1. The Future of HR and the labor market in times of structural change
March 28th, 2017

2. Key themes for discussion
Technology distruption – Services 4.0 and Industry 4.0
Is public policy constructive or destructive ?
Job market in Romania increasingly polarized and under tensions
What actions should we take?
Is the private sector embracing positive change or resisting it ?
Change of expectations and mentality of employers

3. Fundamental change in services driven by major innovations

4. Major job losses expected from new innovations

5. Fundamental change in industry expected

6. New trends will displace low-skilled labor but will require higher skilled workers

7. Overall employment will increase due to Industry 4.0...

8. ... however major losses in basic production

9. What does it mean for Romania?
The threat is real...
... however we should not yet panic
Largest impact will be in the service sector (mainly outsourcing / call centers and repetitive jobs in large service companies, e.g., banks/telcos) and low-end production – where Romania is positioned now
New advanced jobs might be mainly located in developed countries
Outsourcing trend might be slowing down due to lower costs in developed markets
We are still low cost – first cuts might be in the expensive service jobs in western countries
Digital/AI will be a complement to traditional workforce, increasing its productivity, incl. in Romania
A reduction over time of 20% of repetitive tasks might free up labor ressources for higher value add services
In services and industrial management – location will be increasingly less relevant, giving opportunities to work for larger market out of Romania

10. Key themes for discussion
Technology distruption – Services 4.0 and Industry 4.0
Is public policy constructive or destructive ?
Job market in Romania increasingly polarized and under tensions
What actions should we take?
Is the private sector embracing positive change or resisting it ?
Change of expectations and mentality of employers

11. Romania job market – rapidly increasing polarization
Bucharest, top cities + Transylvania
Rural and Moldova/Muntenia
Already at or above EU average levels of GDP/Capita – Bucharest above Budapest, Madrid, Rome or Berlin
50% employment level, mainly in Private Sector (in line with EU averages) ´- strong presence of high value-add industries
Average salary at RON
Strongly increasing GDP, investments, salaries and jobs
Poorest EU regions – with very low contribution to GDP (most of it coming from taxes collected in the other regions and redistributed)
25% employment level – mainly in public sector, with rest in informal economy, subistance farming, retired and under social support
Very high de-population (3-4m people net left to EU and to cities), no investments
Insufficient labor force
Salaries are too low vs. productivity
Top talent leaving to EU
Remaining labor force highly unskilled – and generally leaving to EU or RO urban (or get employed by state)
No realistic economic prospects

12. Key themes for discussion
Technology distruption – Services 4.0 and Industry 4.0
Is public policy constructive or destructive ?
Job market in Romania increasingly polarized and under tensions
What actions should we take?
Is the private sector embracing positive change or resisting it ?
Change of expectations and mentality of employers

13. Employee expectations and mentality changing fast, esp. millenials
Significantly increasing salary and career progression expectations
Job-hopping or job multi-tasking becoming the norm
Increasing on the job flexibility expectations (part time, work from home)
EU jobs seen as part of the available pool of options, both early on and mid-career
Top talent increasingly seeing multinational incumbents as un-attractive
Mid to low talent seeking job stability and free time – and increasingly attracted by public sector or low-end jobs abroad

14. Key themes for discussion
Technology distruption – Services 4.0 and Industry 4.0
Is public policy constructive or destructive ?
Job market in Romania increasingly polarized and under tensions
What actions should we take?
Is the private sector embracing positive change or resisting it ?
Change of expectations and mentality of employers

15. What are the best practice public policies and where do we stand ?
Current situation in Romania
Invest in modern education, incl. in disadvantaged areas
Lowest % of GDP invested in Education in EU
Lowest PISA scores (mainly in rural/disadvantaged areas)
Education output not syncronized with labor market needs
Partner with private sector for tech/on the job skills
No clear incentives and plans (e.g., for co-founded vocational schools, joint curricula in universities, tax breaks for investments in educational facilities)
Support high value-add job creation in urban hubs and rural-urban migration
Investments mainly focused at un-productive projects in low-income areas (that will not increase job prospects there) + pensions and public sector salary increases
Fiscal and labor policy supporting job creation (esp. entry level)
One of highest rates of labor taxation for low-income jobs – leading to significant number of informal arrangements and high migration
Limit jobs in Public sector and introduce meritocratic models of evaluation
Incoherent salary structures, generally higher than private sector (for low/mid jobs)
Increase of public sector employees by 50% since 1990

16. Key themes for discussion
Technology distruption – Services 4.0 and Industry 4.0
Is public policy constructive or destructive ?
Job market in Romania increasingly polarized and under tensions
What actions should we take?
Is the private sector embracing positive change or resisting it ?
Change of expectations and mentality of employers

17. What are best practices and where do we stand?
Flexible salary grids to attract/retain top local talent
Build digital / tech skills of employees and change culture accordingly
Significant investments in internships / on the job training and building up vocational channel
Invest in building eco-system of start-ups to support overall transformation
Flexible arrangements to accomodate other projects or interests of employees
Attract eco-system of local freelancers / experts as alternative quasi-labor relationship
Significant investments in attracting labor from secondary areas

18. Key themes for discussion
Technology disruption – Services 4.0 and Industry 4.0
Is public policy constructive or destructive ?
Job market in Romania increasingly polarized and under tensions
What actions should we take?
Is the private sector embracing positive change or resisting it ?
Change of expectations and mentality of employers

19. A few suggestions
Private sector to get better organized for public lobby / policy shaping
Private sector to take responsiblity in shaping the new labor/technology/education ecosystem – and not rely on public sector to deliver
Significant investments needed in structurally changing culture and HR trainings / "rules" for the new environment
Embrace the opportunity – aggressive local investments in new technologies to make Romania a driving force in the new European game