Dwindling Work Force Spells Trouble for Pensioners

By Marian Chiriac, InterPress Service, 16 March 2000

BUCHAREST, Mar 16(IPS)—The new millennium began in Romania with 33,000 less Romanian residents than at the start of 1999. The number, culled from official data released earlier this month, shows that the country's population is dwindling, a direct result of rising waves of emigration and falling birth rates.

The smaller population—now standing at 22.5 million—poses challenges for the government, particularly as the country is seeing itself age; its elderly population is growing while the number of its young people are falling.

The National Commission for Statistics (CSN) report says that the number of girls aged 0-14 contracted 23 percent between 1991 and 1999. Birth rates also fell from minus 32,000 in 1998 to minus 30,000 in 1999.

“The main problem is that fewer and fewer Romanians want to have children due to the difficult economic situation in the country,” says Mihnea Chiuhat, gynaecologist at a hospital in the capital Bucharest. “How can a family live on only 100 US dollars per month?”—the average monthly salary in Romania.

Romania's retired population has increased dramatically over the last 10 years—much of that rise, artificially produced. Unemployment rose in the country after the 1990 overthrow of the communist regime. The loss of eastern markets, privatisation of state-owned companies and cost cutting exercises in many of these firms left many Romanians jobless.

A considerable number of those who lost their jobs either went into early retirement or retired disabled.

“I prefer to stay at home with my small pension of 55 US dollars than to continue to work in a bankrupt state-run company,” says Ion Filip, 59, a former auto mechanic who quit his job two years ago.

Filip is not alone. Thousands of Romanians are retired before the age of 60. The government made it easy by adjusting the retirement age several times. Currently the average age of retirement is 52 for women and 57 for men.

“Romania is now in a very difficult situation. The most worrying is the fact that there are almost 6 million pensioners while the number of actively employed persons is only 4.5 million,” says Sorin Paslaru of the Labour Ministry.

This trend toward early retirement in combination with the current worsening economic conditions in the country, means that many retirees are barely surviving economically. The pension system is going bust because contributions from financially-strapped companies have dwindled. And the government has tried to restrict pension spending because total expenditure has reached a critical point.

At the end of last year, the Romanian pension system had accumulated a debt of about 1.1 trillion Lei, or 57.9 million US dollars.

But help may be on the way with a new pension scheme, set to be implemented next year. The scheme, worked out with World Bank help, also calls for early retirement. But it envisages the transition from a pensions system based exclusively on the principle of inter-generational solidarity to a three-pillar pensions system within which the first pillar would maintain the principle of inter-generational solidarity, the second would consist of compulsory capitalised individual savings and the third would represent voluntary pension savings.

But for many elderly Romanians the desired reforms from the pension system will come too late.

“I can not understand how during the communist regime my pension was sufficiently enough for a decent living and now this is just a dream for most of ours,” says 72 year old Ana Vlasceanu.