‘’Causes and Effects of the mismatch between demand and supply on the Romanian labor market’’

The paper seeks to evaluate the increased mismatch witnessed between labor demand and supply in Romania. The authors maintain that policy makers and economists across Europe are more concerned with establishing the reason behind labor force shortage in many European countries. Generally, the article focuses on factors that cause labor shortage in Romania –something that has hindered development in most economic sectors in the country. Despite the fact that almost half a million people are unemployed, they are not ready to look apply for jobs. The study explores statistical data regarding Romanian labor market, employment, and job dynamics. Beveridge curve is used to establish relationship between different variables. The researchers found out various factors that cause labor shortage among them: low wages; educational qualification; and high taxation rates. Moreover, it was found out that Romanian labor market will continue to experience mismatch between labor demand and supply due to ageing population. Finally, the article explores a number of recommendations to revert this situation. Thus, the review paper will evaluate various aspects of the paper including its purpose, study variables, research design, and the effectiveness of the findings.

Authors of this article have clearly explained the purpose of the study. Despite the fact that over 500,000 people in Romania are jobless, employers in the country find it difficult to get the right employees to fill various vacancies. Thus, the main objective of the research was to find out the causes and effects of labor shortage in Romania. Moreover, researchers sought to establish the future of labor market in Romania.

The major assumption of researchers is that growing demand in labor is associated with decrease in unemployment. The research questions meant to test this hypothesis have clearly been spelt out –actually, researchers have put down three major questions to guide the process of data collection regarding mismatch between demand and supply of labor in Romania.

The researchers adopted both qualitative and quantitative research methods that sought to analyze statistical data mentioned in various sources regarding “Labor market shortages in the European Union”. The study relied on statistical data and other dynamics regarding Romanian labor market between the year 2006 and 2016. This data is derived from databases such as “Eurostat and the Romanian National Institute of Statistics”. Data associated with trends in labor demand, evolution of employment, education, and GDP were analyzed. Beveridge curve was used to establish the relationship between “unemployment rate and the job vacancy rate”.

Between the year 2006 and 2008, the country’s economy was growing at a high rate, employees were paid well, and unemployment rate had decreased significantly. However, the country was hit by crisis between 2008 and 2012 –a scenario that ruined the economy leading to rise in unemployment. During the crisis, many people lost their jobs and others moved abroad for better employment opportunities. Notably, research findings established various reasons that have led to labor shortage. First, is lack of academic qualifications that has made most jobless people shy away from applying for employment opportunities because all qualified people had left the country during financial crisis that had hit the country (Andrica, Giurgiu & Fora, 2019). Secondly, unfavorable working conditions such as low salaries were the other reason why people were not applying for job opportunities. Finally, taxation has made people not to look for jobs since the government takes up to 39.3% salary deductions –a figure that is way above the 16% target set by the EU. Moreover, the research found out that the country might experience labor shortage in future due to ageing labor force. Notably, the young working population aged between 15-34 years decreased while that aged between 44-49 increased (Florea, 2016).

In conclusion, this study gives a clear picture of the Romanian labor market. The article clearly highlights the problems facing the country –hence leading to increase mismatch between labor demand and supply. The study has followed a logical approach that has clearly analyzed labor market dynamics before and after the financial crisis that hit the country. The methodology and tool of analysis (Beveridge curve) used were very appropriate. The databases used to get the data used in the study were authentic. The research findings are useful to the government and employers as they strive to attain an equilibrium between labor demand and supply. The recommendations are that the Romanian government should strive to make the working conditions more attractive by setting minimum wage levels and also reducing the deductions in terms of taxation. This would make the labor market more attractive.

Reference

Andrica, N., Giurgiu, A., & Fora, A. F. (2019). International Migration. Case Study: Romania. Annals of Faculty of Economics, 1(1), 217-226.

Florea, R. (2016). Ageing Workforce In Romania-Perspectives Of Ageing Workforce Policies In East European Countries. Annals of Faculty of Economics, 1(1), 30-35.

Kerekes, K., & Molnár, I. (2017). Causes and effects of the mismatch between demand and supply on the Romanian labour market 1. In Forum on Economics and Business (Vol. 20, No. 133, p. 34). Hungarian Economists’ Society of Romania.