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Social Policy against Poverty. The case of Romania

George Poede

Al I.Cuza University

IASI, ROMANIA

A. Social policy context

New Social Problems

The processes of transformation and transition to the market economy in Central and East

European countries are associated with social problems that had not existed or were not

exacerbated in their communist past. These problems were generated by the economic

recession, restructuring of the economy which eliminated some industrial sectors and a

specific privatization that reduced the number of jobs. The death and morbidity rates

increased dramatically in the area. The impact of unemployment and low-paid work are

major sources of the inequalities in the distribution of incomes. Therefore, there are

multiple risks for the least advantaged generated by the changes in the labor market such

as risk of poverty arising from low income and the risk of exclusion for those affected by

the poor-quality jobs and unemployment. In Central and Eastern Europe, inflation has

eroded the power purchasing of minimum incomes. The most vulnerable groups are the

least qualified, women, minorities (Roma population especially), youth, children, older

people and people with disabilities.

The social problems resulted from a combination of effects of previous inefficient

economies and consequences of current painful restructuring economies to the market

principles. Changes in unemployment and inflation rates are an indicator of the scale of

transition for most of the countries in this area.

Social Care under communism


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It is important to show that all the East and Central European countries have had

systems to provide care and offer support for individuals and groups. There were several

components of the social care system: the informal sector of the family, friends and

neighbors which remain the most important source of care and support for those in need;

the voluntary sector; the state sector ( regional and local governments departments and

agencies employing social workers and other group of paid staff) and, on a lesser scale,

the profit sector.

There were some key features of the communist approach to Social Care.

Officially, there was a denial of the existence of problems such as poverty, homelessness,

social exclusion, lack of access to better educational and medical services. Writing about

social care in Communism, Kemecsei states that:

On the basis of socialist ideology, the regime thought that it had no need of a welfare

policy because every action of the socialist state is welfare itself. Therefore they turned a

blind eye to any economic and social problems.1

Another important feature of the communist approach to social care was what

Deacon and others refer to as extreme centrally controlled welfare paternalism of the old

system. The three main sources of social help for those in need were the state, the place of

work, the family. Needs and responses to them were defined by the system and virtually

without taking into consideration the recipients own opinions and preferences. The

typical client was an object and not the self-determined subject. In this perspective,

Martin Potucek refers to the typical communist state which is taking all the functions of

the social policy, including those which in a democratic society are performed by the

family, community or non-state organizations and civil action groups. As a consequence,

the system negatively affected the social support and care by suppressing the social

solidarity with those in need, producing a diminished sense of responsibility for self and

others.2

1Kemecsei, E. The family under the impact of change in Hungary, Social Work in Europe, nr.2, p.32,

1995.

2 Potucek Martin - Current social developments in the Czech and Slovak Republics Journal of European

Social Policy, 3, p. 212, 1993.

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A third characteristic of social care in the former socialist states was the almost

complete outlawing of the non-state organizations. There has been in some countries of

Central and Eastern Europe a quite phenomenal growth in the number of community

associations and not-for-profit social care agencies since 1989 as part of the movement to

develop a social civil society.

The emphasis has been placed on the role of work as a provider of social services.

Large enterprises owned houses, child-care institutions and even hospitals and clinics and

social services were often administered by the enterprise trade union committee.

The difference between social policies and other public policies ( health and

educational policies mainly ) in this part of Europe consists in the difficulty to identify

clear social policy trends as it was not the case with economic ones. The transition to the

market economy and democratization were seen as the most important objectives of these

transformations. On a contrary, the social issues were not given much attention in the

transition strategies. Gotting noticed that social policy transformation turns out to be a

gradual, protracted process, far less incisive than in a transition from plan to market or

from authoritarian rule to the liberal democracy. Post-communist societies do not

suddenly throw overboard those social security systems that they inherited from the old

regime.3

The institutional and financial capacities of social policies and programs were not

able to solve the problems related to the social exclusion and the deteriorated social

cohesion, given the scale of the social needs and problems that the social policy had to

address. Social exclusion, poverty and social vulnerability became usual in vocabulary of

the social scientists. Social exclusion is associatedwith social stigmatization, isolation,

low self-esteem, the feeling of not belonging and not having been given a chance to be

included in the society. Also, this phenomenon is perceived as a generalized disadvantage

experienced by individuals due to different social handicaps. Social exclusion places the

individuals out of normal forms of social life due to lack of means and limited access or

poor participation in several of the most important areas of human activity like education,

labour, family and informal networks, consumption of goods and services,

3Gotting U. Destruction, adjustment and innovation: social policy transformation in Eastern and CentralEurope, Journal of European Social Policy, nr. 4 pp. 181-200, 1994

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communication, community and general public institutions, political life, leisure and

recreation. Social vulnerability is considered as a condition of exposure to risk of social

exclusion due to low income, low education and dependence on public support. It is felt

as dissatisfaction with main domains of activity or living circumstances and awareness

that they cannot afford a number of basic goods, services and activities accessible to the

rest of population. In this perspective, we agree with Bob Deacon (Bob Deacon - The

New Eastern Europe: Social Policy, Past, Present and Future, London, Sage, 1992) which

identifies two key tasks that the social policies have to accomplish in post-communist

societies, namely facilitating an active civil society and implementing an acceptable

concept ofsocial justice.

