1. IRU Seminar Image and Employment in Road Transport Impact of Crisis on Road Transport Employment in Romania Brussels, 27 January 2010 Roxana Ilie Internal & External Affairs, UNTRR, Romania

2. Impact of Crisis on Road Transport Employment in Romania Romania in 2009/2010 Transport market situation Road Transport companies’ costs Unemployment Measures to Limit Crisis’ Effects Conclusions

3. Romania in 2009/2010 GROSS DOMESTIC PRODUCT –Strong growth until 2008 : up to 8% –Analysts’ estimations between 0.6% and 2% in 2010 after a -7% fall in 2009 4.7% inflation rate in 2009 (> target set by Romanian National Bank) EU FUNDS ABSORBTION –Only 10.26% absorption rate for EU funds allocated to Romania over 2007-2009 INFRASTRUCTURE –Only 323 km in use as of February 2008 –Recent master plan for the national motorway network many works started around the country, which will result in significant changes by 2015 (A1,A2 +3 more motorways: A3 Bucharest – Western border; A4, A5 – Eastern border)

4. Transport market situation 2007: first internal crisis of Romanian road transport market –Difficulties in complying with EU legislation requirements, –Higher competition; –distortions of the competition on road transport market due to inadequate enforcement of Romanian and EU legislation 2008: National protest campaign „Where are our money “ –Romanian roads are in a disastrous state; –there are no parking spaces for complying with EU requirements concerning the resting times; –abusive traffic control; –fuel price crisis; –high fiscal burden.

5. 2009: Road Transport Market decrease by 20% –Decrease of active transport companies by almost 30% 2009: Increasing number of companies facing bankruptcy or insolvency –Out of 2198 licensed own account transport companies »264 inactive own account transport companies –Out of the 30,294 licensed Romanian transport operators »4.582 inactive transport operators (no vehicle in use) –Reduction of transport fleet - 20,000 goods transport vehicles >3.5t  2008: 121,000 registered vehicles  2009: 102,881 registered vehicles

6. 2010:Transport Companies’ Costs Increase by 10-15% Prognosis for 2010 First Quarter will be the most difficult due to increasing costs and delayed deadlines for the payment of the receipts.  Transport companies’ cost increased by 10-15% at the beginning of 2010 Raise of bankruptcies and insolvencies Cost Elements increase Fixed Costs increase due to the raise in taxes on vehicles (by 20% ) and in insurance premium (by 10% ) Variable Costs: important increase due to the raise in diesel excise (by 4% in Euro and by 15% in RON due to exchange rate).  Opportunity Costs due to increasing bureaucracy : direct and indirect costs for obtaining approved documents and authorizations for entrance/access /transit  Lack of motorways is a major opportunity cost for Romanian companies in comparison to other EU companies’ cost efficiency Transport Tariff should increase by minimum 10% in 2010!

7. Unemployment National Labor Market  709,383 jobless in December 2009 Estimated 70,000 job losses in public system in 2010  7.8% unemployment rate in 2009 (4.4 % in December 2008 !) Estimated 8 % unemployment rate for First Quarter of 2010 TRANSPORT and WAREHOUSING employment  336,7 thou employees in 2008  285,7 thou employees in 2009 Road Transport Sector:  1 certified vehicle = 1-3 transport employees (drivers, technical staff)  - 20,000 certified vehicles = Romanian transport unemployment (only for goods transport ! )

8. Measures to Limit Crisis Effects Measures Taken by Transport CompaniesMeasures Proposed by Transport Industry (UNTRR/IRU) Measures Taken by Romanian Government Management -planning with specific scenarios (budget / analysis plan) and quarterly revision of the planning (roll over forecasting) -Risk management – updated processes -Reset the investments priorities -flexibility to client’s requirements; Costs – measures to correlate the costs with the decreased revenues -Strictly monitoring of the receipts and payments - Renegotiation of the contracts with providers/clients - Externalization/renunciation to some activities; - reduce fleet: sell companies’ trucks due to reduced act. -Headquarter : offices’ displacement, rent renegotiation Personnel: - redundancy/ reduced staffing levels; -retirement decision for aged personnel; early retirement -salaries renegotiation, agreements with syndicates for reducing the salaries to the national minimum salary level - unpaid leave, suspension of bonus payments -individual performance assessment (feedback) Increase transport tariff in order to transfer the rise in transport costs on clients Tax reduction in order to stimulate investments, production, jobs creation Granting incentives to hauliers to support transport businesses and avoid transport reduction Faster absorption of the European funds and sustained motorways construction to allow reduction of unemployment, bottlenecks elimination and the traffic flow, Support road hauliers to get credit lines to finance their activity and investments Turnover tax: a lump tax for all the companies connected only to the turnover but not to their profit. No VAT deduction for: - freight vehicles under 3.5 tons and passenger vehicles with less than 8+1 seats. -fuel used by these vehicles Increase in road transport taxation – new taxes in 2010 introduced by local authorities for the access/transit of Romanian counties

9. Conclusions Crisis has hit the road transport sector hard, in terms of company bankruptcies and job losses NO Government measures to provide relief to Romanian companies URGENT need for proper industry actions to help keep the skilled personnel in the sector until the economic recovery returns.  Focused Industry strategies for dealing with this looming problem

10. Thank you for your attention!