1

EUROMOD Update FEASIBILITY STUDY

Feasibility Study

ROMANIA

(TAX-BENEFIT SYSTEMS 2007-2010)

Cristina Stroe, Eva Militaru, Silvia Cojanu

December 2010

2

Author information: Cristina Stroe, Eva Militaru, Silvia Cojanu National Research Institute for Labour and Social Protection, Bucharest, Romania

About EUROMODupdate

A major EUROMOD development project is being supported by the European Commission DG Employment with the key objective to improve and extend EUROMOD’s usefulness as a tool for policy-relevant research and policy monitoring. This will involve

1) updating EUROMOD to cover recent policy systems; 2) enlarging EUROMOD from 19 countries to cover all 27 Member States 3) upgrading EUROMOD to operate using EU-SILC (European Union Statistics

on Income and Living Conditions) data as the input database; 4) re-building the “old” EU-15 using the most recent version of EUROMOD

software; and 5) developing methods and processes that facilitate the efficient updating of

EUROMOD in the future.

In doing so the project will encourage the widest use of EUROMOD in research and policy analysis at the national and international levels.

The project began in February 2009 and will last 3 years. The aim is to upgrade or newly construct in EUROMOD a selection of 9 or 10 countries each year, and to then update them in subsequent year(s).

The work is being carried out by the EUROMOD core developer team, based mainly in ISER, in collaboration with a group of national teams. The European Centre is responsible for establishing contacts and working relationships in the New Member States in order to explore the feasibility of bringing them into EUROMOD.

A project Steering Group has been established, under the chairmanship of Sir Tony Atkinson.

The main task of the Feasibility Studies is to lay the foundations for integration of the New Member States in EUROMOD, alongside the EU15, and therefore they all include:

1) key features of national tax-benefit systems; 2) identification of appropriate data requirements and data sources; 3) consideration of issues relevant for modelling each tax-benefit instrument

(tax evasion, non take-up of benefits, etc.).

For more information, see: http://www.euro.centre.org/euromod and http://www.iser.essex.ac.uk/research/euromod

3

Table of Contents

!INTRODUCTION......................................................................................................................4 1. ROMANIAN TAX AND BENEFIT SYSTEM .....................................................................4

1.1. TAXES ............................................................................................................................4 1.1.1. Direct taxes ...............................................................................................................4 1.1.2. Indirect taxes...........................................................................................................10

1.2. SOCIAL CONTRIBUTIONS........................................................................................10 1.3. SOCIAL BENEFITS .....................................................................................................14

1.3.1. Contributory benefits ..............................................................................................15 1.3.2. Non-contributory social benefits ............................................................................21

Goal: to support pensioners with low pensions. .......................................................................36 2. DESCRIPTION OF MAIN POLICY RULES .....................................................................37 3. DATASET AND VARIABLES FOR MICRO SIMULATION ......................................38 4. PARTICULAR MODELLING ISSUES..........................................................................40

4.1. INCOME UP-RATING.................................................................................................40 4.2. NON TAKE UP OF BENEFITS ...................................................................................41 4.3. INFORMAL ECONOMY .............................................................................................41 4.4. MIGRATION ................................................................................................................41 4.5. ROMA POPULATION .................................................................................................42

APPENDIX ..............................................................................................................................43 REFERENCES .........................................................................................................................70

4

INTRODUCTION The aim of the study is to assess the possibility of micro simulation on the Romanian tax and benefit system as part of the micro simulation EUROMOD project. The study starts with a detailed description of tax and benefit system in Romania including eligibility rules and units of assessment. Then, the main policy rules are described. Issues regarding datasets availability and data quality and a list of variables used for micro simulation are presented in the third section. The paper discusses particular aspects such as data ageing, non take-up of benefits, informal economy and migration as well.

1. ROMANIAN TAX AND BENEFIT SYSTEM

1.1. TAXES The Romanian tax system has undergone some major changes beginning from 2000, when the tax reform that started made the Romanian fiscal regime more simple and uniform. In 2004, the new Fiscal Code entered into force and brought important exemptions and facilities, but in the upcoming years the changes that took place in the Fiscal Code, except for the introduction of the flat income tax of 16% for individuals and companies, were mainly in favor of higher taxation. The most important direct taxes that are levied through the Romanian tax system are: income tax, real estate taxes, while the indirect taxes are: value added tax (VAT) and excise taxes.

1.1.1. Direct taxes Personal Income Tax The personal income tax is paid by individuals as a flat rate of 16% levied on the income tax base. The personal income tax is paid by the Romanian residents, but also non-residents who are involved either in a dependent activity in Romania or in an independent activity through a permanent headquarters on the Romanian territory. The taxable income for individuals who have residence and live in Romania includes all income earned in Romania or abroad. For the individuals who have residence, but not live in Romania, the taxable income includes only the income earned on the Romanian territory, with two exceptions: (1) the center of person’s vital interests is placed in Romania and (2) the person lives in Romania for at least 183 days per year, if one of these two conditions is fulfilled for at least 3 consecutive years, in which case the taxable income includes also income earned in Romania and abroad, starting with the 4th fiscal year. The income categories that are subject to personal income tax are: ! income from independent activities, ! income from dependent activities (salary or wage), ! income gains from real estate rental, ! income gains from investments, ! pensions and temporary work incapacity benefit, ! income gains from property transfers, ! income from agricultural activities, ! income from gambling and prizes,

5

! other income. Personal income tax free income categories are: ! Social benefits (allowances, indemnities, social insurance benefits, scholarships), other

than pensions and temporary work incapacity benefit. Are excepted from personal income tax: invalidity pensions for the 1st degree of invalidity, benefits for war invalids, survivors’ pensions.

! Income for damages suffered, either received from insurances of any type or from other sources, including moral prejudice.

! The income equivalent of coupons which are freely allotted to individuals, according to the legislation in force.

! Income or goods from inheritance or donation ! Income gains from real estate property transfers in the following three situations: the

property is regained under special laws; donation between relatives of the 3rd degree at most and between spouses; inheritance, if the succession is finalized in maximum 2 years from the moment of decease.

! Income earned by the members of diplomatic missions in Romania, under the condition of reciprocity and income earned by members of Romanian diplomatic missions, councillor offices and cultural institutes placed abroad.

! Income earned by officials of international organizations for their activity in Romania. ! Income earned by foreign citizens for consultancy activities, under non-reimbursable

financing agreements. ! The difference of subsidized interest for credits, under the legislation in force. ! Income from prizes gained by sportsmen medalled at European, World and Olympic

championships. The taxable period is equivalent to the fiscal year which corresponds to the calendar year. The flat rate of 16% is applied on the income tax base by income source. The revenues are collected to the state budget, with the exception of 50% from the tax on real estate property transfer which goes to the local budgets. As it follows, we shall detail the calculation of the tax base for each category of income which is subject to personal income taxation. Income from dependent activities (employees) For the main activity: The tax base is the difference between the net wage and personal deductions and exemptions (see Fig 1). Fig. 1

TAX BASE

(-)Tax exemptions/ deductions

Net wage

GROSS WAGE

(-)Social contributions paid by employees (% of gross wage)

TAX BASE before tax exemptions / deductions

6

The following exemptions may be deducted from the tax base: - Personal deduction. Beneficiaries of personal deduction are the taxpayers who have a monthly gross wage under or equal to 3000 Lei. The personal deduction is applied only on wages and only at the main job or activity. The amount of the deduction is function of the number of taxpayer’s dependent persons, as seen in the table below (for a monthly gross wage not higher than 1000 Lei).

Number of dependents

Personal deduction (Lei)

0 250 1 350 2 450 3 550

4 or more 650

If the gross wage is between 1001 and 3000 Lei, the personal deduction is decreasing with income and its amount is established by applying the following formula (Order of the Finance Minister No. 1016/2005): Personal deduction = Personal deduction (gross wage <=1000 Lei) * [1-(Gross wage – 1000) / 2000] The dependent person can be the spouse, children or other family members, relatives up to the 2nd degree of the taxpayer or his/her spouse’s with a taxable and non-taxable income which does not exceed 350 Lei. Children under 18 years are considered dependent persons. If one person is dependent to more than one taxpayer, the personal exemption is allotted to only one of the taxpayers, according to the parties’ wish. - Trade union fee. - Contributions to private voluntary pension schemes, if the annual contribution does not exceed the equivalent in Lei of 200 Euro (equivalent to 668 Lei1 for policy years 2007 and 2008) and 400 Euro (equivalent to policy years 2009 and 2010). - Savings in collective systems for dwelling expenses. The exemption limit is 300 Lei per year. For secondary activities: The tax base is calculated as the difference between the gross wage and compulsory social contributions. The personal income tax is paid monthly by the employer. Income from independent activities (self-employed) Income from independent activities includes: commercial income, income from liberal professions, income from intellectual property, earned individually or in association. The net income from independent activities (net gain) is the difference between the gross income from independent activity, tax deductible expenses and social contributions (except for the health insurance contribution, medical and leave indemnities health insurance contribution and work accidents and professional disease insurance contribution) paid by self-employed. The tax base (taxable income) from independent activities is the difference between the net income from independent activities (net gain) and health insurance contribution, health insurance contribution for medical leave and indemnities, work accidents and professional

1 1 Euro= 3.34 Lei in 2007 and 1 Euro=4.27 Lei in September 2010 (annual average exchange rates).

7

disease insurance contribution and also the carried up losses for the last five fiscal years, if the case, as well (see Fig. 2). Fig. 2

If the self-employed has no employees, the rule is to be taxed based on net income established by income norms, issued by the Ministry of Finance on yearly basis, but self-employed without employees may choose to be taxed based on their real income. Also as a rule, net income from intellectual property rights can be calculated, if the taxpayer wishes, as the difference between the gross income and a 40% (or 50% if the income is payment for creation of monumental art works) of gross income as deductible expenses and social contributions (policy years 2007, 2008 and 2009). Beginning from July 2010, the share of the above mentioned deductible expenses decrease to 20%, respectively 25%. Net income from intellectual property rights may be calculated based on registered expenses as well. The personal income tax for independent activities is paid on yearly basis. Some income categories from independent activities, such as income from intellectual property rights, income from activities regulated by civil conventions (under the Civil Code), income from technical, accounting and legal expertise are taxed at source as a share of 10% of the gross income paid. This is considered anticipated tax payment. At the end of the year the anticipated payment is compared to the real duty (16% of net income) and compensations are made in favour of the taxpayer or the state budget. Income from real estate rental The net taxable income (tax base) is calculated as the difference between the gross income from real estate rental and a 25% of the gross income which represents deductible expenses. Taxpayers can choose to deduct the real expenses in which case they have to do their bookkeeping (see Fig. 3). Fig. 3

TAX BASE

(-)Losses (carried up for the last 5 years)

Net income from independent activities

(-)Tax deductible expenses

GROSS INCOME from independent activity

(-)Social contributions paid by self-employed (with the exceptions mentioned in text)

(-)Health insurance contribution (-)Health insurance contribution for medical leave and indemnities (-)Work accidents and professional disease insurance contribution

TAX BASE

(-)Tax deductible expenses (25% of the gross income) GROSS INCOME from

real estate rental

8

The personal income tax for real estate rental is paid on yearly basis. Income from investments Income from investments includes dividends, gains from capital investments, interests, foreign exchange operations and income from company liquidation. Until July 2010, gains from interests at current accounts and deposits constituted for savings in collective system for dwelling expenses were exempted from taxation. From 2009, if the dividends are reinvested for employment they are not subject to taxation. The tax base is represented by the net gain from investments. With the exception of dividends and gains from interests which are due monthly, income from investments is taxed quarterly. Income from pensions All income from pensions, earned either in public or private, mandatory or voluntary system is subject to personal income tax. Beginning from May 2010, pensions of severe and accented disabled individuals are not taxed by exception. The tax base is the difference between the gross income and mandatory social contributions and the personal deduction of 900 Lei (for policy year 2007) or 1000 Lei (for policy years 2008, 2009 and 2010) (see Fig. 4). Fig. 4

The tax on pensions is paid on a monthly basis. Income from temporary work incapacity benefit The temporary work incapacity benefit is subject to personal income tax. The net benefit is calculated by subtracting the 16% tax rate from the gross benefit amount. No social contributions are levied on temporary work incapacity benefit. Income from agricultural activities The income from agricultural activities is calculated based on income norms on area unit, issued yearly by the territorial branches of the Ministry of Agriculture and approved by the Ministry of Finance or else, the taxpayer has the option of bookkeeping and register real income. The tax base is the net income calculated on the basis of income norms or else, the difference between income and expenses.

TAX BASE

(-)Personal exemption (1000 Lei)

(-)Social contributions (health insurance contribution) GROSS INCOME from pensions

9

The tax on income from agricultural activities is paid on yearly basis. Income from gambling and prizes The tax base is the difference between the gain from prizes and gambling and an exemption of 600 Lei per prize and gain at gambling at the same organizer or payer during one day. We have an exception from the tax rate of 16% in the case of income from gambling which was taxed with a 20% rate for the policy year 2007. Then, between 2008 and half 2010, the tax was 20% for amounts up to 10000 Lei and 25% else. From July 2010, the rate was set to 25%, irrespective of income amount. Income from real estate property transfer The tax rate is differentiated according to the number of years passed from the moment the property was originally acquired. So, if the building or land is transferred in three years from the original accrual the tax is 3% on the transfer value if this does not exceed 200,000 Lei; and 6,000 Lei plus 2% for the difference between the transfer value and 200,000 Lei for transfer values higher than 200,000 Lei. If the real estate is transferred after more than three years from the original accrual the tax is as follows: 2% up to 200, 000 Lei and 4000 Lei plus 1% from the difference between the transfer value and the threshold of 200,000 Lei. Real Estate Taxes The real estate taxes consist of tax on buildings and tax on land. These taxes are collected by municipalities. Building tax is levied on all buildings in Romania, except for state-own buildings, buildings own by municipalities and by public institutions, churches, historical monuments, schools, public hospitals. Other buildings that are exempted from building tax are buildings used as hothouses, hotbeds, silos or buildings own by foundations or associations and which are used for social or humanitarian activities. For individuals, the building tax is calculated as a 0.1% of the taxable value of the building, per year. The calculation of the taxable value takes into account three elements: the construction material used for the building, building facilities (water installation, sewerage, electrical and heating installation), geographical elements (the rank of the municipality and the location within the municipality). The taxable value thus calculated is then reduced by a percent corresponding to the age of the building: 20% for a more than 50 years old buildings, 10% for a building which was built between 30 and 50 years ago. If the building is used for dwelling and has more than 150m2, the taxable value is multiplied by 5% to every 50m2 or fraction which exceeds the above mentioned threshold. From July 2010, individuals who own more than one building are supplementary taxed. The increment is applied to the taxable value of the second (65%), third (150%) or fourth (300%) building. The building tax is paid yearly in two stages and if paid in advance, the tax is reduced by 10%. Land tax is levied on all land in Romania, except for land own by churches, cemeteries, schools, universities, hospitals or other public institutions, state or municipalities if not used for commercial purpose. Are also exempted from tax land roads, lands which are not suited for agricultural or forestry activities, land used for fighting against floods, used for water sources or underground exploitation purposes, land connected to hydro technical systems, navigation roads, and harbour infrastructure.

10

The land tax is paid by the owner and calculated on the basis of area, municipality rank and location within the municipality and usage of the land. The land tax is paid yearly in two stages and if paid in advance, the tax is reduced by 10%. Vehicle tax is paid for all vehicles registered in Romania, except for cars and motorcycles own by disabled persons and adapted to their disability, cars own by public institutions and conveyances used for public transportation. The vehicle tax is paid by the owner and differs by vehicle type and cylindrical capacity. The tax is paid yearly to the local budgets in two stages and if paid in advance, the tax is reduced by 10%.

1.1.2. Indirect taxes Value Added Tax(VAT) The VAT is levied on the supply of goods and services provided on the Romanian territory by a VAT taxpayer as a result of an economic activity and the imported goods from non-EU countries. VAT is also levied on the import of new vehicles and goods which are subject to excise tax from EU countries. The taxpayer is a person who carries out, independently and irrespective of location, economic activities, no matter of the purpose and result of these activities. The tax base is the price of the operation for the supply of goods and services and the custom value for imported goods. For policy year 2007, the standard VAT rate is 19% and is applied on the tax base. The reduced 9% VAT rate is applied on medicines, medical prosthesis, orthopaedic products, books, newspapers, magazines, and accommodation in hotels or similar, access to cultural and historical events and institutions. Beginning from July 2010, the standard VAT rate was increased to 24%. The reduced 9% VAT rate is maintained and a reduced 5%VAT rate is supplementary introduced for the supply of houses as part of government’s social policy. Excise tax In Romania the excise taxes are applied on the following products: alcohol and alcoholic beverages, processed tobacco, energy products and electricity.

