April 20, 2010

ROMANIA: Romania Debates New Pension Law

. BUCHAREST, Romania / BalkanInsight.com / News / April 20, 2010 Romania needs a new pension law in order to tackle the challenges it faces in this sector, including measures such as an increase in the minimum retirement period, and the recalculation of some pensions, Prime Minister Emil Boc said on Tuesday. "The current public pension system is unsustainable. As it works today, without the necessary corrections, pensions in Romania will not be paid in the medium and the long run,” Boc said in front of the parliament, which is to start debate over a new law. Some 180,000 out of 4.8 million pensions have to be recalculated, while many of the pensions of retired military personnel are to decrease following the new law. Romania’s pension system is seriously affected by the low number of contributors when compared to the high number of people claiming pensions, the low employment rate among elderly workers, and the expansion of the black labour market. A recent report from the European Commission showed that the number of contributors for each pensioner fell to 0.79 in 2003 from 3.43 in 1990, while pension costs, as a percentage of the gross domestic product, declined during the same period to 6.5 per cent from 7.2 per cent previously. Statistics indicate that Romania’s employment rate is 65.4 per cent, way behind the European Union average. In mid-February the government approved a draft law reforming the country's public pension system, which is now under debate in Senate and should be enacted by June. Romania is trying hard to reduce public spending and to cut up to 100,000 jobs in the country's overstaffed public sector this year. The moves are an effort to speed IMF-prescribed reforms linked to the €20 billion aid package the country received.[rc] Copyrights © 2007 Balkan Investigative Reporting Network.