Updated on: 8 May, 2020
What’s the current situation?
The total number of confirmed Covid-19 cases in Romania has reached 14,811 as announced on 8 May. As of 16 March, a state of emergency was imposed for an initial term of 30 days. For safety reasons, more than 25,000 people are kept in domestic quarantine and more than 12,000 are isolated. Out of the total cases of confirmed infections, 6,423 people have recovered while 898 were declared deceased.
The state of emergency was extended as of 14 April. The 10th Military Decree was published on 27 April ruling a relaxation of the hours used for the elderly persons to go out (7:00-11:00 am & 7:00-10:00 pm). The curfew is still in force between 22:00-6:00. The same Decree extends the stoppage of international flights until 14 May (including) to/from the following countries: Italy, Spain, Germany, Austria, Belgium, Switzerland, USA, Great Britain, Netherlands, Turkey, Iran and France. Local trade fairs, congresses and other major events have either been cancelled or postponed to the second half of the year.
14 May will be the last day when Romania will be under the state of emergency due to Covid-19. Starting 15 May, the state of emergency will be replaced with the state of alert, president Klaus Iohannis said on Monday, 4 May. The state of alert is less restrictive than the state of emergency. The government can declare the state of alert at the national or regional level to protect the population and limit the negative effects of an emergency situation. The restrictions will be lifted gradually every two weeks, depending on the epidemiological evolution. ‘The situation hasn’t improved yet, and I don’t want anyone to think that the epidemic has passed, and we have returned to normality,’ the president said.
In Romania, more than a million jobs have either been terminated or temporarily halted between 16 March and 30 April, Labour Ministry data show. By 7 May, over 325,000 employment contracts had been ended due to the pandemic in Romania. Most of the terminated agreements concerned the automotive sector, with a total of 58,837 employment contracts. However, this also applied to industries such as manufacturing and construction. More than 900,000 of these people saw their contracts suspended, however, giving them the hope that their jobs will come back once the crisis is over.
The situation with factory production
The textile industry in Romania has been affected since the start of the pandemic in China, with delays in providing raw materials, as China was the main supplier for accessories and material. Once the factories in China were closed, many brands/retailers moved the production to Turkey.
The Covid-19 epidemic has had a major impact on the textile industry. Currently there is stagnation in production with about a 30% reduction in the export capacity of factories. The forecast analyses show a decrease of orders by over 40% compared to the previous year. At the same time, this accounts for a decrease in production capacity through layoffs at approximately 30% of the factories.
According to the Federation of Employers of Textiles, Clothing and Leather (FEPAIUS), the negative impact of the Covid-19 epidemic is reflected on several levels. Thus, there are difficulties in the supply of raw materials and accessories both as a result of the decrease in transportation and as a result of the suspension of activities of many Italian producers. Romania’s exports to Italy amount to 4.7 billion lei, while imports account for 6.3 billion lei.
FEPAIUS points out that orders have been drastically reduced, especially from customers based in Italy. Another effect of the epidemic is that production schedules can no longer be met, leading to lower production values due to the inability to deliver materials from areas affected by coronavirus.
At the same time, there is a risk of cancelling customer orders due to delayed delivery times. Delays are also seen in receipts, from 30 days to 45-50 or more. But the worst effect of this epidemic on the textile industry is the impact on the Romanian workforce.
Factories have not been specifically asked to stop production, but they need to monitor and follow advice and guidance from relevant authorities such as the World Health Organisation (‘WHO’), the Ministry of Health (MH guidance), the Ministry of Foreign Affairs (MAE guidance), the National Institute for Public Health (NIPH guidance) and the government (government guidance). The factories are able to keep up with work as long as they have still valid orders and no workers have been infected. Obstacles to the free movement of goods is affecting supply chains, but Romania is working on transport corridors and has largely abolished quarantine regulations for truck drivers. However, truck drivers are obliged to carry protective equipment with them.
