Migrants’ Role in Shaping Unemployment Duration and Labour Market Performance in a Sustainable Perspective: Empirical Evidence from Romania

In Romania, unemployment is presented as an element that negatively affects the country's economic development. It is described as an imbalance in the labour market between the demand and supply of labour at the national level [5]. Unemployment is one of the major socio-political problems in the country, having numerous negative consequences, both nationally and for individual citizens.

At the national level, the fact that a part of the workforce is not involved in remunerated work activities negatively influences the dynamics of the size of the Gross Domestic Product (GDP), in the sense that the training and qualification actions of the unemployed have required significant expenditures, both on the part of the individual and the part of society and the authorities, expenses that will not be able to be indirectly recovered in the situation that they are installed for more and more individuals who record long-term unemployment.

The labour force in a declared form of unemployment cannot contribute to the growth of the country's GDP, so the society is forced to bear unemployment costs because of the monthly contributions directed to the unemployment fund by economic agents and employees.

Long-term unemployment, especially among young people, can lead to crime and violence, increasing citizens' insecurity and crime and having a profoundly negative impact on society as a whole. At the level of the individual and family or household, unemployment has a negative impact on income and well-being. This is a serious current problem at the national level and beyond and can affect any individual [6].

To prevent the bankruptcy and disappearance of some market economic agents, the Romanian authorities offered support to employees during the pandemic, bearing part of the expenses related to granting technical unemployment instead of employers. The pandemic has increasingly accentuated national employment issues, changing the perspective on future areas of interest that will be accessible, as well as on skills and qualifications that future employees must demonstrate to increase their employability in the labour market [6].

In the pandemic and post-pandemic period, the changes in the labour market and employees have propagated either positively or negatively, both economically and socially. One of the most noteworthy social impacts of the COVID-19 pandemic is the rapid escalation in the incidence of depression among individuals who have experienced job loss. This is further compounded by the challenges individuals face in adapting to remote work, the resultant social isolation, and the pervasive fear of contracting the virus and mortality [7]. Although the restrictions imposed were meant to protect the population as much as possible, employees see these measures as actions that only isolate them, keep them away from a natural, active social life, and deprive them of freedom, especially of access to treatments of any kind that are necessary for them [8].

The study acknowledges the importance of the digital labour market for Romania as a relatively new and underutilized segment in the country. This highlights the unpreparedness of Romanian workers, including immigrants, to adapt to the emerging trends and demands in this domain [9]. The Digital Single Labour Market is meant to ensure the free movement of persons, especially jobseekers, as well as the free movement of products, services and capital, a market that can be accessed directly by both natural and legal persons without any sign of interruption and which ensures the performance of activities in the online environment under the conditions of fair competition, high level of security of personal data, regardless of a person's nationality or residence [10].

Although advanced technologies and the digital labour market will represent a danger for some categories of employees, they will make people's lives easier, minimise physical efforts and accelerate the transition to a predominantly digital economy and labour market [11]. Teleworking, as the legal paid activity carried out from home or any other space chosen by the provider, the employee, is known without the obligation of physical presence at the office, in an institution or inside a company. Teleworking ensures flexibility and creates a pleasant environment for the employee, in which he can carry out the work activity without being interrupted, embarrassed, disturbed by colleagues or other factors that can be more or less avoided. The restrictions imposed by the authorities during the pandemic to prevent the spread of the virus and to ensure the best possible health for employees have greatly encouraged teleworking [9].

When addressing the labour market, it's essential to take into account the makeup and organization of the workforce within a country. It's crucial to differentiate between the native citizens actively participating in the labour market and the immigrants who have already integrated or are in the process of integrating into the workforce [12, 13]. Governments are urged to actively engage immigrants in labour market activities to bolster and sustain the country's economy, particularly in the context of the pandemic and in the future.

In Romania, immigrants predominantly gravitate towards major urban centres. Unlike in many Western or Southern European countries, immigrants do not constitute a highly visible and acknowledged social group in the host society's daily social reality and life. However, in Romania's bustling urban hubs, particularly in the immigration region encompassing Bucharest and neighbouring counties, foreign workers are increasingly integrating into the local economy [14].

The advent of technology is regarded as a decisive factor contributing to rising unemployment rates, both in Romania and Western countries. The automation of certain processes is leading to the elimination of some jobs and the creation of new ones. Bucharest, Timisoara, and Cluj-Napoca are the primary economic centres in Romania, boasting the highest density of employment opportunities. The IT sector and communication-related roles are particularly abundant. Employers typically seek candidates with a minimum of one year of experience in the field and those willing to work full-time. As a result of the prevalence of industrial robots, jobs involving repetitive tasks have dwindled. Furthermore, employers are increasingly seeking candidates with higher education qualifications.

