Insiders see no rebound of the labor market in second half

Insiders' view

“I’m not very optimistic. I expect employees to further cut staff members as well as to optimize activity of the remaining employees”, said Mirela Marinescu, HR manager at human resources company APT Resources & Services.

In early 2009, managers and entrepreneurs had to face the economic reality – the crisis would soon erupt in Romania, aggressively impacting the operations of local and multinational companies. But an anti-crisis plan was created. Industry’s tycoons scaled back their expansion drive and decided to preserve the most profitable business lines, cutting and chopping every overhead expense that could send them out of business. At first, the companies cleaned up the flow-chart, and subsequently, laid off employees whose work was dispensable to the company. HR budgets suffered drastic cuts. The salaries of the remaining staff members were put on ice unlimitedly, as well as any employee perk.

Unfortunately, the market is expected to continue easing well into the second half. The 2008 profit that supported HR budget in the first half of the year will be dried out, triggering a new wave of layoffs. Unemployment rates will escalate, and will pass the 6% mark in July up to 9% by year-end, as economic analysts predict. The competition in the labor force coupled with executives’ reluctance to start recruiting will put salaries on hold. In the crisis-hit markets, pay packages could even start spiraling downwards. Recruitment drive will grind to a complete halt in second half, as HR specialists say.

“The recovery of HR advisory market is linked to every sign of life that the economy could show However, the recruitment services falls into the category of those services that need a 6-12 months time to get healthy, due to the two parameters that were altered in times of crisis: required labor force and costs incurred by recruitment outsourcing”, said Loredana Ladunca, manager at LCL Financial Recruitment, recruitment company for banking-financial market.

Supply and demand chart for second half

Regardless to the extent of the damage caused by financial crisis in the business environment, precaution and waiting are golden rules for companies to stay afloat in the second half 2009. Since last fall, financial crisis has taken its toll on industries directly dependent on the purchase power and people’s possibility of receiving loans. Real estate, constructions, and car industry suffered the biggest slumps, translated into a decline in turnover, massive cut in headcount, and payroll reductions for the remaining staff members.

Earlier this year, large real estate companies were drastically cutting headcounts, by as much as 50% in some cases. Construction companies were following the same trend, while car industry was putting pay packages on ice. But now, the First Home scheme gives hopes to real estate brokers, same as the new Dacia model that appears to be a reliable sales growth driver to Renault. But despite the new incentive programs that are expected to sprout green shoots of recovery, HR specialists remain skeptical.

“The headcount will remain constant at some large companies. But it is less likely to see too many advertisements for vacant jobs. I think this will get even more difficult toward year-end. Some micro businesses and SMEs will be forced to downsize workers. One here, one there, when you draw the line, you see it’s a lot”, said Alain Lebourg, former recruiter for Dacia Renault.

“The least employment offers will be in the areas that focused on the development of one industry. For example, Banat, where one of the strongest markets was automotive”, said Ovidiu Vilceanu, managing partner at Sales Consulting recruiter.

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