The Labor Market of the Republic of Moldova in the Context of Intra-European Labor Mobility

Abstract

The demographic decline, particularly the shortage of skilled labor, represents the most severe issue facing the Republic of Moldova, obstructing long-term economic growth, placing additional pressure on public finances, and undermining the existence of the state. The economy cannot grow without skilled labor and/or productivity increases, and public finances are unsustainable when the dependency ratio rises rapidly (calculated based on the number of pensioners relative to the number of contributors), while states cannot exist without citizens. The consistently negative net migration is largely responsible for the country's depopulation, resulting in two major interconnected imbalances within the labor market of the Republic of Moldova - labor shortages and wage inflexibility - which hinder the activation of internal depreciation mechanisms in the context of negative demand shocks and obstruct long-term economic growth. This study investigates labor dynamics in Moldova and the associated imbalances in the labor market through the lens of intra-European worker mobility, proposing a series of policies and measures that could mitigate the repercussions of the existing imbalances. DOI: https://doi.org/10.53486/dri2024.04; UDC: 331.556.4(478):061.1EU; JEL: E0, E6, J2, J3, J6