About the ILO in the Republic of Moldova

A labour market hit hard by the pandemic

Moldova achieved important development results over the last two decades, building on an average annual GDP growth of 4.6 percent before the outbreak of the Covid-19 pandemic in 2020. Economic growth, high and constant inflows of remittances, and social transfers have reduced poverty and promoted shared prosperity. Moldova’s convergence with the rest of Europe also improved. In 2000, the country’s per capita income was 14 per cent of the average EU income; currently the national income per person is at 30 per cent of the EU average. However, the country still has one of the lowest per capita incomes and gross wages in entire Eastern Europe. Demographic challenges (aging of the population and continuous emigration) and limited structural transformation (with a quarter of workers still employed in agriculture) combined with incomplete economic transition and governance reforms hold back the country.

Like many other countries in Central and Eastern Europe, Moldova managed relatively well the first wave of the Covid-19 pandemic in the spring of 2020, but was heavily hit by the second and third wave in the fall/winter. The lockdowns and the global economic recession have led to a steep economic decline in 2020 (GDP fell by 7 per cent).

Even before the pandemic, economic growth was mostly jobless. A look at unemployment rates is misleading, they have been low (2000: 8 per cent, 2019: 5 per cent). The real problems are low employment rates and high levels of inactivity. The employment rates of the country have been very low over the past two decades (2000: 45 per cent, 2019: 40 per cent; EU average: 53 per cent in 2019; all data for age group of 15years+). Mainly youth, women, and older workers remain out of the labour force.

Concerning the impact of the pandemic on labour markets, the ILO estimates that 13 per cent of all working hours were lost in Moldova in 2020 as compared to the last quarter of 2019. This decline is higher than the average amount of working hours lost in the EU (8 per cent). The amount of working hours lost in Moldova in 2020 corresponds to an equivalent of 130,000 full-time jobs. The latest data from the Moldovan labour force survey indicate that the loss in working hours mostly translated into reduced employment and not into shorter hours worked while still being under contract. The decline in employment between the 2nd quarter of 2019 and the 2nd quarter of 2020 was 9 per cent. This is not surprising, as the country could not afford to go for large job protection schemes as other European countries did. ILO estimates show that the decline in employment did not lead to an increase in unemployment, but entirely translated into increased inactivity. Thus, the pandemic exacerbated the underlying problems of the Moldovan labour markets from before the pandemic.

ILO assistance to Moldova covers the following three priority areas:

  1. Comprehensive employment policies and inclusive labour market solutions for vulnerable job-seekers with a focus on youth;
  2. Enhancement of social dialogue and collective bargaining through capacity building of the social partners and tripartite social dialogue institutions;
  3. Improving occupational safety and health.     
The ILO has been active in Moldova since 2005 based on several Decent Work Country Programmes. The ILO assisted in public sector pay reforms and the modernization of the Public Employment Service. It supported the first time ever Local Employment Partnerships to generate jobs and improve livelihoods in rural communities. The ILO also initiated reforms of the Labour Inspectorate. In addition, the ILO helps Moldova meet reporting obligations to ratified International Labour Standards (42 ILO Conventions), including the 8 Fundamental Conventions.