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Liviu Voinea: Labor Code not bringing jobs from black market, but increasing unemployment
A flexible labor market, as it is proposed by amending the Labor Code, will not bring jobs from the black market, but will lead to the disappearance of many permanent job contracts by replacing them with fixed-term contracts, to the disadvantage of young and women employees, and probably will end in lower budget revenues, economic analyst Liviu Voinea, Executive Director of the Group of Applied Economics (GEA) told AGERPRES on Monday.
'It is true that the share of employees with temporary contracts is much higher in the EU than in Romania, reaching up to 27 percent in Poland and 15 percent as the European average, compared to 1.3 percent in Romania, but what it is not said is that in those countries the unemployment is much higher than in Romania, the European average approaching to 10 percent, which demonstrates that a high percentage of employees with temporary contracts not necessarily lead to a lower unemployment, but exactly to the opposite situation', said Liviu Voinea.
Another problem created by the new Labor Code provisions is that the employee can not choose between a fixed-term employment and a permanent one, and the so-called atypical jobs are mainly filled in by youth, women, low skilled people, who have less access to paid leave, maternity leave, sickness or unemployment benefits. Also, temporary jobs are paid about 15 percent less than the permanent ones, underlined Liviu Voinea.
GEA head was also keen to draw attention upon the fact that the new Labor Code allows employers not to justify the decisions to reduce or even temporary suspend activity or to pay, once per a quarter, only 75 percent of the agreed monthly salary.
'An unintended consequence, but with a high probability, of a more flexible labor market, according to the new Labor Code, is set to increase the uncertainty of budget revenues generated by job insecurity, since the Ministry of Finance will not know whether a temporary job will still be there in six to seven months. As well, lower wages paid to temporary workers will lead implicitly to lower taxes and duties collected by the state ', underscored Liviu Voinea, who also warned that ' the work taxation reduction after the economy recovers is set to become a pro-cyclical measure and that was a determining factor for the crisis we are still crossing and an aggravating factor during it '.