The new Labour Code is a step forward for a more flexible labour market

The current reform of the Labour Code will bring about a more flexible labour market in Romania, which will improve the country’s competitiveness, thus opening up new opportunities for job creation. This one of the main conclusions of the conference “New Labour Code, new opportunities”, organized today by PwC Romania and its correspondent law firm D&B David si Baias.

According to the new law, the provisions of the job description will become paramount in assessing the professional performance of any employee, which will prevent abuses from employers. Also, the new Labour Code stipulates that professional performance will prevail in case of disposals made due to the economic situation of a company, thus replacing the old provisions that social criteria had to be taken into consideration first when undertaking disposals.

“What we are witnessing is a major step towards a more balanced distribution of power on the labour market, a law that protects both the employee’s rights and the employer’s interests”, stated Peter de Ruiter, Partner, Tax and Legal Services Leader, PwC Romania. “Although we don’t anticipate massive job creation in the short term, it is clear that on the long run the current law will generate new opportunities for fast growing companies and for skilled and resourceful employees”, added de Ruiter.

The temporary labour agreements have been extended up to 36 months, which will stimulate companies to hire more employees project-based, without fear that the additional personnel will become financially burdensome once the projects have been completed.

Another  provision that will make the labour market more flexible, concerns the working time. According to the new Labour Code, in case a company is faced with reduced demand and harsh economic circumstances, it can unilaterally decide on reducing the work schedule from 5 to 4 days per week, thus reducing personnel costs with up to 20%. This will help protect the existing jobs in Romania.

The companies will also benefit from an increase of the trial period for recently hired employees, of up to 90 days for executive positions and 120 days for management positions. In addition, the period in which companies have to compensate the overtime of their employees grew from 30 to 60 days, which is an interval better adapted to current business cycles.

“The reform of the Labour Code has been constantly on the agenda of the Romanian business community. The recent economic downturn and the measures that local companies had to implement in order to safely navigate the crisis, sent a clear message to the authorities that the labour market needed more flexible provisions”, stated Carmen Medar, Managing Associate, D&B David si Baias.

According to the recent edition of PwC’s Global CEO Survey, managing talent has become the top priority of CEO’s worldwide, 83% of the 1200 CEOs surveyed worldwide indicating that they plan to change their firm’s talent management strategy over the next 12 months, while 31% stating that these changes will be major.

“As we move out of the downturn, CEOs are putting the focus firmly on their people.  Competition for talent is intensifying as recruitment activity picks up in some sectors and there are increasing difficulties finding staff with the right skills.  CEOs often speak of the importance of talent, but there’s not enough evidence of action being taken.  The survey findings are encouraging, suggesting talent will be reflected more in company strategy.  HR professionals need to help CEOs see what can and should be done”, concluded Peter de Ruiter.

About the Global CEO Survey:
The 14th PwC Global CEO survey is based on 1201 interviews conducted from September to November 2010 with CEOs in 69 countries. 37% of CEOs polled lead companies with over $1bn annual revenues.


This article is also available in: Romanian

This post is also available in: Romanian

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