Developments and prospects in labor relations 2025-2026

Article by Stefan Guga

It is very possible that 2025 will prove to be a turning point for labor relations in Romania, as were 2010 and the period 2017-2018. The year 2010 marked the end of the economic boom of the second half of the 2000s, with the austerity measures adopted at that time significantly aggravating the situation already complicated by the crisis that began in 2009. In 2017-2018, the government adopted a series of measures to stimulate economic growth (including significant wage increases) against a backdrop of already positive economic developments, which led to a general and rapid improvement in the situation of employees. The pandemic itself seemed to be just a hiccup, with the Romanian labor market returning to an unexpected positive trajectory as early as 2022. Even the high inflation of 2021-2023 did not seem to have a definitive negative impact, with wage increases quickly outpacing inflation. Things started to get complicated in 2024, with the slowdown of the economy, but there were still no clear signs of a reversal of the trajectory, as is certainly the case in 2025.

2025 was a particularly turbulent year for labor relations in Romania, regardless of the perspective from which we view them. First, there was a major change in the labor market to the detriment of workers, caused by a combination of the economic slowdown and the austerity measures imposed by the government. Secondly, wage growth has slowed significantly, despite high inflation and the transposition of the European directive on adequate minimum wages. Thirdly, collective bargaining and social dialogue have entered a period of uncertainty, given, among other things, the government's explicitly hostile stance. The most reasonable assumption is that, as these trends intensify, 2026 will be a considerably worse year, with little cause for optimism even in the medium term.

The labor market

Like the country's economy in general, Romania's labor market is heavily dependent on economic activity in Western countries. This is the legacy of the last two decades, which is now beginning to show its shortcomings more explicitly. A significant part of the domestic industry, as well as services such as IT&C, functions as a link in the supply chains of multinational companies, with economic activity in Romania having virtually no strategic autonomy or capacity to adapt in the event of a decline in activity in the West. As a result of the erosion of competitiveness caused largely by rising energy prices, the European Union as a whole has been facing a sharp decline in industrial activity for more than two years. The impact on the Romanian labor market is already severe and will continue to worsen in the coming period. The situation is further complicated by Romania's historical and structural problems, which do not seem likely to be resolved any time soon—in fact, they are not even on the political agenda or in public debate.

One of these historical problems is the low activity rate—in other words, the fact that relatively few members of the working-age population participate in the labor market in one way or another. According to Eurostat data, in 2024 the labor force participation rate was 67.4%, down even from 2019 — a regression, therefore, in an area where we were already doing very poorly (the EU average is around 75%). An analysis by the International Monetary Fund attributes this situation to the particularly low participation of women in the labor market (mainly due to the lack of childcare services), but also to the difficulties in finding employment for people with low levels of education (linked to very low spending on public education) and the lack of transparency and clarity of the available data (referring, in particular, to the large number of people working abroad who do not always appear in the statistics).[1]

In addition, we still have a very large number of inactive young people (who are neither working nor enrolled in education or training), a relatively high proportion of the population in unpaid employment (self-employed workers, unpaid family workers), and inequalities in the labor market. In the case of geographical inequalities, we are even seeing a worsening of the situation: some counties with a low proportion of employees in the total population have recently recorded more modest developments than the national average and than some counties with a high proportion of employees. Under these circumstances, the gap between counties such as Cluj, Timiș, or Brașov (and, of course, Bucharest) on the one hand, and Vaslui, Teleorman, Vrancea, or Olt on the other, continues to widen.

To a certain extent, such problems could be ignored until now because the situation looked good at the macro level, which is no longer the case today. In the first half of 2025, for the first time since the early 2010s, the number of active individual employment contracts and the number of active employees did not increase (compared to the second half of 2024)[2] . This stagnation actually hides divergent developments at the sectoral level. In the first eight months of 2025, sectors such as IT&C, public administration and defense, banking and insurance, and, in particular, manufacturing recorded declines in the number of employees, while commerce, construction, health and social assistance, and administrative and support services recorded increases. It should be noted that the growing sectors are also likely to decline in the coming period, affected either by the slowdown in economic activity (trade, construction) or by austerity measures (health and social assistance). 