Table1.

Development of income poverty during the early transition process in selected CEE

countries

Country Poverty headcount index

(% of the population)

Late 1980s

Poverty headcount index

(% of the population)

1993-1994

Czech Republic

Hungary

Poland

Slovakia

Central Europe average

0.0

1.0

6.0

0.0

1.8

1.0

3.0

19.0

1.0

6.0

Bulgaria

Romania

Eastern Europe average

2.0

6.0

3.0

33.0

39.0

34.5

Estonia

Latvia

Lithuania

Baltic States average

1.0

1.0

1.0

1.0

40.0

25.0

46.0

37.0

Source: UNDP 1998, statistical appendix

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The social policy response

Many authors are observing that people in post-communist countries expect the

new system to improve in comparison with past social provision which was guaranteed,

universal, but often of poor quality and set at low level. Now, social policy has to face

new welfare problems with severely limited resources available for social protection and

social care. Based on political action, the social policy is considered to be the main way

to redistribute the resources generated by the economic activity in connection with the

aim of decreasing the market dependence of the people. The role of the social policy

should be assess in relation with the position played by the state/public, the market or the

networks and the family/civil society when providing social welfare and by the priority

given by social policy model to poverty prevention or income maintenance. In the

German model (Bismarckian) the objective is income maintenance and this one was

adopted by the most of Central and Eastern Europe countries. The prevention of poverty

as the basic objective of social intervention is emphasized in the Beveridge type of social

policy.

The fight against poverty was always an important political objective in the

modern states but the differences are coming from institutional design, policies, programs

and experiences. Under income-maintenance programs there are three approaches that

provide cash-benefits, (a) employment related, (b) universal, and (c) means-tested

systems. Employment related is a merit-based system compensating the loss of income

due to risks such as sickness and old age and are contribution-based social insurance. The

universal and means tested systems are non-contributory and the eligibility for benefits

in these systems is decided through the measurement of individual or family resources

against a standard based on subsistence needs. Means-testing is concerned with providing

resources to the people who will otherwise fall below the minimum standards of living as

it is defined in a specific country. In Central and Eastern Europe there are some studies

made on social assistance schemes named variously social assistance benefits,

minimum income, subsistence benefits, or social aid. The eligibility for benefit is

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established on a basis of an assessment of means, taking into account established

conventions of family obligations and reciprocity4.

The non-contributory means-tested benefits combating poverty reflect the social

history, the economic potential of the Central and East European Countries, the

institutional developments in the Social Policy Strategy. There are general schemes like

Social Assistance benefit to low-income families or life subsistence benefits but also

categorical schemes focused on specific social groups like care allowance, support for

families with children, additional payments for disabled children, invalidity pension,

social pension, personal pension, part-time work assistance, long-term unemployment

assistance, free meals or meals with partial payments, benefits related to education,

heating allowance.

An important question about social policy and welfare developments in former

communist countries is how these developments are to be assessed. Public expectations

are high but the problems to be addressed are immense in this prolonged period of

transition when the government resources are severely reduced.

After reviewing various approaches, Deacon5 lists ten criteria for evaluating the

social policy:

1. Degree of self-activity by the civil society in shaping policy and provision;

2. Relationship between social policy and economic policy;

3. Priority afforded to welfare provision (includes outcome measures);

4. What social group interests are served by the social policy;

5. Agencies of provision (state, market, citizens, family, employer);

6. Forms of control over policy or provision;

7. Relationship of welfare provider and welfare user;

8. Distribution;

9. Implications for the family formation;

10. National basis of the policy.

4 Capucha, L.A. Social Assistance, in Change and Choice in Social Protection. The Experience of Central

and Eastern Europe, (2 vols.), Phare, Consensus II programme, Bruxelles: European Commission, 1999.5 Bob Deacon - The New Eastern Europe : Social Policy Past, Present and Future in Comparative Context,

in Deacon B.,et al.,ed.- The New Eastern Europe: Social Policy, Present, and Future, Sage, London, 1992.

