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Romania is a major clothing producer. Before the revolution
the industry was set up mainly with the aim to achieve a high
degree of national industrialisation and provide employment for
surplus female labour. With the collapse of central planning in
1990 and the loss of traditional export markets there was a sharp
decline in production. Before the revolution of 1989, the Romanian
garment industry employed 327,000 workers. By 1990, it had decreased
to 107,000 and in 1995 to 82,300 workers. Suddenly Romania was
faced with an unemployment rate of 18%. The current unemployment
rate is 9.7%, however, many people are not registered. They find
work on the black market. More redundancies were avoided by an
agreement with the unions not to pay full wages.
Markets
All factories which were visited produce for export only. Managers
explain that producing for the home market is not viable at all,
simply because the buying power of the Romanian people is too
small. The main share of production is exported to Western Europe,
especially to Italy and Germany. Some producers export to the
USA.
Outward Processing Trade
Almost 100% of the orders are placed in "lohnsystem",
meaning that buyers deliver all materials to the producer. On
the one hand factory managers see this as a good system because
they cannot afford to buy the materials. On the other hand, it
leaves the Romanian producer with a very low profit margin. Especially
factories which produce both fabric and garments get into trouble
because of the "lohnsystem"
State owned companies
The old state owned factories face many problems;
The managers never had a direct relationship with the buyers in the past. This was done by a central department of the ministery of trade. Many of the officials of this department took their clients with them. A manager: "The market is occupied by companies who have a long tradition of exporting to the European market. It's difficult to take a client away from a company which has a long term relationship with a buyer"
Factories existed to create jobs in the first place, now their main aim has to be to make profit.
Many of these companies produce both textiles and garments; because the majority of the clients place orders in "lohnsystem", the textile units often produce at a loss (buyers say that the materials produced in Romania are not the kind of materials they are looking for).
The interest rates are extremely high; factories are stuck with very old fashioned and inefficient machinery, and are unable to invest in new equipment.
The loss of the USSR market is a major problem. It is now considered
to be an unsafe market to produce for. Although privatisation
has been introduced, implementation has lagged far behind neighbouring
sates. In 1998, 5500 companies are still partly owned by the state.
Working conditions
Romanian labour laws cover working hours, minimum wages, statutory
holidays, paid holidays and paid maternity leave. The legislation
provides for social security benefits paid for by employer- and
employee- contributions. The main problem which workers face is
that minimum wages do not reach the level of a living wage. The
legal minimum wage for the industry is 600,000 Lei (gross), which
is 325,000 Lei (net). Different workers and trade union representatives
said a living wage of a family consisting of 2 adults and 2 children
is 2,000,000 Lei per month ($250,-). When a worker doesn't reach
the target, she doesn't make the basic wage. Many workers complain
that targets cannot be reached in a 40 hour workweek. According
to the labour law, overtime hours should be paid 200%. In most
cases workers earn the same rate for overtime. Besides, wages
don't keep up with the inflation rate. Another problem that workers
face is that they never know in advance how many orders, and consequently
how much work there is. One factory manager said: "People
slowly start to see that you have to work for your salary. Before
the revolution it was different. There is an old joke: "We
pretend to work while the state pretends to pay" Before everybody
was sure of having a job. In the beginning people still wanted
to work little and earn little. Now this is changing, people want
to earn more so they choose to work more. People see so many luxurious
things in the shops which they would like to have. This creates
problems because people start buying on credit and then they won't
be able to pay it back" This picture of wanting to work more
in order to be able to buy luxurious goods is rather rosy: most
people do not earn a living wage and thus, are forced to work
as much as possible. The insecurity of not knowing when there
is work makes things worse.
Only a small part of the workforce in the factories are men. They
usually work as technicians and cutters. All managers and trade
union representatives claim that wages are the same for men and
women. A striking difference is that in factories where women
work in the ironing section this is a low paid job because: "the
job doesn't require any skills". In other factories where
only men work in the ironing section the wages are relatively
high because: "ironing is a heavy job" Many older women
workers feel threatened because of a company policy to hire younger
women all the time. If these women complain about bad conditions
a manager bluntly says: "take it or leave it, you won't get
another job anyway because you're too old".
There are safety demands in the law which have to be respected
by all companies. This refers to maximum amount of dust, toxic
gasses, noise. In every company there is a committee for safety
which consists of the management, union and safety inspectors
of the factory. Hazardous working conditions should be compensated
with a wage increase of 35%. According to a union representative,
in practice an average increase of 12% is paid. This regulation
is meant to be a compensation for temporary failures in working
conditions. However, in many cases improvements are never made.
Codes of conduct
Some factory managers knew about the existence of company codes of conduct, others claimed that buyers are only interested in the quality of production and never asked any questions related to working conditions and work relations. When mentioned, the status of the code of conduct is unclear. The managers interviewed understand it to be a set of general recommendations, not requirements.
None of the managers said anything about a time span within which
all requirements posed have to be fulfilled.
Unions
Romania has 4 big garment workers federations. In most of the
former state owned companies unions are organised. Here workers
have a strong awareness of their rights as laid down in the labour
law. In private companies the management won't allow a union although
this is unlawful. Besides, many workers feel that in a private
company it's possible to earn a higher wage but in exchange one
has to agree to a higher workpressure, more working hours and
the absence of a union. One trade union representative stated:
"unemployment is high and people are afraid to loose their
jobs, they don't see their own power" The trade union federations
don't have a policy to actively try to organise workers in the
private companies, nor do they have an idea of how they could
do so. Nastase, a federation representative: "The biggest
problem remains the management control over unions. We know cases
where the management, in order to weaken the union, creates a
fake union. This is a management strategy which doesn't conflict
with the law, but creates big problems for workers and the federation.
Then the management says: "First you two unions come to an
agreement and then negotiations between the management and the
union representatives will take place" But how can these
conflicting unions ever come to an agreement? In the end negotiations
don't take place' "Some union representatives are easily
manipulated and have their own personal interests and goals, which
is not always the same as the interests of the union members.
There was even a case where the union leader became the manager
of the company. He fulfilled the two positions at the same time"!
In other cases the manager closed the factory and later re-opened,
getting rid of the union in the process.
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