Republic of Moldova

1. Moldova Republic of Moldova Written by Vitalie VOVC, for Centreurope.org April 2005

2. Introduction • Goals : • General presentation and key figures of social, cultural and economical environment in Moldova for a better understanding. Contents: • 46 slides presenting the most important themes and issues about Moldova

3. Presented by: • Vitalie Vovc - Post-Graduate Student in Organizational Studies at University Paris 9 Dauphine, Paris. Interests: Organizational learning in Eastern European Subsidiaries.

4. Contents

5. 1.1 About Moldova → A young country with an ancient and rich history → The socialist period and its difficulties → The transition disillusionments in the 1990’s

6. 1.2. Political environment in Moldova → A new institutional environment → Moldavian political chess-board → The difficulties of the Moldovan economy → The uncertain geopolitical strategy

7. 1.3. Social and Cultural Highlights of Moldova • → Moldavian culture: origin and general presentation • → A high level of education • → The religion’s importance in the Moldavian society • → A heterogeneous and declining population • → A difficult everyday life for Moldovans

8. 1.4. Keys for understanding the Moldovans → Norms and values which are significant for Moldovans → The important place of folkloric parties, traditions → Local cuisine → Reciprocal stereotypes. Communication between Moldovans and Americans → Communicate efficiently → To be avoided!

9. 2.1 The Moldovan companies • → A new environment for the Moldovan industry • → The corruption and the bureaucracy hindering normal business practice • → Uncompetitive companies facing a deep crisis • → A qualified and low-cost labor force • → Social environment in the Moldovan companies • → Labor and Employment Law

10. 2.2 Management and Negotiation in Moldova • → No important legal restrictions regarding hiring or dismissing people • → Best pecuniary incentives • → The importance of training programs • → The leadership and team management • → Participative or directive management • → Negotiation and partnership

11. 1. Cultural Issues. Everyday Live in Moldova 1.1 About Moldova

12. A country with a reach and ancient history • The Moldovans are proud of their ancient history (more glorious than the recent history) that they are presenting in a subjective manner. • XVe-XIXe s. : The Moldovans are under the Ottomans. • 1812 – 1918 Part of Moldova by the past, Bessarabia becomes a Russian gubernia. • 1918 – 1940 Bessarabia rejoins Romania • 1944 – 1991 One of the 15 Soviet Republics of the USSR • 1991 – Independency Act The Moldovans are Latin from 106, when Romans invaded Dacia The Moldovans fought against the Ottomans. Vlad Tepes (1428-1476), known as Dracula, is one of the relevant characters of this struggle.

13. The socialist period • After the Second World War, Moldova was subject to a genocide organized by Soviets. Hundred of thousands of Moldavian families were deported or died during the 1946 famine. • Part of USSR, Moldova had the same political and social organization: a single political party, planified and collectivist economy, totalitarian governance. • Due to a certain specialization in the USSR, The Moldovan Soviet Republic was mostly an agricultural zone and suffer nowadays from a lack of competitive industry Leonid Brejnev, head of USSR from 1966 to 1982, started his political carrier in Moldova. He was the chief of local communist party from 1950 to 1952. After Stalin’s death he moved to Moscow.

14. The transition disillusionments in the 1990’s • The August 1991 putsch against M. Gorbachev, 1st USSR president, precipitated the Soviet Union explosion. Moldova becomes an independent state on August 27th, 1991. • A civil war (1992) opposed Chisinau to Transnistria, a separatist eastern region, mostly inhabited by Russians. • The Moldovan presidents (Mircea Snegur (1992-1996), Petru Lucinschi (1996-2000), Vladimir Voronin (since 2000)) are all ancient apparatchiks. That explains difficulties to adopt democratic values in Moldova. August 1991. Troops in Moscow. The army did not support the putsch. Mircea Snegur, first Moldovan president.

