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AmCham: Labor shortage - a major threat to Romania's economic growth

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The labor shortage is undermining Romania's economic growth potential, and this should be one of the government's main concerns, president of the American Chamber of Commerce in Romania (AmCham Romania) Ionut Simion told a press conference on Monday, where AmCham representatives presented the results of this year's survey on the quality of the domestic investment environment conducted among the members of the organization.

"The situation of the labor market is worrying, and the answers to the survey raise a big question mark and sound a wake-up call about the evolution of the economy: in the last two years, the percentage of those who believe that the labor market is relaxed has fallen from 27% to 2%. At the same time, the percentage of those who believe that this is a tense market has risen from 60% to 92%, which shows that the market is experiencing a great deal of tension and that Romania's economic growth potential is being called into question by the shortage of skilled labor," Simion said.

Also, only four of the surveyed companies, ie 2 percent of the respondents, believe that the market is relaxed.

"The lack of skilled labor is a major threat to the growth potential of the Romanian economy. A survey we commissioned in 2019 under the auspices of the Coalition for the Development of Romania found that ensuring a growth of 3 - 3.5 percent per year in Romania for a period of five years requires one million new jobs," said the AmCham president.

The entrepreneurs blame this situation on the continuing fast-paced emigration, as the Romanian authorities have failed to set measures in place to offset or stop this phenomenon.

"The labor tax policy is playing an extremely important role here. The overall taxation of labor places Romania among the countries with the highest level of taxation. As long as you have a significant labor taxation, I don't know how you can interest someone who is taxed the same in England," Simon argued.

Before contemplating progressive taxation, the government should set its focus on the measures required on the labor market, he advises.

In his turn, AmCham first vice-president Ionut Sas said that "in recent years, more than a quarter of Romania's active population has emigrated. Had this workforce remained in the country, it would have meant an economic increase between 0.6 and 0.9 percent."

Keeping these resources in the country requires increasing the living standard in Romania, added the AmCham official, who also warns of the large number of Romanian students who don't return from studies abroad.

AmCham presented on Monday the results of its 2022 survey on the quality of the investment environment, conducted between May and June on 168 member companies. AGERPRES

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