Is no employment better than self-employment? The story of how Romania managed to create a class of ‘invisible’ and forgotten workers

Abstract

Romania has been, for the past decade, not only the country with the highest in-work poverty among EU member states, but – unlike most of the others – also a country with a steadily growing welfare polarisation of the workforce. This article aims to explain why Romania still finds itself in this situation. The article documents the increasing differences in exposure to poverty and social exclusion between employees and the self-employed and points to the mix of factors responsible. Unlike most European countries, where a certain gap between employees and non-employees is the result of the flexibilisation of the labour market, in Romania this appears rather to be the result of a unique inherited structure of employment alongside an inadequate package of social and fiscal measures which has kept and further pushed the self-employed into informality. Thus, Romania is still searching for a policy solution that would allow the existing self-employed to become ‘visible’ in the formal economy and for a diversification of forms of employment. Finally, the article explores the possibilities for a reversal of the current trend.