The rules governing the business environment worldwide are becoming increasingly complex, and even though many of them aim to simplify the relationships between the entities involved, improve financial performance, provide better working conditions for employees, and ultimately enhance the standard of living for the entire population, their implementation is often challenging.

In Romania, this complexity is compounded by frequent changes in regulations with an impact on the economy, especially those concerning taxation. For these reasons, companies operating in the local market must pay close attention to changes in their field, attract, train, and retain specialized employees who can successfully and timely implement these changes.

According to a study published by the World Bank at the end of last year - Private Sector Diagnostic: Romania - inadequate workforce education is the main constraint in the business environment mentioned by the analyzed companies.

According to the study, factors contributing to this situation include deficiencies in the educational system, unfavorable attitudes toward lifelong learning, as well as ineffective professional training policies and other labor market policies, compounded by brain drain.

Romania has the lowest score in the EU regarding the human capital index and the lowest participation rate in lifelong learning. Additionally, World Bank representatives also highlight the low level of financial education, including among employees of private sector companies.

The report also contains a series of recommendations for addressing these deficiencies, which include ensuring access to quality education for all citizens, strengthening lifelong skills training, and improving workplace training.

The second major constraint in the business environment is related to the lack of predictability, in which case the international institution recommends mitigating the impact of political instability and ensuring fiscal sustainability. Moreover, companies analyzed in the report state that they allocate increasing human resources to the process of implementing tax regulations.

Reaction speed, essential for the successful implementation of new regulations

Legislative instability and lack of predictability in the fiscal field have been important concerns for companies in Romania for many years, and 2024 is no exception, given the large number of regulations that came into force at the end of 2023 or from January 1st this year.

These include the new taxation system for large companies, the microenterprise regime, different VAT rates applicable to certain categories of products or transactions, complex reporting systems, new rules for taxing certain incomes, etc.

All these are further compounded by European directives that are transposed into Romanian legislation (for example, the one concerning the minimum tax on global profit applicable to multinational companies), as well as specific regulations from other sectors such as the financial industry, energy, environmental protection, etc.

These changes need to be reflected in the financial and accounting systems of economic entities, often in record time, especially for those adopted urgently and with immediate applicability, to ensure the company's activities continue under normal parameters.

To successfully and timely implement all these changes (so as not to risk sanctions from authorities or disruptions in business relationships), companies must allocate significant resources for this purpose, especially human resources, ensuring a continuous training process, considering the slow pace of educational system adaptation to labor market needs and the speed at which rules change in the economy.

Beyond these organizational aspects, the concern for continuous employee improvement also has other benefits for companies, including higher retention rates and greater involvement in daily activities, especially in the business's long-term projects. Thus, staff turnover decreases, and the company's efficiency increases. (Photo: Freepik)

Opinion piece by Maria Butcu, Director, Outsourced Service Solutions, Deloitte Romania