FES BRIEFING ROMANIA Trade Union Monitor July 2023 POLITICAL, ECONOMIC AND SOCIAL FRAMEWORK POLITICAL CONTEXT Following a two-month-long governmental crisis, a ruling co­alition was formed in November 2021 between three political parties: the left-wing Social Democratic Party(PSD), the right­wing National Liberal Party(PNL) and the Hungarian minority party Democratic Alliance of Hungarians in Romania(UDMR). Despite its ideological heterogeneity, the new coalition was able to maintain political stability throughout 2022. Numer­ous tensions surfaced between the two main parties in the coalition, the PSD and PNL, but these never escalated, as the preservation of a stable government was considered a lofty imperative in the new regional security context emerging af­ter Russia’s invasion of Ukraine. The coalition parties worked efficiently and capably to find an emergency solution to the Ukrainian refugee crisis. Over three million Ukrainian refugees had entered Romania be­tween the start of the Russian invasion until the end of 2022, 107,241 of whom have remained in the country. The response came in two phases: in the initial phase there was an emer­gency response, followed by a second phase centring on pro­tection and inclusion of Ukrainian refugees. Over 20 pieces of legislation have been enacted to meet the refugees’ needs. Over 106 million euros in public funds have been spent on ac­commodation and food, with an additional 12 million euros going to transportation. The main challenges have been re­lated to labour market integration of refugees, support ser­vices for the elderly and the disabled and the enrolment of Ukrainian children in the education system. the energy crisis. The Social Democrats blamed the Liberals, who held the office of Minister of Energy, while the Liberals, for their part, asserted that any solution would have to be crafted by the entire government, not just one minister. In the end, the two parties agreed to extend the scheme to cap energy prices, launched back in 2021, until August 2023. In autumn, a new dispute inside the government coalition ig­nited in connection with the Social Democrats’ proposal to increase the minimum wage and pensions beginning in Janu­ary 2023. While both parties agreed pensions should be in­creased, the PNL proposed a uniform 15 per cent rise, while the PSD insisted on a 10 per cent increase plus bonuses to be paid to low-income pensioners. In the end, the coalition agreed upon a uniform 12.5 per cent increase and cash pay­ments to low-income pensioners. Several proposals made by the Social Democrats in the fiscal area, such as a property tax, progressive income tax, etc., triggered heated reactions from the Liberal Party and were not implemented. Finally, after one year of holding the reins of power, the two major ruling parties, the PSD and PNL, lost several percent­age points in a series of opinion polls, while the extreme right-wing party, the AUR, went up in the polls. The results must be seen in a context in which 59.5 per cent of Romani­ans state that their financial situation had worsened com­pared to the previous year and 55 per cent expected the situ­ation to get worse in the future. ECONOMIC AND SOCIAL SITUATION More recent social and economic developments, such as soaring inflation and mounting energy prices, posed serious challenges to a new government facing the risk of a rapid erosion of public trust. The result was simmering tensions be­tween the main coalition parties, the PSD and PNL, that came to a head several times. In the first months of 2022, the two parties called upon one another to find effective solutions to The Romanian economy continued on its trajectory of recov­ery from the pandemic throughout 2022, but the invasion of Ukraine by Russia slowed down the process, creating uncer­tainty and risks for economic activity. Luckily, the impact on the labour market was limited – both employment(63.4 per cent) and the unemployment rate(5.4 per cent) remained stable compared to 2021. Although Romania’s economic 1