Romania’s Jobless Rate Seen At 9-10% Next Year Depending On Public Sector Adjustments – Analysts

"A significant contribution to rising unemployment in 2010 is expected from likely adjustments in the public sector. Basically, the rise in the jobless rate in 2009 was almost entirely due to layoffs in the private sector," said Nicolaie Chidesciuc, senior economist with ING Bank Romania, who sees the country's jobless rate at 10.2% next year.

Finance Minister Sebastian Vladescu said recently the 2010 state budget entails about 100,000 job cuts in the public sector and much of this process will be achieved by not hiring more people to fill positions that become vacant.

"We expect next year's jobless rate at 9-9.5% but the way in which the government lowers the public sector payroll will probably be decisive in the unemployment rate for 2010," said Ionut Dumitru, chief-economist with Raiffeisen Bank Romania.

The chief-economist with BCR, Lucian Anghel, thinks the country's jobless rate will increase at a slower pace next year than in 2009, as Romania has very low productivity and salary levels compared to other European Union countries.

"We have a productivity lag and we're at 40% of the EU average and we're paid 10-15% of the EU average. From this viewpoint, the jobless rate will rise, but not as much as it did in 2009. It depends on what measures the government will take in terms of jobs and wages," Anghel explained, adding he expects next year's unemployment arte at 9.3% from an estimated 7.8% this year.

The chief-economist with Unicredit Tiriac Bank, Rozalia Pal, said she expects a rise of at least one point in the jobless rate, coming from the public sector.

Romania's jobless rate rose to an annual 7.5% in November, according to the national employment agency.

Romania's draft 2010 social security budget sees the average jobless rate decreasing to 7.3% next year from 7.8% in 2009.

"Romania will be out of the crisis when the private sector starts providing new jobs," Anghel concluded.

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