1.2. SOCIAL CONTRIBUTIONS The Romanian social contribution system consists of six types of social contributions, levied on employers and/or employees, self-employed or on voluntary insurance contracts. These are the following: social insurance contribution, unemployment insurance contribution, health insurance contribution, medical leave and indemnities health insurance contribution, insurance contribution for work accidents and professional disease, contribution for the salary payment guarantee fund. Social insurance contribution is paid on mandatory basis by employers, employees and self-employed and also by the National Employment Agency for the unemployment benefits. The categories of individuals who are mandatory insured in the public social insurance system are: employees, self-employed and unemployed. Social insurance contribution is not due by self-employed (except for income from author’s rights) who are also employees. On a voluntary basis, other categories of individuals than employees or self-employed, individuals who are

11

not benefiting of social insurance rights or are not insured in other than public social insurance systems, have the right to become insured. Also the mandatory insured persons have the right to supplementary social insurance in order to increase their insured income. The individuals who pay the social insurance contribution are in title to social insurance benefits in case of the following insured risks: old-age, invalidity or decease. The total social insurance contribution rate is differentiated by working conditions, which can be normal, unusual and special and is approved by the Law on Social Insurance Budget on annually basis (See Table 1). Unusual working conditions are those that can permanently affect in certain periods the working capacity of the insured person because of the high risk exposure (physical, chemical and biological occupational hazards such as noise, radiation, vibration, electromagnetic waves, etc. which produce effects on health and the workplaces are associated to certain morbidity rates). Special working conditions are considered: mining; exploring, exploitation and manufacturing nuclear raw materials for the 1st and 2nd degree exposure to radiations, civil aviation, and certain artistic activities. The individual employee contribution is also set annually by the Law on Social Insurance Budget, while the employer pays the difference between the total and the individual contribution rate. Beginning from May, 2008, 2% of the individual social insurance contribution for employees is directed to the mandatory private pension system (2nd pillar). The self-employed and the voluntary insured pay the total social insurance contribution rate. From July 1, 2010 there is one exception regarding the contribution rate for self-employed: for income from author’s right the self-employed pay the individual social insurance contribution rate. The base for the calculation of social insurance contribution is the total gross wages at company level for employers, the gross wage for employees, the insured income for self-employed (except for income from author’s rights; in this case the gross income is the tax base) and the statutory minimum wage for beneficiaries of health insurance benefits, (except for work accidents and professional disease to which social insurance contribution is not due) and the total fund of unemployment benefits for the National Employment Agency. The income base for social insurance contributions was limited to 5 national average wages (provisional figure used for building the social insurance budget) until 2007, June 30. For policy years 2008, 2009 there is no upper threshold for the social insurance contribution base. After July 1, 2010 for professional income from independent activities (self-employed), the social contribution base is limited again to five national average gross wages. Until October1, 2007, the social insurance contribution base for self-employed had a lower threshold: one quarter of the statutory gross minimum guaranteed wage. The social insurance contribution is not levied on social insurance benefits, employees’ participation to company profit, daily allowances and author’s rights for policy years 2007, 2008 and 2009. From 2010, the individual (employee) contribution rate is due for author’s rights. The contribution is collected in the social insurance budget. Unemployment insurance contribution In the unemployment insurance system are mandatory insured employees, persons who hold elective positions or other persons who earn income, according to the Law no. 76/2002 on unemployment. On a voluntary basis, self-employed can become insured in the unemployment insurance system. From July 1, 2010 the unemployment insurance contribution is compulsory for self-employed for income received as a result of author’s rights. The insured are entitled to unemployment benefit if the risk occurs.

12

The level of the unemployment contribution rate is set by the Law on Social Insurance Budget on annually basis. The unemployment insurance contribution rate has different levels for employers, employees and voluntary insured. The base for the calculation of the unemployment insurance contribution is the total gross wages for employers, the gross wage for employees and the insured sum for the voluntary insurance contracts (also self-employed), but not less than the statutory minimum wage in Romania and income from author’s rights for self-employed who earn this type of income. The contribution is collected in the unemployment insurance budget. Health insurance contribution All Romanian citizens who live in Romania or foreign citizens in certain conditions are insured in the sense of the Law no. 95/2006 on the reform in the health system if they pay the health insurance contribution. The health insurance contract is individually signed either directly or through an employer, for employees. Are insured without paying contribution the following categories: children up to the age of 18, people aged between 18 ad 26 years if they are pupils, students or apprentices and do not earn any income; young people up to the age of 26 if they come from the child protection system and do not earn any income and are not beneficiaries of the minimum guaranteed income; no income earner spouse or parent of an insured person; people with disabilities who do not earn income from working arrangements, pensions or other sources, except for the disability benefit; people with illness who are included in national health programs, pregnant and child bedding women if they do not earn any income; and politically persecuted persons. The categories that are insured but their contribution is paid from other sources than personal income are those in the following situations: military service; temporary work incapacity leave as a result of work accident or professional disease; childcare leave; arrested persons; unemployment benefit recipients; victims of trafficking in human beings; expelled; family members of guaranteed minimum income recipients. Pensioners with a pension level less than the personal deduction from the personal income tax (1000 Lei) do not pay health insurance contribution in 2007, but beginning from 2008, health insurance contribution is levied on all pensions. The health insurance contribution rate is levied on the total gross wages paid for employers, on the gross wage for employees, on taxable income (or non-taxable income if there is no taxable income) and on gross income from author’s rights for self-employed (from July 1, 2010), on the unemployment benefit for unemployed, on pension income. Income from real estate rental, dividend and interest, intellectual property is subject to health insurance contribution only if it represents the only income source of the insured person. The contribution is collected in the health insurance budget. Health insurance contribution for medical leave and indemnities is paid by employers and self-employed. The contribution base is the total gross wages for employer and the taxable income for self-employed. The contribution is collected in the health insurance budget and its destination is towards the payment of medical leaves and indemnities. The contribution is collected in the health insurance budget. Work accidents and professional disease insurance contribution is paid by all employers and self-employed. The rate is differentiated according to the classification of economic activities (NACE). The contribution base is the total gross wages at employer level (the sum of all employees’ gross wages) and the taxable income for self-employed. The contribution is collected in the social insurance budget.

13

Contribution for the salary payment guarantee fund is paid by all employers, except for public institutions. Its purpose is to guarantee the right to salary to employees in the case the company is legally declared in insolvency procedure. The contributory base is the total gross wages at employer level (the sum of all employees’ gross wages). The contribution is collected in the salary payment guarantee fund. The level of social contributions rates in Romania between 2007 and 2009 is presented in the table below. Table 1: Social contribution rates, 2007 – 2010

% of contribution base* Type of contribution

2007 2008 2009 2010

employer: 19.5%, 24.5%, 29.5%

employer: 19.5%, 24.5%, 29.5% and 18%, 23%, 28%**

employer: 18.5%, 23,5%, 28,5% and 20.8%, 25.8%, 30.8%****

employer: 31.3%, 36.3%, 41.3%

self-employed: 29%, 34%, 39%

self-employed: 29%, 34%, 39% and 27.5%, 32.5%, 37.5%**

self-employed: 28%, 33%, 38% and 31.3%, 36.3%, 41.3%

self-employed: 31.3%, 36.3%, 41.3%

(for author’s rights: 10.5%)

social insurance

employee: 9.5% employee: 9.5% employee: 9.5% employee: 10.5%

employer: 2% employer: 1%, 0.5%** employer: 0.5% employer: 0.5%

employee: 1% employee: 0.5% employee: 0.5% employee: 0.5% unemployment insurance

self-employed:3.25% self-employed: 1.5%, 1% ** self-employed: 1% self-employed: 1%

(for author’s rights: 0.5%)

employer: 6% employer: 5.5%, 5.2%** employer: 5.2% employer: 5.2%

employee: 6.5% employee: 6.5%,5.5%*** employee: 5.5% employee: 5.5% health insurance

self-employed: 6.5% self-employed: 6.5%,5.5%***

self-employed: 5.5% self-employed: 5.5%

employer: 0.85% employer: 0.85% employer: 0.85% employer: 0.85% health insurance contribution for

medical leave and indemnities self-employed: 0.85% self-employed: 0.85% self-employee: 0.85% self-employed: 0.85%

employer: 0.4 - 3.6% employer: 0.4 - 2% employer: 0.15 – 0.85 % employer: 0.15 – 0.85 % insurance for work accidents

and professional disease self-employed:1% self-employed:1% self-employed:1% self-employed:1%

contribution for the Salary Payment

Guarantee Fund

employer: 0.25% employer: 0.25% employer: 0.25% employer: 0.25%

*see text for the contribution base by contribution type and category of payer. ** the rates changed on December 1, 2008. ***the rates changed on July 1, 2008. ****the rates changed on February 1, 2009.

14

1.3. SOCIAL BENEFITS The social benefits system is composed of all transfers in cash or in kind covering the population in case of certain social risks. Social benefits are granted in Romania both in contributory system (social insurance) and non-contributory system, which contains universal family allowances and social assistance benefits and services. The social benefit system includes: A. Social benefits in the contributory scheme through the social insurance system; B. Social benefits and services in non-contributory scheme, including universal family allowances and social assistance benefits and services. A. The social insurance system includes:

I) The public pension system and other social insurance rights; II) The unemployment insurance system; III) The health insurance system.

I. The public pension system and other social insurance rights contains: pension (old-age, early, early partial, invalidity, survivors) and other social benefits (compensation for temporary work incapacity, benefits for illness prevention and recovery of working capacity, maternity allowance, parental allowance, sick care, etc.). II. The unemployment insurance system. Persons in unemployment situation benefit from unemployment benefit, as a passive protection measure, alongside active measures/ programs for unemployment prevention and employment stimulation. III. The risk of disease is covered through the health insurance system. It consists of cash benefits and non-cash benefits such as: medical services, medicines and medical equipment, prostheses. Contributory social benefits are financed from contributory social insurance funds (pension fund, unemployment fund, health fund). These funds are constituted based on the contributions of employees, employers, self-employed, voluntary insured, but in exceptional cases and substantiated motivations, if funds are exhausted, the state covers the deficit. B. Social benefits and services in non-contributory scheme, including universal family allowances and social assistance benefits and services Non-contributory scheme benefits and services are a form of financial support to meet a wide range of social needs and cover both universal rights and benefits applying only to persons or families in a difficult, vulnerability or dependency situation. Benefits in cash or in kind are the following categories: family allowances, social assistance and special support for families or individuals, depending on their needs and income. Universal family allowances are cash allowances for families with children regardless of their income or their social contributions. The universal family allowances are the following: the child’s state allowance, allowance for newborn children, trousseau for newborns, etc. Social assistance benefits are cash allowances granted to persons in need due to chronic lack of livelihood or income. Social assistance benefits include social assistance for individuals/

15

families with low income, emergency aid, aid for home heating, funeral aid, social scholarships for students, repayable aid for refugees, facilities for heat payments and other benefits (benefits for fighters in the revolution of December 1989, the wounded and survivors of martyr-heroes, pensions for veterans, disabled, orphans and widows of war, benefits for former political prisoners). Social services are aimed at “maintaining, restoring and developing the individual capacities to overcome a situation of need, chronic or emergency, if the person or family is unable to solve it alone”. The social services are provided at home or in specialized institutions, daily or residential institutions. These social services can be of two categories: - social medical care services, which are given to those who, temporarily or permanently,

due to physical, sensory or mental diseases are unable to live a decent life, and to those who suffer from incurable diseases in last stage;

- social services aimed to restoring and developing the capacities of the individual and family to overcome difficulties.

The main social services provided by the social assistance system in Romania are: assistance canteens, social services to protect children at risk or in difficult situations, benefits and services for social protection of disabled persons, assistance services for institutionalized elderly and chronically ill persons, home care social services, and services that provide access to fundamental rights: employment, education, health, housing, access to public utilities. The importance of each type of social benefit, given by the monthly average number of beneficiaries (or the annual average number of beneficiaries) and share of the monthly average number in the total population (%); payments (the budgetary effort) in Lei and % of GDP is shown in Appendix no. 4.

1.3.1. Contributory benefits Pensions Romania has a three pillar based pension system: 1st pillar: public pay-as-you-go scheme: contribution is compulsory for employers, employees, self-employed; differentiated total contribution rate depending on working conditions. 2nd pillar: mandatory private; contribution based; compulsory for employed individuals under 35 years and voluntary for individuals aged between 36 and 45 years; coverage: 53% of employed population; contribution rate: 2% of gross wage (carved down from the public social insurance contribution rate). 3rd pillar: voluntary; contribution based; the contribution rate should not exceed 15% of individual disposable income. Pension calculation In the public scheme (Law no. 19/2000 on the public pension system and other social insurance rights), the benefit is calculated based on the pension point; one pension point is equivalent to 39% of the national average gross salary (2010). The entire contribution record of the insured person is taken into account. The minimum length of contribution career is 15 years (2013) (gradually increasing from 10 years in 2000) while the full length of contribution career is 30 years for women and 35 years for men (2013) (gradually increasing from 25, respectively 30 years). The standard statutory retirement age is 65 for men and 60 for women to be attained in 2013, by gradually increasing the retirement ages of 57 for women and 62 for men in 2000. The pension rights are calculated according to the following formulas:

16

, where AAS is the annual average score, AS is the annual score, FCL is the statutory full contribution career length.

, where Si is the score of year i.

, where MSj is the monthly score, calculated as

, where GWj is the monthly gross wage and SAGW is the average gross wage

as estimated by the National Institute of Statistics and used in the social insurance budget. The amount of the pension is given by multiplying the annual average score by the value of a pension point. Old-age pension Retirement age: 65 years for men and 60 years for women (2013). Minimum length of contribution career is required. A person who is eligible for old age pension may continue his professional activity on employer’s agreement. The statutory retirement age and the full length of contribution career depend on working conditions. Working conditions, as defined by Law 19/2000 are: normal, unusual and special. The unusual working conditions are those that can permanently affect in certain periods the working capacity of the insured because of the high risk exposure and the special working conditions are considered: mining; exploring, exploitation and manufacturing nuclear raw materials for the 1st and 2nd degree exposure to radiations, civil aviation, certain artistic activities. If the full length of the contribution career is fulfilled totally or partly in unusual working condition, the statutory retirement age can be reduced to 55 years for men and 50 years for women. If the contribution length for special working condition in mining is longer than 20 years, the statutory retirement age is 45 years. For special conditions in certain artistic activities and civil aviation, the full contribution career’s length is 25 years and the statutory retirement age is reduced by 15 years. For special conditions in exploring, exploitation and manufacturing nuclear raw materials for the 1st and 2nd degree exposure to radiations, the reduction in contribution career is 15 years (1st degree) and 17 years (2nd degree) and there are no statutory retirement age requirements. Women, who gave birth to at least three children and raised them up to the age of 10 years, benefit of a reduction of standard retirement age by one year for 3 children and 2 years for 4 and more children, but not less than 55 years. Early retirement pension/ early partial retirement pension Age requirements: 5 years or less until retirement age. Contribution career: full contribution career exceeded with at least/ no more than 10 years. The pension rights are calculated as in the case of old-age pensions; for early partial retirement pension, the pension is reduced with the reduction of contribution period’s length. Survivors’ pension Eligibility: Survivor children or spouse of a pensioner or a person who was entitled to a pension in the public scheme. The age of the eligible children is 16 years old or 26 years if

17

attending school. The spouse is eligible for survivors’ pension at standard statutory retirement age if has been married for at least 15 years to the deceased. If the marriage lasted less than 15 years, but more than 10 years, the pension rights are diminished by 0.5% per month and 6% per year. If the spouse is in 1st or 2nd degree invalidity, he/she has the right to survivors’ pension if the marriage lasted for at least one year. The length of the marriage period is not an issue if the death is a result of work accidents or professional disease, if the spouse does not earn income from professional activities or their amount is less than one quarter of statutory gross minimum guaranteed wage. The amount of the benefit is differentiated according to the number of survivors: 100% of the entitlement for three or more, 75% for two and 50% for one survivor. Invalidity pension An employee is eligible for an invalidity pension in the case of a total or at least half loss of his working capacity as a consequence of a work accident, professional disease or any other kind of accident and disease not related to work. According to the degree of loss in work capacity and the work place requirements, the invalidity pension can be of 1st, 2nd and 3rd degree. The amount of the invalidity pension is calculated by allotting a potential contribution period as the difference between the length of the statutory full contribution period and the length of effective contribution period until the moment the invalidity occurred. The 1st degree invalidity pensioners are eligible for monthly allowance for attendant, in amount of 80% of the value of a pension point. Unemployment benefit Goal: The granting of unemployment benefits is a passive measure of social protection Basic legislation applied to the unemployment benefit: Law no. 76/2002 regarding the unemployment insurance system and employment stimulation, amended and supplemented and Government Decision no. 174/2002 approving the Methodological Norms for the enforcement of this law. Unemployed is the person who fulfils the following conditions: a) is seeking employment, is over the age of 16 years and does not meet the requirements for retirement; b) he is able to work from the point of view of his health condition and physical and mental abilities; c) has no job, no income or has income from legal activities lower than the statutory gross minimum guaranteed wage (30th of June 2007); d) is available to start work immediately, if he finds a job. The GEO no. 126/2008 published in the Official Monitor at the 14th of October 2008 eliminated the connection between the unemployment benefits and the level of the minimum guaranteed wage. Thus the income obtained from legal activities must be lower than the value of a reference social indicator in force. This reference social indicator in force is a quantum expressed in LEI used in assessing the monetary social benefits. In order to establish the right to receive unemployment benefits, the unemployed persons were defined as persons that can be found in one of the following situations (unemployed) (1):

