THE REFORM OF SOCIAL ASSISTANCE SYSTEM IN ROMANIA PhD LĂCRĂMIOARA CORCHEȘ -General Director General Directorate for Social Assistance/ Ministry of Labor, Family, Social Protection and Elderly of Romania
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OUTLINE 1) COUNTRY CONTEXT 2) REFORMING THE SOCIAL ASSISTANCE SYSTEM 3) MINIMUM SOCIAL INSERTION INCOME (MSII)
Country Context Population (2012) 20 million GDP per capita (2012) EUR 13.500 Government revenues (% of GDP, 2012) 33 Government spending (% of GDP, 2012) 35.5 Of which Social protection spending (% of GDP) 14.3 Of which Pensions 11.0 Unemployment Benefits and ALMPs 0.4 Social assistance and services 2.3 4
Pensioners Coverage of Social Protection System Thousands (2013) Total=5.246 (abt 26% of population) Old age 3.298 Invalidity 729 Survivorship 539 Farmers 564 Social assistance (SSN) Child allowance (categorical) 3800 Child raising benefit 160 Family benefit (means-tested) Heating benefit (seasonal) Guaranteed minimum income 260 (families) 1000 (families) 225 (families) Disability allowance 670 5
Poverty and Inequality Indicators Romania (2008-2012) 23 21 19 17 15 51 50 49 48 47 23,4 22,4 22,2 22,6 21,1 19,9 18,2 18,9 17,5 17,2 17,9 17,6 16,2 19,1 2008 2009 2010 2011 2012 50,3 49,3 49,2 47,7 48 2008 2009 2010 2011 2012 At-risk of-poverty rate At-risk of-poverty rate anchored in 2008 In-work at-risk-of-poverty rate Material deprivation rate 36 35 36 34,9 34 33 33,3 33,2 33,2 2008 2009 2010 2011 2012 Gini coefficient
CZ NL DK SK FI SI HU FR SE AT CY BE MT LU DE UK EU27 EU28 PL EE PT LT IT LV HR BG ES RO EL 9,6 10,1 13,1 13,2 13,2 13,5 14,0 14,1 14,2 14,4 14,7 14,8 15,0 15,1 16,1 16,2 16,9 17,0 17,1 17,5 17,9 18,6 19,4 19,4 20,5 21,2 22,2 22,6 23,1 25 People at risk of poverty after social transfers (AROP) % of total population - relative poverty rate, 2012 23 21 19 17 15 13 11 9 7 5 Source: EUROSTAT, January 8, 2014
CHILDREN: Poverty and Material Deprivation Households with dependent children: 29.2% RO (highest) 19 % EU Children are severely deprived: 37,9% RO (second highest) 18 EU countries < 10%
3,8 4,5 4,5 4,6 5,3 5,6 5,7 6,1 6,2 6,5 6,6 7,4 7,6 7,8 7,9 8,0 8,1 8,3 8,6 9,0 [VALUE] 9,2 9,8 10,2 10,4 11,0 12,3 15,1 19,1 25 In-work at-risk-of-poverty rate (2012) % of total employed, persons aged 18+ 20 15 10 5 0 Source: EUROSTAT, February 5, 2014
The Reform Why do we need it? Is the social assistance system: ADEQUATE? for what needs is designed? COVERING the right beneficiaries? CREATING dependency or not? Level of THRESHOLDS 10
BENEFITS SITUATION UNTIL 2010.. Legal papers and benefits The REFORM MEASURES TO PREVENT POVERTZY AND THE RISK OF SOCIAL EXCLUSION (social assistance schemes) FAMILY AND CHILD SOCIAL ASSISTANCE (family benefits) SOCIAL ASSISTANCE FOR PERSONS WITH SPECIAL NEEDS (disability and long term care) OTHER TYPES OF AIDS ABD FACILITIES Minimul Insertion Income state child allowance foster care allowance indemnities, incentives and child raising aids food monthly allowance for HIV/AIDS indemnities for persons with special needs refugee persons aid refugee persons aid emergency aid facilities
The Reform What we want to do? Introducing the Reference Social Indicator = connector to reference budgets Reducing error and fraud Targeting the social benefits for the poors Integrating measures (packages of benefits +services); Simplifying administration: Single point of submission & single application form
The Reform Steps to be Undertaken 2010: Strategy for the Social Assistance Reform 2011-2013 2012: new Social Assistance Law & secondary legislation 2014: Consolidating 3 programs into one program for tackle poverty. 2014-2015: Developing Management Information System
Notes: Estimates calculated on 2012 HBS Quintiles based on income net of all social assistance per adult equivalent Performance of means-tested programs (2010/2016) Targeting Coverage Total social assistance of which Guaranteed Minimum Income 1 st quintile 35.7% (40%) Population 1 st quintile 66.2% 80.5% (82.5%) 80.5% 3.7% 14.2% Family allowance 56% 6.1% 18.6% Heating benefits 36.4% 25% 8.3%
3500 The evolution of the main social benefits 2010-2012 Number of beneficiaries (thousands) 3325 3000 2500 2000 1500 1000 500 0 805 1535 1696 436 403 269 222 234 2010 2011 2012 Heating benefits Family allowances Social aid (GMI) 900 800 700 600 500 400 300 200 100 0 857 634 Amounts (Mln RON) 683 516 479 452 477 325 300 2010 2011 2012 Heating benefits Social aid (GMI) Family allowances 15
Steps CCT for low INCOME HH Programs COMMUNITY SERVICE WORK for work-able beneficiaries: - proportional with the level of the benefit; - community actions or other works for local benefit - on a monthly basis; SCHOOL ATTENDANCE FOR CHILDREN - benefit is reduced or discontinued if child does not attend school regularly FA; INCENTIVES TO RETURN TO THE LABOR MARKET for work-able beneficiaries - increasing the amount of benefit with 15% if one person from HH has a job GMI; - incentives for employees hiring old aged people and people over 45 years old; 16
Minimum Social Insertion Income Program description: GMI + FA + HB = IMI GMI FA IMI =about30% poorest HB GMI=abt.225.000 families -33 EUR FA=abt.260.000 families 120 EUR HB=abt. 1000.000 families 140/180 EUR 17
Minimum Social Insertion Income: Short-term Plans Will Consolidate all means-tested programs Will Move from the pure Guaranteed Minimum Income formula, to 50% Marginal Tax Rate on Earnings Will Expand from the poorest 5% to the poorest 20-30% of the population Will Expand the set of ALMPs for the poor and tailor them to EACH sub-group Will Include the conditionality for children attending school 18
CONCLUSIONS Fighting against poverty and social exclusion continues to be a national priority EU 2020 targets of poverty and employment Implementation of the strategies for the social inclusion of disadvantaged people (poors, children, disabled, elderly, roma) = integrated approach Avoiding creation of dependence on receiving social benefits and using ALMP 19
THANK YOU FOR YOUR ATTENTION! lacramioara.corches@yahoo.com lacramioaracorches@mmuncii.ro