ING: Low unemployment conceals informal employment

One of the reasons why the unemployment rate registered in Romania fell to less than 6% in March, reaching the last twelve months’ low, might be expansion of informal employment, considering the number of salaried employees has gone down by more than 200,000 people over the past year.

Today, Premier Emil Boc, who took the interim reins of the Labour Ministry, will meet with the representatives of the Interior Affairs Ministry and with those of the Labour Inspection Department to discuss fighting informal employment.

“The low unemployment rate may conceal informal employment. This is not out of the question, considering that as the registered unemployment rate has gone down and the unemployment rate measured by polls, which also includes informal employment, has gone up. However, I think the decline in unemployment rate is caused by the fact that people no longer register as jobless with the employment agencies once their benefits expire,’ said Nicolae Chideșciuc, ING Bank’s chief economist.

The state collects about 45.8 billion lei (10.9 billion euros) in social contributions over twelve months, with contributions amounting to 44% of the gross incomes of employees. Were the 1.68 million Romanians that President Traian Băsescu says are informally employed legally employed the state would collect about 4.5 billion euros in social contributions.