Romania faces one of the highest youth unemployment rates in the European Union. Although total unemployment is close to the EU average, almost three out of ten young people under 25 do not have a job, according to Eurostat data. In this context, the Government has introduced a stability premium of up to 27,000 lei for young people who are employed for the first time, a measure intended to facilitate their entry into the labor market.
Although the financial support is intended to reduce youth unemployment and encourage permanent employment, economists warn that such subsidies can have knock-on effects in companies, including wage distortions between junior and experienced workers.
How state aid can turn the wage scales upside down
“The risk of distorting the labor market is as real as it can be. However, here we need to make an important clarification. Most of the time, the subsidy from the state goes to the employer, not directly into the pocket of the young person. The goal is to compensate for the time and resources that the company loses in teaching an inexperienced person”, economic analyst Adrian Negrescu explains for “Adevărul”.
In his opinion, the problem arises when employers use this money from the state to offer artificially high entry-level salaries, just to attract candidates. “Thus, one can reach the absurd situation where a subsidized junior ends up with a net salary very close to that of an employee with 3-4 years of experience, whose salary growth has been organic but slow. This phenomenon is called ‘salary compression’ and it is extremely harmful”. says the analyst.
In the short term, these aids solve a statistical problem. They help young people overcome that frustrating paradox: “we don’t hire you because you don’t have experience, but you can’t get experience if no one hires you”, according to his statements.
In the medium and long term, however, the measure is often just a transfer of the wage cost from the private to the state budget (ie also from the taxpayers’ money). “The main risk is the revolving door effect. Some employers take advantage of these funds, keep the young employee strictly for the mandatory period provided by law (usually 12-18 months), after which they fire him to bring in another subsidized young person. Thus, the problem of unemployment is not solved, but only postponed, and the state ends up subsidizing the profit of some companies, not the career of young people”, is Adrian Negrescu’s opinion.
If subsidized young people end up costing almost as much as experienced employees, then the experienced ones will feel wronged, he points out. They are the ones who carry the weight of the company and, paradoxically, they are also the ones who have to teach the young newcomers.
In addition, when internal equity is destroyed, productivity drops dramatically, the analyst points out. A disgruntled senior employee will no longer be willing to go the extra mile or be a good mentor to a junior who “he earns as much, but he knows nothing.”
“The worst thing is that good and experienced employees will start leaving the company to look for a job where their experience is paid at true market value, untainted by state aid,” draws the attention of Adrian Negrescu.
What can we do? “Romania has one of the highest tax burdens on low and middle wages in Europe. Instead of taking money from taxes to give back in the form of bureaucratic subsidies to certain firms, a much fairer solution would be to lower labor taxation for all early stage employees, regardless of company. Encouraging companies to offer paid internships during college by offering clear tax deductions could be another optimal solution. Thus, the transition from school banks to office is done gradually, organically, based on competence, not an injection of capital from the state”, the specialist believes.
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Beyond the numbers, online reactions show how complicated entering the job market is in practice. On Reddit, in the r/Romania community, many young people say that the main obstacle is not the lack of a state bonus, but the fact that starting jobs are few, the competition is huge, and the diploma no longer guarantees almost anything.
What do young people who try to enter the labor market say
For example, one user, an engineering student, says that finding an internship or a starting job is extremely difficult, even for students with good results. “I’m an engineering student, both me and my colleagues are applying to find a summer internship or a normal job in our field. It’s really sad, few ads, you’re competing with at least 100 other people for a place. I don’t know anyone from my group who found an internship”, says this one. He adds that he would be willing to work without pay just to gain experience.
Another user says that even after graduating from college, the situation is not easier. “I finished Mechatronics in 2024 and I can’t find anything in the field. Now, at 24 years old, I work for 3,000 lei net in AutoCAD. At least I’m not unemployed”, he says, explaining that many companies no longer hire entry-level positions.
Others talk about a broader problem: the mismatch between the number of graduates and the actual demand in the labor market. Specifically, one user claims that “a whole generation went to college for nothing,” in the context of a recent interview he held for a job in an electronics store, he says that most of the candidates had technical degrees. “6 out of 10 of those we interviewed had finished Polytechnic.”
However, not all participants in the discussion believe that the faculty is the main problem. Someone points out that “among the unemployed, most – 34% – have only completed secondary school and less than 5% have university education”.
Others say universities should better match majors to labor market demand. “Many universities in Switzerland analyze how many jobs there are in the field and how many graduates find work. If the score is too low, the specialization is closed.” says one user, suggesting that a similar model could also be useful in Romania.
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There are also opinions that point to structural problems of the labor market. For example, one commentator claims that official statistics may hide part of the reality, as many people work without a contract. “Of that, 30%, 80% are barbers, photographers, car repairers, OnlyFans and other illegal businesses that the state has no idea about.” he states.
“It doesn’t seem like anyone is coming from behind. The burden of the projects is carried out by people over 45 and there are no young people to learn and take over”confesses an entrepreneur who says he has a company in the field of electrical installations.
Finally, some users think that the solution could be to go abroad. “If I were you, I would try to get in touch with companies recruiting in the UK or Ireland and I would leave.” someone writes, although other users reply that the situation is no longer as simple as in the past.
However, there are also voices that say that the difficulties in the labor market are not an unprecedented situation. “By 2009 it was a similar situation. After 2012 things started to work. Probably something similar will happen this time as well”, says another user.
Some young people say that they cannot find jobs, others believe that the problem is a lack of skills or the wrong orientation towards certain fields, and others argue that the statistics do not fully reflect the reality of the labor market.