18

a) the individual employment contract or temporary employment contract has ceased for reasons not imputable to them (30th of June 2007) / the work relation ended for reasons not imputable to them (from 14th of October 2008) b) the service relation ended for reasons not imputable to them; c) the mandate for which they were appointed or elected has ceased, if they have not previously been employed or if the restart of the activity is no longer possible due to ending of employer’s activity; d) the period during which soldiers were employed on contract has expired or the contract was ended for reasons not imputable to them; e) the employment relation as a cooperative member has ceased, for reasons not attributable to them; f) the person contracted an unemployment insurance and has no income or has an income from legal activities lower than the statutory gross minimum guaranteed wage (30th of June 2007) From October 2008 the income obtained from legal activities must be lower than the value of a reference social indicator in force, established annually by Government Decision. g) the person ended his activity because of disability retirement and subsequently regained the ability to work and failed to get employed; h) the employment or service relation ceased for reasons not imputable to them during their suspension; i) the return to work, ordered by final court decision, is no longer possible in the organizations where they were previously employed; j) the activity based only on civil convention has ceased. People that satisfy the following conditions are assimilated as unemployed (2): a) are graduates of educational institutions, older than 16, who in a period of 60 days from graduation were not able to find employment according to their professional training; b) are graduates of special schools for disabled persons, older than 16, who were not able to find employment according to their training; c) are persons who, prior to military service, were not employed and in a period of 30 days after the ending of the military service were not able to find employment. The unemployed (1) are eligible for the unemployment benefit if they meet the following requirements: a) they have a minimum contribution period of 12 months in the last 24 months preceding the date of benefit claiming; b) they have no income or have an income from legal activities below the level of the statutory gross minimum guaranteed wage (30th of June 2007); From October 2008 the income obtained from legal activities must be lower than the value of a reference social indicator in force, established annually by Government Decision. c) they do not qualify for retirement, according to the law; d) they are registered at the employment agencies in the territorial jurisdiction of their domicile or residence. For persons employed with part-time individual labour contract, the length of contribution is determined according to the time effectively worked, cumulating the contribution period according to the part-time individual labour contract. For persons employed with temporary contract, the length of contribution period prescribed by law is determined by the duration of each assignment. The periods when the employer did not pay the contribution to the unemployment insurance budget, due to judicial reorganization, bankruptcy, operational closure, liquidation, and so on, are also calculated as contributory periods.

19

People assimilated as unemployed (2) under the law in force, receive unemployment benefit if they meet at the same time the following requirements:

a) they are registered at the employment agencies in the territorial jurisdiction of their domicile or residence;

b) they have no income or have an income from legal activities below the level of the unemployment benefit; (30th of June 2007); From October 2008 the income obtained from legal activities must be lower than the value of a reference social indicator in force, established annually by Government Decision.

c) they do not qualify for retirement according to the law. Unemployment benefit is awarded to the unemployed (1), for a period with a length depending on the contributory period, as follows:

a) 6 months, for people with a contribution period of at least one year; b) 9 months, for people with a contribution period of at least 5 years; c) 12 months, for people with a contribution period of more than 10 years.

The amount of unemployment benefit paid to the unemployed (1) is depending on the contributory record, as follows: a) 75% of statutory gross minimum guaranteed wage, for people with a contribution period of at least one year; b) the amount stipulated in point a) plus an amount calculated by applying a differentiated rate (according to the contribution period) on the gross average monthly base salary for the last 12 months of contribution period. Differentiated rates according to the eligibility period have the following values:

a) 3% for those with a contribution period of at least 3 years; b) 5% for people with a contribution period of at least 5 years; c) 7% for people with a contribution period of at least 10 years; d) 10% for those with a contribution period of at least 20 years.

For persons insured under voluntary unemployment insurance contract, the amount is calculated by applying a percentage depending on the period of contribution on the monthly insured income declared in the unemployment insurance contract. The unemployment benefit is granted to people assimilated as unemployed (2) for a period of 6 months and it is a monthly fixed amount, which represents 50% of the statutory gross minimum guaranteed wage, and it is awarded to those assimilated as unemployed (2) once per every form of education graduated. The following persons do not receive unemployment benefit: those who refuse an appropriate job according to their training or educational level, situated at a distance of less than 50 km from home, or refuse the participation to the employment stimulation services and training courses provided by employment agencies. The graduates, who at the moment when the benefit is claimed are included in the educational system, do not receive unemployment benefit. The payment of unemployment benefits is financed by the unemployment insurance budget. Health insurance benefits Goal: to compensate the lack of income in case of risks that lead to the temporary impossibility to work of the insured person. Basic Legislation: GEO no. 158/2005 regarding medical leave and health insurance allowances and Law no. 95/2006 on health reform, Title VIII. Health insurance

20

The health insurance benefits are the following: Medical leaves and indemnities for temporary work incapacity caused by regular

diseases or accidents not connected to work, Medical leaves and indemnities for the prevention of diseases and recovery of

work capacity, exclusively for the situations that occurred following work accidents or professional diseases;

Medical leaves and maternity allowances; Medical leaves and indemnities for the caring of the ill child; Medical leaves and indemnities for maternal risk.

The right to the above mentioned benefits is conditioned by the payment of the health and social insurance contribution. The indemnity for temporary work incapacity caused by regular diseases or accidents not connected to work is offered for a maximum of 183 days in a period of time of one year. In case of special diseases, the indemnity is offered for a longer period, up to one year and six months. The gross monthly quantum of this indemnity is of 75% of the calculation base, determined as the average of monthly income for the last six months out of the 12 months that represent the contribution period. In case of special diseases such as AIDS, tuberculosis, cancer the quantum is 100% of the contribution base. The indemnity for the prevention of diseases and recovery of work capacity consists of the indemnity for reducing the working time with a quarter of the normal duration and the quarantine indemnity. The indemnity for reducing the working time is offered for a maximum of 90 days in a period of 12 working months previous to the first leave day and its quantum is equal to the difference between the calculation base previously mentioned and the gross income of the employee working with diminished working time, without exceeding 25% of the calculation base. The quarantine indemnity is offered to insured people that cannot continue their activity because they suffer from contagious diseases. Its quantum is 75% of the above mentioned calculation base. Medical leave and maternity allowance The insured persons are entitled to receive medical leave for pregnancy and confinement for a period of 126 days and during this period, they receive maternity allowance. Pregnancy leave is granted for a period of 63 days before birth, while confinement leave is granted for a period of 63 days after birth. Insured persons that are entitled to disability benefits may receive, on request, a medical leave for pregnancy, starting with the 6th month of pregnancy. The gross monthly amount of maternity allowance is 85% of the calculation base. The indemnity for the caring of the ill child The insured persons benefit of this indemnity for children up to the age of 7 or in case of children with disabilities up to the age of 18. The maximum duration for this indemnity is 45 days for one child with some exceptions when this duration can be extended. The quantum is 85% of the calculation base. The indemnities of maternal risk This indemnity is offered without requirement of a minimum contribution period and its amount represents 75% of the calculation base.

21

Beneficiaries: Persons insured in the social health insurance system are entitled to medical leave and health insurance allowances if they have the domicile or residence in Romania and are in one of the following situations: i. they carry out activities based on individual contract of employment or work

relations; ii. they carry out activities in elective or appointed positions within the executive,

legislative or judicial system, or they are cooperative members of an organization of handicraft cooperatives, and have similar rights and obligations with the persons mentioned at the letter i.;

iii. they receive monthly benefit entitlements that are paid from the unemployment insurance fund.

(x)The same rights are given to the persons who are not in one of the above situations, but they are: a) associates, partners or shareholders; b) administrators or managers who have signed a contract of administration or management; c) family members of the associates; d) authorized to perform independent activities; e) persons who signed a social insurance contract. The persons mentioned above, which have the status of retirees, are not insured under this emergency ordinance, except the 3rd degree invalidity pensioners and the blind retired, who are in one of the situations mentioned at letters c) and d). The minimum contribution period for the rights mentioned in (x) point a) - d) is one month in the previous 12 months preceding the month for which medical leave is granted. The contribution period takes into account: the periods spent in medical leave and unemployment, invalidity pension and university education (day classes). Since April 2010: The insured persons are entitled to medical leave and temporary disability indemnity, without the contribution period conditions, in medico-surgical emergencies, tuberculosis, infectious and contagious disease from group A, cancer and AIDS. The list of medical and surgical emergencies and infectious and contagious diseases from the group A is established by the Government decision. The calculation of allowances is determined as the average monthly income in the last six months out of the last 12 months of contribution, up to a maximum of 12 statutory gross minimum guaranteed wages, based on which the contribution for leaves and allowances is calculated. The calculation of allowances in the case of 3rd degree invalidity pensioners, the retired blind people takes into account the periods they were in the situations mentioned in the letter i and ii and in situations (x) points c) and d).

1.3.2. Non-contributory social benefits2 1. State allowance for children

Goal: Universal right granted to families with children Basic Law: Law no. 61/1993

2 The translation of the names of the benefits is taken from the Ministry of Labour and Social Protection’s official documents and statistics.

22

Beneficiaries: all children aged up to 18 years, and youth who have reached the age of 18 and who attend secondary education or vocational training, organized according to the law, until their completion. The youth that have reached the age of 18 and are in the situation of repeating the school year do not benefit from the state allowance unless the situation of repeating the school year is motivated by health problems proven by a medical certificate. Through the GEO no. 97/2007 the youth that have reached the age of 18 were no longer beneficiaries of State Allowance starting with the 1st of January 2008. The GEO no. 16/2008 reintroduced this category of beneficiaries in the 27th of February. GEO no. 16/2008 was rejected through Law no. 175/2008 in October 2008 and the Law no. 174 from the 10th of October 2008 finally established that persons over 18 who attend secondary education or vocational training could receive the state allowance. Given to: all children, without discrimination Eligibility conditions and Amounts: Nationality: children of Romanian citizens; children of foreign citizens and of stateless persons, residents in Romania, if they live together with their parents. Residence: Romania Age:

1. children aged up to two years or 3 years in the case of disabled children - in quantum of 200 Lei (in 2009)

2. children above the age of two years, and young people who reached 18 and are integrated in the educational system according to the law – secondary education or vocational training, until the completion of these studies - in quantum of 42 Lei (in 2009)

3. children with disabilities with age above three, including children with HIV / AIDS, until the age of 18 years – in quantum of 84 Lei (in 2009)

Other eligibility conditions: Children are dependant on the family. The payment is made towards a parent, the legal guardian, the curator, the person that received the child in family placement, including the maternal assistant or the person that received the child in the perspective of adoption. The child over 14 can receive directly the allowance if the legal representative agrees. Children with disabilities receive this benefit in an amount increased by 100%. Payment: monthly, from the state budget Relation with other social benefits: Families can also receive other social benefits. Other information: The State allowance for children is not excised.

2. Complementary family allowance Goal: means tested benefit granted as a support to poor families with children Basic Law: GEO no.105/2003 and GD no. 1539/2003 Beneficiaries: Families consisting of husband, wife and their children aged up to 18 years that are dependant on their parents, living together. Eligibility conditions: Nationality: Romanian citizens; Foreign citizens and stateless persons Residence: Romania Age: Children aged up to 18 years Amount in 2007 (GD no. 4 /2007):

- 36 Lei for families with one child; - 42 Lei for families with two children; - 47 Lei for families with three children; - 52 Lei for families with four or more children

23

For the families that benefit according to the Law no. 416/2001 regarding the guaranteed minimum income, the amount is increased by 25%. Other eligibility conditions: Children considered part of the family: natural children, adopted children, entrusted children, children in foster care, and children in guardianship, dependant on the family. Children of school age must be integrated in a form of education organized according to the law. Payment: monthly, from the state budget Threshold: Starting with January 2007, the Complementary family allowance was received by the families with a monthly net income per family member of less than 176 Lei. The threshold changed in January 2008, families receiving the Complementary family allowance in case they had a monthly net income per family member of less than 184 Lei. The Law no. 236 from October 2008 changed the threshold to the level of the net minimum wage per family member. The Law no. 161 from May 2009 changed the threshold again, eliminating the connection between the social assistance rights and the minimum wage. The threshold was established to be up to 470 Lei (net income) per family member. In the assessment of the family income all the incomes received by family members are taken into account: salaries and other wage entitlements; pensions; state insurance and other social insurance rights; unemployment insurance; benefits of permanent nature; allowances; scholarships; aids; other income sources, such as income from lease or rent from lands, buildings, and so on.

3. Support allowance for mono-parental family Goal: means tested benefit granted as a support to poor mono-parental families Basic Law: GEO no. 105/2003 and GD no. 1539/2003 Beneficiaries: Families consisting of the single person and his/her children aged up to 18 years that are financially supported by the single person and are living together with the single person. Nationality: Romanian citizens; Foreign and stateless citizens Residence: Romania Age: Children aged up to 18 Other eligibility conditions: Children considered part of the family: natural children, adopted children, entrusted children, children in foster care, and children in guardianship, dependant on the single person. Children of school age must be integrated in a form of education organized according to the law. Amount in 2007:

- 52 Lei for families with one child; - 62 Lei for families with two children; - 70 Lei for families with three children; - 79 Lei for families with four or more children

Payment: monthly, from the state budget Threshold: Starting with January 2007, the Support allowance for mono-parental family was received by the families with a monthly net income per family member of less than 176 Lei. The threshold changed in January 2008, families receiving the Support allowance for mono-parental family in case they had a monthly net income per family member of less than 184 Lei.

24

The Law no. 236 from October 2008 changed the threshold to the level of the net minimum wage per family member. The Law no. 161 from May 2009 changed the threshold again, eliminating the connection between the social assistance rights and the minimum wage. The threshold was established to be up to 470 Lei (net income) per family member. In the assessment of the family income all the incomes received by family members are taken into account: salaries and other wage entitlements; pensions; state insurance and other social insurance rights; unemployment insurance; benefits of permanent nature; allowances; scholarships; aids; other income sources, such as income from lease or rent from lands, buildings, and so on.

4. Allowances for family placement Basic Law: Law no. 272/2004 Eligibility - General conditions: The following enjoy the provisions of this law:

a) children who are Romanian citizens living on Romanian territory; b) children who are Romanian citizens living abroad; c) children without citizenship living on Romanian territory; d) children seeking or benefiting from a form of protection under legal regulations on the status and regime of refugees in Romania; e) children who are foreign citizens in Romania, in established emergency situations, under the conditions of this law, by the Romanian public authorities.

Nationality: Romanian; Foreign and stateless citizens Residence: Romania. Abroad - for children that are Romanian citizens Age: Children aged up to 18 years or, in the case of the children that are included in the educational system, throughout their studies, but without exceeding the age of 26 years. Conditions for children: Children for which the foster care decision was taken; Children put under guardianship; Children dependant in the process of adoption; Children that are given to maternal assistants; Children with disabilities benefit from this allowance increased by 50%. Payment: monthly, from the state budget Threshold: NO threshold The family income is not taken in consideration in benefiting from this allowance.

5. Indemnity for child rising Goal: to offer a replacement income to the person raising an infant and thus cannot obtain income from professional activities Basic Law: GEO no. 148/2005 Eligibility conditions:

• Person (mother) that in the last year before childbirth obtained for 12 months professional revenues subject to taxation, under Law no. 571/2003 regarding the Fiscal Code with subsequent amendments can benefit of a leave for child rising until the child reaches the age of 2 or 3, in case of disabled children, and of the Indemnity for child rising

• It can be received, optionally, by any of the child's natural parents, or by the person who was entrusted with the child in the process of adoption, the person that adopted the child, the person that has the child in foster care or in emergency foster care or the person that obtained the guardianship on the child.

• Children are dependant

25

• It is given for natural children, adopted children, entrusted children, children in family foster care, children with established guardianship,

• Monthly allowance and incentive shall be granted for the first three births, or where appropriate, for the first three children of persons in one of the following situations:

o Adopted child o Child entrusted in the process of adoption o Child is in foster care or emergency foster care, except the

professional maternal assistant o The person has guardianship on the child

Nationality: Romanian; Foreign citizens and stateless persons; The persons must live with the child /children for whom they require the rights and are responsible for their care Residence: Romania Amount: Starting with the 1st of January 2007 the amount of the indemnity for child rising was 600 Lei. This changed in 2008 when the Law no. 257/November 2008 established that the indemnity would be 600 Lei, or optionally 85% of the average income for the last 12 months, but no more than 4,000 Lei. The persons that were already receiving this benefit could also choose one of the two alternatives. The Law no. 239/ June 2009 established that the allowance is increased by 600 Lei for each child born of a pregnancy of twins, triplets or more, starting from the second child from such a birth. Payment: monthly, from the state budget Threshold: NO threshold

6. Incentive for child raising Goal: Incentive to return to work offered to the person that has been raising a child and benefited of the Indemnity for child raising Basic Law: GEO no. 148/2005 Eligibility conditions:

• It can be received, optionally, by any of the child's natural parents, or by the person who was entrusted with the child in view of adoption, the person that adopted the child, the person that has the child in foster care or in emergency foster care or the person that was appointed guardian of the child.

