FRIEDRICH-EBERT-STIFTUNG IMPROVING SOCIAL PROTECTION IN ROMANIA INTRODUC TION The quest for social protection is enshrined as a fundamental task of modern states and assumed to constitute a key pillar of the European Union¹. Although the ideological framing of social protection varies historically and geopolitically throughout Europe, with there being a different emphasis on compensation for"dis-welfare" and structural disadvantage, social investment, lifelong and intergenerational redistribution of resources, risk­sharing, empowerment of the most vulnerable and support for the enactment of human rights, there is a mainstream consensus that governments should act to ensure the welfare of their citizens. The Romanian Constitution² explicitly assigns the state the role of safeguarding the quality of life for all citizens in Art. 47: 1 The State shall be obligated to take measures promoting economic development and social protection of a nature to ensure a decent living standard for its citizens. 2 Citizens have the right to pensions, paid maternity leave, medical care in public health centres, unemployment benefits, and other forms of public or private social security, as stipulated by the law. Citizens have the right to social assistance by law. (The Romanian Constitution, Art. 47) At the moment of writing(September 2020), the Romanian government was just completing its National Strategy on Social Inclusion and Poverty Reduction 2015-2020 as well as the more specific Strategy for the Inclusion of Romanian Citizens of Roma Ethnicity for the period 2014-2020. According to the baseline indicators of the European Semester, Romania has made little progress on poverty-reduction and social inclusion since the strategy was launched(European Commission, 2020). This report has a twofold aim: first, to examine welfare efforts and(whenever possible) the effectiveness of the Romanian welfare state compared to the European Union's(EU) average; second, to explore and discuss potential directions of change that could improve social protection in Romania. To this end, we adopt the conventional distinction between the social insurance system(pensions, unemployment benefits, sickness and maternity leaves, compensations for workplace accidents, etc.), the social assistance system(means-tested income support benefits, family allowances, benefits for people with disabilities, 1 See: The European Pillar of Social Rights, https://ec.europa.eu/commission/ priorities/deeper-and-fairer-economic-and-monetary-union/european­pillar-social-rights/european-pillar-social-rights-20-principles_en(Accessed: 15 September 2020) 2 http://www.cdep.ro/pls/dic/site.page?den=act2_2&par1=2(Accessed: 15 September 2020) 3 https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN­20200131-2(Accessed: 15 September 2020) social housing and other forms of support in kind for low-income households, etc.) and subsidised social services(child care, long­term care for the elderly and those living with a life-limiting disease or disability, protection for vulnerable groups, etc.). Our focus remains on redistributive social transfers that provide income-support in situations involving unemployment, poverty, old age or other forms of vulnerability, i.e. through social protection and social assistance and benefits. When analysing the functioning of social protection and forwarding recommendations on how to improve it, we bear in mind the specific context of the Covid-19 pandemic, but also some enduring features specific to Romania that warrant greater attention in the design of social policy: Very high rates of in-work poverty(16% as compared to the EU average of 9%)³ Marginalisation and severe multiple deprivations faced by Roma communities High levels of income inequality and excessive taxation of (low) wage-earners Rural-urban divide in terms of access to fair employment and social services High rates of transnational labour migration to other EU countries and very low rates of immigration to Romania In the first section, the report takes a cursory glance at major changes that have taken place in the social protection system in Romania during the past decade, demonstrating that the underlying rational has been to slash expenditures, reduce state involvement in the provision of welfare and cut support for labour market outsiders. Based on a liberal-conservative understanding of society, these changes have had disastrous consequences for the poorer strata of society. Second, the report then performs a deep-dive into the main means-tested income support benefits and social protection for the unemployed, while also providing a summary review of other welfare policies. Next underscore that the main consequence of welfare state retrenchment during the past decade has been that Romania has remained a European laggard in terms of poverty reduction, access to services, and labour market integration. Freezing the value for the Social Reference Indicator(ISR), to which key social assistance programmes are pegged, has led to an increasing gap between labour market insiders and recipients of social assistance, who typically combine precarious labour-intensive work with welfare benefits(Vincze et al., 2019, Guga, 2016, Teșliuc et al., 2015, Bojincă, 2009). We also evaluate the macroeconomic impact of increasing the ISR and show how an increase in the ISR would translate into different economic growth levels. In the final section we conclude by outlining our key policy recommendations. 2