Tag: social security

  • Budget for 2025, promulgated

    Budget for 2025, promulgated

     

    The outgoing president Klaus Iohannis signed the decrees promulgating the 2025 state budget and social security budget laws. The two bills had been quickly endorsed last week in the joint plenary meeting of the Romanian parliament. MPs in the opposition—AUR, Save Romania Union, SOS Romania and the Young People’s Party—submitted thousands of amendments, but these were dismissed one by one by the vote of the ruling coalition, comprising the Social Democratic Party, the National Liberal Party and the Democratic Union of Ethnic Hungarians in Romania.

     

    The opposition claimed that many amendments were rushed away without careful consideration. The budgets of ministries, on the other hand, were adopted as received from the reporting committees, and one of the few amendments to pass concerned an increase in the funding of the health ministry. Another amendment scrapped the approx. EUR 140,000 originally earmarked to the Constitutional Court of Romania for covering medical prescription claims for employees and retired judges.

     

    The draft budget for 2025 was passed by the government on February 1 and is based on a 2.5% economic growth rate and a budget deficit of 7% of GDP. The 2025 budget will enable the country’s development process to continue, PM Marcel Ciolacu said. He emphasised that higher amounts have been earmarked for the health ministry, for motorways and railways, as well as for education, and he dismissed the idea of ​​an austerity budget.

     

    In turn, the finance minister Tanczos Barna described the state budget for 2025 as “modest” and based on a prudent increase in revenues, “without exaggeration.” He claimed that there is “enough money for salaries, pensions and social benefits”.

     

    The budget was criticised not only by the opposition, but also by employers and trade unions, while Fiscal Council experts said that revenues were overestimated.

     

    The 2025 budget was finalised after late last week an IMF delegation completed its talks in Bucharest with the main institutions responsible for Romania’s monetary and fiscal policies. It was not an assessment mission, but only a fact-finding one, and PM Marcel Ciolacu assured the IMF of the government’s determination to comply with the budget deficit target of 7% of the GDP and to implement the reforms undertaken in the National Recovery and Resilience Plan.

     

    The IMF made public its latest forecasts regarding the Romanian economy last autumn, when it estimated a 7% deficit for the end of 2025, the same as predicted by the Government. The IMF estimates are, however, more optimistic both in terms of the economic growth rate (3.3%, compared to only 2.5% forecast by Bucharest) and inflation (3.6%, below the 4.4% target set by the government). (AMP)

  • The State Budget – adopted

    The State Budget – adopted

    On Tuesday, Romanias Parliament adopted the 2021 state and social security budget in the form proposed by the Government. This is the first state budget that was not altered in Parliament, with the coalition managing to reject all the amendments proposed by the opposition. Representatives of the National Liberal Party, the Save Romania Union – PLUS Alliance and the Democratic Union of Ethnic Hungarians in Romania, which make up the governing coalition, have described the 2021 budget as balanced, based on sustainability, political responsibility and economic growth.



    Prime Minister Florin Cîţu has stated that this budget marks the beginning of Romanias reconstruction, but this can be done only by reforming the administrative apparatus and through investments. Florin Cîţu:


    “Reform and investments, these are the two things that this budget is focused on. Record investments, half from European funds, and reform, mentioned so many times in the public space, but rather ignored in reality by many politicians. So, its time we did it.”



    Finance Minister Alexandru Nazare says the budget is robust, balanced and realistic. In turn, the Deputy Prime Minister Dan Barna considers that Tuesdays vote in Parliament confirms that Romania now has the most ambitious investment budget it has ever had.



    The Democratic Union of Ethnic Hungarians has drawn attention to the fact that multi-annual budgets are needed to secure economic growth and predictability for investors. Here is the Deputy PM Kelemen Hunor:


    “Weve managed to come up with a very well-structured budget, so in 2021, not only that the deficit goes down to 7.1, but we will be able to make investments in all major fields, from big infrastructure to health-care, from education to environmental protection and local development. These are investments that will change Romania in the coming years.”



    The opposition, which had filed more than 3,400 amendments, claims that the budget is based on the austerity principle. The Social Democrats have accused the governing coalition of instating a “budgetary dictatorship” and getting an absolute control over the budget, despite all constitutional provisions and democratic practices. Here is Lucian Romaşcanu, leader of the Social Democratic Senators:


    “The budget is anti-economic, anti-social, illegitimate and anti-national. It represents by no means the will of those who sent us to Parliament, and the worst thing is that, for the first time in 30 years, a budget was adopted without any amendments”.



