FRIEDRICH-EBERT-STIFTUNG IMPROVING SOCIAL PROTECTION IN ROMANIA 2 BENEFIT ADEQUACY, COVERAGE AND POVERTY-REDUCTION EFFECTIVENESS In order to evaluate the impact of social transfers on social inequalities and welfare, we used two standard indicators: benefit adequacy, measured against the monetary relative poverty threshold(Eurostat methodology) and minimum wage, and relative poverty-reduction effectiveness, measured as the share of persons living in households below poverty thresholds based on their market income and other private resources(pre­transfers poverty rate) who nonetheless avoid poverty because they receive social benefits(post-transfers poverty rate). In addition, in order to estimate the coverage of benefits, we tracked the evolution of the number of beneficiaries in relation to the evolution of the poverty rate. Benefit adequacy worsened over time, as the gap between the minimum net wage and the national social reference indicator (ISR) continued to widen between 2008 and 2020. As of 2020, ISR only accounts for 37% of the minimum net wage and 66% of the 2018 monetary poverty threshold. The guaranteed minimum income has remained almost unchanged since EU accession, while the guaranteed minimum pension for those who qualify for old-age or disability pensions in the public system has increased moderately, but still falls below the ISR( Figure 4). Figure 4 The level of the Social Reference Indicator relative to the minimum net wage, the poverty threshold, the guaranteed minimum income and the minimum pension 1600 1400 1200 1000 800 600 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Poverty threshold for single person/ month GMI for single person/month Guaranteed minimum social pension National Social Reference Index Minimum net wage(no dependents) Sources: Tempo on-line(the poverty threshold), the Ministry of Labour and Social Protection(minimum wage, social reference index, guaranteed minimum income – GMI). Authors' own graph. Given that the statistics provided by the Ministry of Labour and Social Protection only report on the number of families receiving means-tested benefits, but do not indicate the number of persons who make up these families, nor do they break down the data by family structure, indicators of coverage could hardly be computed without using estimates based on EU-SILC or other survey data. However, existing data point to a decrease in the number of beneficiary families and also to a discrepancy between the high number of people living below the poverty threshold and the very low number of GMI beneficiaries and families with children receiving means-tested family allowances (see Figure 5). 6