Mostly true: “Poverty remains a major problem in Romania and the value of work in Romania is more than 3 times lower than the EU average”
On the 1st of May 2021, which is symbolically deemed Labour Day, Raluca Turcan, the Romanian Minister of Work and Social Protection, took to Facebook in order to convey a clear radiography about the economic reality of the country. Her post, comprising at first a positive note regarding the increasing entrepreneurial spirit and the ascending nature of the average wage earned in Romania, also took a stand on poverty, social inequalities triggered by the striking deficiencies in the national economy and on the issue of the pensions which do not reflect the level of committed work performed by a Romanian employee throughout his lifetime.
Raluca Turcan has been a durable presence in the National Liberal Party and has tackled similar, economic-oriented issues, proposing throughout time several alternatives for the revival and reconstruction of the Romanian economic sector: prolonging the duration of the professional life until 70 years old or the attempt of reducing the incessant bureaucratization, in regards to the unessential documents, in the small companies via the introduction of the electronic signature. One of her latest endeavours in the economic sector comes from the 29th of March 2021, when she pleaded her minister’s 5 potential variants in order to reconfigure the special pension system from Romania. “There are approximately 90,000 Romanians who have reached retirement age and who do not even have access to the minimum social pension, because they do not have the minimum contribution period of 15 years,” reads the official statement given by the politician herself via a press release.
“Poverty remains a major problem in Romania and the value of work in Romania – 8 euros/hour is more than 3 times lower than the EU average – 28 euro/hour, and in-work poverty is almost twice as high in Romania – almost 15 % compared to the EU average – 8%,” reads fragmentary, yet essential part from her lengthy and comprehensive post. The statement extracted from her Facebook post is also infused with the troublesome status quo of the economic sector in Romania. The assertion is divided between two different directions: in-work poverty and the value of work. Both these trajectories are worthy of a closer investigation in terms of accuracy. Due to some inexact numbers infused in this post, this claim turned out to be only mostly true, with minor errors infiltrating themselves.
Regulation and statistical data upon wage in Romania
In Romania, the minimum wage is mandated by the Government. According to article 112 of the Labour Code, the pre-imposed, normal work schedule for a full-time employee is of 8 hours per day, amounting to 40 hours per week. The Government decision implies that the minimum wage is calculated on 168 average working hours her month. The minimal working wage per hour in 13.58 lei, the raw and approximated equivalent of 2.76 euros. In 2019, an inquiry into the minimal wage obtained in European countries by European Foundation for the Improvement of Living and Working Conditions was rather revelatory for Romania, as the country where the monthly wage barely 400 euros was incapacitated to compare itself with other strongly founded economies such as Luxembourg (minimal wage of 2,201.93 euros per month), the Netherlands (minimal wage of 1,684.80 euros per month) or Belgium (minimal wage of 1,675.72 euros per month). These results, at their finest, are already a sombre provision of the detrimental place the value of work in Romania occupies.
Indeed, according to a scientific survey realized by Eurostat in 2020, the average hourly cost of labour was 28.5 euros across the European Union, with a severe pendulation between Bulgaria, with a low rate of 6.5 euros and Denmark, with the apogee of 45.8 euros as average. Romania, trailing towards the end of the ranking, is allotted an average hourly wage of 8.1 euros, which accounts to 3.5 times lower than the average encapsulated by the European Union. All the sectors are impacted the same, with the wage rates only subtly differentiated: business economy, 7.7 euros per hour, industry, 7.3 euros per hour, construction, 6.2 euros per hour, services, 8.3 euros per hour, non-business (excluding public administration), 10.1 euros per hour.
A slim but sure increase
Although the term of “poverty” does describe with doubtless exactitude the grim and deficient economic situation in Romania, it is of utmost importance to note that the present circumstances are actually an improvement compared to the shabby economy of the last decade. Romania followed the European trend depicted by the report “Employment and Social Developments in Europe”, devised in June 2019. Its contents foreshadow a slow but steady increase into the hourly productivity and thus, its afferent monetary compensation raised with 12%, in comparison to the impetuous 2009, in the aftermath of a global financial crisis.
