05.12.2022
CARING FOR THE POOR: ROMANIA STEADILY RAISES PENSIONS AND THE MINIMUM WAGE
Romania is preparing steady increases in pensions and the minimum wage to ease the lives of its citizens struggling with rising prices and the economic crisis. The authorities have prepared energy aid, food vouchers and higher social payments for the most vulnerable groups in society. This was agreed upon by the parties of the triple ruling coalition, reports the state agency Agerpres.
All pensions will be increased by 12.5%, and the pension point, according to which pensions are calculated, will reach 1,784 lei (361 euros). The minimum wage in the country will rise to 3,000 lei (607 euros) compared to the current 2,550 lei, of which 200 lei are tax-free. The increase is 17.7%, and 1.2 million Romanians are expected to benefit from it.
Supplements for pensioners
People with a pension of less than 3,000 lei will receive a financial supplement next year. It will have a different value depending on their monthly income. The supplement will be 1,000 lei (202 euros) for pensions up to 1,500 lei (304 euros), 800 lei (162 euros) for pensions up to 2,000 (405 euros) lei and 600 (121 euros) for those up to 3,000 lei (607 euros). The aid will be split into two tranches in 2023.
"In recent weeks, there was a lot of talk about percentages and numbers, but less about people's lives. For the Social Democratic Party, it was never about numbers and percentages, but about people and what they need," said the chairman of the Social Democratic Party (SDP) Marcel Cholaku.
"We considered that each category should be supported in a different way, and the support from the state should go to a greater extent to those who feel the effects of the economic crisis the most. And here I mean both the active persons - the working on the minimum wage - as well as those who have worked all their lives and yet now have small pensions," explained the leader of the largest party in the coalition.
The construction sector will continue to be stimulated, with the minimum wage in this branch increasing to 4,000 lei (810 euros) while maintaining the current tax benefits.
Help for the most vulnerable
The Romanian authorities will seriously increase social payments for the most vulnerable groups in society. People with disabilities will receive a "13th salary" - an additional benefit at the end of the year. Romanians with incomes up to 1,700 lei (344 euros) will receive food vouchers worth 250 lei (51 euros) once every two months throughout 2023.
Elderly people with the lowest pensions will receive energy assistance of 1,400 lei (283 euros), divided into two six-monthly installments, to pay their heating bills. Pensioners over the age of 60 who have pensions below 2,000 lei (405 euros) will be entitled to the assistance.
The veterans' and war widows' benefit, which has not been changed since 2018, will rise by about 30% to match the level of inflation. State child benefits will also be indexed to price increases.
95% of vulnerable families in Romania cannot cover their children's basic needs such as medical care, medicine, food and education because of the economic crisis. A large part of the large families in the country support themselves thanks to social assistance from the state, according to a study by the organization "Save the Children". The authorities must take urgent measures to ease the impact of the economic crisis on children's lives.
The planned measures were also confirmed by Prime Minister Nicolae Chuka, who is the leader of the National Liberal Party (NLP). "The period we are going through is marked by multiple crises worldwide and we need to ensure mitigation of the effects caused by high inflation. That is why the NLP strongly opposed increases of less than 15% and obtained in the negotiations total increases of more than 15.8%," Chuka pointed out.
Danger to public finances
The increases in pensions, social security payments and salaries are part of a 26.65 billion lei (5.4 billion euro) social package called "Support for Romania" proposed by the rulers.
The Balkan country collects budget revenues worth around 30% of gross domestic product, well below the EU average of around 46% of GDP, and spends most of it on public sector wages, pensions and social grants.
The government plans a budget deficit of 4.4% of GDP, down from this year's forecast of 5.7%, and the European Commission, International Monetary Fund, Romania's central bank and rating agencies have warned that the fiscal deficit and low revenue collection are major risks to the economy.
Fitch Ratings, Moody's and S&P Global Ratings place Romania in their lowest investment grade. Analysts expect economic growth to slow significantly in 2023.