The immigration of highly skilled individuals stimulates development and innovation in the receiving countries. Skilled migrants bring forth substantial reservoirs of advanced knowledge and enhanced skills, attributed to a combination of migration policies, such as temporary visa programs, and their deliberate self-selection fostering superior technical and engineering acumen. As skilled immigrants embed specific expertise gained through education, their direct impact on innovative activities within the receiving countries is anticipated to be favourable.

The existing body of literature predominantly examines the influence exerted by skilled migrants on the innovative performance of the respective country, region, or province of settlement. Nevertheless, a geographical approach is inadequate in discerning between the contributions of immigrants engaged directly in innovation or operating within innovative sectors and those employed in non-innovative sectors within the same geographic region [15]. Hence, adopting an industrial perspective is imperative to effectively segregate potential confounding variables and ascertain the genuine contribution of immigrants to innovation [16].

Other unforeseen events can also determine the decision to return to the country of origin, the COVID-19 pandemic being a conclusive example [17, 18]. The suspension of the economic activities they were carrying out, the loss of jobs, as well as the increasingly severe restrictions, determined most of the Romanians who went to work abroad to return to the country, either to wait for the improvement of the situation at European or global level regarding the spread of the disease, to resume their work activities in the host countries or to look for new jobs in the country and be closer to family and relatives in case the disease continues its worrying course [18].

In order to deepen the understanding of the inferences between international labour migration and unemployment, particularly when referring to the Romanian labour market, we performed a bibliometric analysis using data extracted from 233 Web of Science-indexed articles processed with the VOSviewer software. To select the 233 articles, we tailored our search to specific keywords like ‘international migration”, “emigration”, “unemployment”, “labour market”, “Romania”, and “European Union (EU)”. Afterwards, we focused only on articles published during 2019-2023 to capture the pre-pandemic and post-pandemic years. Finally, we targeted highly-cited and open access scientific articles published in the Economics and International Economics field.

The co-occurrence maps resulting from data processing with VOSviewer are presented in Figures 1-3 below.

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Figure 1. Co-occurrence map of main keywords/ concepts found in the relevant literature on international migration and labour market inferences, with a keen focus on Romania Source: Authors' research in VOSviewer

When analysing the first co-occurrence map in Figure 1, we note that most of the scientific articles on the interlinkages between international migration and the labour market refer mainly to the immigration impacts on employment / unemployment and earnings in host economies while also addressing the migration effects on the size and structure of the labour force (human resource) and job opportunities, particularly for youth.

On the other hand, when examining the impacts of emigration on countries of origin, studies tend to focus on the determinants of migration decisions, brain drain patterns, and remittances, particularly in post-communist countries. Authors have also addressed the latest impacts of digitalization and big data on the labour market and job queries in their published works on similar topics.

These concluding remarks, resulting from the preliminary bibliometric analysis, highlight that international migration continues to be a topical subject in research endeavours, mainly due to its notable effects on the labour market and economic development of both migrant sending and receiving economies.

Coming closer to the pandemic period, we note from Figure 2 that in 2020, most scientific articles analysed in our sample have addressed the emigration process and the brain drain phenomenon, while recent studies published in 2022 and 2023 provide more advanced econometric modelling procedures, particularly cluster analysis to assess the tailored migration impacts on specific sectors, like agriculture or mining, without disregarding big data and the digital transformation impacts on the labour market and migration flows.

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Figure 2. Co-occurrence map of main keywords and links associated with the scientific articles published in the COVID-19 pandemic context

Source: Authors' research in VOSviewer

Finally, the bibliometric analysis concluded on the main concepts associated with international labour migration and labour market outcomes, as represented by Figure 3.

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Figure 3. Main concepts revealed by the bibliometric analysis for keywords appearing more than 5 times in all analysed articles

Source: Authors' research in VOSviewer

The literature about migration to and from Romania, shown in Figure 3, is of particular interest to Romanian writers, as well as to economists and researchers from other EU member states. These countries are hosts to Romanians who have gone abroad to find work and are also the countries from which many Romanians have decided to return in recent years, such as Italy, Spain, or Austria. However, Romanian migration is also closely monitored and analyzed in countries such as Switzerland, India, the USA, Canada, and China.