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B. National context

Economic situation

The process of transition to a market economy produced in Romania a lot of changes

connected with a general reduction of the GNP, a sharp decline in industrial

production production, a global rise of prices, currently devaluation, depreciation of

certain services such as health, reduction of social spending, an increase in

unemployment. All these factors affected the quality of life of the majority of the

population and the poverty became the most important concern of the government,

parliament and political parties, civil society, pressure groups.

Table 2

Evolution of different incomes in real terms compared to 1989

Source: Database of the Institute for Quality of Life quoted by Catalin Zamfir Poverty and

Social Exclusion in Romania, HDSE Report on Romania, Council of Europe, 1997.

.

The share of food and beverages in the structure of the consumption expenditure

represents a strong indicator of poverty. In the employed families, food and beverages

consumption represented 60% of the total consumption expenditures in 1994.

Romanians are confronted with new situations as the lack of monetary resources, low

professional skills, a reduced rate of school attendance in primary and secondary,

sharp decrease in the birth rate, high morbidity rate and others. Romania can be

explained by the insufficient attention given to the development of social care

services, the weakening of social ties and human solidarity as a consequence of

growing individualism.

1994 1995 1996

Average real wage 62.1 62.9 77

Minimum real wage 33.4 33.8 35.7

State pension 58.1 64.3 28.6Child allowance 25.0 28.6 28.6

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As a consequence, poverty became a major issue in media and political

institutions. The analysis of the present social context of Romania shows that after

1990 the lack of a coherent system of social services contributed to the deepening of

poverty. The social services tended to develop only as an answer to social crisis

situations. Two major crises persons with handicap and abandoned children-

imposed a rapid institutional development. The social intervention was characterized

by the priority given to the absorption of social consequences of those social crises

than to the correct treatment of multiple causes of the growing number of social

problems. As a result, the financial and institutional actions focused more on

institutions for abandoned children and people with handicap than on families and

communities and the social services were established more at the national and county

level. They were not able to prevent the child abandon, neglecting and abuse, school

abandon, juvenile delinquency and drug consumption or to ensure support for the

families. Professor Catalin Zamfir has established a list with the mechanisms and

factors that produced the explosion of poverty and social exclusion in Romania in

the last ten years:

The economic crisis produced the decrease of wages in value and number; the

real medium wage in 2000 was 60% from its value in 1989;

The polarization of wages; according to the National Institute for Statisticsbetween 0ctober 1997-1999 the wages of about 25% of the employees

represented less than 50% of the medium wage;

The diminishing number of wage labor to 55,7% in 2000 in comparison with

1989; Part of the income based on wage labor has been replaced by social

benefits;

Income uncertainty of those who are self-employed; The majority of self-

employed is working in agricultural sector which is producing low income;

Low value of social benefits: child allowance diminished very much, three

times less than its value in 1989 when it represented 10% from the medium

wage. In 2000, child allowance is only 3, 2% from the medium wage. The

value of the pension is 10% less than the medium wage. The group of retired

people is very large and vulnerable to changes occurred in prices of public

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utilities or food. In October 2001 the rate between wage earner and retired

people was 1:1, 44.

Getting into Agenda

Members of the Parliament, different political parties and the civil society began

to express with different approaches their attitudes toward poverty in the political

system. Beginning with 1992 poverty is a part of the systemic agenda. The most

vulnerable are the families with many children, families affected by the

unemployment, young people leaving the secondary school or the social institutions,

elderly.

The international factors represented by the World Bank, International Monetary

Fund, UNDP played an important role in including the poverty issues in the systemic

agenda and mainly in institutional agenda. They put pressure on Romanian

government to adopt anti-poverty measures in order to get the support of the

population for the economic reforms which, everywhere in Central and Eastern

Europe, produced a lot of harm to communities.

The formulation of the policy proposal

Backed in Parliament by a political coalition, Romanian government introduced in

1995 a project of law whose aim was to ensure the material support for the poor, one

year before the local, general and presidential elections. The project was approved in

the parliamentary commissions of Adunarea Deputatilor and Senate without much

concern for the economic and administrative feasibility. The project received the

consent of the political forces represented in Parliament and was quickly adopted

regardless the budget analysis process needed for such a public policy. As criteria for

the access to monetary aid, the project established a certain level of revenue. There

were no preliminary studies, nor a clear definition of groups living in poverty, no

administrative independent unit to implement the policy, no coordinating structures at

local and at national level or forms of evaluation.

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Fearing a strong negative reaction from voters, not a single political force

formulated fundamental critics to this project of law.

In August 1995, the law was promulgated by the President of Romania.

