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EXCLUSIVE: Romania To Set Unemployment Aid At 75% Of RON500 Reference Social Indicator

Unemployment aid in Romania will be set next year at 75% of the national reference social indicator, which is currently 500 lei (EUR1=RON4.2996), and will no longer be tied to minimum wage, increased to RON670.
EXCLUSIVE: Romania To Set Unemployment Aid At 75% Of RON500 Reference Social Indicator
Oana Gavrila
25 nov. 2010, 14:25, English

The new system will be applied as of January 1, 2011, according to a draft emergency ordinance, obtained by MEDIAFAX. It says people who have paid social security contributions for at least one year will be entitled to unemployment aid in the amount of 75% of the reference social indicator, plus 3-10% of the average gross salary in the last 12 months. School graduates eligible for unemployment aid will receive 50% of the value of the social indicator as of next year.

People on unemployment aid before the ordinance enters force shall continue to receive it in the same amount „until the payment of this right is suspended,” says the act.

Romania’s Government has committed to the IMF to no longer tie unemployment aid to the minimum wage to avoid having to raise it along with the wage hike planned for 2011, according to the Government’s letter of intent. At the same time, the new system is expected to encourage jobless people to find work, by widening the gap between net income and unemployment aid.

According to the data of the National Employment Agency, on October 31, 2010 there were 329,182 unemployed people receiving aid and 316,271 not receiving aid. The Government said urgent measures need to be taken to protect their rights and ensure that the unemployment insurance budget is sustainable, with negative consequences on the state’s ability to provide these social security rights otherwise. The state is expected to save RON168,000 in 2011, RON555,000 in 2012, RON518,000 in 2013 and a further RON518,000 in 2014.

The draft state budget for 2011 says the average unemployment allowance will be 10% lower than this year’s, down to RON476 from RON523, while unemployment aid for young graduates will be kept at RON300.

The Government expects the number of unemployment aid beneficiaries to rise significantly in 2011 compared to this year’s projection, to 449,000 from 280,000, while the number of graduates to get unemployment aid is seen rising to 45,000 from 10,000.