Inside the European Union: A Diagnosis of the Labour Market and Social Protection System in Romania at the Moment of Integration

20 Pages Posted: 7 Feb 2007

Date Written: February 2007

Abstract

In Romania, a combination of population decline, slow job creation and early retirement resulted in employment decreasing significantly in the 1990s, although the employment rate has stayed above average levels in the New Member States. Industrial restructuring and land restitution have induced a peculiar shift of less qualified and older-aged employment from industry to agriculture, which has represented a survival strategy for those with inadequate skills. Urban unemployment rates have been significantly above rural ones, since subsistence agriculture has absorbed a part of the jobless persons.

The institutional structure of social protection is fragmented, with unclear delineation of responsibilities, especially between central and local levels. An excessively high number of central agencies makes the financing of many social protection programmes unclear. The health care system has generated some serious problems of access to medical services for low-income groups and limited coverage in rural areas and small towns. The pension system, although reformed in 2000, continues to have inequities in pension levels; a low number of contributors, reduced rate of pension coverage and insufficient resources. Social assistance has developed since 1990 to cope with crisis situations, and replaced in 2002 by the Minimum Guaranteed Income, partially funded by local budgets and partially by the state budget.

Overall, public expenditures on social protection, education and health - as a percentage of GDP - have increased during the transition period, but remain among the lowest in Europe. The co-ordination of spending among various public institutions remains a weak point, negatively impacting its effectiveness.

Keywords: Labor Economics Policies, Labor Force and Employment, Size, and Structure, Retirement; Retirement Policies, Wage Level and Structure, Wage Differentials, Agricultural Labor Markets

JEL Classification: J08, J21, J26, J31, J43

Suggested Citation

Zaman, Constantin, Inside the European Union: A Diagnosis of the Labour Market and Social Protection System in Romania at the Moment of Integration (February 2007). Available at SSRN: https://ssrn.com/abstract=961816 or http://dx.doi.org/10.2139/ssrn.961816
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