Policy implementation

In the process of policy implementation, the government decided to use the Social

Offices from the City Halls with poor training in the field of social work and low

professional skills instead of creating a new institution responsible for the

implementation of the newly adopted law. The public servants were supposed only to fill

applications with general information, mainly economic and less to define the target

groups emphasizing on demographic, biological, psychological, social, economic,

cultural and political characteristics, on numerical size of relevant groups projected in

time, on short and long range effects on target and non-target segments of the society.

Soon, the offices were blocked by a large number of people fulfilling the criteria adopted

- a certain level of revenue of the each of the family member.

By the end of the year, the first financial obstacles appeared. The huge numbers of

applicants received the allocations latter than previously set up. It was obviously that the

law was underfinanced and could no longer offer the allocations.

Here is a list of potential causes for the explanation of the failure of Social Aid Law:

1. Absence of the situational analysis prior to the formulation of the Law.

2. The lack of definition of the group entitled to the benefits.

3. An incorrect budgetary process.

4. Lack of skilled personnel able to implement the law.

5. Formulation and adoption of the law only in political institutions without a large

debate of the project among the specialists.

6. An inadequate definition of poverty and of the threshold used.

7. The Law focused exclusively on the monetary services without attention to

counseling, identification of personal causes for the situation of poverty.

8. A simple strategy without combinations on the regional local level in order to identify

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these resources

After one year, the law passed under the authority of local administration which was

declared responsible for the financial means to ensure the law provisions.

The majority of the local administration units suffer from lack of resources due to

the difficult process of taxation. New criteria were set up narrowing, in a large measure,

the number of those entitled to obtain the social aid. In the new context, some groups

were excluded.

The evolution of the aproved requests for social aid

655.178

322.255

168.473

145.473

161.177

176.159

1995

1996

1997

1998

1999

2000

Source: Ministry of Labor and Social Solidarity, Report on Social Assistance Activity,Bucharest, 2001

We can assume that the process of implementation had so many financial,

institutional and administrative obstacles that the law became non-operational. The

budgeting process was totally wrong and the law cannot longer fulfill the objectives and

the values supposed to be protected. The Social Aid Law is a typical expression of the

government failure to implement, evaluate and help the beneficiaries as they have been

defined. No report has been published on the Laws implementation and evaluation.

The poverty is even greater now.

Last developments

The failure of the strategy to combat poverty made the entire Romanian society

very sensitive to this problem. The Government, local authorities, academic community

became aware not only of the consequences of this social problem but also of a necessity

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to formulate a coherent long and medium anti-poverty plan. The establishing of Anti-

Poverty Strategies for member and accession EU countries was one of the objectives of

The European Conference in Nice (2000) with four global components for action: overall

access to resources, rights, goods and services, exclusion risk prevention, support for the

most vulnerable individuals and groups, mobilization of all relevant institutions.

These four components were included in the Romanian strategy alongside with

the objectives generated by the specific country transition situation for the next ten years:

Eliminating extreme poverty:

Eliminating the situations of severe social exclusion and the promotion of

social inclusion;

Poverty reduction of economically active persons and retired;

Cohesion and social development promotion;

Decent life conditions for children and their access to development

opportunities;

The new Romanian strategy has also a system of monitoring and evaluation, an

important element that was lacking in the previous institutional approaches to poverty. In

the framework of the new National Anti-Poverty and Social Inclusion Promotion Plan the

adoption of Guaranteed Minimum Income (Law nr. 416 from 18th of July 2001)

represents already an important element of the first objective eliminating the extreme

poverty due to his role in prevention of extreme material deprivation.

Bibliography

1. Catalin Zamfir ( coordinator ) Poverty Situation in Romania, The Research Institute

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for Quality of Life / PNUD Romania, Bucharest, June 2001.

2. Esping_Andersen, GThe Three Worlds of Welfare Capitalism, Oxford, Oxford

University Press, 1990.

3. Przeworski, A. Democracy and the market: political and economic reforms in

Eastern Europe and Latin America, Cambridge, Cambridge University Press, 1991.

4. Deacon, B. (editor) - The New Eastern Europe: Social Policy, Past, Present and Future,

London, Sage, 1992.

5. Staffan Marklund Social Policy and Poverty in Post-Totalitarian Europe, in

Scandinavian Journal of Social Welfare, Vol. 2, Number 3, July 1993.

6. Capucha, L.A. Social Assistance, in Change and Choice in Social Protection. The

Experience of Central and Eastern Europe, (2 vols.), Phare, Consensus II programme,

Bruxelles: European Commission, 1999.

7. Braithwaite, J. Grootaert, C. and Milanovici, B Poverty and Social Assistance in

Transition Economies, New York, St. Martins Press, 1999.

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