Labour force market behaviour in Romania.

Botezatu, Mihai Alexandru ; Botezatu, Elena

1. INTRODUCTION

The study of the labour market begins and ends with the analysis of supply and demand of labour. The supply of labour consists in employed and potentially employed persons, whose decisions to enter the labour market are influenced by several factors, including: demography, immigration, education, social protection policies etc. Labour market is a concept, a fictional space that gathers the supply and demand of labour, adjusting them through salaries. The statistical size of the supply of labour is given by the active population, employed and unemployed.

Labour supply comes from those individuals who want or need to obtain an income in exchange for work. It represents the amount of work that individuals wish to sell on the market at a price called "salary". It is expressed statistically by the number of people of working age able and willing to work for a wage. This includes self-employed labour--and assimilated--because it can be assumed that by selling the result of labour--good or service--it is actually selling labour.

Labour supply is subject to factors such as (Benoit & Sahn, 2006):

a) The population size and structure, by age group;

b) The level of wages (up to a level of salary that ensure a decent living the employee expand the quantity of work supplied, while above this threshold he substitutes work with leisure, thus reducing the amount of labour provided);

c) The structure of ownership in relation to the size of income which it brings to individual owners (the smaller they are, the larger is the available active population);

d) The traditions, customs etc. which influence the use of the labour force;

e) Psychological factors concerning the labour supplier.

The demand for labour comes from enterprises, whose decisions about the employment of labour are influenced by conditions on the three markets that operate they operate on: the capital market, the market of goods and services and the labour market. It is also of great interest for economic analysis and for outlining economic and employment politics the correlation between total population and active population segment.

Labour demand shows how the employment policies of enterprises react to changes regarding production, sales, revenue, taxation, wages etc. (Ciobanu & Pirciog, 1999). Therefore, the demand for labour is a derived demand (depending on the demand for the company products and services), so this may be influenced by exogenous factors, like technological changes, free trade and global competition. The purpose of this study is to determine the main labour force market indicators, their models of calculation and the interpretation of the results concretised in recommendation for governmental policies.

2. BASIC LABOUR INDICATORS

The analysis of labour supply must be made in close connection with the population size and structure, which in turn is directly influenced by the level of economic development of the country, and the social factors that characterize the community. Law no. 76/2002 regarding the unemployment insurance system established the main statistical indicators of the labour market. Labour demand is measured statistically by the number of jobs in the economy (occupied and vacant). Any occupied job presumes the existence of a contractual relationship. In addition to the occupied jobs, the economic agents may have job vacancies. The statistical indicator for measuring the occupied jobs is the employed population.

Thus, one can identify several categories of statistical indicators (Botezatu & Botezatu, 2008):

a). Absolute indicators:

* The total active population is represented by all the persons who supply labour during the reference period, including the unemployed and the employed population according to the criteria defined by the International Labour Office.

* The total employed population includes all persons aged 15 and older who had a job and who worked in the reference period at least one hour in non-agricultural activities or more than 15 hours, for self-employed and unpaid agriculture activities. It includes all categories of people (employees, employers, self-employed, unpaid family workers, members of farm cooperatives etc.) who worked in the formal sector activities and the informal sector, with or without legal forms.

b). Relative indicators

* The overall rate of activity (R (ga)) is defined as the proportion of total active population (P (a)) in the total population of the country (P (t)).

R (ga) = P (a) / P (t) x 100 (1)

* The rate activity of the population above 15 years of age (R (A15 +)) is the proportion of the active population aged 15+ (p (A15 +)) in the total population aged 15 + (P (+ t15)).