As regards manufacturing, the decline is more or less widespread and no longer characterises only industries that are heavily dependent on low labor costs (especially the clothing industry). The sharpest decline is in the automotive industry, where no fewer than 15,400 jobs were lost between August 2024 and August 2025. The decline is notable in several respects. Firstly, it adds to the declines of previous years: overall, between 2019 and 2025, the automotive industry lost more than 41,000 employees (a decline of 23%). Secondly, for a decade, the automotive industry was the most important industrial employer in Romania, being the most eloquent example of the structural dependence of the Romanian economy on the trajectory of Western multinational companies. Thirdly, the decline of the automotive industry shows us how problematic the economic policy of the governments of the 2010s was, which supported foreign investment practically unconditionally, stimulating job creation on strictly quantitative criteria and without any minimal concept of what should support economic development in the longer term. In the 2010s, investments were attracted mainly in low-complexity activities with little added value, low technology, and structurally dependent on low labor costs; the automotive industry was the main beneficiary of this policy, absorbing most of the state aid granted for private investment. Most of Romania's automotive supply industry developed on these foundations, which have proved particularly fragile over the last five years. 

To a large extent, the same dynamics can be observed in Romania's IT&C sector, which is also experiencing major difficulties due to the same vulnerabilities—although the decline in this sector is, admittedly, more recent. The symbolic impact of the decline is all the more powerful given that the IT&C sector has been insistently presented for more than a decade as the star of the national economy, an essential vector for healthy long-term development. However, there were plenty of signs of a slowdown in IT&C activity even before the shocks that the sector has suffered in the last two years: the moderation of the advance of digitization, the implementation of artificial intelligence solutions, and competition from countries even cheaper than Romania. In both the automotive and IT&C industries, we are talking about the failure of the development model promoted over the last decade and a half, for which there is still no replacement.

On the other hand, we have sectors where employment is growing, especially the food industry, which has become the most important branch of the manufacturing industry in terms of the number of employees. On the one hand, the growth of the food industry is a positive thing, as Romania's food processing capacity is well below the potential of the market and the upstream supply chain. On the other hand, strictly from a labor market perspective, the situation is not necessarily a good one, as the food industry does not have high added value, pays poor wages, and cannot sustain a trend of socio-economic development in the medium and long term.

In such a context, it is not surprising that there is almost no talk of labor shortages, a major topic of public debate both before the pandemic and during the period 2021-2023. This last period has been marked by an unprecedented development, at least in terms of its scale: a significant increase in the number of workers from outside the EU. A study by the Economic and Social Council[3] mentions that in 2024, there were approximately 200,000 non-EU workers in Romania, most of them in construction and manufacturing. In terms of their share of the total workforce, the highest presence is found in the hospitality industry, with 12.5% of non-EU workers in 2024. The government's announcement at the end of the year regarding the reduction of the quota of foreign workers in 2026 is a clear sign that the difficulties in the labor market are deepening. In fact, government representatives have explicitly linked this measure to the negative impact of cuts in the public sector: employees leaving the public sector will be forced to look for work in the private sector, where competition from foreign workers must be limited.[4] 

Such statements are consistent with the government's broader vision: laid-off public sector employees should find jobs in the private sector, where there is demand for labor.[5] This perspective is remarkably cynical, but by no means new. The government and the presidency were operating according to the same ideas in the early 2010s, even if they did not make explicit statements to that effect. We must not forget that the government's position carries a lot of weight in the Romanian labor market. The state is not only the largest employer, but also the authority that regulates many aspects of labor relations. The combination of austerity measures and an ideological vision that is clearly contrary to the interests of workers is a clear signal that things are moving in the opposite direction to that of the last decade. If 2025 marks a deterioration in the overall situation of employees for the first time in many years, we can expect things to get even worse in 2026 and, most likely, in the longer term.

Wages

Wages are the area where this deterioration is probably most evident. Rising prices in recent years have put strong pressure on wage dynamics, but at least until 2024, wage increases have kept pace with price developments. For 2025, however, data from the National Prognosis Commission published in September show an increase in the real average wage of only 0.7% this year, the lowest in the last decade (excluding 2022, a year of inflationary shock that was fully absorbed by wage increases in 2023). The actual figures at the end of the year will most likely be even more pessimistic. Even from the partial figures, with an average close to zero, it is clear that wages have fallen in real terms for many workers. Moreover, in nominal terms (without adjusting for inflation), data for September 2025 show a decline in the public sectors (public administration and defense, education, health, and social assistance). It should not be forgotten that, as in 2010, the aim of public sector austerity is not only to reduce personnel costs, but also to give the private sector the green light to slow down or even completely halt wage increases.

