The First Half of 2020: Major Changes in the Labor Market

The first half of 2020 was marked by significant changes in the labor market, driven by the emergence and rapid spread of the SARS-CoV-2 virus in Romania.

The state of emergency, established on March 16 and maintained until May 15, had multiple implications. On one hand, it led companies to adopt the “work from home” system, where the nature of the work allowed it. On the other hand, it forced certain companies, whose activities were directly affected by imposed restrictions, to downsize and resort to furloughing employees.

During the two months of the state of emergency, the number of suspended jobs fluctuated significantly, exceeding 1,000,000 in April (according to data published by the Ministry of Labor and Social Protection). The situation gradually improved, and by early July, the number of suspended jobs had decreased to just 100,000, partially due to the easing of restrictions and the reimbursement of a portion of the employees’ wages on furlough (amounting to 41.5% of the gross base salary corresponding to the occupied position, but not more than 41.5% of the average gross wage), from the unemployment insurance budget.

SMARTREE WORKFORCE INDEX – a study conducted by Smartree, considering over 250 partner companies from various industries (retail, pharma, medical services, automotive, construction, industrial production, oil & gas, agriculture, insurance & financial services, logistics) – indicates a slight increase in job numbers in the first seven months of the year (January-July) by 4% compared to the same period last year. This growth was mainly due to the first quarter of the year and the months of June-July, when, after a market stagnation, certain sectors such as support services, delivery and courier services, large retail chains, and software & technology companies significantly increased their number of employees compared to June-July 2019, in some cases by 20% to 60%. Stagnations were recorded in April and June, mainly due to the contraction of activities in sectors such as horeca and tourism, industrial production, automotive, and fashion retail.

Employee Benefits Offered by Companies Decreased by 11% in the First Seven Months of the Year

The benefits offered by companies, which include bonuses (for performance, seniority), remained at the same level as in 2019 during the first quarter of the year but decreased by an average of 20% between April and July. With the onset of the state of emergency and the implementation of restrictions, many projects and investments planned for the year were put on hold or postponed, including the budgets allocated for employee rewards. Additionally, the value of benefits decreased during this period due to the inapplicability of certain types of benefits, such as transportation reimbursements (including car allowances), lunch subsidies, or relocation bonuses, during the state of emergency. Furthermore, even now, some companies have not reopened their offices, and their employees continue to work from home.

Despite the unfavorable economic context, salaries have followed a slight upward trend, increasing by 3%, primarily due to the rise in the gross minimum wage at the beginning of the year by 7% for medium-level employees and 13% for those with higher education. This slight increase in salaries reflects the general concern of companies to maintain employee salary levels at pre-crisis values, with salary cuts applied only selectively and for a limited time, depending on the impact on business operations and financial results.

Annual Leave Taken: The Most Significant Decline in Recent Years

The most pronounced declines were naturally recorded in the number of vacation days taken, which decreased by nearly 32% compared to January-July 2019. This represents one of the most significant drops in recent years, with the highest negative values reached in the second quarter of the year: -47%, with decreasing values each month: April – 34%, May – 64%, June – 40%. By July, vacation days had decreased by 20%.

Thus, the decline in the indicators mentioned above also led to a 21% decrease in Employee Well-Being, an indicator directly correlated with the benefits provided by the company and the vacation days taken by employees. Regarding the Economic Situation, an indicator associated with the number of jobs and employee salaries, it increased slightly compared to the same period last year, by nearly 4%.

Check Out the Smartree Workforce Index January-July 2020 Infographic Below:

The Smartree Workforce Index, an instrument that provides a summary of the evolution of recruitment, salary growth, and employee well-being, is based on data from over 250 companies operating in various private sector industries, with average annual revenues exceeding 2.5 billion euros.

The “Economic Situation” index consists of the evolution of the number of employees and salary trends in the analyzed companies, nationwide.

The analysis took into account all types of employment contracts (fixed-term or indefinite, full-time or part-time). The salary represents the gross base salary as per the individual employment contract.

The “Employee Well-Being” index is constructed based on two indicators that reflect the well-being of employees in the analyzed companies: vacation days and the value of benefits received.