How AI is transforming the labor market in Romania and how much the economy could grow with its help

For years, the labor market in Romania has shown remarkable resilience, supported by accelerated wage growth and record low unemployment. However, this engine fueled by fiscal expansion and consumption on credit seems to have entered the exhaustion phase. Economists warn: The growth model that defined the last decade has reached its structural limits.

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In the last year, Romania's macroeconomic landscape has changed rapidly. Economic growth, which was previously driven by consumption, is now constrained by fiscal tightening, weaker domestic demand and a shrinking labor market, ING economists warn. While some of this adjustment reflects the business cycle, the slowdown also points to a deeper structural shift: Firms are increasingly relying on automation and artificial intelligence to boost productivity. Therefore, economists argue, future recoveries could generate higher output without a corresponding increase in employment.

Divergent labor market signals

According to the analysis, data on the labor market already show a deterioration. The total number of jobs taken fell from a peak in early 2025, from a record 5.18 million in March to 5.12 million through December. The vacancy rate stands at a measly 0.6%, placing Romania among the lowest in the European Union. Hiring has largely shifted from expansion to replacement as firms focus on filling essential jobs while limiting net job creation.

The unemployment rate remains steady at around 6.0%, but this resilience masks deeper structural problems. The working population continues to shrink due to low birth rates and persistent emigration, reducing the upward pressure on measured unemployment. At the same time, some laid-off workers become inactive or turn to informal employment or seasonal migration instead of registering as unemployed. In 2024, the public sector temporarily absorbed the workforce, but fiscal tightening ended this protection measure.

Massive layoffs in some industries

The analysis also highlights the sectors of activity that will make massive layoffs, as well as those in financial difficulty due to the split in the purchasing power of the population.

The manufacturing industry remains under significant pressure. Weak demand in Germany and the wider euro area continues to weigh on export-oriented industries, while domestic demand has also been sluggish. Market surveys show expectations for further contraction, low order numbers and excess capacity. Companies are cutting back gradually but steadily as manufacturing jobs fell by nearly 25,000 from a year earlier in December 2025, or about 2.5 percent of total jobs in the sector. At the same time, industry surveys and reports indicate a growing interest among firms in technologies such as industrial robots and process automation as part of broader efforts to protect margins and improve productivity.

The construction sector has held up well across all segments so far, although the residential sector could be affected by declining purchasing power and rising taxes. Large-scale infrastructure projects, including around 700km of motorways funded by the EU's structural and recovery funds, have supported civil engineering activity, pushing the number of jobs in the sector to a record 462,000 in July 2025. However, the removal of long-standing tax breaks for construction workers has increased labor costs, squeezing margins. Business sentiment in the sector has turned cautious, with 17.5% of managers surveyed anticipating job cuts in early 2026.

The service sector, particularly retail and hospitality, is directly exposed to weaker household purchasing power. The erosion of real wages has forced consumers to prioritize essential goods. Although the annual pace of employment is still positive, business surveys indicate that hiring is clearly becoming more defensive, relying more on cost control and flexible staffing arrangements where possible. The era of rapid job expansion in the service sector appears to have stalled.

The IT sector, long a major driver of growth, is undergoing its own strategic shift. While turnover continues to rise, employment has begun to decline. After years of rapid expansion, fueled by outsourcing and large-scale hiring of junior staff – pushing employment to record levels at the end of 2023 – the growth pattern has changed, and headcount has slowly declined since then. Globally, technology spending has shifted decisively towards artificial intelligence, data centers and advanced software solutions. Demand should remain strong for specialist, high-value roles, but entry-level recruitment is likely to weaken further. The sector appears to be moving away from volume hiring towards increased specialization, efficiency and productivity.