Another clear signal in this regard from the government is, of course, the freezing of the minimum wage, the most plausible scenario at the time of writing this essay[6] . Again, we are talking about an unprecedented measure in the last 15 years, with the minimum wage increasing symbolically by a few dozen lei even at the height of the pandemic. The government justified this measure by resorting to the well-known myths (lack of productivity, job losses, etc.)[7] and, for the first time, to the idea that any increase in the minimum wage leads to a "cascade effect" of wage increases in the public sector[8] ꟷ as in the case of the myths about productivity and declining employment, and here we are talking about false statements, as there is no automatic mechanism for indexing public sector wages to the increase in the minimum wage. The government's position is, once again, part of a broader vision of reducing the bargaining power of employees.

The importance of 2025 as a turning point is probably most visible in the case of the minimum wage. The year began under the auspices of the transposition of the European Directive on adequate minimum wages ꟷ without question, a major step forward in improving the living standards of low-wage employees. However, the interpretation of the directive at the national level has been favorable to employers: a de facto threshold of 47% of the average wage has been chosen—the law stipulates a range of 47-52%— but in practice this is purely symbolic, as evidenced by the uncontested setting of the minimum wage for 2025 at 47% of the projected average wage. Furthermore, the procedure for setting the minimum wage adopted as part of the transposition process reintroduced the Orban government's 2019 formula for increasing the minimum wage: the increase in the minimum wage should be equal to the sum of inflation and labor productivity growth.[9] However, both the Orban and Bolojan governments abandoned this formula almost immediately after its adoption (Orban for the 2021 increase, Bolojan for the 2026 increase). We therefore already have two precedents in which the desire expressed insistently over time by employers and certain political parties to have an "objective mechanism" for setting the minimum wage is first fulfilled, after which the same employers and political parties block the application of the established mechanism when they do not like the results.

There is no doubt that freezing the minimum wage will set the tone for a general wage freeze in the private sector. The conditions for this had already been created by the economic slowdown and austerity measures in the public sector. From this point of view, it is certain that 2026 will be a very bad year for employees in terms of purchasing power, with high inflation and, as a result, significant losses in purchasing power. From a European perspective, Romania will lose even more ground, as recent wage increases have been lower than in countries such as Poland or Bulgaria. However, a return to the 2010 strategy of reducing costs to attract investment is illusory, as economic sectors prone to relocation in search of low labor costs are already turning to other geographical areas (North Africa, Asia). For this reason, the most plausible scenario in the medium and even long term is that Romania will not return to the wage growth rates of the last decade anytime soon.

Collective bargaining and social dialogue

Normally, collective bargaining should provide a certain level of protection for workers in such difficult situations. In companies where trade unions have a strong historical presence and well-established collective bargaining agreements, this is indeed the case. But these are rather exceptions in the landscape of collective bargaining in Romania, which, although in theory covering around 40% of employees[10] , tends to carry little weight, not least because of the severe restrictions imposed over time by the authorities (for example, according to the law, wage rights in the public sector cannot be negotiated).

However, the end of 2025 will mark three years since the new Social Dialogue Law (Law 367/2022) came into force, and we should already be seeing its effects. In general, the law introduced several changes aimed at facilitating trade union activity and increasing the coverage of collective bargaining. The most notable consequences of the new legislation in this regard have been the three sector-level collective bargaining agreements that currently exist in the private sector: in banking, insurance, and construction, with the latter two being registered during 2025. There is no doubt that these agreements would not have been possible under the previous legislation, just as there is no doubt that they represent a major advance in the landscape of collective bargaining in Romania. In almost all other respects, however, the beneficial effects of the legislation are uncertain. The most obvious example is strikes: even though the current legislation is relatively permissive (and certainly much more permissive than the previous one), strikes are still extremely rare in Romania, regardless of whether the situation of workers is improving or worsening.

