POVERTY MAP IN ROMANIA

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1 POVERTY MAP IN ROMANIA TOMESCU-DUMITRESCU CORNELIA ASSOCIATE PROFESSOR, CONSTANTIN BRANCUSI UNIVERSITY Abstract A quarter of a million Romanians receive the guaranteed minimum income, that is to say, the state's social support to those who do not have enough income to live in. More specifically, according to May (latest available) data from the Ministry of Labor, 248,987 Romanian citizens received social assistance. Compared to the total number of inhabitants in the records of the Ministry of Labor, it results that 1.17% of the entire population receives this guaranteed minimum income. In May, for which we have the most recent official data available, the average guaranteed minimum income paid to beneficiaries was 281 lei. The government paid 70 million lei for this aid in that month. Keywords: poverty map, income, social assistance, guaranteed minimum income, degree of poverty Classification JEL: A1,E0 1. INTRODUCTION One of the major problems of modern Romania is poverty and corruption. NIS data show that there are 8.5 million people in Romania at risk of poverty or social exclusion. Also, one-third of the population suffers from severe material deprivation in the sense that they can not afford to buy items considered desirable or even necessary to lead a decent life. Moreover, Romania is by far the most unequal country among the rich and the poor in the European Union, given that the most prosperous 20% of Romanians have incomes exceeding seven times the poorest 20% of the country's inhabitants, according to statistics published by Eurostat. Poverty-affected urban areas include small towns experiencing demographic aging and depopulation, mono-industrial cities (eg mining towns), agricultural cities or newly established cities. Small towns are poorer because of poor physical infrastructure (transport, health, education), moreover, they have been severely affected by industrial restructuring and are very vulnerable to industrial and economic reform, which has the effect of a low employment rate and, therefore, unstable and low income. In November 2015, UN Rapporteur on extreme poverty, Philip Alston, said that "many Romanian officials are in a state of denial about the high poverty rate in the country, although 40% of the population is affected by this phenomenon, and 34.1% of children suffer from extreme material shortages. " According to data collected at Eurostat level, Romania's position is generally characteristic of a country with relatively large problems in ensuring a high standard of living for all its citizens. 2. POVERTY MAP IN ROMANIA Almost 250,000 Romanians receive social assistance, according to the latest statistical data. Economica.net shows the magnitude of this phenomenon at the level of each county of the country, which can be a relevant indicator to compare poverty in Romania. 128

2 Source: ECONOMICA.NET Figure no. 1. Poverty map in Romania - people who receive the minimum guaranteed income A quarter of a million Romanians receive the guaranteed minimum income, that is to say, the state's social support to those who do not have enough income to live in. More specifically, according to May (latest available) data from the Ministry of Labor, 248,987 Romanian citizens received social assistance. Compared to the total number of inhabitants in the records of the Ministry of Labor, it results that 1.17% of the entire population receives this guaranteed minimum income. In May, for which we have the most recent official data available, the average guaranteed minimum income paid to beneficiaries was 281 lei. The government paid 70 million lei for this aid in that month. Extremes: Most beneficiaries of this help can be found in Dolj county, about 15,600, and the fewest in Bucharest, only 277. However, a more relevant comparison can be made if the number of beneficiaries of social assistance in each county is taken into account in relation to the population of that county: that percentage is a relevant indicator of the poverty rate there, compared to the other counties. Top 5 of the county with most beneficiaries, relative to the population: 1. Teleorman. 2.9% of the total population receive this aid, respectively people, to a population of about 381,000 inhabitants. 2. Buzau: 2.5% of the population receives the guaranteed minimum income. That is, 12,090 people from about 465,000 inhabitants, including the whole county. 3. Vaslui: 2.5% of the county's population of about 452,000 people receive this aid, ie 11,328 people 4. Mehedinti: 2.5% of the county's population receives the guaranteed minimum income. That's, 7,277 people out of the 283,000, all the county. 129

