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The Impact of Legislative Reforms on Industrial Relations in Romania

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The Impact of Legislative Reforms on Industrial Relations in Romania The Impact of Legislative Reforms on Industrial Relations in Romania Edited by: Susan Hayter, Corinne Vargha, Cristina Mihes DeceNT WORK TechNICAL SUPPORT TeAM AND COUNTRY OFFIce FOR CENTRAL AND EASTERN EUROPE INDUSTRAL AND EMPLOYmeNT RELATIONS dePARTmeNT (DIALOGUE) Copyright © International Labour Organization 2013 First published 2013 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. Hayter, Susan; Vargha, Corinne; Mihes, Cristina The impact of legislative reforms on industrial relations in Romania / edited by Susan Hayter, Corinne Vargha and Cristina Mihes ; International Labour Office, Industrial and Employment Relations Department (DIALOGUE), Decent Work Technical Support Team and Country Office for Central and Eastern Europe. – Budapest: ILO, 2013 ISBN 9789221275985; 9789221275992 (web pdf) International Labour Office; Industrial and Employment Relations Dept; ILO DWT and Country Office for Central and Eastern Europe labour relations / collective bargaining / social dialogue / labour legislation / comment / Romania 13.06.1 ILO Cataloguing in Publication Data The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications and electronic products can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by email: [email protected] Visit our website: www.ilo.org/publns Printed in Hungary Foreword In the midst of the financial and economic crisis, the Romanian Government assumed responsibility before Parliament for substantial changes to labour and industrial relations legislation and institutions, primarily through Social Dialogue Law No.62/2011 and amendments to the Romanian Labour Code as provided by Law No.40/2011. These measures were among the structural reforms aimed at meeting Romania’s budget deficit reduction targets, restoring macroeconomic stability and employment growth. The ILO provided detailed technical comments on both draft laws, in particular with regard to their compliance with core international labour standards. The reforms that were enacted failed to address fundamental ILO concerns. With growing concern over the impact of the 2011 reforms, and following a formal request of the national trade union confederations, the ILO commissioned a study to consider the impact of these reforms on working conditions and employment relations. This paper outlines the major changes made in 2011 to the legal and institutional frameworks relating to the social partners and their activities, including collective bargaining. It considers the negative impact of the reforms on workers’ rights. In this regard, it makes an important contribution to the debate concerning Romanian labour market reforms and how best to ensure that they lead to decent job creating growth. Its insights are also highly relevant to wider questions about compliance with fundamental international labour standards and how to regulate the relationship between workers’ and employers’ organizations so as to strike a balance between workers’ rights and enterprises’ needs for sustainability and competiveness. By taking stock of current legal frameworks and practices relating to collective bargaining arising out of the adoption of the new Law on Social Dialogue in 2011, as well as of the outcomes of a round table involving the Romanian tripartite constituents, the ILO, the IMF, the World Bank and the European Commission, a number of recommendations are made in the Preface which follows. We strongly encourage the tripartite constituents to implement the full set of recommendations in order to meet the overarching objective of decent workplaces in sustainable enterprises in Romania. We are grateful to the authors of the study, Professor Raluca Dimitriu, Assistant Lecturer Tiberiu Ţiclea, Professor LuminiŢa Chivu and Professor Constantin Ciutacu and commend the study to readers both in Romania and elsewhere. We hope that it will serve as a valuable contribution to debates now underway in Romania and to better understanding of the potential impact of reforms in other countries. Furthermore, we would like to extend our appreciation to ILO colleagues Ms. Susan Hayter, Mr. Ovidiu Jurca, Mr. Robert Kyloh, Ms. Cristina Mihes and Ms. Corinne Vargha for their valuable comments and assistance in the finalization of the study, as well as to Mr. Gearoid O’Sullivan who copy edited the English version. Special thanks should also be expressed to the ILO’s Romanian tripartite constituents, as well as to representatives of the IMF, the World Bank and the European Commission who have contributed comments and suggestions. The opinions expressed in the study do not necessarily reflect the views of the ILO. Moussa Oumarou Mark Levin Director Director Governance and Tripartism Department DWT/CO-Budapest III Table of Contents Foreword iii About the Authors vii Preface ix Executive Summary xi Chapter 1 Background to the Legislative Changes 1 A. Review of labour legislation in force prior to the legislative reforms 1 B. The main labour market indicators before the reforms 2 Chapter 2 Description of the Legislative Changes 5 A. Declared objectives of the legislative reforms 5 B. Collective labour relations 5 C. Emploment relations 8 Chapter 3 Review of the Impact of Legislative Changes 11 A. The impact of legislative changes on the social partners 11 B. The Impact of the legislative changes on collective bargaining 14 C. The impact of the legislative changes on employment, working conditions and collective bargaining outcomes 25 Chapter 3. Conclusions 36 A. The social impact of reforms to the Labour code 36 B. The impact of the Law on Social Dialogue on collective bargaining 37 Annexes 40 List of Charts Chat 1 The evolution of the minimum wage in Romania and other EU member states (EUR/month) 16 Chat 2 The evolution of the minimum wage in Romania and other EU member states (S II 2012/S II 2011, %) 17 Chat 3 Salaries according with the size and ownership of the company (%, average at national level 100.0) 18 Chat 4 Proportion of companies with fewer than 10 employees, in which is impossible to establish a trade union organization at company level (2010) 24 Chat 5 Persons identified as providing undeclared work 27 Chat 6 Evolution of gross minimum wage during the period 2006–2012 (lei/month) 31 Chat 7 Evolution of employment (thousand persons) 33 Chat 8 Evolution of the number of employees (thousand persons) 34 V VI About the Authors Professor Raluca Dimitriu Prof, PhD., Law Department, Academy of Economic Studies, Bucharest Assistant Lecturer Tiberiu T¸iclea Assist., Law Faculty, The Ecological University of Bucharest Professor Luminiţa Chivu Senior Researcher I, National Institute for Economic Research ‘Costin C. KiriŢescu’, Romanian Academy. Professor Constantin Ciutacu Senior Researcher I, National Institute for Economic Research ‘Costin C. KiriŢescu’, Romanian Academy VII Preface With concern growing over the impact of the 2011 legislative reforms on industrial relations in Romania, the ILO commissioned a study to consider the impact of these reforms on working conditions and employment relations. The study concluded that on the whole the social impact of the reforms appears to have been detrimental to social partnership, collective bargaining and the quality of employment: – The reforms have made it considerably more difficult for trade unions and employers’ organizations to operate effectively. Since 2011 when the Law on Social Dialogue entered into force, trade union membership has declined and there is a considerable reduction in the number of employers’ organisations which are actually able according to the new statutory criteria to obtain the status of “representative”. – The reforms have had a negative impact on national institutions of social dialogue in general, one of the immediate consequences of which is that the Economic and Social Council no longer
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