Even after 2 months of the pandemic, the factories are struggling to keep up with the difficult times, whether that’s the uncertain status of orders, lack of raw materials or higher standards for the safety of the workers. Under the pandemic circumstances, factories are struggling to keep business going and this will be affected by the duration of the situation. Factories are faced with financial losses caused by fixed costs like payment of rent, utilities, state taxes, salaries, VAT, etc.
Within these divergent situations, there is a notable initiative: a group of factories joined up to create a national hub for medical textiles. The first step was taken by the national producer of Voluminous waddings, the factory ‘Minet SA’ from Râmnicu Vâlcea. There are 52 Romanian local producers, with a total of 10,000 workers, that have joined the initiative. The initiative is working jointly with the National Agency for Military Research for Engineering and technology to approve a material (development and production) with protective role, with proper use for suits and masks.
What are the government policies to support local businesses?
- Romania has activated 400 million euros of pre-arranged financial support from the World Bank to help prevent and respond to the Covid–19 pandemic. The financing covers a range of interventions to strengthen health services, minimise losses to both the public and private sectors, and to safeguard lives and livelihoods.
- Measures to sustain the payment of technical unemployment for employees sent into technical unemployment due to the coronavirus crisis will come from the Labor Ministry’s budget, through the Workforce Occupancy Agency – ANOFM. All employers who reduce or interrupt activity, totally or partially, as a result of the effects of the coronavirus epidemic, but only during the state of emergency, can receive the state aid for the payment of employees in technical unemployment. Employees will receive compensation of 75% of the basic salary corresponding to the workplace occupied, but not more than 75% of the average gross wage forecasted for 2020 – respectively 5,429 lei, according to Law no. 6/2020 of the state social insurance budget for 2020.
- The government has decided to reimburse VAT of up to RON 9 billion (EUR 1.87 billion) to allow companies to benefit from the working capital needed to operate.
- The possibility to help companies pay the salaries of their employees was also considered, but it was opted to support technical unemployment because of the context. The government believes that if salary payment is supported, it will have instituted the obligation that employees continue to go to work. It is considered a more useful measure to pay this technical unemployment so that employees do not have to go to work and can thus avoid social contact.
- The Minister of Economy, Energy and Business Environment launched the online application ‘National Register of Producers’ of equipment, medical and non-medical devices and other necessities for the population in the fight against Covid-19. The database will centralise at national level all certified producers of medical equipment.
- Romania’s support program for SMEs successfully launched on the second try. Over 2,800 firms applied in 1 hour.
- Romania’s government successfully relaunched the IMM Invest platform on 28 April, after a failed attempt on 17 April, when the platform crashed due to high traffic. The IMM Invest website is a key component in the government’s programme to support small and medium enterprises (SMEs) affected by the crisis. Local SMEs can use the platform to submit financing applications within a government-backed loan programme. Over 1,000 companies submitted financing requests within the first half an hour after the platform went live.
- The government is willing to guarantee loans of up to RON 15 billion (EUR 3.09 billion) within this programme. It expects about 44,000 companies to apply to this scheme. Finance minister Florin Citu has called it ‘the biggest programme to support SMEs in the last 30 years.’
- Romanian majority lawmakers drafted a law to cancel Covid-19 fines. The Alliance of Liberal Democrats (ALDE), the Social Democratic Party (PSD), and Pro Romania have penned a draft law that will automatically cancel the fines issued during the state of emergency, News.ro reported. Their initiative comes after the Constitutional Court ruled on 6 May that the emergency ordinance that increased penalties applied under the state of emergency was unconstitutional. The interpretation of the Court’s decision is still subject to debate in terms of whether it regards only the size of the fines or the validity of the penalties themselves. The initial understanding was that the Court’s decision only invalidated the increase in the size of the fines. Still, under a more detailed interpretation, the penalties were void because the regulations setting them offered no guidance on how to decide the size of the fine depending on the specific misdemeanours.
What are the government policies and regulations of to protect employees – the workers?
All employers need to assess the risks faced by their employees and visitors and implement measures to mitigate those risks, paying particular attention to vulnerable staff (such as those who are pregnant, with impaired immunity, on secondment or working away from home). Employers should inform their employees and, where relevant, recognised unions about their proposed measures.