    Representatives of the ultranationalist Alliance for the Unity of Romanians have also criticized the budget. Here is Deputy Mircea Chelaru:


    “This is the governing coalitions budget, not Romanians budget. Is an appalling budget, built on political exclusion.”



    Romanias 2021 budget was draw up on the basis of a 4.3% economic growth and a budget deficit of 7.1%, with revenues of up to 75 billion Euro and spending set at some 90 billion Euro. (M.I.)


  • Disquieting Budget Figures

    Disquieting Budget Figures

    Romanias consolidated budget deficit stood at roughly 3.2 billion Euros in the first half of the year, accounting for 1.61% of the GDP. The deficit is twice as big as in the first six months of 2017, but remains below the level forecast by the government of 2.21% of the GDP. The figures have been made public by the Finance Ministry, which explained that in the first half of the year budget revenues were 13% higher, but expenditure grew significantly, at a 19% higher rate than in the same period of 2017.



    The data published by the Finance Ministry shows that revenues from social security contributions grew by 37%. The Ministry has also noted that the month of June saw an improved VAT collection rate, which also rose by over 15% as compared to the same month last year, but that on the other hand revenues from income and salary taxes went down by almost 22% against a reduced tax rate, from 16% to 10%. According to the same data, payroll expenditures saw the highest increase, by over 24% as compared to the first half of 2017, a situation caused by the pay rises granted to public employees. Expenses incurred for the procurement of products and services also went up by 10%, and the social assistance costs have also been significantly higher.



    Investment expenditure, which includes capital investments as well as expenses for development programmes funded from domestic and foreign sources, stood at 9.1 billion lei, 1.5 higher than the same period last year. A month ago, Ionut Dumitru, chair of the Fiscal Council, cautioned that the budget deficit in the first five months of the year is very big, being, first and foremost, the outcome of higher expenses. According to him, unless measures are taken the deficit could reach 3.5 – 3.6% of the GDP at the end of the year. According to the economic forecasts made public by the European Commission in mid-July, the budget deficit could reach 3.4% of the GDP in 2018 and make it to 3.8% in 2019.



    In another development, deputy Prime Minister Viorel Stefan has recently said that the budget deficit for 2018 will certainly be under the 3% ceiling specified in the EU treaties, and that the adjustment of the structural deficit with a view to meeting the mid-term objective is planned to begin in 2019.


    (translated by: Daniel Bilt)

  • November 4, 2017 UPDATE

    November 4, 2017 UPDATE

    UNIONS – The “Solidaritatea Sanitara union federation announces its opposition to the Governments plan to transfer the payment of social security contributions from employers to employees, and says it will join the all-out strike planned by the countrys main union confederations. Previously, trade union federations Frăţia, Cartel Alfa and the National Union Bloc had voiced fears that this transfer would entail a drop in salaries and the loss of jobs. In turn, employer associations say that should this measure be implemented, they will have to lay off employees, while the National Liberal Party in opposition announced it would notify the Constitutional Court unless the Government gave up these plans. President Klaus Iohannis described the Governments initiative as fiscal confusion through which average gross salaries would only go up by a rough 70 eurocents. In response, PM Mihai Tudose and his Social Democratic Party chief, Liviu Dragnea, say they do not understand the opposition to the measures announced for next year, given that in fact both employers and employees would stand to gain. The Cabinet postponed to Monday the meeting in which the new provisions were to be discussed, on grounds that some of the bills on the agenda had not received all the required approvals.




    BY-ELECTIONS – The town of Deva, in western Romania, as well as 16 villages in 12 counties hold by-elections on Sunday. 16 localities elect their mayors, and a village will elect its local council. In Deva, the mayor position has been vacant since the former mayor, Mircia Muntean, re-elected to office last summer, was sentenced to six months in prison for abuse of office and DUI.




    HEALTHCARE – The Romanian healthcare and tourism ministries will work together to come up with medical tourism packages. The announcement was made by the Healthcare Minister Florian Bodog at a medical tourism conference in Bucharest. The healthcare services in the highest demand from foreign patients in Romania are dental treatments, spa treatments, and plastic surgery, Bodog explained. He added that the Government is working to adopt the public-private partnership bill, which will allow foreign partners to invest in Romania, including in the healthcare sector. The Romanian official added that he had already received offers from foreign investors interested in setting up hospitals and cardiovascular surgery and recovery centres.




