However, the latest data of the welfare department within the Labor Ministry shows that the government has already spent around RON19 billion (EUR4.36 billion) on welfare, with the amount including expenditures allocated through the budget of the Labor Ministry to other ministries, as well as through local budgets.
This is the government’s spending on the eight million Romanians who at present get some form of social aid or beneficiaries of holidays and of social security benefits, whose number has risen alarmingly in a few years. However, the population has declined by almost 3 million residents over the course of a few years. How has it come to this?
“On the one hand, the wellbeing of the years 2001-2007 has reflected in an increase in amounts allocated for the poor. As the state found itself wealthier, it could afford to be more generous. Inevitably, abuses followed. With eligibility left into the hands of mayors and amid weak control from the central Government, discretionary allocations started. Many of them were done in election years 2007-2009, when we had six rounds of elections,” explains Sebastian Lazaroiu, former Labor minister and former advisor to president Traian Basescu.
“The Labor Inspection that exists at the moment can only notice the fraud and irregularities in the system. But since it is only a ministry department, lacking authority and the means to enforce sanctions, it is surprising that we only spend 15 billion per year on welfare. Considering how weak control is, spending could be double as high,” adds Lazaroiu.
Marian Sirbu, former Labor minister, does not share this opinion, instead he says Romania has never been a welfare state.
“I have always believed that Romania was not a welfare state. However, welfare spending can always be optimized. We have never been a welfare state and this is seen in the low share of welfare to GDP. The adjustments, especially in times of crisis, are necessary precisely to save some of the welfare character of the state,” said Marian Sirbu, former labor minister from PSD (Social Democratic Party).
Where the cuts will be made in 2012
The budget projection for 2010-2015 published on the website of the Finance Ministry reveals that in the future welfare spending (except for the pension budget) will be cut by 0.21% for social aid and by 1.99% for social insurance.
Almost 6 million Romanians receive social benefits to raise their children (government allowances, incentives and allowances for mothers), disability benefits and “emergency” benefits, but the number of those receiving some sort of social benefits is much higher, if you include those who receive subsidies from local budgets.
In the first six months of the year, the number of beneficiaries of social aid reached 5.68 million people, 1.7 million more than in 2004. During the same period, spending on social benefits tripled, going from RON1.3 billion in 2004 to RON3.85 billion at the end of June this year, according to data published on the Labor ministry website.
The new law reduces the categories of spending from 54 to 9
The law on welfare, tacitly adopted in Senate in early November, is currently debated in the Chamber of Deputies. The purpose of this law is to reduce welfare spending by 0.78% of GDP by 2013.
The categories of spending will be cut from 54 to nine. In order to distribute the money correctly and efficiently, welfare will be divided into four major categories, correlated with EU practice: measures to prevent poverty and the risk of social exclusion, the welfare of families and children, welfare of people with special needs and other types of aid and facilities.
“The poorest Romanians are not included in the system and this must come to an end. Aid from the state means helping those in need, but the system has in the last few years developed the best barriers to remove from the game those who are in need,” said Lazaroiu.
“The current law leads to the modification of the 20 special laws which in fact refer to the various categories of beneficiaries. This package of laws is not sufficient to reduce spending. Of course, when you put things in order, there is less squandering. But you also need to strengthen Social Inspection and the institutions that monitor and issue certification.”
“There is a program to modernize the welfare system, assisted by the World Bank, with a half a billion euro loan which, if respected, will lead by the end of 2013 to spending being cut by 0.8% of GDP,” says Lazaroiu. But, according to him, this program could be delayed because of the election year that will follow.
“All parties want to continue to benefit from the squandering and lack of control in the system, in order to buy votes with government money,” believes Lazaroiu.
(EUR1=4.3564)
(English version by Daniela Stoican)