
While other countries are striving to protect their employees, create jobs and keep them in the country, Romania is exporting workers on the conveyor to Germania and, possible, over the next months, to Italy and France, which said, in turn, they want Romanian workers. According to analysts, beyond a flagrant breach of rules regarding the state of emergency, this situation shows the lack of vision of Romanian authorities regarding workforce.
Romania needs, more than ever, leadership and politicians who must put their electoral interests aside and take drastic measures, even though unpopular. On lack of concrete measures, Romania is doomed to poverty over the next years.
Meanwhile, in the absence of concrete measures to mitigate the effects of the crisis, Romania’s state budget situation is worsening each and every day. Revenue collections to the state budget fell by RON12-13 billon and expenses grew by RON20 billion. Basically, in just one month, the country’s budget deficit widened by 3%.
Frames & ACDA experts also say Romania must develop a solid and predictable national program aimed at supporting the entrepreneurial initiative, which should include all national and European programs for SMEs, with extended budgets covered both from the amounts received from the European Union and from redirecting the amounts gained from public salary and pension cuts, from canceled special pensions, plus de minimis mechanisms to include tax credit.
“The growing number of annual financings from 10,000 to 30,000 projects, accompanied by a focus on projects targeting the manufacturing, the creative industries and the IT, must come first’’, Lungu concluded.