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More than a Fifth of Romanians Are Employed by Multinationals

More than a Fifth of Romanians Are Employed by Multinationals France Took over from Germany

Germany (16.6%), France (12.4%) and Italy (9.2%) are the countries that hold the largest share in the Romanian economy by the number of employees operating in 80,591 groups of enterprises, according to the data processed and published by the National Institute of Statistics (INS) for 2018. Together with the USA (8.3%) and the Netherlands (7.6%), they control most of the existing enterprise groups in Romania.

From the perspective of the changes that have taken place in the last three years, it can be noted that France (+1.9 percentage points) is gaining on Germany’s share (-1.9 pp) and the Netherlands and the USA advanced by almost one percentage point, as opposed to quite significant decreases for Austria (-1.8 pp) and Italy (-1.3 pp). It should be noted that, before Brexit, the United Kingdom had risen to 6%.

Only 6% of the enterprise groups were identified as residents by official statistics, while no less than 75,451 enterprise groups were qualified as multinational enterprises. Of these, only 401 (slightly more than 0.5%) were controlled from within the country and 75,050 (99.5%) from abroad.

Over one-fifth of employees in Romania (21.4%) work in companies controlled by the top ten countries that have invested in our country. Germany has an important position in the manufacturing industry (10.1%) and in wholesale and retail trade (3.1%), while Italy has a significant share in the manufacturing industry (6.2%) and French companies are also focused on the combination between manufacturing industry (5.6%) and trade (2.7%). 

Distribution of most groups of enterprises in Romania by types of activities, by CAEN Rev.2 sections: total/residents

Section G – Wholesale and retail trade; Auto and motorcycle repairs: 35%/19%

Section C – Manufacturing: 11%/13%

Section F – Constructions: 11%/10%

Section M – Professional, scientific and technical activities: 9%/11%

Section L – Real estate transactions: 8%/9% 

The data has improved compared to previous years but still reflects a rather low presence of the domestic capital in foreign trade (where it owns only 3 of the top 100 companies). Therefore, there is a strong concentration of decisions taken from abroad involving facilities in Romania and the Romanian workforce. Of course, there is a considerable number of small businesses that do not belong to a multinational group, but that is not where important decisions are made.

Thus, through the opened horizons associated with the unification of markets within the EU, it can be seen that the three countries that hold the most important shares in the Eurozone economy (and Romania’s largest trading partners as well) also control strategic parts of the domestic economy, now connected to international production chains.

This image comprises also the retail side, not to mention the banking sector, where three quarters of the capital (75% in December 2018, but decreasing to 73.7% in December 2019 – National Bank of Romania data) is foreign.

Therefore, we are dealing, for semantic precision, with the economy from Romania rather than with the Romanian economy, even if the employees are (more recently, in their vast majority) Romanians. 

A useful glossary

Legal unit – any economic or social operator that has its own patrimony, can conclude contracts with third parties in its own name and defend its interests in justice (it has legal personality). The legal units are either authorized natural persons, individual enterprises, family enterprises (in their capacity as entrepreneurs), or legal entities;

Control – a legal unit is “controlled” if another legal unit holds a percentage strictly exceeding 50% in the decisions of the general meeting of shareholders, or which, by contract, has the right of control;

Group – the set of enterprises linked to a group leader by a real non-null control share;

Group leader – a legal unit not controlled, directly or indirectly, by another legal unit and which controls at least one subsidiary;

Multinational enterprise group – the enterprise group consisting of at least two legal units located in different countries;

Subgroup of enterprises – the legal units (enterprises) of a group of multinational enterprises resident in the same country;

Resident enterprise group – the group of enterprises whose legal units (enterprises) are all resident in the same country.

 

 
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OEconomica No. 1, 2016