The legislative changes that took place within the last month brings a lot of uncertainty to the private sector when they are faced with making new business decisions.
Government regulations to protect employees are adopted on two levels. The first layer of measures is designed to support businesses in ensuring workers’ income regardless of the financial losses of the businesses. The second layer comprises of the H&S preventive measures issued by Ministry of Labour and Ministry for Workers regarding safety in the workplace. In this regard, the following governmental measures have been put in place:
- The employer may grant paid days off for one of the parents of children aged up to 12 years (or up to 18 years for children with disabilities), during the temporary closure of the educational units, under certain conditions
- Employees will receive compensation of 75% of the basic salary corresponding to the workplace occupied, but not more than 75% of the average gross wage forecast for 2020 – respectively 5,429 lei.
- All the employers who reduce or interrupt activity, totally or partially, as a result of the effects of the coronavirus epidemic, but only during the state of emergency, can receive the state aid for the payment of the employees in technical unemployment.
- The employer may recover the amounts paid to the employees from the Guarantee Fund for Payment of Employees, based on a procedure approved by a government decision.
- The employer has an obligation to ensure the workers’ health and security in all aspects related to work. (Source: Article 6, Law 319/2006 on Occupational Health and Safety) Based on that law, the labor inspectorate published the guidance to businesses in Romania, which recommends companies switch to working from home.
- If a workers suffer from symptom of Covid-19, a viable solution is to be granted medical leave based on a certificate issued by a family doctor. Another solution would be medical leave for quarantine. This type of leave involves the issuance of a document by the Public Health Department together with the medical certificate from the attending physician.
- The gross monthly amount of the quarantine allowance represents 75% of the income (it is applied to a salary base that represents the average of the gross monthly income for the last six months from the 12 months from which the contribution period is calculated) and is fully supported by the budget of the National Fund of Social Health Insurance.
- The employers can choose between simple suspension of the contracts and unemployment aid. The differences between these during the state of emergency state is as follows:
- Factories can send workers on:(1) Holiday with no pay; (2) Technical unemployment (up to 75% wage paid); (3) Legal annual vacation; (4) Suspend labor contracts
- There are no special agreements for the piece rate workers, as the law refers to the contractual wage, not the achieved wage. During the suspension, workers are still insured and benefit from health care.
Health & safety at work needs to be ensured under the regulations of the H&S law in Romania, Law 319/2006, with updates. The workers must work according to the employers’ instructions, so that they also do not expose themselves to infection, and to prevent the exposure of other people that may be affected by their actions.
On 10 March the Labour Inspection Office issued the recommendations that among other issues prescribe that:
- The use of any PPE can be established based on a risk assessment that should also result in a prevention and protection plan. These actions can be done by a certified H&S professional.
- The masks should be worn by the sick persons. At the same time the employer should inform and prepare the workers for the following measures: washing hands with water and soap or disinfection with a an alcohol-based disinfectant; the use of the protection masks by the sick persons; avoid contact with persons that are suspected to have acute respiratory infections; avoid touching the nose, eyes and mouth with the hands; cover the mouth and nose in case of cough or sneeze; periodically disinfect the contact surfaces with chlorine- or alcohol-based solutions.
- The employers should ensure the legislation for the health and safety and the hygiene in work, so that these do not incur additional costs for the workers/ employees.
Information intended for employers in the context of the effects of spreading the Covid-19 was issued, and the obligations of the employer as per Law 319/ 2006 related to the H&S at work were prescribed. Some of the stipulated measures are:
- employer is obliged to takes measures in order to: a) ensure the security and protection of the workers; b) prevent professional risks; c) inform and train the workers; d) provide PPE (masks, gloves, etc.)
- for any activity susceptible to present a risk of infection with Covid-19, the employer must determine the nature and exposure level, in order to establish the required measures, such as: limit exposure, elaborate a plan for emergency measures based on the recommendations of the company’s contracted labour medicine doctor; inform the Public Health Office immediately.
The Centre for Supervision and Control of Transmissible Diseases issued a recommendation published on 12 March 2020.
