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The crisis increases poverty in Romania in 2009
The Economic crisis increases poverty in Romania, according to a report of the World Bank. The elderly, the employees with less job security and the families supported by the Romanians working abroad will suffer the most.
The Government must take firm measures for the incomes of the Romanians not to slide abruptly, say the experts of the World Bank. "The Household wealth will be affected by a smaller demand for workforce as well as by the increase in the unemployment rate and the smaller amounts of money sent by the Romanians working abroad. The Government could take into account certain measures to counter the crisis shocks", shows the report of the global institution. According to it, in Romania, the absolute poverty could increase this year, as compared to 2008, by 1 or 2 points and could affect 11% -12% of the families. The worse part is that the people affected will live under the poverty line because the Romanian expenditure per capita for social protection is low and there are no premises for increasing it due to the budgetary constraints. The amounts for social protection rise, this year, to 11.4% of the GDP.
The elderly are very vulnerable to poverty because Romania does not have clear rules on indexing the pensions, the World Bank experts show. Many European countries have a clear scheme for indexing pensions according to the price increases. The World Bank analysts note that the significant increases of the pensions in 2007 and 2008 will produce a deficit in the pension system representing 2.3% of the GDP as from this year. In 2050, the deficit would reach 6% of the GDP. "This deficit, along with the possible negative effects of the international financial crisis could jeopardize the plans for further integration and convergence of income at EU levels", says the report. The fiscal pressures are generated by the relatively small retirement age, so that the World Bank experts suggest raising the retirement age of women and smoothing it with that of men. Another problem identified by the World Bank refers to the aging of the population, and this will hinder the fiscal situation of the pension system.