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Social orientation — no strategy yet
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Since the beginning of 2003 two additional factors have drawn increased attention to social issues, which the Government has constantly declared as its priority. Firstly, elaboration of the Poverty Reduction Strategy (for which the country wishes to receive World Bank and IMF credits). Secondly, necessity of a “bigger care for people” on the eve of local elections. That is why, at least half of the 400 Government decisions adopted in January — March were on social issues.
In this respect, emphasis has been placed upon strengthening state regulation in the field of employment, wages and social security. Thus, beginning with April 2003, the pensions of 658,000 pensioners will be raised by 18%. The Government passed this decision given the increase of the minimal wage, which in its turn should secure higher revenues to the state social insurance fund.
In March, the National Employment Program for 2003–2005 was finally approved. The situation of the labor market in the country is quite worrisome. The decrease in the population number registered since mid 90’ has been intensified in the recent years by the decreasing number of population able to work (ranging 18–62 years of age), in the IV quarter of 2002 they accounted for 1,579,000. According to statistics the latter reside mainly in rural areas, where 60% of the unemployed live. Resumed economic growth (in GDP terms!) had no impact so far on the employment: 1,688,000 in 1993 and 1,505,000 in 2002 (a 10.8% reduction). Under the methodology of the International Labor Organization, there were 110,000 unemployed and the unemployment rate was 6.8%. Youth, including those with higher education, accounts for the great majority of this figure. Half of those who went abroad in search for a job are younger than 30. The National Employment Plan provides that 70 “actions” would be organized to create new workplaces, to facilitate employment, to aid youth in finding jobs, to conduct professional training, to organize public works and to ensure social protection of the unemployed. The goal is to reduce the unemployment rate to 6.0 — 6.1% by 2005.
Government decided that the time has come to increase the monthly wage rate for the lowest (first) qualification rank workers in self-financing enterprises from 250 to 300 MDL. And since June 1 it will be raised for the second time — up to 340 MDL.
Gradual increase of the minimal wage sounds encouraging. However, a guideline, instead of inflation rate, should be rather considered adjustment of the minimal wage to the cost of living (in the IV quarter of 2002 — 521.7 MDL). So far, the ratio is 0.5:1.0. It is worth mentioning that the minimal wage of the public employee is currently 100 MDL, or 19.2% of the cost of living. Public employees’ wage has been a constant headache for the Government. In 2002 monthly wage in education was 464.2 MDL, or 67.1% of the average salary per country, in health-care and social services 463.3 MDL or 63%. The Government recommended raising the wage in the budget-financed sphere by 15–20%, however trade unions believe it is not enough. The Government declared it would raise the wage despite the fact that its arrears in paying wages to the budgetary sphere exceed 170 million MDL (approximately 12 million USD).
Republic of Moldova is considered to be one of the poorest countries in Europe. So who are poor, where do they reside, and what stratum is the most affected by poverty? According to the “Report on Poverty” developed by the Poverty Monitoring Unit of the Ministry of Economy poverty rate has been estimated at 22.8%, based on the relative poverty line — 50% of the average household consumption, i.e. every forth Moldovan may consider himself to be relatively poor. This conclusion has been made based on examination of 6,400 household budget surveys (2002).
Poverty level is a little higher in the South of Moldova, where agriculture and small towns are predominant. In general, residence in rural areas is a factor increasing the risk of poverty (poverty rate is higher in villages than in cities). As for small towns, unemployment is stagnant there, many “old” factories are not working and there are no investments to create new work places.
It is interesting that in contrast to many countries, in Moldova the poverty is lower in households lead by women than in those lead by men. At the same time it was pointed out that the younger the women are, the lower is the risk for the household to become poor.
In general, the young age of the household head, which is considered to be a risk factor in other countries, is not valid for Moldova. Moreover, the poverty among the households lead by young people, up to 30 years of age, is lower as compared to other families and represents 72.1% of the average level. The reason for this is the fact that traditionally young families benefit of material support from their parents and relatives, which enables them to enjoy better living standards especially until they have children.
The Government should pay attention to the fact that poverty in families increases with the number of children. The poverty rate in families with three children is 1.4 times higher than in families with one child, whereas in families with four or more children 2.1 times higher. Children up to five are in a particularly difficult situation. An extremely worrying fact is malnutrition in families with many children. Another risk category consists of retired people. Level of their poverty increases along with their age advancement.
Education — a good legacy of socialism — reduces the risk of poverty. People with higher education are 2.3 times less subject to poverty risk than the rest. Unfortunately, education has become lately a privilege of well-off families. Average per capita spending on education in poor families is 10.5 times less (!) than in prosperous ones. This is also valid for health-care: in poor families those expenses are 9.7 times less than in well-off families.
As we can see, poverty is many-sided in Moldova. But the country both lacked strategy on poverty reduction in the past and still lacks it. It has been two years now since various committees and projects are working, seminars and meetings are held. Nevertheless, there still is no integral vision of the problem and ways of its solution, which IMF/World Bank missions have noted with regret and left Moldova without seeing any Poverty Reduction Strategy that the Government promised to deliver by March 31.