• Children are dependant on the family • The incentive is received by the persons that were entitled to receive the

Indemnity for child rising and earn professional income subject to taxation, under Law no. 571/2003 regarding the Fiscal Code, with subsequent amendments

• Receiving the incentive for child rising implies the suspension of the Indemnity for child rising

Nationality: Romanian; Foreign citizens and stateless persons; the persons must live with the child /children for whom they require the right and are responsible for their care Residence: Romania The incentive is granted for the first three births, or where appropriate, for the first three children of persons in one of the following situations:

o Adopted child o Child entrusted in the process of adoption o Child is in foster care or emergency foster care, except the

professional maternal assistant

26

o The person has guardianship on the child Nationality: Romanian; Foreign citizens and stateless persons Residence: Romania Quantum: Starting with the 1st of January 2007 the monthly incentive was 100 Lei. Payment: monthly, from the state budget Threshold: NO threshold

7. Financial aids for family set up Goal: to support family set up Basic Law: Law no. 396/2006 and Order no. 976_1537/2006 Eligibility conditions: Both spouses should be getting married for the first time and should have an address or residence in Romania Citizenship: With or without Romanian citizenship; Stateless persons and foreigners that benefit from a form of protection in Romania Residence: Romania Quantum: 200 Euros, in Lei equivalent, based on the exchange rate on the day of the application. In Appendix no. 2 there is a Note no. 5 with the Annual average of the exchange rate. Families referred to above that are in one of the following situations benefit from the provisions of this law:

a) the marriage was contracted to competent local authorities on Romanian territory; b) the marriage was contracted to competent local authorities on other countries territory; c) the marriage was contracted in diplomatic missions, in career consular offices of

Romania or of the state of the other spouse; d) the marriage was contracted by masters of vessels.

Threshold: NO threshold The financial aid is given from the local budget through transfer from the state’s budget. The income of the family is not considered.

8. Allowance for new born children Goal: to support the set up of the newborn child into the family Basic law: Law no. 416/2001 and GD no. 1010 / 2006 Eligibility conditions: The beneficiary is the mother or the child's legal representative when the mother is not in the position to benefit from this right. Citizenship: Romanian; Stateless persons and foreigners that benefit from a form of protection in Romania Residence: Romania Other conditions: The allowance is granted for the first four children born alive. The allowance is granted only once for each child born, no later than 12 months after childbirth. Quantum: 230 Lei (in 2009) Threshold: NO threshold The financial aid is given from the state’s budget. The income of the family is not considered for accessing this benefit.

9. Outfits for new born children Goal: to support the set up of the newborn child into the family Basic Law: Law no. 482/2006

27

Eligibility conditions: For each newborn child it is given a trousseau including clothing, linen and care products. It is granted only once by the local public administration authorities, when the child lives the maternity or when the childbirth certificate is released. Citizenship: Romanian; Stateless persons and foreigners Residence: Romania Quantum: 150 Lei (in 2009) The financial aid is given from the local budget through transfer from the state’s budget. The income of the family is not considered.

10. Emergency benefits Goal: to support the families in emergency situations Basic Law: Law no. 416/2001 and GD no. 1010/2006 Eligibility conditions: Families and persons that face justifiable emergency situations - emergency circumstances due to natural disasters, fires, accidents, and other special situations established by law. The emergency situation is assessed through social investigation/survey. Citizenship: Romanian; Stateless persons and foreigners Residence: Romania Threshold: NO threshold The aid is paid through the state or local budget. The income of the family is considered, by analysis on social survey.

11. Financial benefits Goal: to support the families in extreme situations Basic Law: GEO no.118/1999, Law no. 366/2001 and GD no. 743/2000 Eligibility conditions: It is given to families and persons that face extreme difficulties due to health problems or other justifiable causes. The extreme situation is assessed through social investigation. Citizenship: Romanian; Stateless persons and foreigners Residence: Romania Threshold: NO threshold The aid is paid through the state or local budget. The income of the family is considered, by analysis or social survey.

12. Home heating aid Goal: to support poor families that cannot afford the expenses of home heating during cold season Basic Law: GEO no. 5/2003 and GD no. 1350/2006 Beneficiaries: It is given to persons and families with low incomes in the following situations:

o Spouses and other persons, whether or not between these people there are family relations, that share the same residence, are subscribed in the building book and are taken into consideration in calculating the dwelling maintenance costs.

o The person that has more than 16 years of age and lives alone. Citizenship: Romanian; Stateless persons and foreigners Residence: Romania It is given during the cold season, since November 1st till March 31st next year. Threshold: YES. The average monthly income of the family is taken into consideration. Funds necessary to pay the home heating aid are supported by the local budgets, including from the amounts deducted from certain incomes of the state budget to balance the local budgets.

28

The home heating aid is given monthly, at request, based on documents regarding the family structure and the personal statement regarding the incomes of the family members in the previous month of application, accompanied by supporting documents. The incomes for determining the amount of heating housing aid are provided by Law no. 416/2001. The truthfulness of the data contained in the personal statements regarding the family structure and its revenues may be tested by social surveys. Relation with other social benefits: Families can also benefit from other social benefits. The amount of the home heating aid is presented in the Appendix no. 2, during 2007-2010. Changes during 2007-2010: The GEO no. 26/2010 established that ownership of certain goods was a condition for the exclusion of the person / household from receiving this aid.

13. Benefits for refugees Goal: support offered to refugees Basic Law: Law no. 122/2006 and GD no. 1251/2006 Citizenship: Stateless persons and foreigners Payment: The benefit is paid monthly for 6 months and in exceptional cases the aid can be obtained another 3 months. It is paid from the state’s budget. Quantum: For 2009, the amount is at the level of December 2008. Until 2009, the benefit for refugees was set at a national gross minimum salary (in Appendix no. 2, there is a note with the national gross minimum wage, during 2007-2010)

14. Aid for the purchase of automated burning Goal: to support poor families to modernize their heating system Basic Law: GEO no. 91/2005 Eligibility conditions: The beneficiaries are families or single persons with low income that use natural gas for the heating of their homes; The beneficiary must have the status of individual consumers, assessed by a contract with a supplier of natural gas; The income on family member must be less than the statutory gross minimum wage. The aid is given only once for the acquisition of automated burning, by voucher, provided by the Ministry of Labour, Family and Social Protection Amount (the following values are for 2009): a) the amount of 1500 Lei for the acquisition, installation and commissioning of an individual boiler; b) the sum of 300 Lei for the acquisition of an automated burner. Threshold: The average monthly income on family member must be lower than the statutory gross minimum wage.

15. Monthly allowance for the adult with severe visual disability, designated for the payment of the attendant

Goal: support for disabled persons Basic Law: Law no. 448/2006 and GD no. 268/2007 Eligibility conditions: Adults with severe visual disability Citizenship: It is given to Romanian citizens, stateless persons and foreigners that have residence or domicile in Romania. Residence: Romania Payment: Monthly from the state budget through transfer towards the local budget.

29

Quantum: Equivalent to the net salary of the junior social worker with secondary education from the budgetary sector. Threshold: NO threshold The income of the family is not considered.

16. Monthly allowance for adults with severe and marked disabilities Goal: support for disabled persons Basic Law: Law no. 448/2006 and GD no. 268/2007 Eligibility conditions: Beneficiaries are adults with marked or severe disabilities, with certificates that assess their state. Citizenship: It is given to Romanian citizens, stateless persons and foreigners that have residence or domicile in Romania. Residence: Romania Payment: Monthly from the state budget through transfer towards the local budget. Quantum: (in 2009): 202 Lei for severe disability; 166 Lei for marked disability Threshold: NO threshold The income of the family is not considered.

17. Complementary personal budget for adults with disabilities Goal: support for disabled persons Basic Law: Law no. 448/2006 and GD no. 268/2007 Eligibility conditions: Adults or children with disabilities, with certificates showing that they have severe, marked or medium disability. Citizenship: It is given to Romanian citizens, stateless persons and foreigners that have residence or address in Romania according to the law. Residence: Romania Payment: Monthly from the state budget through transfer towards the local budget. Quantum (the following values are for 2009): 91 Lei for severe disability; 68 Lei for marked

disability; 33.5 Lei for medium degree of disability. It is a monthly complementary budget that is paid regardless of the beneficiary’s income. Threshold: NO threshold The income of the family is not considered.

18. The guaranteed minimum income Goal: support for poor families Basic Law: Law no. 416/2001 and GD no. 1010/2006 Eligibility conditions: Families and single persons that have their domicile or, where appropriate, residence in Romania, with or without Romanian citizenship and also stateless persons. Payment: Monthly Threshold: yes (in 2009)

a) 125 Lei for one person; b) 225 Lei for families with two members; c) 313 Lei for families with three members; d) 390 Lei for families with four members; e) 462 Lei for families with five members; f) for families of more than five members there is an additional sum of 31 lei for each

additional member. The income of the family is taken to consideration in assessing the right to this benefit. The means are tested through social survey.

30

The amount of social assistance is determined as the difference between the levels mentioned above and the net monthly income of the family or single person. If the difference is a sum of less than 10 Lei, the amount of 10 Lei is granted. In determining the net monthly income of the family all the incomes earned by all members are taken into account, including those from the state social insurance rights, unemployment insurance, legal liabilities for dependant persons, indemnities, allowances and benefits with permanent character and other claims, [except for scholarships and social grants, and financial support provided through GD no. 1488/2004] [...] – Paragraph exempted by Law 115/4 May 2006, which comes into force in 90 days after publication. This paragraph is reproduced completely in Law 51/19March 2008 The law establishes a list of goods of basic necessity that are taken into account is assessing the right to this benefit. For goods that are not on this list the potential income from their exploitation is taken into account. The local councils may approve additional criteria for assessing the potential income. The lists of goods and the limits are updated annually by Government decision. If the family owns at least one property excluded from the list of goods of basic necessity it is excluded from obtaining this benefit. If the family or single person lives together with other families or single people and contribute to the purchase or construction of goods and of incomes from their capitalization or of their consumption, in determining of the amount of social assistance are taken into account both the net monthly income, as well as the share of net monthly incomes, conducted jointly by the persons in the household. Changes during 2007-2010: The guaranteed minimum income (without taking into account the draft in May 2010) was subject to essential changes during 2007-2010: 1. Modifications of the amounts of the guaranteed minimum income (explained in Appendix 2). 2. Adjustments of the difference between family revenues and the minimum income thresholds (before July 2009, if the difference between the threshold and the family revenue was less than 5 Lei, then the social aid granted is 5 Lei; after July 2009 the difference between the threshold and the family revenue was less than 10 Lei, then the social aid granted is 10 Lei). 3. From 2008, some scholarships, grants and social support for students in the program “money for school” are excluded from the net monthly income of the family that determines the access to this benefit.

19. Aid for partial covering of funeral expenses Goal: to support poor families Basic Law: Law no. 416/2001 and GD no. 1010/2006 Eligibility conditions: Families and single persons that benefit of the minimum income guaranteed. The funeral expenses of the persons in this category are paid from the funds allocated for the payment of social aid. Citizenship: Romanian; Stateless persons and foreigners Residence: Romania

20. Monthly allowance of food for children and adults infected with HIV or AIDS

Basic Law: Law no. 584/2002

31

Nationality: Romanian Residence: Romania Quantum (the following values are for 2009):

o 13 Lei / day for adults o 11 Lei / day for children

Threshold: NO threshold The income of the family is not considered.

21. Contribution for health insurance for the beneficiaries of the indemnity for child rising

Basic Law: GEO no. 148/2005 and GD no. 1025/2006 Eligibility conditions: It is given to the persons benefiting from the indemnity for child rising. Nationality: Romanian; Foreign citizens and stateless persons Residence: Romania Age: Children up to the of age 2 or 3 for the children with disabilities The territorial directions are required to send monthly, to the Territorial Health Insurance Houses the individual health contributions and the names of the beneficiaries. Payment: monthly, from the state budget Threshold: NO threshold The income of the family is not considered. Amount: presented in Appendix no. 2

22. Financial aid to purchase computers (Euro 200 Program) Goal: to improve access to information and communication technologies for children from poor families. Basic Law: Law no. 269/16.06.2004 on financial aid for stimulating the purchase of computers, with subsequent modifications and additions and Government Decision GD no. 1294/13.08.2004 regarding the Methodological Norms for applying the Law no. 269/2004 on financial aid for stimulating the purchase of computers. Beneficiaries: Families with students and/or college students in accredited state or private educational institutions, till the age of 26 years if the gross monthly income per family member is below a certain threshold established by law. The threshold is indexed annually, by Government decision, on the basis of consumer prices index. One family receives financial assistance to purchase a single new personal computer, irrespective on the number of students. Documents on family income and school attendance are required in order to apply for the benefit. Amount: The financial aid provided represents the equivalent in Lei of 200 Euro for a computer, without exceeding the price of the purchased computer (voucher). Note: See in the Appendix no. 2, Note no. 4: Annual average exchange rate (Euro – Lei), 2007-2010. Assessment of the family income: (1) All income of each family member during the previous month to application is taken into account, except for: state allowances, complementary family allowance and support allowance for single parent family, additional personal budget of disabled, scholarships and social grants. (2) If the family owns movable and immovable property which could be exploited, taking into account the potential income gain from their exploitation, with respect to art. 8, item (2) - (4) of Law no. 416/2001 on the guaranteed minimum income.

32

(3) If the eligible beneficiaries have equal incomes, other additional criteria is taken into account. Financing: The benefit is financed from a limited amount which is allocated in this purpose from the budget of the Ministry of Education and Research.

23. Financial support for students in the national social protection program “Money for school”

Goal: to improve access to education for children from poor families. Basic Law: GD no. 1488/09.09.2004 and Order of the Minister of Education and Research no. 4839/2004 on the approved criteria and the amount of the financial support granted to students in the national social protection program “Money for school”, with subsequent modifications and additions. Beneficiaries: Students who are enrolled in education in day classes, in school or vocational school and are dependants of families whose gross monthly income per family member in the last three months preceding the application was under a certain ceiling (maximum 150 Lei, according to GD no. 1488/2004), and students receiving a protection degree or under guardianship or curatorship, respecting the conditions regarding the income. Conditions: The financial support is received during the academic year. Financial support is ended if the student does not attend school for unjustified reasons and he has an undisciplined behaviour in school. Amount: The amount of financial support is 180 Lei, and may be amended by Government decision, on the proposal of the Ministry of Education and Research. Conditions: The benefit is granted upon application made by the student with the authorization of its legal representative at the school where the student is enrolled. The application shall be accompanied by evidence on the gross monthly income per family member and other medical or legal documents. Local authorities carry out social surveys to test the truthfulness of the statements on income and family property (in accordance with the procedure established by Law no. 416/2001 regarding the guaranteed minimum income and its norms of application). As the budget for this benefit is limited, additional criteria is taken into account for families with same income levels. The beneficiaries of the national programme of social protection “money for school” may not receive at the same time the social grant for students. Assessment of the family income: All income received by the each family members during three months prior to application are taken into account, except for: state allowance, complementary allowance for families with many children, scholarships and social grants, and other social aid provided for students. Financing: The funds for financing this benefit come from the state budget, through the budget of the Ministry of Education and Research. The payment of the benefit is done directly to students by schools.

24. School supplies Goal: to improve access to education and school supplies for students from poor families. Basic Law: Government Ordinance no. 33 of 16 August 2001 on the provision of school supplies during the school year 2001-2002, with subsequent amendments, Order no. 3224/14.02.2008 for approval of the components of school packages provided to students and the Methodology for the implementation of Law no. 126/2002 for approval of the Government Ordinance no. 33/2001 on the provision of school supplies.

33

Beneficiaries: Students in the state primary and secondary education, day classes, who are dependant on families whose net monthly income per family member, assessed in July of each year, is a share of maximum 50% of the gross minimum wage in the country (GO no. 33/2001, Order no. 3224/2008). Conditions: School supplies will be provided on request from the student’s parent or legal tutor, in five days after the start of the school year when the student is enrolled in school. The application shall be accompanied by evidence of net average monthly income per family member, assessed in July of that year. Assessment of the family income: All incomes received by each of the family members are taken into account, including: unemployment benefits, legal claims, civil conventions, permanent allowances, state allowances for children, allowances for children in foster care, scholarships for students and college students, granted under the law. If the family owns land, buildings, residential areas or other movable or immovable, in assessing the net monthly income per family member there are also taken into account the following: lease, rents, other civil fruits, natural or industrial, provided by them. Amount: The maximum amount, in school year 2010-2011, for each package of school supplies is 25 Lei / package / student in primary education, and 30 Lei / package / student in secondary education (Order no. 3281/2010). The same values were also applicable for the school year 2008-2009. The amounts allocated will be updated by the Ministry of Education at the beginning of each school year. Financing: The funds for this benefit shall be provided from the budget of the Ministry of Education. Funds are allocated by the Ministry of Education and Research to County School Inspectorates / of Bucharest. The amounts of funds are established annually by Order of the Minister of Education and Research (Order no. 3224/2008). Other information: School supplies shall not affect the right to scholarships.