- The preventive measures considered as most effective include: frequent hygiene of the hands with hydro-alcoholic substances through friction if hands are not visibly dirty, or with water and soap if the hands are dirty; avoid touching eyes, nose and mouth; practice respiratory hygiene by coughing or sneezing in the elbow, or use napkin/tissues and throw it away immediately; wearing a mask if the person has respiratory symptoms and ensuring in such case the hygiene of the hands after removing the mask; maintain the social distance of minimum 1 meter from the persons with respiratory diseases.
- PPE must be used based on exposure risk (as ex. type of activity) and based on the dynamic of transmitting the pathogen agent (ex. contact, drops or air). The overall use of PPE will have a supplementary impact on the lack of supplies of PPE.
- The state office mentions that for the people with no symptoms, it is not recommended to use masks of any type. The wearing of the masks when it is not recommended can cause useless costs, a burden on purchases and can create a false feeling of security that can lead to the neglect of other essential prevention measures. There is a table for different categories, and in yellow it is marked for communities, and the masks are not recommended to be used if there are no symptoms of respiratory distress.
- The guidance for use of PPE measures can be found here.
What are local stakeholders doing to lobby their government?
Employers’ Federation of Textiles, Clothing and Leather (FEPAIUS) has made a series of recommendations for authorities to support the factories in the textile industry.
- Postponing the payment of taxes on wages or even reducing them. Tax exemption and salary contributions for a period of 3 months for those who will be employed during this period in this industry.
- Rescheduling rates from all banks operating in Romania, especially for loans for investments in this industry.
- Extension of the period of technical unemployment from 30 to min. 90 days
- Reactivating the technical unemployment procedure with funds from the unemployment aid that is currently in surplus would be to maintain the labour force.
- For situations of incapacity to work due to the current epidemiological crisis, the settlement of medical leave should be made entirely by the state without the employer being forced to bear the first five days of each initial leave
- Flexibility to compensate for additional work in the sense of allowing free days in advance without the employee’s agreement and for longer periods of time. At this moment it is possible only to reduce the work schedule from 5 days to 4 days per week, by min. 30 consecutive days. In the case of needing to stop activity, the free days can eventually be compensated with extra work that will be required to fulfil the orders.
- Reactivating the law whereby Eximbank removes 50% of exporters’ interest
- The pandemic should be considered a force majeure. In the case of total closure of company activity, it should be considered a case of force majeure in relations with third parties.
What are local organisations doing to support and protect workers?
- On 18 March, a multilateral working group involving the government and trade unions agreed a first plan of economic measures for the 30 days of the current state of emergency. This plan includes the following measures:
- Establishing part-time work with the agreement of both parties. The employees will be remunerated in proportion to the time worked or according to the volume of work done;
- In case the work/production needs to be stopped, with the exception of the case of technical unemployment, remuneration is at least 2/3 of the basic salary per established time unit, but not less than the minimum wage;
- In case of temporary impossibility of continuing the production activity by the unit or by its internal subdivision for objective economic reasons, the employer may announce technical unemployment, with the payment of an allowance that cannot be less than 75% of the base salary, but not more than 75% of the gross average wage stipulated by state social insurance budget for 2020;
- Exemption from the payment of social and healthcare contributions for a period of 3 months for employees of companies active in the fields of tourism, transport and entertainment. Normally these contributions are paid by the employee and not the employer.
- For people in quarantine, the payment of the utility bills and the suspension for 3 months of their monthly loan payments to banks will be ensured
- A consortium consisting of Concordia Employer Confederation, National Council of Small and Medium Private Enterprises in Romania, National Trade Union Block and the National Trade Union Confederation ‘Cartel Alfa’ has signed a joint statement regarding the economic and social crisis caused by COVID 19. They invite public authorities to ensure the right balance between preserving public health by reducing the spread of the virus and keeping economic activity as close to normal as possible.