3 5. Dolj: 2.2% of the population is a beneficiary of the guaranteed minimum income: 15,604 people of the nearly 689,000, all of the county benefit from this kind of help. Social benefits (known as Minimum Guaranteed Income - VMG) are granted to families and single persons, Romanian or foreign citizens, including non-dwellers, whose monthly incomes are below the threshold of 142 lei - for single persons and 527 lei for the family consisting of five people. Specifically, they are entitled to receive VMG single persons with monthly net income below 142 lei, families with two people with monthly incomes per household under 255 lei, families with three persons with monthly incomes per household under 357 lei, families made up of four persons with monthly incomes per household less than 442 lei, families with five people with monthly incomes per household less than 527 lei. The monthly value of the VMG received by the payee is the difference between the levels shown above and the monthly net income of the single person or family, as the case may be. Social assistance is granted on the basis of an application, a declaration on its own responsibility, as well as on the basis of evidence of family composition and income achieved, which is recorded at the town hall in the territory of which the beneficiary has its domicile or residence. The granting of the right to social aid is made by the written order of the mayor after a social investigation at the domicile or residence of the beneficiary. Workers who are applying for social assistance and who do not earn income from wages or other activities must prove that they are registered as AJOFM as job seekers and have not refused a job, provides monthly shares or works of local interest. As can be seen in Figure 2, over 40% of Romanians are exposed to the risk of poverty and social exclusion. According to the World Bank, five Romanians live in misery and another is at the poverty line. In other words, absolute poverty affects between 22% and 27% of our country's population. According to the World Bank, five Romanians live in misery and another is at the poverty line. In other words, absolute poverty affects between 22% and 27% of our country's population. Fig. 2. Poverty Map in Romania - People at Risk of Poverty 130

4 Beyond the boosted economic growth, the poverty figures show a less worthy reality. Of the five Romans, one lives in misery and another is at the limit of poverty. This translates, in simple words, the figures presented by the officials. In technical terms, absolute poverty affects between 22% and 27 of the country's population, according to World Bank data. What does Absolute Poverty mean? It means that these people do not even allow a minimum consumption basket with a value of about 300 lei / person. In this basket, not only food, but also current, heating, water and other services. It seems a small sum, but a fifth or even a quarter of the Romanians do not have it monthly. Statistics become even more dramatic when we look at the Romanians at risk of poverty and social exclusion. What does this pretentious expression mean? It refers to those who either earn less than 60% of their national average income or live in less than 20% of households for money or can not afford basic products and services - for example, TV, washing machine, meat on the table at least once every two days or home warmth. In short, people you would normally consider poor. How many are they? More than 40% of Romanians are in this situation, according to Eurostat figures, confirmed by the Government of Bucharest, especially as they come from the National Institute of Statistics. The only EU country that surpasses us is Bulgaria (48%). We also have a region in the top 5 Europeans - the South-East region, where more than 53% of the population are at risk of poverty. Five of the seven regions of Romania have a Gross Domestic Product (GDP) per capita less than half of the European Union average, while only two regions of the country are somewhere between 50% and 100% of the EU's average GDP, show data released on Friday by the EU Statistical Office, Eurostat. According to news.ro, the most drastic situation is in the north-east of the country. Here GDP is 34% of the EU average. The only consolation is that there are regions in Europe and poorer ones. They are Mayotte from France (31%), Iuzen Ţentralen (32%) and Severen Ţentralen (34%) from Bulgaria. Mayotte is an island in the Indian Ocean, an overseas territory owned by France. The other four regions, whose GDP is less than half of the EU average, are Southwest Oltenia (41%), South-Muntenia (43%), Northwest (48%) and South East (50%). The only regions with GDP above 50% of the European average but below this average are the West and the Center. Exceptions to the above data make Bucharest. This area, together with Ilfov County, has a per capita GDP of 29% above the European Union average, similar to Austria, but lower than that of Vienna (158%). Bucharest is also ahead of Central Hungary, where Budapest also has a GDP per capita of 107% of the EU average. At the level of Romania, GDP per capita is 55% of the European Union average. For the EU as a whole, GDP per capita varies from 30% of the EU average in Severozapaden to 539% in West London. In the West of London, other regions with a very high GDP per capita are Luxembourg (266%), Brussels (207%), Hamburg (206%), East London (204%) and Bratislava (186% ). In total, the number of EU regions with a GDP per capita of over 50% of the European average is 21, of which five in Germany, three in the Netherlands and the UK, two in Austria and one in Belgium, the Czech Republic, Denmark, Ireland, France, Slovakia and Sweden, as well as Luxembourg. Despite the massive differences between the regions of Romania and the widespread presence of the poverty phenomenon in most of the country's regions, the Government believes that attention should be directed to the formation of a so-called middle class in the country. According to Eurostat data quoted by Agerpres, in 2016, approximately 24.8 million children aged 0-17 in the EU were at risk of poverty and social exclusion. In Romania, about 1.8 million children were exposed to this risk last year, more than the 1.6 million children in Poland in a similar situation. In , at EU level, the proportion of 131