25. Scholarships Goal: to improve access to education for students from poor families. Social grant (social aid scholarship) Basic Law: GD no. 445/08.08.1997 establishing general criteria for scholarships and other forms of support for students, university students and students in state education, day classes, with subsequent amendments (GD no. 558/1998 amending Annexes no. 1 and 2 of Government Decision no. 445/1997 on general criteria for scholarships and other forms of support for students, college students and students in state education, day classes) Beneficiaries: Social grants are given to pre-university and university level students, attending day classes, depending on the financial situation of the family or in other cases provided by law. Conditions: For Students: Social grants are given to the following categories of students in state pre-university education, day courses: - orphans and those suffering from serious diseases (tuberculosis, diabetes, chLeiic hepatitis, asthma, epilepsy, congenital heart disease, AIDS, etc.). - students in secondary schools in rural area in another locality than their residence and for those for which a meal cannot be ensured; - students coming from families whose average monthly net income per family member, for the past 12 months, is less than 50% of national statutory net minimum wage and do not possess agricultural land or the surface of the land is bellow some thresholds; - occasionally, once a year, may be granted to students who come from families with the net monthly income per family member is bellow 75% of the national statutory minimum wage;

34

- students attesting for themselves or for one of their parents the title of “martyr hero” or “fighter for the Romanian revolution of December 1989”, with one of the mentions: injured, detained, injured and detained, remarked during special events. Social grants are awarded during the academic year, including during training and exam for high school diploma and during practice periods in firms. It can be granted also during the summer holiday under some conditions. For university students: Social grant consists of an amount paid to university students from poor families, if they do not receive a scholarship or a merit scholarship. A social grant may be awarded, under certain conditions, also occasionally, on request, for clothing, for university students who are orphans of both parents, for socially disadvantaged college students, for those from orphanages or foster care, who have an income per family member under 75% of the statutory gross minimum guaranteed wage. Occasionally social grant may be awarded two times during an academic year at the request of the university student, even if the student also receives another type of scholarship. A social grant may be awarded in case of maternity, occasionally, for university student girls or for university students whose wives do not earn income. It is given in the form of a grant for birth and of a grant to buy clothes for the newborn child. Social grant for university students is awarded for the following categories: - students attesting for their or for one of their parents the title of “martyr hero” or “fighter for the victory of the Romanian revolution of December 1989”, with the one of the mentions: injured, detained, injured and detained, remarked during special events; - students who are orphans, from orphanages or foster care; - students suffering from certain diseases; - students whose families did not earn in the last three months prior to application an average monthly net income per family member greater than the national statutory minimum wage. Social grants are awarded during the academic year, but they can be granted also during the summer holiday under some conditions. Amount: Students: The amount of social assistance grant is established by the boards of the county school inspectorates. The amount of the occasionally social grant must be at least equal to the monthly amount of the social grant. University students: The amounts of social grants for university students are set by the university senates, and these amounts must cover their minimum accommodation and meals in canteens. University senates may establish differentiated specific criteria for awarding of social grant. Higher education institutions can complement scholarship fund from the state budget with their own funds. Assessing the family income: All regular income earned by each family member is taken into account, except for the complementary allowance for families with children. Financing: Students: Social grants are paid from the state budget and allotted to school inspectorates by the Ministry of Education, depending on the number of students attending day classes. University students: Social grants are paid from the state budget and allotted to higher education institutions by the Ministry of Education, proportional to the number of students, in day classes, short and long term education and postgraduate education.

26. Scholarships for tuition, scholarships for further education, adult literacy grants, according to Law 116/2002

Goal: to improve access to education of socially excluded individuals.

35

Basic Law: Law no. 116/2002 on preventing and alleviating social exclusion, amended and supplemented. Beneficiaries: Scholarships for tuition can be received by people in school age who attend compulsory education and belong to families who are entitled to the guaranteed minimum income scheme and have two and more dependant children. Scholarships for further education is granted to compulsory education graduates who continue their studies in pre-university schools and in higher education institutions and who belong to families who are entitled to the guaranteed minimum income scheme and have two or more dependant children. Literacy grants is granted to adults who participate in regional literacy programs, under the law. The beneficiaries must be aged over 14 years and should have never attended compulsory education courses or haven’t completed primary education or have attended primary education but have not acquired basic knowledge. Conditions: The granting of these scholarships is conditioned on attending classes and on grades level. Under specific conditions, individuals aged over 14 years may participate in literacy programs; these conditions are specified in Government Decision no. 1149/2002 regarding the approval of the Methodological Norms for applying Law no. 116/2002 on preventing and alleviating social exclusion. The selection of participants in literacy programs is done according to the methodology developed by the Ministry of Education. Amount: The level of the tuition scholarship is set annually by the Government and is paid from the budget of the Ministry of Education or local budgets. The level of the scholarship for further education is set annually by the Government and its amount needs at least to cover accommodation and meals and is paid from the budget of the Ministry of Education or local budgets. The level of the literacy scholarship is set by decisions of local authorities.

27. Nursery voucher Goal: to help families with children to cover child care expenses. Basic Legislation: Law no. 193/ 17.05.2006 on gift tickets and nursery vouchers (with effect from January 1, 2007) Beneficiaries: Employees from state and private companies who are not eligible for child raising leave and allowance. Conditions: Nursery vouchers can be used only to pay for nursery services. Nursery vouchers are given upon request of a parent or, optionally, of a tutor, to whom the child was entrusted for raising and education. Amount: The nominal value of the nursery vouchers, beginning with January 1, 2007, is equal to 300 Lei, for each child in nursery. For the first half of 2009, starting with February, the indexed monthly amount for nursery vouchers is 350 Lei (Order no. 23/2009 of the Minister of Labour, Family and Social Protection), for 2010 the amount is equal to 370 Lei (Order no. 62/2010, Order 56/2010). The nursery voucher is paid by the employer and it fall into the category of deductible social expenses. These amounts are not taken into account neither by the employer nor the employee in establishing other rights and obligations that are assessed in relation to the salary income.

28. Guaranteed minimum social pension

36

Goal: to support pensioners with low pensions. Basic Law: GEO no. 6/18.02.2009 on the guaranteed minimum social pension (entered into force in April 2009). Beneficiaries: public pension system retirees with residence in Romania, if the pension amount, due or in payment is less than the guaranteed minimum social pension. Conditions: residency in Romania. In case of persons who benefit from one or more of public pension rights, as well as rights established and paid by the public pension system under special laws or by the private pension systems, the granting of the guaranteed minimum social pension takes into account all these amounts. If pensioners receive a survivor's benefit, the guaranteed minimum social pension, calculated according to the law, is given to each survivor, separately. Amount: The guaranteed minimum social pension is assessed as the difference between the guaranteed minimum social pension level and the pension amount due or in payment, according to the Law no. 19/2000 on public pension system and other social insurance rights, combined with any other duties paid under special laws. In 2009, the guaranteed minimum social pension was 300 Lei from the 1st of April 2009, and 350 Lei from October 1st, 2009. Starting with 2010, the guaranteed minimum social pension is set annually by the state budget law and can only be increased by correcting the state budget in relation to the evolution of macroeconomic indicators and financial resources. Financing: The benefit is funded by the state budget through the budget of the Ministry of Labour, Family and Social Protection. Conclusion: The essential changes in the period 2007-2010 for the guaranteed minimum social pension:

1. This social benefit has entered into force starting with April 1, 2009 2. During 2009-2010, the major change consist in quantum (explained in Appendix 2) 3. Since 2010, the guaranteed minimum social pension is determined annually through

the state budget law and can only be increased by correcting the state budget, in relation to the evolution of macroeconomic indicators and financial resources, according to the framework document, GEO no. 6 / 2009.

From July 3, 2010, Law no. 118/2010 on certain measures needed to restore budgetary balance sets some provisions about social benefits (the term "guaranteed minimum social pension" is replaced by "social allowance for pensioners", the social benefits for retirees will be no less than 350 Lei, the social benefits for pensioners are set annually by the budgetary laws, and may be modified in relation to the evolution of macroeconomic indicators and financial resources). Changes in 2010 for social benefits: Law no. 118/30.06.2010 on certain measures necessary to restore the budget balance (starting with July 3, 2010) 15% reduction for the following social benefits: - Unemployment benefit (Law no. 76/2002) - Child raising allowance (GEO no. 148/2005) - Monthly support for the surviving spouse (Law no. 578/2004) - Social benefits revolutionary heroes (Law no. 341/2004)

37

- Material support given to survivor members of the Academy of Scientists of Romania (Law no. 752/2001). Repealed: - Trousseau for newborns (Law no. 482/2006) - Support for family constitution (Law no. 396/2006) - Allowance for newborn children (Law no. 416/2001, Art. 25)

2. DESCRIPTION OF MAIN POLICY RULES The income concepts and the units of assessment used in benefit and tax calculation have been described in detail in the subsections devoted to the description of main elements of the tax and benefit system in Romania. As it follows, we shall outline the interaction between the main income elements as useful for micro simulation purposes. Firstly, we emphasize the fact that if for taxes and social contributions, as well as income from dependent or independent activities, social insurance and unemployment benefit the individual is the unit of assessment, for family allowances, guaranteed minimum income and other means tested benefits, the assessment unit is the family. According to Law no. 416/2001 on minimum guaranteed income, the term family designates the husband and wife or husband, wife and their unmarried children, who share the domicile or residence in the identity cards and manage their resources together in the household. The law considers family, a person who lives together with dependent children and in the following situations: is unmarried; is widow; is divorced; whose spouse is declared missing by court order; has not reached the age of 18 years and is in one of the situations mentioned above. Brothers without children who manage the resources of the household together and shared the residence with parents are considered family. Family is also the used term referring to the unmarried man and woman, with their common or not common children, living and managing their resources together. The term child means a child from the marriage of the spouses, the child of a spouse, the adopted child, and also the child put into foster care or in care by a person named tutor or curator, established by law. The term single person means the person, who reached 18 years, lives and manages alone his resources. Generally speaking, these terms are used in the national legislation, with minor variations. Some legal acts vary these terms. Income is taxed by income source. Are excepted from personal income tax: income from social assistance and social insurance benefits except for pensions and temporary work incapacity benefit. Only the following types of pensions are fully exempted from income tax: invalidity pensions for the 1st degree of invalidity, war invalids, survivors’ pensions. In other cases, pensions benefit of a personal deduction of 1000 Lei. Pension recipients could also be entitle to income from any kind of professional activities in the following cases: old-age pensioners, 3rd degree invalidity pensioners, survivor children orphan of both parents until the age of 26 if in school (only if the gross monthly professional income is less or equal to one fourth of the statutory minimum gross wage), blind people.

38

The child rising indemnity is conditioned on the non-existence of income from professional activities in the case of the recipient. The unemployment benefit recipients may earn other income, except for social insurance benefits, but the amount of the income has to be less then the unemployment benefit to which the person is entitled. The sequence of main policy rules is the following:

- Individuals receive income from dependent (wage) or independent activities and other categories of taxable income (income gains from real estate rental, income gains from investments, income gains from property transfers, income from agricultural activities, income from gambling and prizes, other income), pensions (other than invalidity pensions for the 1st degree of invalidity, war invalids, orphans and widowers pensions), temporary work incapacity benefit. This is gross income.

- Social contributions are levied. The social insurance contribution is levied on gross wages or health insurance benefits for employees, insured income for self-employed and voluntary insurance. The health insurance contribution is levied on gross wages, pensions or taxable income for self-employed or on other income sources if they represent the only income source for the person in case. The unemployment insurance contribution is levied on gross wages or on the insured amount (but not less than the statutory gross minimum guaranteed wage (390 Lei in 2007, 600 Lei in 2010). Self-employed pay also medical leave and indemnities health insurance contribution. The result is the taxable income before exemptions for employees.

- For self-employed, tax deductible expenses are subtracted from the gross income. Thus, gross income minus social contributions (except for health insurance contribution, etc., see Social contribution section) and tax deductible expenses gives the net income. Then, from the net income, past losses (maximum 5 years back) are subtracted and taxable income is obtained.

- For employees, the taxable income is obtained by subtracting personal exemptions/ deductions from the taxable income before exemptions.

- For pensioners, the pension is taxed after subtracting the health insurance contribution. - Individuals may receive other benefits in the contributory system, which are not

subject to taxation, except for temporary work incapacity benefit. - Individuals may receive education related allowances, disability benefits, under the

eligibility conditions described in the benefit section and which are not subject to personal income tax.

- The household may receive family allowances. - The net income of individuals belonging to the same household is added up and

represents the base for the eligibility of means tested benefits allotted at household level.

3. DATASET AND VARIABLES FOR MICRO SIMULATION

The available data set for benefit and tax micro simulation purposes is the EU-SILC (European Union Survey on Income and Living Conditions) for Romania. The year when Romania joined the EU-SILC was 2006 and the survey was applied for the first time in 2007. For benefit and tax micro simulation purposes the 2008 EU-SILC which has 2007 as the

39

income reference year, shall be used. The dimension of the sample investigated in 2008 is 19,132 individuals, of which 16,528 individuals aged over 16, belonging to 7,806 households. The data that can be purchased from the Romanian National Institute of Statistics is the UDB (EUROSTAT) version and contains the household register, personal register, household data and personal data. Though a national version of EU-SILC with more detailed variables in the case of social benefits exists, its accessibility is still under question. Thus, we anticipate that overcoming the low degree of disaggregation of social benefits in the UDB EU-SILC as the main challenge of our micro simulation task. The household register contains basic household data, including the degree of urbanization. The personal register contains basic personal data and demographic data. The household data consists of:

- basic household data, - total household income, - net series of income components at household level, - gross series of income components at household level, - non-monetary household deprivation indicators, - physical and social environment.

The personal data contains: - basic personal data, - demographic data, - education, - basic labour information on current activity status and current main job, including

information on last main job for unemployed, - basic information on activity status during income reference period, - total number of hours worked on current second, third, etc. jobs - detailed labour information - activity history, - calendar of activities, - health, including health status and chronicle illness or condition, access to health care, - net series of personal income at component level, - gross series of personal income at component level, - gross monthly earnings for employees.

The longitudinal component for the available data set for Romania is missing. Income variables are collected net, thus we need to do some imputations in order to obtain the gross values. The variables included in the dataset and used for simulation are: Net series of personal income at component level:

- net or gross employee income (cash or near cash, non cash), - contributions to individual private pension plans, - net or gross cash profits or losses from self-employment, - net or gross pensions from individual pension plans, - net or gross unemployment benefits, - net or gross social insurance benefits: old-age benefits, net survivor’s benefits, net

sickness benefits (or health insurance benefits) - net social assistance benefits: net disability benefits - educational related allowances - gross monthly earnings for employees

Total household income with the components:

40

- total household gross income - total disposable household income - total disposable household income, before social transfers other than old-age and

survivors’’ benefits - total disposable household income, including social transfers other than old-age and

survivors’ benefits - imputed rent - net or gross income from rental a property or land - family-children related allowances - social exclusion, not elsewhere classified - housing allowances - regular inter-household cash transfers received - net or gross interests, dividends, profit from capital investments in unincorporated

business - net or gross income received by people aged over 16 - tax on income and social insurance contributions

Some other variables are not simulated, but should be included in our list of variables because they stand for eligibility rules for unemployment insurance, minimum guaranteed income, education related allowances, etc.:

- occupational status - status in employment - actively looking for a job in previous four weeks - currently involved in education - employment history - main activity during the last 12 months.

As already mentioned, the EU-SILC data should be further detailed in order to be used for the micro simulation model. In the case of social benefits, the EU-SILC, family allowances, housing allowances and educational related allowances, social exclusion benefits are treated as a whole. A very important issue in the case of social assistance benefits is that, as already mentioned in the section devoted to policy rules, the assessment unit is the family, while the EU-SILC provides income data at individual and household level. Therefore, we have to split the household in families and identify income components at family level, which will be further used in social assistance benefit micro simulation. In the Annexes, we have summarized the possibility and recommendations for micro simulation for the benefit and tax system in Romania.

4. PARTICULAR MODELLING ISSUES

!"#"$%&'()*$+,-./0%&1$In order to up-rate the income variables, the following strategies can be adopted:

- for salary or wage, health insurance benefits and social insurance benefits which are calculated based on previous wages in the last 6 or 12 months, the adjustment can be done using the average wages from the Statistical Research on Labour Cost in Socio-Economic Units, which is carried out by the National Institute of Statistics on yearly basis.

41

- for the unemployment benefit, the statutory gross minimum guaranteed wage can be used for adjustments, as the unemployment benefit is calculated as percent of the statutory minimum wage.