- National Trade Union Confederation ‘Cartel ALFA’ calls for urgent measures to manage the economic and social effects of this unprecedented situation. They request the government to inform and consult the social partners in a timely and appropriate manner, so that they can contribute to guaranteeing the interests of the workers, especially when ad hoc social measures are adopted and considering economic issues that may arise from this crisis. Any measure that does not take into account the interests of workers will lead to the deepening and prolongation of the effects of this unprecedented crisis.
- Many non-profit organisations, associations, foundations or even individuals in Romania have been raising funds for the local healthcare system or vulnerable communities in the context of the Covid-19 pandemic. Most are raising money for protective equipment or other materials the healthcare workers need to fight the pandemic, but some have even bigger plans, such as building a modular hospital for coronavirus patients.
- Trade unions took part in a government working group which agreed workers will continue receiving two-thirds of their normal wage if they cannot work or are temporarily laid off.
- UNICEF in Romania is developing a series of communication materials dedicated to children, parents, caregivers and professionals working for children. The goal is to help them better protect themselves and their loved ones to prevent the virus from spreading.
What have been the responses and requests of business associations to support the industry?
- Employers’ Federation of Textiles, Clothing and Leather (FEPAIUS) has analysed the negative impact of Covid-19 and has made a series of recommendations for authorities to support factories in the textile, clothing, leather and footwear industry (see above). The measures adopted for the private sector are applicable for the textile industry, without exemption.
- Some of the biggest business organisations in Romania and hundreds of local investors, entrepreneurs and managers have initiated a ‘Call for Saving the Economy’ asking the state authorities for an economic stimulus package worth EUR 30 billion, the equivalent of 15% of the country’s gross domestic product (GDP). They warn that the local economy could collapse in the absence of massive state involvement. The appeal is signed, among others, by Romanian Business Leaders (RBL), the National Council of SMEs, the German, Dutch and Belgian chambers of commerce, and business associations in the tourism, hospitality, transports sectors, as well as over 100 of local entrepreneurs and managers. The whole document (in Romanian) is available on the blog of local entrepreneur Marius Ghenea.
- The Concordia Employers’ Confederation and the Foreign Investors Council, two of the biggest business organisations in Romania, have proposed to the government a set of over 100 urgent measures that would help the business environment overcome this critical moment and protect the consumers from the indirect effects of the coronavirus epidemic. They believe that state support measures are needed to prevent blockages or bankruptcies of otherwise healthy sectors or companies, and the state itself needs resources. The whole document (in Romanian) is available here.
- Employers’ Federation of Textiles, Clothing and Leather (FEPAIUS) has made a series of recommendations for authorities to support the factories in the textile industry (see above), but the measures adopted for the private sector are applicable for the textile industry, without exemption. The business associations expect response on their recommendations in the coming period.
What are international brands doing to support suppliers and protect workers?
Brands and retailers are being called on to endorse priorities for action to support the garment industry and protect workers from the impacts of the global crisis.
As retailers have closed shops around the world, garment factories have shut down at an alarming rate with devastating impacts for millions of garment workers. Urgent action is needed to protect their livelihoods during the shutdown and beyond.
The statement of priorities and commitments, COVID-19: Action in the Global Garment Industry, reflects a broad consensus on joint action to protect garment workers’ income, health and employment and help manufacturers survive the economic disruption caused by the Covid-19 pandemic, as well as to improve social protection for garment workers for the long term.
Organisations that endorse the statement commit to working with governments and financial institutions to mobilise sufficient funding to enable manufacturers to ensure business continuity including payment of wages, as well as income-support and job-retention schemes to address the impact of the crisis.
Relevant links for more information
Ministry of Health
Ministry of Labour
Guidance to businesses in Romania
Emergency Ordinance 29/2020
Decision no. 217/2020 for the application of the provisions of Law no. 19/2020 on granting parents free days for the supervision of children, in the situation of temporary closure of the educational establishments
Emergency Ordinance no. 29/2020 regarding some economic and fiscal-budgetary measures
The guidance for use of PPE measures can be found here
15 recommendations on social behavior responsible for preventing the spread of coronavirus (COVID-19)
Federation of Employers of Textiles, Clothing and Leather (FEPAIUS)
Covid-19 Romanian Economic Impact Monitor