Mircea Baciu, entrepreneur
The first and most acute problem today is the shortage of labor force. We have been saying for many years that the availability of qualified and relatively inexpensive labor force is one of the key advantages of Moldova for attracting foreign investments. But times and reality are changing. And today the shortage of labor force, even unskilled, becomes the main deterrent not only for foreign investors, but also for local businesses. Consequently, it is also the main brake on the country’s economic development.
In recent years, the number of labor force in Moldova has been steadily decreasing. Thus, in 2024 the number of economically active population aged 15 years and older amounted to 889,1 thousand people, which is 4,3% less than in the previous year. At the same time, the number of employed population decreased by 3.7%, reaching 853.9 thousand people.
Speaking about the labor shortage, two trends should be emphasized. The first is a massive outflow of population accompanied by a decline in birth rate and an increase in mortality. Only in recent years, the number of people living in the Republic of Moldova has decreased by more than 240,000 people. Particularly alarming is the fact that the number of young people under the age of 34 has decreased by about 150,000 people. In other words, we are talking about a force that should drive the national economy forward.
The second trend is the accelerated urbanization process, which Moldova has been experiencing for more than a decade. If the 2014 population and housing census showed that every fifth resident of the country lived in Chisinau, according to the 2024 census, every third person living in Moldova has settled in the capital. This internal migration has practically deprived agriculture, fisheries, forestry and other important spheres of activity, somehow related to the rural environment, of the necessary labor force.
Another big problem for the labor market is the instability caused by the frequent change of jobs by a large number of workers. And this trend is becoming more and more prominent. For example, in 2024, 11.9% of workers expressed their intention to change jobs, and the main reason was the desire for higher income. Under these circumstances, in order to retain their employees, some employers are forced to raise wages. On the one hand, this is good, as the income of a certain category of workers increases. But, on the other hand, it reduces the investment attractiveness of the Republic of Moldova. Some investors pay special attention to the availability and qualification of labor force in the market they want to enter, and if it is relatively expensive, they choose countries with cheaper labor force.
Another important problem of the Moldovan labor market remains the relatively low participation rate of young people in the general labor force. For example, about 13.5% of young people between the ages of 15 and 24 are neither working nor in training. They are outside the labor market, and there is no reason to believe that integration of this important category will occur in the near future.
Today the state is concerned about solving the problem of labor shortage, and this is natural, because without its solution the potential of the national economy will decrease, and attracting new investments from abroad will be out of the question. However, the state is more concerned about liberalizing the labor market, i.e. improving conditions for attracting citizens of other countries who could fill the labor shortage in the domestic market. This is an important but insufficient effort.
Equally, the state should take care of restructuring the education and training system, which would make it possible to attract to the labor market the 13.5% of young people under the age of 24 who are now outside it. The state should also develop and implement a process for retraining the existing labor force based on the real needs of key sectors of the national economy.
We mentioned above that out-migration and internal migration have left important sectors uncovered in terms of labor needs. Retraining and internal geographic relocation would solve this problem. Third, state programs are needed to provide opportunities for compatriots in the diaspora to return home. Currently, the state is only willing to support compatriots returning and starting their own businesses, but not those who simply want to return for a decent-paying job. In this case, a broad nationwide mechanism of incentivizing business entities to create jobs specifically for compatriots wishing to return home could also be involved. I agree that this approach borders on discrimination, but if we act prudently and in a balanced way, solutions can be found here as well.
I have given only a few examples of possible solutions, but there could be many more. At this stage, it is important to understand how serious the problems facing the labor market are and how important it is to address them now. After all, tomorrow may be too late.
If the depth and complexity of the problems in the labor market are understood at the state level and appropriate measures are taken, all the necessary solutions will definitely be found. Business is ready to get involved in this process with its vision and concrete proposals.
Then the labor market in the Republic of Moldova will return to normal, which is important for the economy and the country as a whole.