- for pensions, administrative data from the National Pensions House on average pensions by pension type can be used.

- for social assistance benefits, administrative data sources can be used for data adjustment.

The eligibility rules for unemployment insurance benefit, guaranteed minimum income, education related allowances and other social assistance benefits, such as actively looking for a job or currently involved in education cannot be adjusted.

!"2"$&(&$0/3*$+,$(4$5*&*4%06$We cannot mention any study or data on the non take up of benefits in Romania. However, the non take up of means tested benefits can be assessed as the EU-SILC data set includes the total household disposable income before social transfers. If other eligibility conditions, except for income level, can also be assessed (employment, actively looking for a job, currently in education, etc.) then we can estimate the entitlement to some means-tested benefits. Unfortunately, only the benefits that are explicitly described in the dataset can be operated. Usually, in surveys, in Romania there is an issue of income under-reporting which can apply to social benefits as well.

!"7"$%&4(.)/8$*'(&()9$Various estimations of the size of informal/shadow economy in Romania using the electricity method belong to Schneider (1998, 2002, 2004, 2005, 2006, 2007) and he obtains about 26% of official GDP for the period 1990/93, and 28.3% in 1994/95. Applying the currency demand approach and DYMIMIC model, Romania has an ascending trend for the shadow economy, registering 27.3% of official GDP in 1990/93, 33.4% in 2000/01 and 37.4% in 2002/03. In the last years, it can be observed a decreasing evolution of the shadow economy, which registers 36.2% of official GDP in 2003/04 and 35.4% in 2004/05.

Using discrepancy between actual and desired income and between declared and actual income method, Albu L.(2007, 2008) estimates the lower and upper bound of the shadow economy:(28.6-35.9)% of official GDP in 1990, (23.5-28.7)% in 1995, (22.5-27.3)% in 2004 and (22.5-27.8)% in 2005.

!"!"$)%1./0%(&$$The issue of migration for employment abroad is a very significant one in Romanian context. Migration for employment, either temporary or circulatory became the most important component of Romanian migration in the last years. Unfortunately its description in figures is not complete and official statistics regarding migration for employment begin to exist only with the year 2005, when the Ministry of Labour became aware of the magnitude and implications of the phenomenon. According to the Romanian Office for Labour Force Migration’s estimates, there are about 2 million Romanians employed abroad in non seasonal activities, which represents more than 10% of Romania’s inhabitants. A study performed at the request of the International Organization for Migration states that in one out of five Romanian families there is a migrant for employment. According to the Open Society

42

Foundation (OSF) who carried out a representative research at national level concerning migration for employment of Romanians during 1990-2006, more than one third of the households had at least one migrant for employment in the period mentioned above. The study also revealed three different stages in migration for employment: the first one, between 1990-1995, characterized by a rate of emigration of 3 to 1000 inhabitants, the destination countries being Israel, Turkey, Italy, Hungary, Germany; the second stage, between 1996-2001 with a rate of emigration of 7 to 1000 inhabitants with the destinations: Spain, USA, Canada; the last stage, characterized by the removal of Schengen visa (2001-2006) registers a huge emigration rate of 28 to 1000 inhabitants, the main countries of destination being Italy (40% of all migrants for employment), Spain (18%), Germany (5%), Hungary (5%), Israel (6%). While during the first stages of emigration for employment men and urban areas were dominants, after 2001 women and men, rural and urban areas are almost equally represented, while youngsters and secondary level of education were dominant in every stage. The official data reported by the Department for Labour Abroad comprises only the number of work agreements abroad obtained through the Office for Labour Force Migration or private agents for employment, which is only a part of the emigration for employment (46,409 workers during the first three quarters of 2006). As for immigration for employment to Romania, the Office for Labour Force Migration declares a number of 7,102 active work permits for foreign citizens in November 2006, out of which 25% are possessed by EU citizens and 17% by citizens of the Republic of Moldova, the main fields of activity being commerce, services and industry. The working immigrants are mainly men (85% of total) of age between 26 and 35 years. In the last few years the number of permits has been growing significantly. As for micro simulation purposes, using EU-SILC data for Romania we cannot assess migration because the variable residential status records only the presence or absence of a person from the household, the longitudinal components for the membership status in personal register data is lacking. The amount of remittances received from migrants is very important, 4,674 million EURO in 2009 (Jan -August) according to National Bank of Romania estimates. The EU-SILC does not provide specific information on remittances received by the household.

!":"$.()/$,(,+8/0%(&$The latest official record on the number of Roma population in Romania dates from the 2002 Census and indicates 534.000 Roma people. Official surveys in Romania (conducted by the National Institute of Statistics) do not record ethnicity, but sociologists and NGO’s estimate that actually we are dealing with 1 to 2 million Roma people in Romania (5 to 10% of the Romanian population). Therefore, Roma population is under represented in official surveys, but we do not know the extent of the issue. We also know that they are highly dependent on social assistance benefits, their main sources of income being the minimum guaranteed income and occasional income (Sandu, 2005).

43

APPENDIX Appendix 1 Summary of recommendations

No. Instrument Can be simulated?

( Yes (at least partly)/ Can be taken from the

data/ No information)

Data requirements available in the dataset Additional information needed (not available in the dataset)

1. Income tax Yes (at least partly)

Gross employee income, Gross profits or losses from self-employment, Gross pension from individual pension plans, Gross old-age benefit. Some of the dependent persons for personal deductions. Contribution to individual pension plans.

The temporary work incapacity benefit is taxable income but can not be explicitly found in the data set, but as part of the variable sickness benefits. Gross income from rental of a property or land, gross interest, dividends, profit from capital investments, taxable income element, are available at household level, while the unit of assessment for the income tax is the individual. Is not reported income from gambling and prizes.

2. Personal deduction Yes (at least partly)

Number of dependent persons: children, spouse, parents.

No information on other relatives which could be dependent persons.

3. Other exemptions Yes (at least partly)

Contribution to individual pension plans. No information on trade union fees and savings in collective system for dwelling expenses.

4. Building tax Yes (at least partly)

Tenure status of dwelling, dwelling type, region, imputed rent.

Information not available for other own buildings than the residence building. Building characteristics and location.

5. Land tax No information Information on land own, characteristics and location. 6. Vehicle tax No information Information on vehicles own and characteristics. 7. Social insurance

contributions Yes (at least

partly) Gross employee income, Net cash profits or losses from self-employment, Tax on income and social contributions at household level.

Social insurance contribution for self-employed is due on gross income, information which is not available.

8. Unemployment insurance contribution

Yes (at least partly)

Gross employee income, Tax on income and social contributions at household level.

For self-employed, unemployment insurance contribution is levied on the insured income and no information available in the dataset on this.

9. Health insurance contributions

Yes (at least partly)

Gross employee income, Net cash profits or losses from self-employment, Tax on income and social contributions at household level.

Not available information for persons insured on voluntary basis, other than self-employed.

10. Health insurance contribution for medical leave and indemnities

Yes (at least partly)

Gross employee income The contribution for self-employed is due on gross income, information which is not available.

11. Work accidents and professional disease insurance contribution

Yes (at least partly)

Gross employee income, NACE The contribution for self-employed is due on gross income, information which is not available.

44

12. Contribution for the salary payment guarantee fund

Yes (at least partly)

Gross employee income, NACE Information not available on company ownership (public/ private).

13. Old-age pensions, early retirement and partially early retirement

Can be taken from the data

Old-age pensions, Number of years spent in paid work, NACE

Information on monthly gross earning for the entire contribution period.

14. Invalidity pension No information No information on invalidity pensions. The existent variable gross disability benefit could include, besides invalidity pensions, disability allowances

15. Survivors’ pension Can be taken from the data

Survivor’s benefit, Demographic data, Children, Gross employee earnings, current activity status

Information on the length of the marriage between the deceased and his/her spouse.

16. Unemployment benefit Yes Gross unemployment benefit, Current activity status, Activity status in income reference period, Number of years spent in work

17. Health insurance benefits No information Gross sickness benefits, Current activity status, Activity status in income reference period

The benefits are summed up in one single benefit: gross sickness benefits.

18. State allowance for children Yes Children, Age of children 19. Complementary family

allowance Yes (at least

partly) Total disposable household income, Net employee income, Pensions, Unemployment benefit, Family allowances, Education related allowances, Number of children

Information on family allowances is not detailed. Income from other sources is not available (means-tested benefit).

20. Support allowance for mono-parental family

Yes (at least partly)

Total disposable household income, Net employee income, Pensions, Unemployment benefit, Family allowances, Education related allowances, Number of children

Information on family allowances is not detailed. Income from other sources is not available (means-tested benefit).

21. Allowances for family placement

No information Information not available for children in family placement.

22. Indemnity for child raising Yes (at least partly)

Employee income, Current activity status, Age of children

No specific information on indemnity for child raising.

23. Incentive for child raising Yes (at least partly)

Employee income, Current activity status, Age of children

No specific information on indemnity for child raising.

24. Financial aids for family set up

No information Information not available on the moment of family set up

25. Allowance for new born children

No information

26. Outfits for new born children

No information

27. Emergency benefits No information Information not available 28. Financial benefits No information Information not available 29. Home heating aid Yes (at least

partly) Individual income, Total disposable household income

Information not available on type of heating system.

30. Benefits for refugees No information 31. Aid cash for the purchase No information

45

of automated burning 32. Monthly allowance for

attendant’s payment of adult with serious visual disability

No information Information not available on disabled persons.

33. Monthly allowance for adults with severe disabilities and emphasized

No information Information not available on disabled persons.

34. Complementary personal budget for adults with disabilities

No information Information not available on disabled persons.

35. The guaranteed minimum income

Yes Individual income added up to family income, Net disposable income at household level, Current activity status of family members, Household size. Eligibility condition: in community service at mayor’s request, possibly available in self-defined current activity status (7)

36. Aid for partial covering of funeral expenses

No information

37. Monthly allowance of food for children and adults infected with HIV or AIDS

No information

38. Financial aid to purchase computers (Euro 200 Program)

No information

39. Financial support to students in the national social protection program “Money for school”

No information

40. School supplies No information 41. Social grant (social aid

scholarship) No information Information on education related allowances is not available in

detail. 42. Scholarships for tuition No information Information on education related allowances is not available in

detail. 43. Scholarships for further

education No information Information on education related allowances is not available in

detail. 44. Adult literacy grants No information Information on education related allowances is not available in

detail. 45. Nursery voucher No information Conditioned on child’s nursery attendance. 46. Guaranteed minimum

social pension Yes Old-age pension, Survivor’s pension

46

APPENDIX 2

SOCIAL BENEFITS, 2007-2010 Quarterly Statistical Bulletin on Labour and Social Protection no. 1 (61)/2008 – BS 61 – database for 2007 Quarterly Statistical Bulletin on Labour and Social Protection no. 1 (65)/2009 – BS 61 – database for 2008 Quarterly Statistical Bulletin on Labour and Social Protection – first quarter T1 – BS T1 – database for the first quarter 2010 (for 2010, at the end of August 2010, taking into account the Law no. 118/2010) MLFSP – Minister of Labour, Family and Social Protection NASB – National Agency for Social Benefits No The quantum of the

social benefit 2007 2008 2009 2010

Social benefits administered by MLFSP (or NASB): 1. State allowance for

children

- children aged up to two years or 3 years in the case of disabled children

200 Lei BS 61

200 Lei BS 65

200 Lei MLFSP

200 Lei BS T1

- children above the age of two years, and young people who reached 18 and are integrated in the educational system according to the law – secondary education or vocational training, until the completion of these studies

25 Lei BS 61

32 Lei BS 65

42 Lei MLFSP

42 Lei BS T1

- children with disabilities who aged three years, including children with HIV / AIDS, until the age of 18 years

50 Lei BS 61

64 Lei BS 65

84 Lei MLFSP

84 Lei BS T1

2. Complementary family allowance

Jan. – Oct. 2008

Nov. – Dec. 2008

see below, after the table (note 3)

- family with one child BS 61 - 36 Lei

BS 65 - 38 Lei

BS 65 - 50 Lei

MLFSP - 50 Lei

BS T1 - 50 Lei

- family with 2 children BS 61 - 42 Lei

BS 65 - 44 Lei

BS 65 - 60 Lei

MLFSP - 60 Lei

BS T1 - 60 Lei

- family with 3 children BS 61 - 47 Lei

BS 65 - 49 Lei

BS 65 - 65 Lei

MLFSP - 65 Lei

BS T1 - 65 Lei

- family with 4 or more children

BS 61 - 52 Lei

BS 65 - 54 Lei

BS 65 - 70 Lei

MMFPS - 70 Lei

BS T1 - 70 Lei

- the threshold for the monthly net income per family member

176 Lei BS 61

184 Lei BS 65

423 Lei BS 65

470 Lei MLFSP

470 Lei BS T1

- for families receiving the guaranteed minimum income, the amount increases by 25% 3. Support allowance

for mono-parental family

Ian. – Oct. 2008

Nov. – Dec. 2008

see below, after the table (note 3)

47

- family with one child BS 61 - 52 Lei

BS 65 - 54 Lei

BS 65 - 70 Lei

MLFSP - 70 Lei

BS T1 - 70 Lei

- family with 2 children BS 61 - 62 Lei

BS 65 - 65 Lei

BS 65 - 80 Lei

MLFSP - 80 Lei

BS T1 - 80 Lei

- family with 3 children BS 61 - 70 Lei

BS 65 - 73 Lei

BS 65 - 85 Lei

MLFSP - 85 Lei

BS T1 - 85 Lei

- family with 4 or more children

BS 61 - 79 Lei

BS 65 - 83 Lei

BS 65 - 90 Lei

MLFSP - 90 Lei

BS T1 - 90 Lei

4. Allowances for family placement

- children BS 61 - 86 Lei

BS 65 - 90 Lei

MLFSP - 97 Lei

BS T1 - 97 Lei

- children with disabilities The quantum increases by 50% 5. Indemnity for child

raising 600 Lei 600 Lei 600 Lei or optionally 85%

of the average incomes for the last 12 months, but no more than 4,000 Lei. The allowance is increased by 600 Lei for each child born of a pregnancy of twins, triplets or more, starting from the second child from such a birth.

From 1 January to 2 July: 600 Lei or optionally 85% of the average incomes for the last 12 months, but no more than 4,000 Lei. From 3 July, the value decreases by 15% (Law no. 118/2010).

6. Incentive for child raising

100 Lei 100 Lei 100 Lei 100 Lei

7. Financial aids for family set up

200 euro, in Lei equivalent

200 euro, in Lei equivalent

200 euro, in Lei equivalent From 1 January to 2 July: 200 euro, in Lei equivalent. From 3 July, the law is repealed.

8. Allowance for new born children

204 Lei 213 Lei 230 Lei From 1 January to 2 July: 230 Lei. From 3 July, the law is repealed.

9. Outfits for new born children (trousseau)

150 Lei 150 Lei 150 Lei From 1 January to 2 July: 150 Lei. From 3 July, the law is repealed.

10. Emergency benefits MLFSP

The proposed amounts as emergency aid are awarded by the territorial directorate of labour and social protection and are based on social survey carried out by specialized personnel from the directorate. Amounts are awarded from state budget and also from local budgets.

11. Financial benefits MLFSP

The proposed amounts as financial aid are determined based on social surveys carried out by specialized personnel in the territorial directorate of labour and social protection.

12. Home heating aid see below, after the table (note 1) 13. Benefits for refugees The benefit for

refugees is set at a national gross minimum salary for six months, or, as appropriate, for 9 months.

The benefit for refugees is set at a national gross minimum salary for six months, or, as appropriate, for 9 months.

For 2009, the amount is at the level of December 2008 (GEO no. 118/1.10.2008)

The aid is indexed by the decision of the Government, according to the consumer price index evolution.

14. Aid cash for the purchase of automated burning

During 2005-2008: See the quantum of 2008!

Vouchers in the amount of: a) 1,500 Lei, for the acquisition, installation and

Vouchers in the amount of: a) 1,500 Lei, for the acquisition, installation and

Vouchers in the amount of: a) 1,500 Lei, for the acquisition, installation and

48

operation of a heating central. b) 300 Lei, in the acquisition and installation of an automated burning.

operation of a heating central. b) 300 Lei, in the acquisition and installation of an automated burning.

operation of a heating central. b) 300 Lei, in the acquisition and installation of an automated burning.

15. Monthly allowance for attendant’s payment of adult with serious visual disability

The monthly allowance is an amount equal to the net salary of junior social worker with secondary education from the social assistance units in the public sector, other than with beds.

16. Monthly allowance for adults with severe disabilities and emphasized

1. the quantum is 179 Lei, for the adult with severe deficiencies; 2. the quantum is 147 Lei, for the adult with marked deficiencies.

1. the quantum is 187 Lei, for the adult with severe deficiencies; 2. the quantum is 154 Lei, for the adult with marked deficiencies.

1. the quantum is 202 Lei, for the adult with severe deficiencies; 2. the quantum is 166 Lei, for the adult with marked deficiencies.

or the first quarter T1 2010: the same as in 2009

17. Complementary personal budget for adults with disabilities

1. the quantum is 80 Lei, for the adult with severe deficiencies; 2. the quantum is 60 Lei, for the adult with marked deficiencies; 3. the quantum is 30 Lei, for the adult with medium deficiencies.