R (A15 +) = P (A15 +) / P (t15 +) x 100 (2)

* The overall employment rate R (go) is the proportion of the employed population (P (a)) in the total population of the country (P (t)):

R (go) = P (o) / P (t) x 100 (3)

* The rate of employment of the population above 15 years of age R(o15+) is the proportion of the occupied population occupied aged 15+ (P (o15 +)) in the total population aged 15 + (P (t15 +)):

R (+ o15) = P (o15 +) / P (t15 +) x 100 (4)

* The rate of employment of the labour resources R (rm) is the proportion of the employed civilian population (P (oc)) in the total labour resources (R (m)):

R (rm) = P (oc) / R (m) x 100 (5)

* The ILO unemployment rate is calculated as the ratio between the number of unemployed people defined according to criteria of the International Labor Office (S (ILO)) and total active population (P (a)), as follows:

R (ILO) = S (ILO) / P (a) x 100 (6)

* The registered unemployment rate is determined as the ratio between the number of unemployed registered with employment agencies (paid and not-paid) and total active civilian population. It is calculated by the National Agency for Employment as follows:

R (NAE) = S (NAE) / P (ac) x 100 (7)

3. THE ECONOMETRIC MODEL FOR THE STUDY REGARDING THE DEMAND OF LABOUR FORCE

Taking into account the notions previously presented, we propose ourselves to elaborate a linear, multifactor, econometric model which has synchronous influences for the simulation of the increase in demand concerning the labour force in Romania within 2000-2007 (table 1). The model for the employed population of the country presents the evolution of this indicator in correlation to the demographic factor, total population of the country at the "t" moment, the activity rate of the population at the "t" moment, also according to the economic factors represented by the savings rate of the population's households defined as a percentage report between the gross economy of households and their available gross income (because the employed population is that segment of population which participates directly in the economic activity through labour, contributing to the development of economy) (Botezatu, 2008).

[PO.sub.t] = f ([P.sub.t], [RA.sub.t], [R.sub.Ec.pop.t]) (8)

where:

[PO.sub.t] = The employed population at the "t" moment;

[P.sub.t] = Total population of the country at the "t" moment;

[RA.sub.t]= The activity rate at the "t" moment;

[R.sub.Ec.pop.] = savings rate for the households of the population.

The indicators "employed population" and "savings rate of population", resulted from model mention above using data from table 1 are presented in figure 1 and figure 2.

[FIGURE 1 OMITTED]

[FIGURE 2 OMITTED]

4. CONCLUSIONS

Given the psycho-social particularities of the labour force and also the feedback relations with the other markets, the labour market is the most sensitive and fragile of all markets. It picks up and amplifies the distortions and dysfunctions of the other markets formulating its own demands. So the labour market is conditioned by the equilibrium of all the other markets and at the same time by the conditions the socio-political equilibrium and stability.

It is noticed that, between the employed population and the total population, the activity rate and the savings rate of the population's households is a direct developing trend. The determination coefficient (93,4%) indicates a strong dependency between the employed population and the endogenous variables (total population, activity rate and the savings rate of the population) included in the model. Likewise, the econometric model offers efficient solutions for the economic analysis. The references years reflect the result of many changes in governmental and European labour market. Actual financial crisis impose to develop new model for evaluate the market, being the subject of next authors' research

5. REFERENCES

Benoit, D. E. & Sahn, D.E. (2006). Labor Market Dynamics in Romania during a Period of Economic Liberalization IZA Discussion Papers 2511, Institute for the Study of Labor (IZA)

Botezatu, M.A. (2008). Models For Labor Force Analysis, Journal Of Information Systems And Operations Management, (http://JISOM.RAU.RO), No2, July 2008, ISSN: 1843-4711, pp. 167-178

Botezatu, M. A. & Botezatu, Elena (2008). Migration Of Labour Force In Romania, Annals of DAAAM for 2008 & Proceedings of the 19th International DAAAM Symposium, ISSN 1726-9679, ISBN 978-3-901509-68-1

Ciobanu, & Parciog, S. (1999). Background study on employment and labour market in Romania, Available on: http://www.etf.eu.int/etfweb.nsf/pages/downloadromania Accesed 18.03.2009

Tab. 1. Data used for the econometric model

year Employed Total Rate of Savings
 population Population active Rate (%)
 (thousands) (thousands) population (%)

2000 10764 22435.2 68.6 5.5
2001 10697 22408.3 67.6 2.6
2002 9234 21794.7 63.6 -0.7
2003 9223 21735.5 62.4 -10.2
2004 9158 21673.3 63.2 -7.2
2005 9147 21623.8 62.4 -11.5
2006 9313 21584.3 63.7 -16.3
2007 9353 21537.5 63 -23.5