Figure 3 clearly shows that emigration and unemployment are tightly related and extensively analysed by various studies, having notable implications for the Romanian economy, and other EU countries.

The theoretical frameworks that inform the relationship between migration, unemployment, and labour market performance are diverse and multifaceted. Central to this discourse is the push-pull theory of migration, which posits that migration decisions are driven by a combination of factors that "push" individuals away from their home country, such as unemployment or political instability, and factors that "pull" them toward a destination country, such as better job opportunities or higher living standards. Over time, this theory has evolved to account for more complex socio-economic dynamics, particularly in the context of globalization and regional economic integration. Recent global events, notably the COVID-19 pandemic, have further complicated these dynamics by introducing new push and pull factors, such as health security and remote work opportunities, which have reshaped traditional migration patterns. This study builds on these theoretical foundations, exploring how these evolving factors manifest in the specific context of Romanian labour migration and unemployment duration.

We designed eight SEM models starting from the general configuration of our model in Figure 6 that were processed for eight sub-datasets extracted from the full sample of 12,475 observations, namely one sample of Romanian migrants under 3 months stay abroad, one over 3 months, and 6 sub-samples according to the educational level, namely lower-secondary, upper-secondary and tertiary education. All SEM models were processed through the Maximum Likelihood Estimator (MLE). The results obtained are presented in Figures 7-14, Table 4 and Table 5.

Overall, the most significant positive influence is exerted by the age of the migrants and the quality of the allowance. At the same time, education and experience have a negative impact on the latent variable, which leads, in turn, to a reduction in the period of unemployment status registered with ANOFM.

In contrast, the recurrent obtaining of the allowance for a more extended period prolongs the citizens' stay in the country and postpones the decision to work abroad (except for the tertiary education sample).

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Figure 7. Emigration duration – under three months – total sample

Source: Own process in Stata 18

The results in Figure 8 show that, of all the variables, experience in a certain field is the most significant for people with a low level of education or no education, alongside proof of having a previous job.

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Figure 8. Emigration duration – under three months – sample of migrants with lower secondary education

Source: Own process in Stata 18

According to Figure 9, for migrants with secondary or post-secondary education who emigrate for less than three months, previous experience can be a way out of unemployment, supported by the level of education, gender, or residence.

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Figure 9. Emigration duration – under three months – sample of migrants with upper secondary education

Source: Own process in Stata 18

People with tertiary education who left Romania to work abroad for a maximum of three months were kept in place by their experience in the field they essentially graduated in, as well as by their environment of residence or the county to which they belonged.

In the case of migrants with tertiary education opting for a short period of stay abroad, the results bring some empirical evidence to attest to a migrant selection according to experience and gender. In this particular case, educational background (studies) and age have the most pronounced favourable impact on unemployment duration and exit due to emigration (positive estimated coefficients significant at the 1% threshold) (Figure 10 and Table 4).

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Figure 10. Emigration duration – under three months – sample of migrants with tertiary education

Source: Own process in Stata 18

Table 4. Detailed SEM results – shaping factors of the emigration decision and unemployment exit – stay abroad less than three months

Note: ,, standard errors in parentheses, ^*p < 0.05, ^**p < 0.01, ^***p < 0.001”

Source: Authors research in Stata 18

Table 4 highlights the factors that have the greatest impact on the number of persons who decide to leave their country of origin for work for a maximum period of 3 months, thus leaving the ANOFM records, including age, ethnicity, and county of residence. In the case of people with lower education, age has the most significant and real influence resulting from econometric processing, an indicator of high impact even in the case of people with secondary and tertiary education.

For people who decided to go abroad for more than three months (Figure 11), the previous experience and the unemployment indemnity granted by the Romanian state had the most significant impact, increasing the period of maintaining the unemployed status with compensation.

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Figure 11. Emigration duration – over three months – total sample

Source: Own process in Stata 18

Figure 12 shows that unemployment benefits, experience, and ethnicity are the most important factors in maintaining unemployment status for those with lower secondary education who decide to emigrate for more than three months.

12.png

Figure 12. Emigration duration – over three months – lower secondary education

Source: Own process in Stata 18

People with secondary education, more precisely those with secondary education, remained in the country due to the unemployment benefits they received and the experience they had.

However, the lack of a previous job decreased the possibility of finding a job in the country, which led to the decision to emigrate. 

