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Republic of Moldova

Written by Vitalie VOVC, for Centreurope.org

April 2005

Moldova

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IntroductionIntroduction

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

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PresentedPresented by: by:

Vitalie Vovc

- Post-Graduate Student in Organizational Studies at University Paris 9 Dauphine, Paris.

Interests: Organizational learning in Eastern European Subsidiaries.

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ContentsContents

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1.1 About Moldova1.1 About Moldova→ A young country with an ancient and rich history→ The socialist period and its difficulties → The transition disillusionments in the 1990’s

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1.2. Political environment in 1.2. Political environment in MoldovaMoldova→ A new institutional environment

→ Moldavian political chess-board

→ The difficulties of the Moldovan economy

→ The uncertain geopolitical strategy

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1.3. 1.3. Social and Cultural Social and Cultural Highlights of MoldovaHighlights 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

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1.4. 1.4. Keys for understanding Keys for understanding the Moldovansthe 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!

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2.1 2.1 The Moldovan companiesThe 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

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2.2 Management and 2.2 Management and Negotiation in MoldovaNegotiation 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

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1. 1. Cultural Issues. Everyday Live in Cultural Issues. Everyday Live in MoldovaMoldova

1.1 About Moldova

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A country with a reach and A country with a reach and ancient historyancient 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.

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The socialist periodThe 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.

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The transition disillusionments in the The transition disillusionments in the 1990’s1990’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.

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1.2. 1.2. Political environment in Political environment in MoldovaMoldova

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A public A public environment underenvironment under construction construction

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.

Sondage sur la démocratie

Source : GFK, 2002

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The Moldovan Political chess-boardThe 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.

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Difficulties of the Moldovan EconomyDifficulties 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.

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An uncertain geopolitical strategyAn 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?

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1.3. 1.3. Social and Cultural Highlights Social and Cultural Highlights of Moldovaof Moldova

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Origins and main features of the Moldovan Origins and main features of the Moldovan cultureculture

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– ScienceAll fine arts are represented with a specific

national style

Eugenio Coseriu, born in Mihaileni, is one of the outstanding linguistsof the XX-th century

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A high level of educationA 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.

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The religion place in the societyThe 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

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A heterogeneous and declining A heterogeneous and declining populationpopulation

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%

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1.4 1.4 Keys for understanding the Keys for understanding the MoldovansMoldovans

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A difficult everyday life for MoldovansA 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

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Norms and values wich are significant for Norms and values wich are significant for MoldovansMoldovans

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

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The important place of folkloric parties, The important place of folkloric parties, traditionstraditions 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

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Local cuisineLocal 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.

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Reciprocal stereotypes. Communication Reciprocal stereotypes. Communication between Moldovans and Americansbetween 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.

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Communicate efficientlyCommunicate 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.

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To avoid!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!

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2.1 2.1 Moldovan CompaniesMoldovan Companies

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A new environment for Moldovan A new environment for Moldovan IndustryIndustry 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.

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The corruption and the bureaucracy The corruption and the bureaucracy hindering normal business practicehindering 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 MoldavianCommunist Party, but also Moldovan president from 1996 to 2000

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Uncompetitive companies facing a deep Uncompetitive companies facing a deep crisiscrisis

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

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A qualified and cheap labor forceA 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

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Social environment in the Moldovan Social environment in the Moldovan companiescompanies 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.

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Labor and Employment LawLabor 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.

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2.2 2.2 Management and Negotiation Management and Negotiation in Moldovain Moldova

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No important legal restrictions regarding No important legal restrictions regarding hiring or dismissing peoplehiring 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.

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Best pecuniary incentivesBest 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

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The training programs importanceThe 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

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The leadership and team managementThe 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.

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The negotiation and partnership 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

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The EndThe End

Thank you for your attention.