Another significant event in 2025 was the adoption in early October of the Action Plan for the Promotion of Collective Bargaining[11] as part of the process of transposing the European Directive on adequate minimum wages. The plan includes a whole series of vague measures with uncertain practical implications (information and awareness-raising campaigns, “administrative” actions), but also measures that could have a concrete positive impact (such as facilitating negotiations at sectoral level). Theoretically, within a reasonable time frame, the plan should contribute decisively to a significant increase in the coverage of collective bargaining, from approximately 40% (of all eligible employees) at present to somewhere close to 80%. This is the goal clearly stipulated in the European directive. Strictly from this point of view, the plan is an absolute novelty in Romania, and the consequences can only be beneficial.

On the other hand, it is hard to believe that the current government has any intention of actually implementing the measures to promote collective bargaining in this action plan, measures that blatantly contradict the government's ideological positions and its concrete actions (described in part above). Admittedly, the government program stipulates as an objective "the revision of the Law on Social Dialogue"[12] , but it is hard to believe that the intention is not to return to a situation closer to the old legislation, which was very restrictive towards collective bargaining and trade union activity. In addition, the government program includes a truly extraordinary objective: "revising collective labor agreements that provide for excessive rights". It is unclear which contracts are being referred to or what the "exaggerated" rights might be. Regardless of whether this objective refers only to the public sector or to the entire economy, the inclusion of this point in the government program is a particularly serious matter and shows the government's extremely rudimentary view of the very idea of collective bargaining. It is hard to believe that a government guided by such objectives has any intention of implementing in good faith an action plan designed precisely to give a massive boost to collective bargaining.

More generally, 2025 was also a year in which trade unions once again made their presence felt in the public sphere. Reactions to the austerity measures were not long in coming, even if they were relatively timid and limited to street protests, which over the years have proven to be completely ineffective. Even in education, a sector heavily affected by austerity measures and with a long tradition of strikes, a genuine strike movement was slow to emerge. As such, from this point of view, the situation seems to be a carbon copy of that in 2010, with the government publicly displaying its contempt for the unions. The Education Minister's disrespectful public statements and the delay in consultations with trade union confederations at Cotroceni after the presidential elections, in the context of giving unprecedented priority to employers, are an integral part of the picture characteristic of 2025, a déjà vu of 2010. The same is true of the lack of real reaction. There is no plausible reason to believe that the situation will change in the coming period.

[1] https://www.imf.org/en/-/media/files/publications/selected-issues-papers/2023/english/sipea2023062.pdf 

[2] According to data published by the Labor Inspectorate.

[3] https://www.ces.ro/newlib/PDF/2025/CES-2025-Migratia-Cetatenilor-din-Tari-Terte-in-Romania.pdf?1 

[4] https://ziare.com/permis-de-munca/guvern-reducere-numar-cetateni-straini-munca-1974127 

[5] https://gov.ro/ro/stiri/conferinta-de-presa-sustinuta-de-prim-ministrul-ilie-bolojan1756802916 

[6] https://www.zf.ro/zf-24/ce-se-va-intampla-cu-salariul-minim-si-cu-salariile-din-sectorul-22970858 

[7] See https://romania.fes.de/ro/e/salariul-minim-si-traiul-minim-decent-de-la-mituri-la-oportunitati.html 

[8] https://www.zf.ro/zf-24/bolojan-anunta-sustine-cresterea-salariului-minim-economie-iar-22938736 

[9] This formula, taken practically word for word from the Orban government, was proposed in 2025 by the National Institute for Scientific Research in the Field of Labor and Social Protection (INCSMPS), which has consistently taken a very unfavorable stance on increasing the minimum wage. The impact analysis carried out by INCSMPS in the case of a possible increase in the minimum wage in 2026 follows this line of completely unjustified propagation of myths about the minimum wage.

[10] https://agerpres.ro/economic/2025/03/03/gradul-de-acoperire-prin-contracte-colective-este-de-46-2-subsecretar-de-stat--1427363 

[11] https://legislatie.just.ro/Public/DetaliiDocument/302778 

[12] https://www.gov.ro/fisiere/pagini_fisiere/25-06-24-11-11-52PROGRAM_DE_GUVERNARE.pdf 

The views expressed in this article do not necessarily reflect the views of the Friedrich-Ebert-Stiftung (FES).

About the author:

Stefan Guga is director at Syndex Romania, a labor expert, and a doctor of sociology and social anthropology at the Central European University (CEU).