In the study generated by Gaetano D’Adamo, Nora Hesse, Julien Hartley and Nicolae Bîea for the European Commission, the wage dynamics in Romania finds itself on a mounting trajectory. The public wage even managed to keep the same abrupt pace with the private sector, registering a 60% of increase, with the most prolific and palpable development registered in the time span of 2015-2017. “Ad hoc public wage hikes and consecutive increases of the minimum wage, which rose by almost 40% in real terms between end-2015 and end-2017, have been among the drivers of these developments,” pointedly elucidates the study. The rise was more than necessary as at the beginning of 2015, since a staggering 40% of the population was earning the minimum wage and 6.8% were totally unemployed, as unearthed by the National Statistics Institute.
In-work poverty, an everlasting dilemma
On the 11th of April 2018, Angela Cristea, head of the European Commission office in Romania declared that “Romania still displays a paradox of social inequality and poverty, while the country’s economic growth stays above the European Union average,” as mentioned by a telling report of World Vision Romania tackling the same problematic labyrinth. According to an entry devised by the European Foundation for the Improvement of Living and Working Conditions, the phenomenon of in-work poverty originated in 2008, after a tumultuous and burdening financial crisis. Romania was one of the countries to take the toll the hardest. As a defining terminology, in the vision of Rod Hick and Alba Lanau from Cardiff University, “in-work poverty occurs when a working household’s total net income is insufficient to meet their needs”.
In 2017, the report entitled “ESPN Thematic Report on In-work poverty” conceived by Luana Pop for the European Commission, depicted an identical, double-oriented ratio exhibited by Romania and the European Union. Romania had an in-work poverty rate of 17%, duplicating the rate possessed by the European Union, in integrum, of 9.6%. The 2020 Country Report tailored to the pressing needs of Romania, assessing the progress on structural reforms, prevention and correction of macroeconomic imbalances, measured that in 2018, the in-work poverty rate was 15.3%. This rate supposedly affected mostly vulnerable groups and alienated the economic status of the rural areas.
The latest known statistics embolden this binary consideration whilst the lineage of in-work poverty in Romania remains constant. According to the Eurostat Data Browser, 2019 witnessed an in-work poverty rate of 15.7% whereas 2020 beheld a rate of 14.9%. However, the European Union as a whole registered an outlay for 2019 of 9.2%. This percentage is solidly sustained by the same unfaltering consistency, with the rate never going below 9% ever since 2013. With the latest pair of viable considerations from 2019, 15.7% and 9.2%, Romania stands inches away from the threshold of a double amassing.
In this particular case, the term “poverty” is much more suitable, as there is no glimmer of progress, the in-work poverty rate is stuck on the perpetual oblique, with the values only barely shifting. As a further ado, the dismissive factors determining Romania’s economic panorama are multiple and they all conglomerate to create these fuzzy and dense problems. Gabriela Bodea and Emilia Herman, in their scientific study named “Factors behind working poverty in Romania”, prophesize that “low wages generated by an extremely reduced labour productivity represent an important channel of in-work poverty.” Therefore, the linkage between the in-work poverty rate and a shrinking minimum or average wage is even tighter than possibly imagined.
In short, the claim distributed via social media channels by Raluca Turcan is preponderantly true as the numbers mostly match. Even her implying the term “poverty” as both a positive and a negative connotation is an endeavour that underlines the oxymoronic nature of the Romanian economic sector.
However, it is vital to mention that the in-work poverty rate for the entire European Union is not consistent with the statistics pertaining to the Eurostat Data Browser from 2019 or from the past 8 years as the rate avoided falling beyond the rigid boundary of 9%. Consequently, this part of the affirmation transmitted by the politician is erroneous. With this mention in hindsight, this is the magnanimous reason why this claim can only be regarded as mostly true.
RESEARCH | ARTICLE © Iulia Mureșan, Babeș-Bolyai University, Cluj, Romania
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