More than 30% of company leaders in Romania believe that new forms of work that have become more prevalent in the context of the pandemic, especially remote working, have made it easier to recruit talent from abroad. When asked what they consider to be the biggest barrier to recruiting talent from abroad, almost half of the respondents (46.2%) mentioned the lack of specific legislation in Romania. In the second place, with 20.5%, came inflation and economic instability, and in third place social reasons – 11.5%, on a par with the lack of adaptation to the organizational culture. The last place was taken by lack of diversity within companies, with 6.4%.
Aimed at highlighting the issue of labor mobility in the local market, the EY Romania survey was conducted among leaders of HR departments of local companies, revealing that the problem of Romanian legislation would be the first and biggest barrier to attracting foreign talent. Figures show that it can take an average of eight months to hire a foreign national in Romania because of red tape.
According to reports, over the last decade, more than 100,000 non-EU citizens have come to work in Romania in fields such as textiles, HoReCa, or construction. However, there are still areas facing a labor shortage, one of which is the IT&C sector. This is a paradox, as it is a field that has developed more and more in Romania, but the Romanian university environment fails to provide manpower at the level of market demand for this sector. Other areas to consider are BPO (Business Process Outsourcing) and support services (back office and customer support) and retail.
Concerning the BPO and support services sector, both the private sector in Romania and the public sector need to present a strategy in this regard as soon as possible because Romania has been nominated as the second most selected location for foreign investment in support services in European level, according to the EY Attractiveness Survey Romania 2022.
Digitalization – the path to international mobility
In the respondents’ view, the future of international employee mobility is closely linked to digitalization – 40.5%. In the second place, at 19%, respondents decided that the future of mobility is linked to business strategy. In third place, with 17.7%, we find operational efficiency, and in fourth place new capabilities – 15.2%. In last position respondents mentioned tax compliance – 2.5%.
Remote working – risk or opportunity?
Remote working has started to gain ground compared to traditional ways of working. We see more and more countries offering visas to digital nomads and trying to attract talent from other countries through various tax benefits.
The novelty of remote working today lies not so much in the employee’s desire to work while traveling, but rather comes from the breadth of expectations, the duration of remote working, and the strategies that are pushing companies in setting locations for their workforce and the time allocated to it. This, coupled with increased competition for talent, is driving employers to seek talent from new locations. According to the survey, 55% of respondents to the EY Tax and Finance Operations Survey believe that companies with a permanent location risk and many employees working remotely (from other countries) will face tax risks in the future. Examples of this would be a company employee crossing international borders, but also an employee switching tax jurisdictions within a country, such as between US states and Swiss cantons, to conduct business.
More than half of the respondents to EY’s survey on international labor mobility answered that their companies do not work remotely – 56.4% – and only 11.5% said that their company’s business and operations are completely remote.
In addition to the risks outlined above, there are also challenges regarding the management of employee data. Romania is taking important steps towards a digital cloud to manage the logistics of international mobility, but more time is needed. There is a need for a well-planned and realistic infrastructure that takes care of the physical security of people and assets of the organization as well as cyber security.
International mobility – a solution for the Romanian business environment
A significant majority, almost 79%, believe that attracting talent from abroad is an advantage for the Romanian business environment, which reinforces the idea that organizations can no longer rely solely on their internal workforce. Romania started attracting foreign talent with the arrival of multinationals in the late 1990s, and today there are an estimated 30,000 foreign nationals working in Romania.
When asked which business sector in Romania is most in need of recruiting foreign talent, 16% of respondents mentioned healthcare, followed by tourism and hospitality – 9.3%, and professional services 8%.
The pandemic has changed social life, political agendas, and the way people work, but paradoxically it may bring people closer together than ever before. The fact that today a worker in the United States can work in the same company as one in Romania, in different locations, and be able to change expertise, is a beneficial effect of two years of tests and tribulations. People have the chance to encounter more complex working environments, with cultural organizations that are diametrically opposed to the usual ones, but for this to happen most effectively, robust strategies need to be applied to the new realities.
Corina Mîndoiu, Partner People Advisory Services EY Romania: “While some Romanian employers are still reluctant to implement remote working policies abroad, other trends are gaining speed. For example, some multinationals have implemented ‘workation’ (‘work’+’vacation’) policies. Also, the ‘gig economy’ that took off before the pandemic is now a reality, not even a trend in my view. Organizations will look across borders, and across continents to identify and recruit talent, and if they can do this in the right way, they will have access to a diverse pool of labor. It remains to be seen over time whether employers will indeed go large-scale in this direction, but for now, as well as soon, both employers and employees see more benefits in pursuing work in a hybrid fashion.”