People with higher education who chose to go abroad for more than three months made such a decision after obtaining a meagre allowance considering their needs and qualifications. Also, education is not valued in the country. Still, the request for previous experience in the field of graduation was a reason for leaving the country of origin, to which can be added the gender indicator, which supports the fact that there are still gender differences in specific fields of work, which makes the accessibility on those positions shallow, thus discriminating against people. Generally, women go abroad to find jobs suitable for their training and qualifications.

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Figure 13. Emigration duration – over three months – upper secondary education

Source: Own process in Stata 18

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Figure 14. Emigration duration – over three months – tertiary education

Source: Own process in Stata 18

Table 5. Detailed SEM results – shaping factors of the emigration decision and unemployment exit – stay abroad for more than three months

Note: ,, standard errors in parentheses, * p < 0.05, ** p < 0.01, *** p < 0.001”

Source: Authors research in Stata 18

Table 5 shows that, in the case of those who decided to look for a job outside the host country and try to settle into the environment of the new residence for more than three months, they were influenced to a considerable extent, illustrated by the data obtained, by previous experience at a particular job or in a specific field sought by employers, and the unemployment benefits received. On the other hand, the regions of residence and the origin from the urban or rural area were hostile influencing factors. In the case of people with secondary education, the unemployment benefit was an incentive in deciding to leave the country, and for those with higher education, a barrier with a negative impact on the number of people who chose to leave their country of origin during the analysed period.

In summary, the study's results underscore several key factors influencing Romanian migration patterns and their implications for unemployment:

(i) Short-term migration factors:

• Educational background, ethnicity, and age: these factors significantly shape the emigration decisions of Romanian migrants staying abroad for less than three months. Younger individuals with varied educational backgrounds and ethnicities are more likely to engage in short-term migration.
• Unemployment exit: for these short-term migrants, the duration of unemployment is typically shorter, suggesting that temporary work abroad serves as a quick solution to unemployment.

(ii) Medium and long-term migration factors:

• Studies and experience: for those staying abroad for more than three months, educational qualifications and work experience are crucial determinants. This indicates that individuals with higher education and relevant experience are likelier to seek longer-term employment opportunities abroad.
• Unemployment benefits: the quality and duration of unemployment benefits play a significant role in shaping migration flows. Generous and prolonged unemployment benefits tend to delay migration decisions as they provide financial stability, allowing individuals more time to seek local employment before considering emigration.

Based on current research, we entail several recommendations that should be accounted for by policymakers and representatives at the European Union level to improve the labour market performance under the international labour migration impact:

(a) harmonizing labour market policies: to manage labour migration effectively across member states, the European Union should focus on: (i) standardized qualifications: develop standardized recognition of qualifications and skills across the EU to facilitate the mobility of workers and reduce barriers to employment; (ii) EU-wide job platforms: enhance EU-wide job matching platforms to connect employers with job seekers from different member states, promoting intra-EU mobility; (iii) regional development funds: allocate regional development funds to areas disproportionately affected by emigration, supporting economic development and job creation;

(b) strengthening social protection systems: to mitigate the impact of migration on social protection systems, the EU should grant: (i) portability of benefits: ensure the portability of social security and pension benefits across member states to provide continuous coverage for mobile workers; (ii) minimum standards: establish minimum standards for social protection and unemployment benefits across the EU to reduce disparities and ensure a safety net for all workers, including migrants.

(c) addressing the digital divide: recognizing the importance of the digital economy, the EU should develop: (i) digital inclusion initiatives: invest in digital inclusion initiatives that ensure all citizens have access to high-speed internet and digital tools; (ii) digital skills training: support EU-wide digital skills training programs, targeting both current workers and the unemployed to prepare them for future job markets; (iii) innovation and research funding: increase funding for innovation and research in digital technologies to keep the EU at the forefront of the global digital economy.

While this study provides valuable insights into the factors influencing migration and unemployment in Romania, it is important to acknowledge its limitations. The use of data from a single country limits the generalizability of the findings to other contexts, particularly those with different socio-economic conditions or migration patterns. Additionally, the focus on the period from 2018 to 2023, although capturing both the pre- and post-pandemic periods, may not fully account for longer-term trends or the lasting impacts of the COVID-19 pandemic. Another potential limitation is the reliance on structural equation modelling (SEM), which, while robust, is contingent on the accuracy of the underlying assumptions. Future studies could address these limitations by incorporating a broader dataset, including multiple countries and extended timeframes, and by employing alternative analytical methods to validate the findings presented here.