    CAMPAIGN – MEP Cătălin Ivan has announced he intends to start a signature campaign to ban bearer shares in Romania. Such shares, which are not registered, may be transferred from one holder to another without tax and accounting records. Ivan argues that this enables civil servants to own stock in companies that are awarded public procurement or service contracts, without any means of combating corruption. According to official data there are around 400 companies in Romania having issued bearer shares, and most of them have been awarded government contracts worth hundreds of millions of euros. Bearer shares have already been banned in countries like the UK, Belgium, Portugal, the Czech Republic, Malta and Cyprus.




    PUIGDEMONT – Belgian authorities announced having received the international arrest warrant issued by Spain against the ousted Catalan leader Carles Puigdemont and 4 members of his secessionist cabinet. The source added that prosecutors would study the documents before submitting them to a judge. The five Catalan ministers arrived in Brussels this week, after Spain issued an arrest warrant for sedition. Puigdemont insists that he is not in Belgium to escape justice, and that he is facing a potential 30-year prison sentence for keeping his promise to his voters. A Spanish court approved the arrest after the five failed to appear in court on Thursday to respond to accusations regarding the Catalan independence declaration. Before the arrest warrants were issued, the European Commission said the trial of the Catalan separatists was for the judiciary to settle.




    HANDBALL – The Romanian womens handball team CSM Bucharest beat the Danish side Nykobing at home, 39-26, in the 4th round of Champions League Group A, making up for the surprising defeat they had sustained two weeks ago, in Denmark, 22-25. In the first 2 games in Group A, the Romanians defeated Krim Ljubljana of Slovenia and Vistal Gdynia of Poland, and are now qualified into the main group stage. Romanias target in the current competition season is to reach the Champions League Final Four.


    (translated by: Ana-Maria Popescu)

  • Government looks into pensions and allowances

    Government looks into pensions and allowances

    After the Cabinet formed by the Social Democratic Party and the Alliance of Liberals and Democrats focused for about six months on the salaries of public sector employees, it is now the turn of pensioners to have their incomes scrutinised.



    The measure does not concern the large category of pensioners whose benefits are proportional to their life-time contributions to social security funds, but those who receive the so-called “special pensions, namely former diplomats, pilots, magistrates, and former employees of the Defence Ministry, Interior Ministry and the intelligence services. The average benefits paid to these categories reach nearly 2,000 euros, and this is outrageous for a country where the overwhelming majority of the 5.3 million pensioners receive in average ten times less than that.



    Under these circumstances, the Government intends to change the law that regulates special pensions. Without reducing the benefits paid at present, the Cabinet intends to keep future pensions below the salary earned by the respective people while employed. Special pensions will no longer be adjusted to the salary increases granted to those employed on the same positions, but only to the inflation rate. Here is the president of the Social Democratic Party, Liviu Dragnea, explaining the reasons behind this plan:



    Liviu Dragnea: “The greatest risk here is that, unless we do something about it, the budget impact of these special pensions, which currently stands at 6 billion lei, may get to 10-11 billion in two years time, perhaps even 15 billion. At this rate, these pensions may put a lot of strain on the public budget, to the point of making it impossible for the government to increase the benefits of the other several millions of pensioners in Romania.



    The National Liberal Party, in opposition, is not happy with the idea. The senior vice-president Ilie Bolojan explains:



    Ilie Bolojan: “Throughout its election campaign, the Social Democratic Party said nothing about changing the special pensions, about reducing or confining them. As for operating these changes by means of an emergency order, we are against this solution, because, as the bill on the unified pay scheme has proved, rushing a bill through and failing to assess all the effects it may create triggers negative consequences in other fields.



    Just as it has luxury goods and luxury pensioners, Romania also has luxury children, whose parents receive much higher allowances for their rearing, prorated to the parents salaries. The ruling coalition in Bucharest has decided to put a cap on these allowances, and the Labour Minister Olguta Vasilescu suggested a ceiling of 1,800 euros per month.



    In another move, as of August 1 employers pay contributions to the public pensions and healthcare schemes for their employees proportional to the minimum national salary for full time employees, even for their part-time staff and for salaries below 322 euros. The goal is to avoid cases when part-time employment contracts are signed by employers in order to avoid higher taxes and contributions.


    (translated by: Ana-Maria Popescu)

  • The Week in Review December 6-12

    The Week in Review December 6-12

    David Cameron pays a visit to Bucharest


    Bucharest and London boast important bilateral relations and the two sides want to strengthen and develop this partnership, said Romanias President Klaus Iohannis after the talks he held with the visiting British Prime Minister, David Cameron. The Romanian President said the military and security dimension of bilateral cooperation had a major role, in a complex context marked by challenges. The economic side of the relationship between Romania and Great Britain was also tackled during the talks.