1. the quantum is 84 Lei, for the adult with severe deficiencies; 2. the quantum is 63 Lei, for the adult with marked deficiencies; 3. the quantum is 31 Lei, for the adult with medium deficiencies.

1. the quantum is 91 Lei, for the adult with severe deficiencies; 2. the quantum is 68 Lei, for the adult with marked deficiencies; 3. the quantum is 33,5 Lei, for the adult with medium deficiencies.

For the first quarter T1 2010: the same as in 2009

18. The guaranteed minimum income

see below, after the table (note 2)

19. Aid for partial covering of funeral expenses, according to the Law 416/2010

The mayors may provide an aid representing a portion of funeral expenses.

20. Monthly allowance of food for children and adults infected with HIV or AIDS

11.5 Lei / day for adults 9 Lei / day for children

From May 2008: 13 Lei / day for adults 11 Lei / day for children

13 Lei / day for adults 11 Lei / day for children

Other benefits administered by other authorities: 1. Financial aid to

purchase computers (Euro 200 Program)

200 euro, in Lei equivalent (coupons)

200 euro, in Lei equivalent (coupons)

200 euro, in Lei equivalent (coupons)

200 euro, in Lei equivalent (coupons)

2. Financial support to students in the national social protection program “Money for school”

For the school year 2007/2008: 180 Lei

For the school year 2008/2009: 180 Lei

For the school year 2009/2010: 180 Lei

For the school year 2010/2011: 180 Lei

3. School supplies The amount in the school year 2008-2009 is 25 Lei / package / student in primary and 30 Lei

The amount in the school year 2008-2009 is 25 Lei / package / student in primary and 30

The amount in the school year 2009-2010 is 25 Lei / package / student in primary and 30

The maximum amount in the school year 2010-2011 is 25 Lei / package / student in primary

49

/ package / secondary school student.

Lei / package / secondary school student.

Lei / package / secondary school student.

and 30 Lei / package / secondary school student.

4. Social grant (social aid scholarship)

For students: The amount of social grant (social aid scholarship) shall be determined by the board or the county school inspectorate or of Bucharest, respectively. For college students: The amounts of social grant for college students are set by the university senate, so this amount must cover the minimum accommodation and meals in canteens. University senate may establish differentiated specific criteria for awarding the social grant.

5. Occasionally social grant (occasionally social aid scholarship)

Occasionally social grants are given also for students and college students (see the Feasibility study). The quantum of the occasionally social grant must be at least equal to the social grant (social aid scholarship, for students). University senate may award also other special grants (occasionally social grant for clothing, occasionally maternity social grant, occasionally social grant in case of death), according to its own criteria and regulations. University senate may establish specific criteria for awarding the social grant, according to professional activity. Higher education institutions can complement scholarship funds from the state budget with funds from their own income.

6. Tuition scholarship Tuition scholarship level is set annually by Government and is an indexed amount, given from the budget allocated to the Ministry of Education or local budgets, according to the annual budget laws.

7. Scholarship for further education

Scholarship for further education level is set annually by the Government and is an indexed amount at least equivalent to cover accommodation, meals respectively in dormitories, boarding and canteens, given the budget allocated to the Ministry of Education or local budgets, according annual budget laws.

8. Literacy scholarship

Literacy scholarship amount is determined by decisions of local authorities.

9. Nursery voucher From January 2007 – 300 Lei by child; From February 2007 – 310 Lei by child; From August 2007 – 320 Lei by child.

From January 2008 – 320 Lei by child; Starting with February 2008 – 330 Lei by child; From August 2008 – 340 Lei by child.

From January 2009 – 340 Lei by child; From February 2009 – 350 Lei by child; From August 2009 – 360 Lei by child.

From January 2010 – 360 Lei by child; From February 2010 – 370 Lei.

10. Guaranteed minimum social pension

- - From April, 1, 2009 – 300 Lei From October, 1, 2009 – 350 Lei

From 3 July 2010, the level of the social indemnity for pensioners (till 2010, the guaranteed minimum social pension) will not be less than 350 Lei.

11. Unemployment allowance

The unemployment allowance represents 75% of the gross minimum salary in force at the time of its determination. The amount of unemployment allowance paid to unemployed (1) is an amount paid monthly and in different ways, depending on the period of contribution. a) 75% of gross minimum salary, for people with a contribution period of at least one year. The amount stipulated in point a) plus an amount calculated by applying on the gross average monthly basic salary for the last 12 months contribution period, a distinctive rate according to the eligibility period. Distinctive rates according to the eligibility period have the following values (the differential amounts are applied as follows:

a) 3% for those with a contribution period of at least 3 years;

From July 3, 2010, the value drops by 15% (Law no. 118/2010).

50

b) 5% for people with a contribution period of at least 5 years;

c) 7% for people with a contribution period of at least 10 years;

d) 10% for those with a contribution period of at least 20 years

The unemployment benefit is granted to people assimilated as unemployed (2) for a period of 6 months and it is a monthly fixed amount, which represents 50% of gross minimum guaranteed wage, and it is awarded to those assimilated as unemployed (2) once per every graduated education form.

12. Health insurance indemnity

see the Feasibility study

The amount of the contribution is the application of 6.5% rate on the amount representing the value of twice the gross minimum wage in the country.

January-June 2008: 6.5% x 2 gross minimum wage. Starting with July 2008: 5.5% x 2 gross minimum wage. GEO no. 118/01.10.2008 eliminates the relationship with the gross minimum wage guaranteed.

The amount of the contribution is the application of 5.5% rate on the value of child rising allowance and this contribution is supported from the state budget.

The amount of the contribution is the application of 5.5% rate on the value of child rising allowance and this contribution is supported from the state budget.

13. Contribution for health insurance for those families that benefit of the indemnity for child raising

The territorial directions of the MLFSP are required to send monthly, to the Territorial Health Insurance Houses the individual health contributions and the names of the beneficiaries.

(Note no. 1) Home heating aid - the dynamic values between 2007 and 2010 Families and single persons, who use for home heating only thermal energy supplied by a centralized system, or use natural gas, or wood, coal, and oil fuel, for heating receive a monthly aid for residential heating during the cold season, differentiated according to the average net monthly income per family member. Home heating aid is a monthly support, at the request of the beneficiary, based on documentary evidence regarding the family structure and on personal statement regarding the incomes earned by its members earlier in the month of application, accompanied by supporting documents. The income for the establishment of the home heating amount is provided in Article 8. (1) and (2) of Law no. 416/2001 on the guaranteed minimum wage. To check the truthfulness of data from the personal statements, regarding the family structure and the income, the executive directors of regional directorates may dispose investigations carried out by social survey, after the statement of the entitlement for the home heating aid. Current year for receiving the home heating aid is the period between November 1 and March 31 next year. Aid for home heating in centralized heating system Families and single people with low incomes, who use thermal energy supplied by a centralized system for heating, benefit from a compensation for heating expenses as a

51

percentage of the actual amount of heat energy bill, depending on the average net monthly income per family member (See table bellow). Single persons receive a compensation 10% higher compared to the compensation shares set for families. Families and single person whose income level is less then 125 Lei and are in the same time social aid beneficiaries (Law no. 416/2001 on the minimum guaranteed income), the compensation is 100%. The benefit is granted for a period of 12 months when beneficiaries have opted for billing as provided in point a) of the GEO no. 5 / 2003 (see below). The benefit is granted for a period of 5 months when beneficiaries have opted for billing as provided in points b) and c) of GEO no. 5 / 2003 (see below). The benefit is granted for a stipulated period of 12 months, differentiated by cold season and the rest of the year, when beneficiaries have opted for billing as provided in point d) of GEO no. 5 / 2003 complete with GEO no. 143/2005 (see below). Traders and producers of public services and / or distributors of heat in a centralized system set on contractual basis, together with associations of owners / tenants or individuals, the billing and payment of the value of thermal energy consumed, which can be: a) billing and payment in equal monthly installments during the calendar year, based on the average monthly quantity of heat actually consumed in the previous calendar year; b) billing and payment in equal monthly installments set differently during the cold season and the rest of the year, during a calendar year, based on monthly average quantity of heat actually consumed during the corresponding previous calendar year; c) billing and monthly payment based on actual consumption. d) billing and payment system of binomial tariff. The actual amounts of aid for home heating in centralized system are calculated according to the compensation determined according to the billing method, as a percentage of the invoice/ bill value calculated by multiplying the consumption broken down by individual consumers to the local price charged for heating. 2006-2007: 1 of November 2006 ! 31 of March 2007, GEO 57/2006: Average monthly net income per family member, and per a single person (LEI)

Percentage compensation of the actual amount of heat energy bill (%)

GEO no. 57/2006: During : 1 November 2006 ! 31 March 2007 Thermal energy provided by the centralized system Up to 125 Lei 90% 125 – 170 80 170 – 210 70 210 – 250 60 250 – 290 50 290 – 345 40 345 – 390 30 390 – 440 20

52

440 – 500 10 1 of November 2006 ! 31 of March 2007, GEO 57/2006: Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

1 November 2006 – 31 March 2007: Natural gas Wood, coal, and oil fuel

GEO 57/2006: Until September 15 of each year, mayors are obliged to draw up the lists with the beneficiaries of social aid for heating the house using wood, coal, oil fuels, based on documentation submitted to establish the social support. On this list, the mayors list provide orders regarding the establishment of the entitlement for home heating aid, which is transmitted till September 30 of each year to the social support holder. GEO 107/2006, starting with 1 of January 2007:

Up to 125 Lei 210 Up to 125 Lei 46 125 – 170 130 125 – 170 42 170 - 210 110 170 - 210 38 210 - 250 90 210 - 250 34 250 – 290 70 250 – 290 30 290 - 345 50 290 - 345 26 345 – 390 35 345 – 390 22 390 - 440 25 390 - 440 18 440 - 500 15 440 - 500 14 GEO 57/2006: Families and single persons who receive social assistance under the conditions established by Law no. 416/2001 (regarding the guaranteed minimum wage, as amended and supplemented), and for residential heating use wood, coal and oil fuel for heating receive in the cold season, an amount of 50 Lei per month. GEO 107/2006, starting from January 1, 2007: For families and single person whose average net monthly income per family member, or per single person, is up to 125 Lei, and receive social aid established according to Law no. 416/2001 on the minimum guaranteed income, with modifications and completions, the monthly aid for heating house is 50 Lei. 2007-2008: 1 of November 2007-31 of March 2008, HG 1197/2007: Average monthly net income per family member, and per a single person (LEI)

Percentage compensation of the actual amount of heat energy bill (%)

Average monthly net income per family member, and per a single person (LEI)

Percentage compensation of the actual amount of heat energy bill (%)

GD 1197/2007: During 1 November 2007 ! 31 March 2008: Thermal energy provided by the centralized Thermal energy provided by the centralized

53

system during November – December 2007 system during January – March 2008 Up to 125 Lei 90% Up to 155 90% 125,1 – 170 80 155,1 - 210 80 170,1 – 210 70 210,1 - 260 70 210,1 – 250 60 260,1 - 310 60 250,1 – 290 50 310,1 - 355 50 290,1 – 345 40 355,1 - 425 40 345,1 – 390 30 425,1 - 480 30 390,1 – 440 20 480,1 - 540 20 440,1 – 500 10 540,1 - 615 10 1 of November 2007-31 of March 2008, HG 1197/2007:

Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

During 1 November 2007 – 31 December 2007: Natural gas Wood, coal, and oil fuel Up to 125 Lei 233 Up to 125 Lei 50 125,1 – 170 144 125,1 – 170 45 170,1 - 210 122 170,1 - 210 41 210,1 - 250 100 210,1 - 250 36 250,1 – 290 78 250,1 – 290 32 290,1 - 345 56 290,1 - 345 28 345,1 – 390 39 345,1 – 390 24 390,1 - 440 28 390,1 - 440 19 440,1 - 500 17 440,1 - 500 15

During 1 January 2008 – 31 March 2008: Natural Gas Wood, coal and oil fuel Up to 155 Lei 233 Up to 155 Lei 50 155,1 – 210 144 155,1 – 210 45 210,1 - 260 122 210,1 - 260 41 260,1 –310 100 260,1 –310 36 310,1 – 355 78 310,1 – 355 32 355,1 - 425 56 355,1 - 425 28 425,1 - 480 39 425,1 - 480 24 480,1 - 540 28 480,1 - 540 19 540,1 - 615 17 540,1 - 615 15 For families and single persons whose average net monthly income per family member, or per single person, is up to 155 Lei, and receive social aid established according to Law no. 416/2001 on the minimum guaranteed income, with modifications and completions, the monthly aid for heating the house during 1 of November 2007 and 31 of March 2008 is 54 Lei.

54

In the year 2008, there was an additional aid for home heating to support the families and single persons with low incomes, according to GEO no. 14/2008. The providing of an additional support to families and single persons with low incomes, who use natural gas for heating, for the period February-March 2008 and November-December 2008, according to GEO no. 14/20.02.2008:

Average monthly net income per family member, and single person

(LEI)

Monthly amount (Additional monthly amount)

(LEI) During February – March 2008 and November – December 2008: Natural gas Up to 155 Lei 100 155,1 – 210 70 210,1 – 260 60 260,1 – 310 45 310,1 – 355 30 355,1 – 425 25 425,1 – 480 20 480,1 – 540 15 540,1 – 615 10 The amounts of additional aid granted to families and single persons with low incomes, who use gas for heating, will be paid from the social fund, according to GEO no. 14/2008. Unused amounts of the additional add at the end of the year 2008 will be carried forward and used in 2009 with the same destination, according to GEO no. 226 / 2008. 2008-2009: 1 of November 2008-31 of March 2009 Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

During 1 November 2008 – 31 March 2009: Natural gas Wood, coal and oil fuel Up to155 Lei 262 Up to 155 Lei 54 155,1 - 210 162 155,1 - 210 48 210,1 - 260 137 210,1 - 260 44 260,1 - 310 112 260,1 - 310 39 310,1 - 355 87 310,1 - 355 34 355,1 - 425 62 355,1 - 425 30 425,1 - 480 44 425,1 - 480 26 480,1 - 540 31 480,1 - 540 20 540,1 - 615 19 540,1 - 615 16 Web site MMFPS / Minister of Labour, Family and Social Protection For families and single persons whose average net monthly income per family member, or per single person, is up to 155 Lei, and receive social aid established according to Law no.

55

416/2001 on the minimum guaranteed income, with modifications and completions, the monthly aid for heating house during 1 of November 2008 and 31 of March 2009 is 58 Lei. 2009-2010: During 1 November 2009 ! 31 March 2010, GEO no. 106/2009: Average monthly net income per family member, and per a single person (LEI)

Percentage compensation of the actual amount of heat energy bill (%)

GEO no. 106/2009: During 1 November 2009 ! 31 March 2010: Thermal energy provided by the centralized system Up to155 90% 155,1 - 210 80 210,1 - 260 70 260,1 - 310 60 310,1 - 355 50 355,1 - 425 40 425,1 - 480 30 480,1 - 540 20 540,1 - 615 10 1 of November 2009-31 of March 2010 (GEO no. 106/2009, approved with modification by Law no. 358/2009) GEO no. 106 / 7 October 2009 – the reducing of the threshold from 615 Lei to 425 Lei, but GEO is approved with modification of the threshold from 425 Lei to 615 Lei, by Law no. 358 / 20 November 2009) Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

Average monthly net income per family member, and single person

(LEI)

Monthly amount

(LEI)

During 1 November 2009 – 31 March 2010: Natural gas Wood, coal and oil fuel Up to 155 Lei 262 Up to 155 Lei 54 155,1 - 210 162 155,1 - 210 48 210,1 - 260 137 210,1 - 260 44 260,1 - 310 112 260,1 - 310 39 310,1 - 355 87 310,1 - 355 34 355,1 - 425 62 355,1 - 425 30 425,1 - 480 44 425,1 - 480 26 480,1 - 540 31 480,1 - 540 20 540,1 - 615 19 540,1 - 615 16 For families and single persons whose average net monthly income per family member, or per single person, is up to 155 Lei, and receive social aid established according to Law no. 416/2001 on the minimum guaranteed income, with modifications and completions, the

56

monthly aid for heating house during 1 of November 2009 and 31 of March 2010 is 58 Lei (GEO no. 106/2009). 2010-2011: 1 of November 2010-31 of March 2011 GEO no. 86/20.09.2010: restoring the list of goods for receiving the heating aid for the period November, 1, 2010 and –March, 31, 2011.

