Labour market in Moldova continues to endanger economic growth. Analysis by Info-Prim Neo

The situation on the labour market in Moldova is still tense despite the progress seen in the past years. But analysts say that the progress is due to the development witnessed by most of the states of the region. The main weakness of the Moldovan market, they say, is the high employment rate in the sectors with a low productivity like agriculture. According to official statistics for last year, 33.6% of the employed worked in the agricultural sector. [One-day employment – uncontrolled source of wealth for leaders] Ion Holban, first deputy director general of the National Employment Agency, described the one-day employment system, especially for peasants, as inefficient. In most of the cases, the relations between the employer, leader of the peasant farmsteads, and the salary earner, the peasant who provides one-day services, are not regulated by work contracts. As a result, the peasant suffers the consequences. Receiving the salary in hand, he does not benefit from labour protection. At the same time, given the lack of transfers to the social insurance budget, he cannot hope for a pension and for subsidies from a risk fund that could be created. Ion Holban says that it is relatively easy to carry out investigations and oblige the land owners to make work record books for the farmers that work their land. A single family cannot farm, for instance, 300 hectares that it owns or manages. Of course it will use additional hands. In this way, the leader accumulates wealth by exploiting the peasants. [Personification system – solution for annihilating the shadow labour market] The labour market went out of control, says analyst Veaceslav Ionita. Only 10% of the employees enjoy legal work relations. The problem does not necessarily reside in the fiscal burden that the economic entities invoke. Compared with other states, in Moldova it is much lower. In fact, it is the bad management of the business that generates payment incapacity. About 7-8% of the total incomes in Moldova are now used for paying salaries. But this figure should be threefold higher. In agriculture, but also in other sectors of the economy, the personification system would enable the employees to demand that their employers keep truthful records over salaries, considers the chairman of the Federation of Transport Trade Unions Boris Rojnevschi. Corruption among managing personnel is high in Moldova. It is hard to develop the economy and give decent salaries under such a system. If the people knew that the contributions they pay to the social insurance budget or to the compulsory health insurance budget are transferred to a personal account or to a family account, the salary earners will not want to work illegally anymore. Why should you finance the pension of an old man whom you don’t know and ask yourself if a child that goes to the kindergarten will accept in the future to finance your pension, when it is much reasonably to have the money transferred monthly to an account that you can manage together with the family and that will be passed from parents to children. Our ordinary people do not ask themselves such questions and the state does not stimulate them to do so either. [Halting of migration of brains and skilled workers – priority for labour market] The uncertain tomorrow and the economic environment that favours the discrepancies in salaries make many Moldovans leave to work abroad. The poor correlation between the national education system and the demand on the labour market encourages even more the migration of intelligensia and skilled workers. The number of places in higher education establishments was increased 2-2.5 times in the past ten years. But the rooms as well as the number of teachers remained the same. The students go to classes in the second shift, as well as on Saturday and Sunday. As a result, the graduates have poor qualifications. According to official statistics, about 17,000 students graduate from higher education institutions each year. More than half of these are economists, lawyers or specialists in international relations. But Moldova needs builders, engineers, workers in industry etc. The official policy to limit the number of places in the departments that are in demand is backed and criticised at the same time. Most of the people agree yet that the higher education establishments in the past years turned into profitable businesses. Analyst Veaceslav Ionita thinks that though it is indisputably an abusive practice, the Government’s decision is justified by the present conditions. However, it must be replaced by regulations that would enable to expel the students with poor academic standing after the first exam. This means that the number of students admitted the next year should be equal to the number of students expelled the previous year. In parallel, the first deputy director general of the National Employment Agency Ion Holban says that there should be worked out a methodology for making average-term forecasts for the labour market. The logistical support of the education institutions should be updated by implementing modern technologies and equipment. Teachers’ mentality should be also changed. The encouragement of decent salaries in the most important sectors of the economy will help the young people make the correct choice. [Implementation test] Besides the main fears of the investors pointed out so far, including the macroeconomic instability in Moldova and the fiscal burden, the recent studies of the World Bank and of the European Bank for Reconstruction and Development reveal other threats such as the unsafe infrastructure, the minor requirements for honouring the contractual obligations, the distrust of justice. These relations cast a shadow on the forecasts regarding the investments that could help create new workplaces. Recently approved by the Government, the strategy for optimising the use of labour force is a good document, but as in the case of other reform bills, it is not sure if it will pass the implementation test, says expert Tatiana Larusina. The Government needs serious political support to achieve the results projected in the strategy. There should be devised efficient mechanisms for redistributing the jobs and the workers by moving them from inefficient companies to profitable companies, as well as schemes for adapting the labour force and an efficient social protection system that would enable to guarantee the primordial rights of the salary earners, including by liberalising the legislation.