SOCIAL PROTECTION IN ROMANIA AT A GLANCE AND MAJOR CHANGES OVER THE PAST TEN YEARS 1 SOCIAL PROTECTION IN ROMANIA AT A GLANCE AND MAJOR CHANGES OVER THE PAST TEN YEARS The Romanian welfare state has undergone significant changes during the past two decades. Its universalist kernel has been gradually altered through both parametric and paradigmatic reforms, resulting in a residual welfare state model with a dualist bent(Kuitto, 2016a, Kovács et al. 2017, Raţ et al. 2019). Entitlements have been cut, especially for the least fortunate and those most in need of redistribution, while relatively generous benefits have been maintained for labour market insiders, whose incomes remain protected both before and after retirement. Dualisation is most evident in the social insurance system, with regressive redistribution in the case of maternity and child care leave benefits, and deeply rooted inequalities in the public pensions system. These issues also surface in the social assistance system. Although the number of social assistance programs in Romania is high(14 programmes in sum total), they fail to target the most vulnerable groups and are ineffective in reducing poverty. In fact, while any type of social assistance program fails to reach about 11% of people in the first income decile, the richest 20% of Romanians receive some form of tax­financed social benefits(Ministerul Muncii, 2019). The evolution of the social reference indicator(ISR) is illustrative of these broader processes of dualisation that have cast aside the aim of vertical redistribution to the detriment of the underprivileged. Launched in 2008, ISR was supposed to serve as a benchmark to ascertain the values of different social protection benefits in a coherent manner, based on a system of specific indexes(Law 292/2011 on Social Assistance). However, subsequent governments ignored the indexation rules for the ISR, which were set out in legislation, instead making ad-hoc decisions on the indexing of various benefits. For example, while the value of the universal child allowance(a popular measure supporting all families with dependent children) was increased more than three times in the last ten years, the guaranteed minimum income(reaching out to the most disadvantaged, who are allegedly“welfare dependent”) has remained more or less constant. Moreover, as we discuss later, the ISR was indexed neither to the monetary poverty threshold, nor to the minimum basket of goods and services(Mihăilescu, 2012, Pop et al., 2016, Guga et al., 2018). It remained constant at RON 500/month, regardless of the changing value of real wages and inflation levels. For example, by September 2019 the value of the basket of consumption goods for a family of two parents and two dependent children climbed to almost RON 7,000/month according to an updated study commissioned by the Friedrich Ebert Stiftung⁴, while the cumulated value of the guaranteed minimum income and family allowances for this model family was only RON 732 /month⁵. Poor targeting and regressive redistribution are compounded by the low level of expenditures on social assistance benefits. As Figure 1. shows, total welfare state expenditures in Romania are below 15% of GDP, whereas the European average currently lies at 28% of GDP. Overall, in terms of welfare spending Romania is also a laggard when compared to other Central and Eastern European countries( Figure 2). The data furthermore shows that the bulk of welfare state expenditures in both the EU and Romania go towards financing old-age pensions. Furthermore, compared to the EU average, Romania directs a significantly lower share to benefits aimed at tackling social exclusion, unemployment and providing housing benefits. 3 4 3