Struggling Talent Hunt: Foreign Investors in Romania Face Talent Shortage Amid Global Uncertainty Escalation
Investing in Romania, according to a report from business consultancy firm Kearney, is still an alluring prospect due to the talent of the local workforce and the ease of doing business. However, companies are finding it increasingly difficult to secure the right talent due to a growing mismatch between demand and supply of skilled labor.
This predicament can be traced back to the nation's education system, and it comes at a crucial time, as per the Kearney Foreign Direct Investment Confidence Index (FDICI), a barometer of investor sentiment regarding future FDI flows.
The latest FDICI report reveals significant trends, such as an anticipated rise in commodity prices, with nearly 38% of surveyed investors predicting this development within the next year. This forecast might be due to investor concerns about increased global conflict and potential supply chain disruptions leading to increased commodity prices.
Moreover, 35% of investors anticipate heightened geopolitical tensions in 2025, a seven percent increase from last year. A more restrictive business regulatory environment in a developed market and political instability in a developed market are other predicted developments, signaled by 32% and 26% of surveyed investors, respectively.
Romania's downgraded country ranking and political uncertainty have dropped its index score by 30% compared to last year, placing it 21st out of 25 countries included in the Emerging Markets FDI Confidence Index, a fall of two positions.
Alexandra Velescu, Head of Kearney Romania, acknowledged the problem, stating, "Investors planning to invest in Romania still cite the talent/skill of the labor pool and ease of doing business as the top reasons for investing. However, companies are finding it more and more difficult to identify the right talent due to increasing mismatches between the demand and supply of labor and skills."
She also emphasized, "Without adapting the education system to the needs of the labor market and focus on upskilling / reskilling of the labor force, Romania risks losing its competitive advantage and positioning as 'value for money' market."
European markets dominate the rankings, with the United States holding the top position. Investors are drawn to the US due to its technological innovation, with 45% of investors citing it as the main reason for choosing to invest there. The United Kingdom and Germany lead the way in Europe, holding the 3rd and 5th positions, respectively.
In Asia, Japan improves its standing with a jump from 7th to 4th, while China slips from 3rd to 6th. Across all markets, investors prioritize the efficiency of legal and regulatory processes, domestic economic performance, and technology and innovation capabilities as the primary factors driving their investment decisions.
While the provided data doesn't explicitly reference the FDICI, it highlights key investment drivers and talent-related challenges in Romania. Several sectors, such as renewable energy, real estate, hospitality, IT, and transportation infrastructure, are experiencing growth and attracting investment. Despite these opportunities, challenges in the education system and labor force distribution create potential hurdles for foreign investors.
- Despite the talent of the local workforce and the ease of doing business in Romania, a growing mismatch between demand and supply of skilled labor is posing a challenge for companies, as indicated by Alexandra Velescu, Head of Kearney Romania.
- The Kearney Foreign Direct Investment Confidence Index (FDICI) indicates that Romania's downgraded country ranking and political uncertainty have led to a drop in its index score, potentially impacting its appeal to foreign investors.
- A more restrictive business regulatory environment in a developed market and political instability in a developed market are other predicted developments, signaled by 32% and 26% of surveyed investors, respectively, according to the latest FDICI report.
- In contrast to Romania, the United States, due to its technological innovation, is a favored destination for investors, with 45% of investors citing it as the main reason for investing there, as seen in the European markets.
