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KeysFin analysis: Unemployment rate in Romania is rising and could reach 6.5% this year
The unemployment rate is on the rise and may reach 6.5% this year, but Romania remains under the European average of 7.1% or the U.S one of 11% in June 2020, according to a study published by KeysFin on Thursday.
According to INS data, the number of jobless people (15-74 years old) grew to 463,000 in May, the unemployment rate growing by 0.4% against April, to 5.2% (the highest level in the last three years).
At the same time, the number of insolvencies and company dissolutions in Romania continues to be a lot under the level of 2019, which shows the resilience of the local business environment in pandemic conditions, while the number of companies which entered insolvency dropped more than a quarter, that is by 26% in the first 6 months of 2020, against the same period of 2019, reaching 2,360 companies, the lowest value in the last ten years. On the other hand, the number of suspended companies dropped by almost a third – 32% in the first 6 months of 2020 against the same period of 2019, totaling 5,136 companies, the lowest number in the last ten years.
The number of local firms dissolved dropped even more dramatically, by 58% in the first months of 2020, against the same period of 2019, to 35,000, while the number of active entities grew this year by 4% to 1,391,147 on June 30, 2020.
According to the study, technical unemployment temporarily helped companies affected by the pandemic, which needed this facility to keep their employees, on a short term (about 1.1 million employees upon the request of 129,000 employers).
“The distribution per sectors is different from that of suspended contracts: trade and the processing industry represent about 18% of total each, followed by constructions by 15%. Considering that, even before the pandemic, in 2018, 292,000 local companies did not have any employees, the present impact on the local labor market is higher,”the authors of the analysis say.
Most insolvencies appeared in the sectors: trade (705 companies, 30% of total), constructions (387 companies, 16.4% of total) and the processing industry (307 companies, 13% of total).
From the geographical point of view, most companies in insolvency were in Bucharest (423 companies, 18% of total), Bihor (211 companies, 9% of total) and Constanta (140 companies, 6% of total).
Moreover, as expected, on the background of uncertainties generated by SARS-COV2pandemic, company registrations dropped in the first 6 months of 2020 by 37% against the same period of 2019, to 49,000 new companies.
About 66,000 companies (9% of 733,000 small companies that reported financial results for 2018), with 811,000 employees (25% of labor force of 3.2 millions), presented financing applications through IMM Invest program. Of them, the Credit Guarantee Fund sent 36,000 applications to banks (55%). The 12,300 credits approved (18.7% of overall applications) are worth 10.8 billion lei, and of them 51% of funds are focused toward investments and the rest to work capital (49%).
KeysFin offers solutions to reduce commercial risk by using data about companies in Romania and abroad by means of dedicated instruments. With a portfolio of over 500 clients, KeysFin is one of the most important suppliers of business information solutions in Romania. KeysFin also owns the application KeysFinder, with which users can easily and quickly access financial situations, indicators and juridical information from over 4 million economic entities in Romania.