    President Iohannis underlined that trade exchanges last year reached the highest level so far. In turn, the British PM Cameron said that Romanians have a valuable contribution to the development of Great Britain in important domain such as finances, science and medicine. However he highlighted what he called the pressure put by the free movement of labour force on the public services in the UK. In turn, the Romanian Prime Minister, Dacian Ciolos, said upon his meeting with his British counterpart, that most Romanians who work in Great Britain are paying their taxes.




    The state and social security budget


    For the new technocratic government in Bucharest led by Dacian Ciolos the state and social security budgets for 2016 are a major challenge. If parliamentary parties have generally agreed with the draft budget, the representatives of civil society expressed their discontent with being consulted rather late. Institutions such as the Fiscal Council also criticized certain infringements of the fiscal rules.



    According to the bill proposed by the Ciolos cabinet, the Education and Healthcare Ministries will receive additional money, alongside the Interior, Defense and European Funds Ministries. Less money will be channeled towards the Labour Ministry. The budget is based on a deficit of 3% of the GDP, the maximum threshold agreed upon with the EU, and on an economic growth rate of 4.1%. The two draft budgets have already been forwarded to Parliament, which, according to the established timetable, is to give its verdict next week.




    Important decisions by the Supreme Council of National Defense


    As many as 1,200 Romanian soldiers and over 1,500 gendarmes will participate in various NATO, EU, the OSCE and UN missions abroad in 2016. The decision was made by Romanias Supreme Defense Council, in a meeting chaired by president Klaus Iohannis and attended, for the first time, by the ministers of the new government. On the occasion, they approved the Guide of the National Strategy for the Countrys Defense for 2015- 2019 and the Intelligence Strategy of the Romanian Intelligence Service, valid for the same period of time. Also, according to the Presidential Administration, the members of the Supreme National Defense Council have ascertained that the line Romanian institutions applied the sanctions set up at international level between October 2014- September 2015.




    The anti-corruption fight continues


    The National Anti-Corruption Directorate (DNA) has registered the highest credibility rate among the population thanks to its relentless fight against corruption of the last years. This week the DNA has opened a new case related to illegal retrocession, a common crime, that brought huge revenues to those involved in the case, among whom two public figures: journalist Dan Andronic, the director of the well known post-Communist daily paper, “Evenimentul Zilei, and the controversial businessman Remus Truica. In the early 2000, the latter was the head of the chancellery of the then PM Adrian Nastase, himself sentenced to prison on corruption charges. Prosecutors accuse the abovementioned of several acts of corruption and of setting up a criminal group to deal in illegal retrocession.



    The estimated damage in this case exceeds 136 million euros. In another DNA case, the High Court of Cassation and Justice has decided this week that the Liberal MPs Ioan Oltean, a veteran of post-Communist politics and Catalin Teodorescu, alongside the former head of the National Authority for the Restitution of Property, Crinuta Dumitrean, should be subject to legal restrictions pending trial. They are being investigated in a case related to illegal compensations worth more than 20 million euros, granted to a businessman by the National Authority for the Restitution of Property.




    Demography on a downward trend


    In 2014, Romanias population dropped under the threshold of 20 million – a level similar to that reported in mid 1960s. According to the National Institute for Statistics, last year Romanias population dropped by 80 thousand people, let alone the 40 thousand citizens who migrated. Such a great number of people is equivalent to the disappearance of two small towns every year. The president of the National Institute for Statistics, Tudorel Andrei, claims that until 2013 the number of population was reduced especially due to migration. In the years to come the main cause of the demographic downward trend is expected to be the low birthrate.


    (Translated by: Lacramioara Simion; Edited by: Diana Vijeu)

  • Home Care for the Elderly

    Home Care for the Elderly

    27.5 % of Romanian senior citizens over 65 (around 900,000 people) live in dire poverty, compared to a European average of 7%. Of them, one in five needs home care, but only 0.23% of them have the benefit of such care. These are grim statistics, little known to the general public. But wait, there’s more. NGOs that offer care services say that, even though over 350,000 people in Romania need home care, the healthcare budget, both insurance and ministry issued, has only paid for home care for 29,306 people. As such, NGOs have joined forces to compensate as much as they can for the lack of government funding. Let’s now listen to Doina Crangasu, head of the Caritas Confederation for Romania:



    “Two years ago, Caritas Romania had the initiative of creating an NGO platform providing social and medical services for seniors. In record time we managed to get together 57 NGOs from various counties around the country, which joined this on-line platform. 81% of SeniorNet’s member organizations announced a constant rise in demand for home care. Unfortunately, many requests go unanswered, because social services in Romania have many gaps.”