(Note no. 2) The guaranteed minimum income, 2007 - 2010 2007: GD no. 5/10.01.2007: Starting with January 2007, the monthly level of the guaranteed minimum income is the following: a) 96 Lei for single person; b) 173 Lei for families with 2 persons; c) 241 Lei for families with 3 persons; d) 300 Lei for families with 4 persons; e) 356 Lei for families with 5 persons; f) 24 Lei for each person over the number of five persons belonging to the family, as provided by Law no. 416/2001, as amended and supplemented. If the calculation results a social support less than 50 Lei, then the social aid is 50 Lei. Families and single persons with net monthly income to the level of MIG receive 15% increase of the amount of social assistance per family, if at least one family member working on the basis of individual labour contract, have the status of civil servant or performs a task, making revenues on salaries. The amount of social assistance is determined as the difference between the levels mentioned above and the monthly net income of the family or single person. 2008: Stating with January 2008, the level of the guaranteed minimum income is: a) 100 Lei for single person; b) 181 Lei for families with 2 persons; c) 252 Lei for families with 3 persons; d) 314 Lei for families with 4 persons; e) 372 Lei for families with 5 persons; f) 25 Lei for each person over the number of five persons belonging to the family, as provided by Law no. 416/2001, as amended and supplemented. 2009: GD no. 1664/10.12.2008: Stating with January 2009, the level of the guaranteed minimum income is: a) 108 Lei for single person; b) 196 Lei for families with 2 persons; c) 272 Lei for families with 3 persons; d) 339 Lei for families with 4 persons; e) 402 Lei for families with 5 persons; f) 27 Lei for each person over the number of five persons belonging to the family, as provided by Law no. 416/2001, as amended and supplemented.

57

GEO no. 57/27.05.2009: Starting with July 2009, the level of the guaranteed minimum income is: a) 125 Lei for single person; b) 225 Lei for families with 2 persons; c) 313 Lei for families with 3 persons; d) 390 Lei for families with 4 persons; e) 462 Lei for families with 5 persons; f) 31 Lei for each person over the number of five persons belonging to the family, as provided by Law no. 416/2001, as amended and supplemented. If the calculation results a social support less than 10 Lei, then the social aid is 10 Lei. Starting with May, 26, 2010: Draft for the completion and amendment of the Law 416/2001 on the guaranteed minimum wage (still in draft stage, in debate; legislative provisions for 2011); Source: website of the Minister of Labour, Family and Social Protection. (Note no. 3). The complementary family allowance and the support allowance for the mono-parental family – Draft, starting with 2011, Still in Draft stage (semester II, 2010) 1. For families with 2 parents

The family support allowance (Lei) – Draft stage for Semester II, 2010, For families with 2 parents

The amounts starting with 2011 (draft) 1 child 30 2 children 60 3 children 90

Incomes between 0 – 200 Lei

4 and more children 120 1 child 25 2 children 50 3 children 75

Incomes between 201 – 370 Lei

4 and more children 100 2. For families with 1 parent

The family support allowance (Lei) – Draft stage for Semester II, 2010, For families with 1 parent

The amounts starting with 2011 (draft) 1 child 50 2 children 100 3 children 150

Incomes between 0 – 200 Lei

4 and more children 200 1 child 45 2 children 90 3 children 135

Incomes between 201 – 370 Lei

4 and more children 180 Source: website MLFSP, 31 August 2010 - COMUNICAT DE PRES", Preciz!ri cu privire la aprobarea proiectului de lege privind aloca"ia pentru sus"inerea familiei (31 August 2010 - PRESS RELEASE, Notes on the approval of the draft law on family support allowance).

58

(Note no. 4) Annual average exchange rate Euro-Lei 2007 2008 2009 2010

Annual average exchange rate

3,3373 3,6827 4,2373 4,1837

Jan-Sept.2010 Annual averages are computed as simply arithmetic averages of monthly figures. Source: website of the National Bank of Romania.

59

Appendix 3 Table 1: National statutory minimum gross guaranteed wage, during 2007 – 2010

Year Period Amount Regulation 2007 January – December 390 GD no. 1825/2006

January – September 500 GD no. 1507/2007 2008 October – December 540 GD no. 1051/2008

2009 January – December 600 GD no. 1051/2008 2010 Starting with January 600 GD no. 1051/2008

Source: Minister of Labour, Family and Social Protection Table 2: Other key indicators

2007 2008 2009 Average gross nominal earnings* 1396 1761 1889**

Average pension*** 399 593 711 Inflation rate**** 5,59 7,85 4,94

*Source - Ministry of Labour, Family and Social Protection **provisional data ***Source – National House of Pensions and Other Insurance Rights – CNPAS ****Source – National Bank of Romania Table 3: Labour force indicators

Labour force indicators

2007 2008

Activity rate 63,0 62,9 Employment rate 58,8 59 Unemployment rate - ILO

6,4 5,8

Source: Romanian Statistical Yearbook, 2009 Figure 1

Source: Ministry of Finance, 2010

60

Figure 2

Figure 3

Source: Ministry of Labour, Family and Social Protection, 2010 Figure 4

Source: National Pension House, 2009

61

Figure 5

Source: Ministry of Labour, Family and Social Protection, 2010

Figure 6

Source: National Institute of Statistics, 2009

62

Appendix 4

2003 2004 2005 2006 2007 2008 2009 2010 Comments

for 2010 GDP

(million Lei current

prices) 197427,6 247368,0 288954,6 344650,6 416006,8 514654,0 491273,7 114707,4

114707,4 (at the level of the second quarter 2010)

Population

(at 1st of July, each year) 21.733.556

21.673.328 21.623.849 21.584.365 21.537.563 21.504.442 21.469.959

21.462.186

21.462.186 (at the 1st of January 2010)

NOTE for the following table: 1. The monthly average number of beneficiaries for each social benefit (or all the paid aids; for social benefit, including the number of effective social aids paid as total number per year - see table) was reported at the total population on 1 July each year. 2. The paid amounts for each social benefit are reported to the GDP of that year. 3. For GDP, the amounts in the table are in million Lei current prices, according to the national statistics.

63

The magnitude / importance of social benefits

No 2004 2005 2006 2007 2008 Semester I 2009 July 2010

1. State allowance for children

The monthly average number of beneficiaries 4228155 4411776 4270759 4207224 3775707 3989264 3995738

% of the monthly average number of beneficiaries in the total population 19,509 20,402 19,786 19,534 17,558 18,581 18,618

Payments (Lei) 1104899271 1230647156 1263822295 2082807807 2586442182 1462390821 247468607

% of the payments in the GDP 0,447 0,426 0,367 0,501 0,503 0,298 0,216

2. Complementary family allowance

The monthly average number of beneficiaries, total of which: 667905 708480 651666 576844 506096 524076 616390

% of the monthly average number of beneficiaries in the total population 3,082 3,276 3,019 2,678 2,353 2,441 2,872

Families with one child 268450 291950 270242 236649 201547 207674

Family with 2 children 280172 294339 270844 238556 209627 220203

Family with 3 children 76884 77557 69791 63652 59463 61162

Family with 4 or more children 42399 44634 40789 37987 35459 35037

Payments (Lei) 283962380 335203819 316730482 297426778 288685481 195860027 37606363

% of the payments in the GDP 0,115 0,116 0,092 0,071 0,056 0,040 0,033

3. Support allowance for mono-parental family

The monthly average number of beneficiaries, total of which: 209328 247373 244845 221194 189768 190073 204114

% of the monthly average number of beneficiaries in the total population 0,966 1,144 1,134 1,027 0,882 0,885 0,951

Families with one child 116973 143243 143822 129895 110797 111937

Family with 2 children 60985 68040 66461 59641 51165 50875

Family with 3 children 20528 22940 22322 20269 17726 17439

Family with 4 or more children 10842 13150 12240 11389 10080 9822

Payments (Lei) 122341240 161649371 165108064 155733316 145442793 89028549 16035555

64

% of the payments in the GDP 0,049 0,056 0,048 0,037 0,028 0,018 0,014

4. Indemnity for child raising

The monthly average number of beneficiaries 186342 189990 179070 179667 199501

% of the monthly average number of beneficiaries in the total population

0,863 0,882 0,833 0,837 0,930 Payments (Lei) 1661174033 1436236286 1320183369 787024720 194792828

% of the payments in the GDP 0,482 0,345 0,257 0,160 0,170

5. Incentive for child raising

The monthly average number of beneficiaries 11369 16608 17928 16324 9723

% of the monthly average number of beneficiaries in the total population 0,053 0,077 0,083 0,076 0,045

Payments (Lei) 36175154 23877393 22211145 10485164 1023376

% of the payments in the GDP 0,0105 0,0057 0,0043 0,0021 0,0009

6. Contribution for health insurance for those families that benefit from the indemnity for child raising

The monthly average number of beneficiaries 185707 191120 179070 180383

% of the monthly average number of beneficiaries in the total population 0,860 0,887 0,833 0,840

Payments (Lei) 86557551 104262784 131432062 41831539 7370514

% of the payments in the GDP 0,0251 0,0251 0,0255 0,0085 0,0064

7. Allowance for new born children

The monthly average number of beneficiaries 185091 189857 184477 187457 19640 96510 16575

% of the monthly average number of beneficiaries in the total population 0,854 0,878 0,855 0,870 0,091 0,450 0,077

Payments (Lei) 25873260 34091669 36217424 37877906 39886535 21803983 3813467

% of the payments in the GDP 0,0105 0,0118 0,0105 0,0091 0,0078 0,0044 0,0033

65

8. Allowances for family placement

The monthly average number of beneficiaries 48263 48815 49866 48081 50207 46609 44053

% of the monthly average number of beneficiaries in the total population

0,223 0,226 0,231 0,223 0,233 0,217 0,205

Payments (Lei) 41161790 49173921 52397940 54907823 54492459 29245711 4715726

% of the payments in the GDP 0,0166 0,0170 0,0152 0,0132 0,0106 0,0060 0,0041

9. Outfits for new born children (trousseau)

The number of beneficiaries 142360 199856 106296 291

% of the number of beneficiaries in the total population

0,661 0,929 0,495 0,001

Payments (Lei) 21359069 29709177 15943902 43608

% of the payments in the GDP 0,00513 0,00577 0,00325 0,00004

10. Financial aid for family set up

The number of beneficiaries 133942 106464 26242 111

% of the number of beneficiaries in the total population

0,622 0,495 0,122 0,001

Payments (Lei) 87812168 76656154 21842458 90370

% of the payments in the GDP 0,02111 0,01489 0,00445 0,00008

11. Number of paid social aids

Social aids effective paid - monthly average number

316569 297894 280731 240236 223777 215657

% of the monthly average number of beneficiaries in the total population

1,461 1,378 1,301 1,115 1,041 1,004

Payments (Lei) 440392320 472347719 449233027 396615888 366540421 189612712

% of the payments in the GDP 0,178 0,163 0,130 0,095 0,071 0,039

12. Average number of paid social aids, by number of family members

66

Social aids effective paid - monthly average number 316569 297894 280731 240236 223778 215657

% of the monthly average number of beneficiaries in the total population 1,461 1,378 1,301 1,115 1,041 1,004

Single person 84389 77791 78486 80122

Families with 2 persons 58838 48864 46077 44013

Families with 3 persons 50902 40754 35481 33217

Families with 4 persons 42993 35676 31185 29215

Families with 5 persons 23766 19971 17864 16074

Families with more than 5 persons 19843 17180 14685 13016

11. Number of paid social aids, by number of family members

Social aids effective paid – total number per year

3798823 3574732 3368775 2882828 2685325

% of the annual total number of beneficiaries in the total population

17,528 16,531 15,607 13,385 12,487

Payments (Lei) 440392320 472347719 449233027 396615888 366540421

% of the payments in the GDP 0,178 0,163 0,130 0,095 0,071

12. Average number of paid social aids, by number of family members

Social aids effective paid – total number per year 3368775 2882828 2685325

% of the annual total number of beneficiaries in the total population 15,607 13,385 12,487

Single person 1012664 933488 941830

Families with 2 persons 706052 586362 552922

Families with 3 persons 610820 489044 425771

Families with 4 persons 515920 428113 374218

Families with 5 persons 285196 239653 214366

Families with more than 5 persons 238123 206168 176218

13. Aid for partial covering of funeral expenses

67

The total number of granted benefits 4203 3801 4239 4588 5094 2808

% of the number of granted benefits in the total population 0,019 0,018 0,020 0,021 0,024 0,013

Payments (Lei) 917767 797465 1104242 1561659 2069040 1012598

% of the payments in the GDP 0,00037 0,00028 0,00032 0,00038 0,00040 0,00021

14. Financial benefits

The total number of granted benefits 10575 4729 6416 4820 7478 0 0

% of the number of granted benefits in the total population 0,0488 0,0219 0,0297 0,0224 0,0348

Payments (Lei) 8144080 4747089 5791604 6629116 9494822 0 0

% of the payments in the GDP 0,0033 0,0016 0,0017 0,0016 0,0018

15. Emergency benefits

Number of emergency benefits paid from: 57032 38061 59538 79932 102308 17618 0

% of the number of granted benefits in the total population 0,263 0,176 0,276 0,371 0,476 0,082

The state budget 1789 8160 11761 17628 25385 0 0

Local budget 55243 29901 47777 62304 76923 17618

Payments (Lei) 18070220 15762258 21274539 30946461 37235709 7424423 % of the payments in the GDP 0,0073 0,0055 0,0062 0,0074 0,0072 0,0015 The state budget 4649270 7216758 4228536 7004300 12786820 0

Local budget 13420950 8545500 17046003 23942161 24448889 7424423

16. Benefits for refugees

The monthly average number of beneficiaries 61 56 22 60 64 61 34

% of the monthly average number of beneficiaries in the total population

0,000281 0,000259 0,000102 0,000279 0,000298 0,000284 0,000158

Payments (Lei) 82276 99720 61254 163430 375543 192806 18360

% of the payments in the GDP 0,000033 0,000035 0,000018 0,000039 0,000073 0,000039 0,000016

17. Social benefits for persons with disabilities

68

* Social allowance for adults with visual disability, with severe and marked disability*

The monthly average number of beneficiaries 82601 82462 85000

% of the monthly average number of beneficiaries in the total population

0,382 0,382 0,395

Payments (Lei) 129645089 143643309 12427239

% of the payments in the GDP 0,0449 0,0417 0,0030

* Indemnity for visual disabled persons attendants *

The monthly average number of beneficiaries 35232 38898 42866

% of the monthly average number of beneficiaries in the total population

0,163 0,180 0,199

Payments (Lei) 112581307 140908383 12943957

% of the payments in the GDP 0,0390 0,0409 0,0031

* Indemnity for employees hired as attendants for persons with visual disability *

The monthly average number of beneficiaries 1115 1125 1139

% of the monthly average number of beneficiaries in the total population

0,0052 0,0052 0,0053

Payments (Lei) 266512 264892 22020

% of the payments in the GDP 0,000092 0,000077 0,000005

* Indemnity for visual disabled persons attendants **

The monthly average number of beneficiaries 42404 44603 44617

% of the monthly average number of beneficiaries in the total population

0,1969 0,2074 0,2078

Payments (Lei) 154890512 213292646 121174370

% of the payments in the GDP 0,037 0,041 0,025

69

* Indemnity for disabled with severe and marked disability **

The monthly average number of beneficiaries 427175 493282 516329

% of the monthly average number of beneficiaries in the total population

1,983 2,294 2,405

Payments (Lei) 720369786 943901454 539256623

% of the payments in the GDP 0,173 0,183 0,110

* Complementary personal budget for adults with disabilities (severe, marked and medium) **

The monthly average number of beneficiaries 507295 590248 621133

% of the monthly average number of beneficiaries in the total population

2,355 2,745 2,893

Payments (Lei) 347497584 457891969 262809954

% of the payments in the GDP 0,084 0,089 0,053

Total payments for social benefits for persons with disabilities (Lei)

204690653 242492908 284816584 1248151098 1615086069 923240947 *** 169840111

% of the payments in the GDP 0,083 0,084 0,083 0,300 0,314 0,188 0,148

18. Monthly allowance of food for children and adults infected with HIV or AIDS

The monthly average number of beneficiaries 5676 5104 5703 7852 6310 6304

0,0262 0,0236 0,0264 0,0365 0,0293 0,0294

Children 3613 2885 1626 822 …

Adults 1491 2818 6226 5488 … 6843

Payments (Lei) 8416784 13980257 16182766 27087366 27753008 15037124 **** 2675559

% of the payments in the GDP 0,0034 0,0048 0,0047 0,0065 0,0054 0,0031 0,0023 * Social benefits granted till 2006 are regulated by GEO no. 102/1999 on special protection and employment of persons with disabilities, repealed by Law no. 448/2006 on the protection and promotion of disabled persons, ** Social benefits for 2007 regulated by Law no. 448/2006 on the protection and promotion of disabled persons, *** For June 2010, inclusive children infected with HIV or AIDS.

70

REFERENCES ! Alexandru A., Dobre, I., Ghinararu, C., Estimating the size of the Romanian shadow. economy using the

currency demand approach, INCSMPS Working paper, 2010 ! Human Development Report Romania 2007, Making EU Accession Work for All, UNDP, 2007. ! Romanian Statistical Yearbook 2009-2007, National Institute of Statistics, Romania. ! Sandu, D., Roma social mapping. Targeting by a community poverty survey, World Bank, 2005.