EU’s new tobacco products directive could cause 19,000 job losses in Romania

Romania is one of the EU countries which stand to lose the most if the proposed revisions of the current EU Tobacco Products Directive (TPD) will pass, according to a Roland Berger study commissioned by cigarette manufacturer Philip Morris. Up to 19,000 direct and indirect jobs could be lost locally and tax revenues generated by the industry could drop by up to EUR 200 million, according to the study.

Tobacco Cigarettes

Tobacco and cigarettes

At EU level the directive could cause 175,000 job losses and more than EUR 5 billion in lost tax earnings.

The major proposed revisions to the TBD are the implementation of standardized cigarette packs with large graphic warning labels and roll-your-own tobacco (RYO) and raising the area covered by health warnings to 75 % of the front and the back of the package in comparison to 25 % presently, the ban of slim cigarettes and cigarettes, RYO and smokeless tobacco products with characterizing flavors.

EU authorities expect that these modifications will help decrease tobacco use but tobacco companies say the proposed steps could have the exact reverse result.

The research emphasized that pack standardization is probably to have an impact on consumer behavior, leading to down trading to cheaper cigarette brands and growth in the illegal trade which already stands for around 10% of cigarette use in the EU and which could increase by 20 to 50% under the TPD due to standardized packaging.

In addition, the ban on slim and menthol cigarettes would signify these tobacco products would only be for sale on the illegal market. This could lead to an boost in yearly sales of illegal cigarettes from 68 billion to 84-106 billion, says the report.

Nations where tobacco is grown and cigarette exporting nations will be the most impacted. For example, in Poland, the TPD could cost as much as 50,000 jobs and up to EUR 780 million in lost tax revenue. Bulgaria could lose around 29,000 jobs, while in Greece yearly tax revenue could drop by about EUR 220 million, according to Roland Berger.

The new TBD could be implemented by the end of this year and is predicted to produce effect by starting the end of 2014.

In Romania the cigarette industry has produced total tax revenues worth EUR 2.8 million, according to industry representatives.

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