5 children at risk of poverty and social exclusion decreased from 27.5% in 2010 to 26.4% in Contrasting developments have taken place among Member States. In the vast majority of EU Member States, the proportion of children exposed to this risk decreased between 2010 and The largest decreases were registered in Latvia, from 42.2% in 2010 to 24.7% in 2016, a decrease of 17.5 percentage points. Other significant reductions were registered in Poland, a decrease of 6.6 percentage points, Ireland, a decrease of 5.3 percentage points, Hungary, a decrease of 5.1 percentage points, Bulgaria, a decrease of 4.2 percentage points, and Lithuania, a decrease of 3.4 percentage points. In contrast, in several Member States, including Romania, the proportion of children at risk of poverty and social exclusion increased between 2010 and The highest increases were recorded in Greece, from 28.7% in 2010 to 37.5 % in 2016, an increase of 8.8 percentage points and Cyprus, an increase of 7.8 percentage points, followed by Sweden, 5.4 percentage points increase, and Italy, an increase of 1.1 percentage points. In Romania, the proportion of children at risk of poverty and social exclusion increased from 48.1% in 2010 to 49.2% in 2016, an increase of 1.1 percentage points. CONCLUSIONS A quarter of a million Romanians receive the guaranteed minimum income, that is to say, the state's social support to those who do not have enough income to live in. More specifically, according to May (latest available) data from the Ministry of Labor, 248,987 Romanian citizens received social assistance. Compared to the total number of inhabitants in the records of the Ministry of Labor, it results that 1.17% of the entire population receives this guaranteed minimum income. Over 40% of Romanians are at risk of poverty and social exclusion. According to the World Bank, five Romanians live in misery and another is at the poverty line. In other words, absolute poverty affects between 22% and 27% of our country's population. In Romania, the situation for 2015 is as follows: the relative poverty rate on the total population was 24%, indicating that 24% of Romania's total population is poor, with disposable income below the 60% of the income monthly median of the total population. BIBLIOGRAPHY 1. Iordache, Ş., M. Militaru, Pandioniu, M., (2016), Jobless Recovery in Romania: the Role of Sticky Wages and Other Frictions Firm-level Evidence from the WDN Survey, National Bank of Romania Occasional Papers No Majuru A., 2013, Sărăcia, marginalizarea şi indiferenţa socială în contextul urban 3. Mărginean, S., Creţu, A.Ş., (2013), Effects of Raising Minimum Wage: Theory, Evidence and Future Challenges, Procedia Economics and Finance 6 (2013) 4. Mihailescu, A., (2012), Coşul de consum al populatiei României, Editura Expert, Bucureşti 5. Neculau A., Ferreol G., 1999-Aspecte psihosociale ale sărăciei, Ed. Polirom 6. Pană, M.C., (2015), Minimum wage and business environment in Romania: an institutional perspective, International Conference "Recent Advances in Economic and Social Research", mai 2015, Bucureşti, IPE Working Papers 7. Petrescu I., 2016, Creşterea economică din România fără efect pentru populaţia săracă, 132

6 8. EUROSTAT, OECD *** *** 133