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Employees Working Abroad, of Great Importance for Romania

Employees Working Abroad, of Great Importance for Romania

For France, Romania and Belgium, the positive net balance of personal transfers and compensation of employees reduces their current account deficits significantly, according to data for 2022 published recently by Eurostat. For some countries, net inflows of personal transfers and compensation of employees are important sources of external funding and contributors to a recipient’s disposable income and GNI.


Romania considerably reduced its negative current account balances through these net inflows, with €7.4 billion (see Figure 1). The current account deficit for Romania would have been €33.5 billion instead of €26.1 billion, which includes transactions related to personal transfers and compensation of employees. Only France showed a bigger net inflow, €17.7 billion (current account deficit of €53.9 billion; without these net incoming flows, this deficit would have considerably increased to €71.6 billion). Responsible for this reduction was mostly the net income generated in Switzerland, Luxembourg, and Germany. Less than Romania, Belgium exhibited a current account deficit of €5.6 billion, which would have widened to €11.7 billion without net compensation of Belgian employees’ working for EU institutions (€4.6 billion) and for institutional units in Luxembourg (€3.8 billion).

Another measure of importance for the money sent home by the people working abroad is the financial influx ratio to GDP. Among Member States, Croatia, Latvia and Romania were most dependent on personal transfer and compensation of employees’ inflows (Figure 2).


Dependency rates are measured by showing the share of inflows in personal transfers and compensation of employees in relation to the country’s GDP. According to this, the highest dependency rates in the EU were observed for Croatia (7.6% of GDP), Latvia (3.2% of GDP) and Romania (2.9% of GDP). For reference, the least reliant economies in the EU were Ireland (less than 0.1% of GDP), Finland and the Netherlands (each 0.2% of GDP). By comparison, South-eastern non-EU countries appeared much more dependent on this source of income: Kosovo (17.2% of GDP), Montenegro (13.3% of GDP), and Bosnia and Herzegovina (10.6% of GDP.

Outside the EU, by far the highest surplus in 2022 in personal transfers and compensation of employees, €34.5 billion, was recorded vis-à-vis Switzerland, mostly due to compensation of employees flows to France, Germany and Italy. But it’s worth mentioning that this was followed by the United Kingdom, with a surplus of €4.1 billion, mostly due to personal transfers to Romania and to personal transfers and compensation of employees to Poland.

Regarding the major corridors for personal transfers and compensation of employees, Romania is mentioned 4 times in the first 40 routes according to the total amount. Somewhat surprising, the first two major officially recorded inflows are from Netherlands (€1,438 million) and Germany (€1,331 million), both regarding compensation of employees. They are followed by personal transfers made (again) from Germany (€763 million) and Italy (€501 million). As it becomes clear, although most Romanians working abroad are located in Italy and Spain, Germany is the country that totalises more than 2 billion euro in influxes to Romania.


But EU countries are not the only sources of influx for Romania. The data shows they count for about three quarters of the total amount and that another quarter comes from non-EU states. Overall, although they do not contribute to the national budget, employees working abroad are of great importance for the macroeconomic balance of the country and the money brought home are essential.

Photo source: PxHere



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