15. 1.2. Political environment in Moldova

16. A public environment under construction Sondage sur la démocratie • Democratic institutions are established but not always functioning. • Different governments failed to accomplish the mission of public service: inefficiency of public Administration, health policy problems, transport and telecommunications infrastructures in a poor state. • The law system does not correspond to the new society. • Big security problems: racket and hold-ups are frequent. Source : GFK, 2002

17. The Moldovan Political chess-board • The communists obtained the majority in the Moldovan parliament in 1996. The parliament elected Vladimir Voronin to the presidency. • In 2005, the communists confirmed their leading position but had to face a stronger opposition during elections. • The centrist coalition BMD and the pro-Romanian PPCD represents the opposition in the Moldovan parliament. Vladimir Voronin, the communist president of Moldovan Republic.

18. Difficulties of the Moldovan Economy • In spite of economical growth, Moldovan economy is in a deep crisis. • Inflation rate, internal and external debt, commercial balance are still difficult to bring under control. • At least 25% of national GDP are due to the currency transfers from abroad. • Moldova is actually the poorest European country.

19. An uncertain geopolitical strategy • Moldova is one of the CIS countries. • Moldova declared International political neutrality and does not participate to any military alliance. • Russia has a military base in Transnistria despite of Moldova’s disapproval. • During the last campaign, the communists adopted a new international strategy for European integration (the same as their opponents). A new Moldovan international strategy?

20. 1.3. Social and Cultural Highlights of Moldova

21. Origins and main features of the Moldovan culture Main influences are Roman, Byzantic, Balkan, Slavic and occidental. • The most representative are: • The architecture of orthodox churches and monasteries, • Painting and sculpture, • Literature and music • Science All fine arts are represented with a specific national style Eugenio Coseriu, born in Mihaileni, is one of the outstanding linguists of the XX-th century

22. A high level of education • A good level of primary educational programs • Technical and professional education are largely represented • Moldovan Universities are facing difficulties: lack of financial resources, non attractive for young researchers, low international recognition. The Moldovan schools are facing important financial difficulties.

23. The religion place in the society • The Moldovans are deeply religious people. • 98,5 % of them are orthodox. The Catholic and Jewish religions are not relevant. • Different sectist groups are also acting in Moldova, taking advantage of a lack of legal restriction and general poverty The orthodox liturgy is spectacular and solemn

24. A heterogeneous and declining population • Total Population: 4 434 547(2002 estimation), • Pyramid of ages: • - 14 years old : 21.7% (male- 490 414 ; female- 472 912) • - 15-64 years old: 68.2% (mail- 1 451 962 ; female- 1 572 561) • - 65 year and more: 10.1% (male- 165 860 ; female 280 838) (est. 2002) • Moldovans: 64.5% • Ukrainians: 13.8% • Russians: 13% • Jewish: 1.5%, • Bulgarians: 2% • Gagauz and others: 5,2%

25. 1.4 Keys for understanding the Moldovans

26. A difficult everyday life for Moldovans • Moldova is considered to be the poorest country in Europe. • « Perhaps no place in Europe faces the wrenching problems of poverty quite as actually as Moldova » Washington Post, 07.11.98 • A lot of Moldovans are working abroad. The massive migration could jeopardize the future economic development. Old people are the most vulnerable social category

27. Norms and values wich are significant for Moldovans • The Moldovans are open-minded, united, appreciating cultural discussions and different fellow parties. • They worship family and social justice • Moldovans are proud and could be rather nationalist. In a country where women position are rather difficult, Eugenia Ostapciuc holds the position of Parliament Speaker

28. The important place of folkloric parties, traditions • The Folkloric music and dance are very popular in Moldova. • Festivals and concerts are organized regularly. • The Moldovans are fond of sports and are very proud about Moldovan sportsmen’s achievements. Tudor Casapu (weight lifting) Olympic Champion in Barcelona '92

29. Local cuisine • Various and consistent, the Moldovan cooking takes its origins in Greek, Turkish, Russian, French cuisine. • Meat is common, especially pork. • Moldovans are producing lots of local alcohols: (different sorts of wine and brandy), but also good natural mineral waters. The ciorba is a soup with corn, bacon, potatoes, beef or chicken. It is widespread in Moldova.

30. Reciprocal stereotypes. Communication between Moldovans and Americans • The West-Europeans have negative stereotypes on Moldovans and this fact chocks them. • The Moldovans are pro-American and pro-European, but they are expecting much more efforts from western countries.