Wages, eroded by inflation

Nominal wages have risen rapidly over the past decade, with average net earnings rising to 5,914 RON per month at the end of 2025. However, economists argue, inflation has severely eroded purchasing power. By the fourth quarter of 2025, real wages had contracted by about 5.0% from a year earlier. With public sector wages frozen and private firms under pressure on profit margins, an increase in real wages is unlikely in 2026, further weighing on consumption, employment and investment, the analysis said.

Another structural factor is the rapidly rising minimum wage, which has risen by about 15% annually over the past decade. This compressed wage differentials and increased costs in labor-intensive sectors. For firms operating with thin profit margins, automation is increasingly becoming the more viable alternative.

Structural Change: Automation and Artificial Intelligence

Romania's traditional competitive advantage has been the relatively low cost of EU labor. As wages rose and labor supply dwindled, companies naturally began to turn to investing in robotics and automation.

According to the International Federation of Robotics, the density of industrial robots globally has doubled in the past seven years, reaching 162 units per 10,000 employees. Although Romania still lags behind competitors in the region, automated assembly lines, robotic welding systems and digital warehouse logistics are becoming much more common. Eurostat data also shows a sharp rise in AI adoption, suggesting a large and growing flow of firms implementing, planning or testing automation and AI tools. For the future, the implication is simple: when needed, production can increase without commensurate increases in employment.

At the same time, AI is reshaping work in the service sector as AI tools enter daily routines. Formal adoption by Romanian firms remains relatively low – although growing rapidly – but individual use is expanding rapidly, ING economists warn.

Romania's GDP could increase by 50 billion euros by 2040, thanks to AI

A national survey conducted by Reveal Marketing Research at the beginning of 2026 found that 68% of Romanians used artificial intelligence tools at least occasionally, and 44% already rely on them for work-related tasks such as administrative support, analysis and content creation. This informal adoption suggests that AI is affecting service sector workflows even before widespread enterprise-wide implementation. Tasks that were once handled by entry-level employees can now be automated or significantly simplified. McKinsey estimates that the widespread adoption of generative artificial intelligence could add between 30 and 50 billion euros to Romania's GDP by 2040 by increasing productivity and efficiency in both the public and private sectors.

However, ING economists argue, these changes may also lead to job losses in areas such as junior IT roles, call centers or routine administrative work, as companies redirect resources to digital infrastructure and automation. This change risks creating a “barbell” labor market. Demand could continue to grow at the higher end of the skills spectrum – where specialist roles in artificial intelligence, engineering and advanced management are enhanced rather than replaced by technology – and remain stable in low-skilled, non-automable services such as care, hospitality, logistics and on-site work. In contrast, routine white-collar, middle-skill jobs and low-skill repetitive tasks are increasingly likely to stagnate or decline.

Romania faces a shrinking and aging workforce

The year 2026 will probably mark the low point of the current cycle. Fiscal policy will remain restrictive, real incomes will remain weak, and firms will continue to focus on efficiency. The employment rate could fall even if unemployment remains stable. By 2027, conditions should improve: inflation should fall, monetary policy could normalize, EU-funded projects would make their way into the real economy, and external demand could strengthen. However, the recovery is unlikely to generate the same magnitude of job creation seen in previous expansions.

During the current economic slowdown, businesses are integrating automation and artificial intelligence into their operations. When demand recovers, it may increase production by using newly implemented technological capacity rather than launching large waves of hiring. The historical relationship between GDP growth and job creation may be weakening at this point.

This is not necessarily a negative. Romania faces a shrinking and aging workforce, and productivity gains are critical to sustaining economic growth and living standards. The current adjustment represents a necessary transition from a labor-intensive, consumption-based model to a more capital-intensive, productivity-based economy.

In the short term, weak job creation and low real incomes will remain a constraint. At a deeper level, however, Romania is going through a structural transition from a labor-intensive growth model. As firms rely more on technology, automation, and higher-value activities, economic growth will increasingly be driven by greater output per worker rather than the absorption of more workers. This implies that future recoveries may be economically robust, even if employment growth is more limited than in previous expansions.