    Even though at this time there is work being done for a map of senior citizens’ needs, to see exactly what they are and in what areas, the need for intervention is urgent, and a number of needs can be readily identified. Depending on those, NGOs offer the following range of home care services: psychological counseling, social assistance, medical care, household work which the seniors is unable to perform. Many problems come from poverty, but also from loneliness. Some seniors are abandoned by families, others suffer from the ‘kids gone to work abroad’ syndrome, just as many kids have the same syndrome for lack of parents. Doina Crangasu:



    “These are generally elderly people who live alone either because they don’t have a family, because they are widows, are childless, or their children work abroad, or because an illness has caused them to lose independence and they have become incapable of carrying out daily tasks such as personal care or going to the doctor for treatment. At the same time, Romania faces a higher outflow of younger migrants. This means that in the countryside we see a predominance of older people with no family support, or support from the local authorities.”



    At the same time, many retirees have taken fate into their own hands, and created their own assistance structures. One example is the Mutual Assistance House for Retirees ‘Omenia’. With 1,400,000 members nationally and 35,400 members in Bucharest and its surroundings, this institution is underwritten by members and sponsors, as well as through a very low intensity commercial activity whose profits go back to the retirees. In the Rahova-Ferentari area of Bucharest, one of the poorest in the capital, on a tiny street with tiny houses, recalling the slums between the two world wars, we find one of the CARP Omenia areas, a tiny town for seniors with a small shop, a cobbler’s and tailor’s, a barber’s, a chemist’s medical cabinets and a small loan shop. All of them practice symbolic prices, at no profit, according to Gheorghe Chioaru, head of the National Federation of Mutual Assistance Houses for Retirees, who told us how pensioners contribute in order to have access to such services:



    “Each member pays a contribution. When they withdraw from the association, they are paid back their dues. In addition to the dues there is a monthly 3 lei contribution, of which 70% goes to help with burial costs, with the rest going for services. The dues depends on the size of pensions. The entrance fee is 20 lei. After that, members can borrow money from the association’s fund, depending on the size of their dues. They can borrow as much as three times more. Interest rates are between 1 and 14%.”



    The shop, workshops and medical facilities are for all members. But CARP Omenia pays special attention to the bedridden, as Gheorghe Chioaru told us;



    “There are cases in which some pensioners have never seen a doctor in their lives, and we send them a family physician. We have medical caravans going from village to village. In the countryside, old people are forgotten and abandoned. We take bread and food for people stuck in their homes. Another project involves a contract with UnitedAway, involving 100 pensioners who are stuck at home, and we send them food, hygiene products, a nurse, a dentist, and home care providers. The latter are a rarity, because they get training with us, but then leave the country. The state does nothing to encourage us.”



    At this moment, the government is working on a national strategy to protect the elderly, a strategy which needs a lot of improvement, as Doina Crangasu says:



    “Now we are in a process of public debate launched by the Ministry of Labor and Social Protection in early January. At the center of the public debate we have the National Strategy for the Promotion of Active Aging and Protection of the Elderly. We salute this initiative, but we looked at the project, and it has gaps. They promote active aging, and yet there is no mention of the situation facing most of the elderly right now.”



    Until the strategy goes through, NGOs are looking for independent financing, and are looking into European funds earmarked for the 2014-2020 period.

  • Economic Measures

    Economic Measures

    The Romanian Senate passed by a wide margin a bill cutting 5% off of social insurance payments by employers. If the draft law passes the lower chamber, it goes into a special plenary meeting in early July, to come into effect on October 1st. The government, which introduced the bill, said it is meant as an incentive for employers to create jobs. In a rare occurrence in Romania, both the parties in power and the opposition supported the move, but trade unions claimed that the economy cannot cope with it. Dumitru Costin, head of the National Trade Union Bloc, said that the social insurance budget would take a heavy hit:



    Dumitru Costin: “The present economic model in Romania cannot support this five percent slash in social insurance revenue, as the Romanian government plans, and the measure will not motivate employers and employees to come out of the informal economy. We should have a huge number of officially employed people, something like eight million, in order to make this work. I cannot believe that over two million more jobs would emerge overnight in the Romanian economy.”



    The IMF also expressed skepticism in relation to the move. Spokesperson Gerry Rice said that there would be an impact on the 2015 budget, which should be calculated. The vice-chairman of the European Investment Bank, Mihai Tanasescu, said that the move has to be accompanied by restructuring:



    Mihai Tanasescu: “Such a measure has to be accompanied by large-scale restructuring of the Fiscal Administration, in order to improve collection and priorities, so that the volume of investments may rise.”