31. Communicate efficiently • Moldovans like oral communication. They are also much more demonstrative. • They like passionate discussions on politics, sports, literature… • The Romanian language is full of imagery ant poetic forms. Poetry is generally appreciated. • The Moldovans hesitate to ask for an explanation when something is not clear enough.

32. To avoid! • Condescending attitudes, lapidary and unfounded judgments on Moldovans must be avoided. • Try to avoid sumptuousness signs and attitudes • Subjects to avoid: person’s political adherence (pro-Romanian / pro-Russian); Your salary; Moldovan’s negative image in western countries This is the image the Moldovans prefer!

33. 2.1 Moldovan Companies

34. A new environment for Moldovan Industry • Unproductive and over dimensioned Moldovan industry collapsed during the 1990’s. • The Moldovan industry was closely tied to the USSR economy system. The USSR explosion broke existing links and closed an important market. • The military conflict in 1992, the Russian crises in 1998, affected Moldovan industry.

35. The corruption and the bureaucracy hindering normal business practice • The Administration’s inefficiency in Moldova and the high corruption level dissuade foreign investments. • Moldova is ranked 114th (on a total of 135 countries) in the 2004Transparency International survey on corruption in the world. • Ancient apparatchiks are still on key positions in Moldova. Petru Lucinschi: last First Secretary of The Moldavian Communist Party, but also Moldovan president from 1996 to 2000

36. Uncompetitive companies facing a deep crisis The Soviet legacy is still producing negative effects on Moldovan companies: over-stuff, obsolete technology, organizations and equipment, maladjusted products, inefficient commercial strategies, payment problems… The privatization process did not solve existing problems. Small business is not supported enough

37. A qualified and cheap labor force • The Moldavian labor force has the lowest cost in Europe: only 0,3 Euros per hour. In spite of a high unemployment level, many competences and skills are difficult to find. • The Stakhanovism was always a legend: the employees are not enterprising, low involved and of an uncertain ethics. • Migration is a big problem for the Moldovan companies (1/4 of active population). • There is a big gap between young generation and the 40 – 50 years old people. Moldovan average salary constitute only 2% of the Dutch salary, but only 9% of the employees have a high level of education

38. Social environment in the Moldovan companies • Social environment in Moldovan companies is considered to be positive. • The Moldovans like team working, but not in high rhythm. • Foreign managers are well accepted and respected.

39. Labor and Employment Law • The Moldovan Labor Law is based on European models, but not always respected • It is not a constraint for the company and gives the opportunity to be flexible. • The trade unions do not have a big influence in the private companies.

40. 2.2 Management and Negotiation in Moldova

41. No important legal restrictions regarding hiring or dismissing people • The law and the usual hiring process are very simple. It does not require anticipation, excepting management and key functions. • The unemployment rate is important but it could be difficult to find a good specialist. • Dismissing people could be risky. • Trade unions are not active in the private sector.

42. Best pecuniary incentives • Salary varies widely and depends on the particular job and company type. • Moldovans are fascinated by mass-consumption consumer culture, and money in general. • Pecuniary incentives could have negative effects (too much taxes, bonuses could be considered salary part) • Professional « perks » and social activities are really appreciated In a country where appearance is important, driving a company car is prestigious

43. The training programs importance • Moldovans are eager to learn • Training programs are uncommon in the Moldovan companies. Only 5 to 6 % of Moldovan employees are involved in a training program every year. • A training abroad (at the head quarter for ex.) could motivate a Moldovan employee. Young people are eager to learn

44. The leadership and team management • Moldovans respect too much the hierarchy. • It is difficult to delegate, Moldovan executives have no enough management skills and are not convinced about its utility. • The authoritarian tradition and bureaucratic organization are a barrier to the participative management implementation.

45. The negotiation and partnership • Moldovans are not familiar with the negotiation process and techniques. They are often afraid of tricks • Human relations and different personal arrangements have the same importance as contract clauses • The final decision is taken progressively and with changes of mind and renegotiation

46. The End Thank you for your attention.