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Earning less than spending or what does it mean to be a retired person in the Republic of Moldova?

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The pensioners of the Republic of Moldova will receive a one-time support payment of 700 lei (about 36 euros) at the begging of January, as a statement of Ministry of Health, Labour and Social Protection announced. The financial support will be granted to all beneficiaries of pensions (employment-based pensions, disability pensions, descendants received pensions, pensions for former military employees, state officials, cultural employees, beneficiaries of state social allowances, etc.) who do not receive a monthly pension of more than 2000 lei (about 104 euros).

Such a payment was granted last year as well and maybe will be granted next year. The questions here are what can a pensioner in Moldova do with this money and what does it mean to be a retired person in this country?

Earnings of retired people

According to the official statistics of the National Social Insurance Authority of the Republic of Moldova, there are 700 467 beneficiaries of pensions, being on record on October 1, 2019. 75.4% of them are represented by the retired persons who receive employment-based pensions, the average amount of it being 1840.56 lei (about 96 euros). 9008 retired persons are granted also a social allowance for aged people of 215.57 lei (about 11 euros) on average.

The situation is even worse when looking at the minimum legal amount of the employment-based pension in the Republic of Moldova, which is 1079.33 lei (about 56 euros), whereas the official subsistence minimum for retired people in the Republic of Moldova was calculated as being 1 726.5 lei (about 90 euros). The average subsistence minimum for the entire population was 2 028.3 lei in the first half of 2019, according to the Nationals Bureau of Statistics (NBS) data.

Moreover, as a study conducted by Platzforma and the Friedrich Ebert Stiftung Moldova Foundation in 2018 showed, the minimum living wage (the necessary minimum income, taking into consideration the basic needs for a decent life) for a person who resides in the urban area should be not lower than 12 306.8 lei and for the one who resides in the rural area not lower than 11 359.6 lei per month.  Consequently, the minimum income for a retired person, when applying the same principle, should amount 10 072.4 lei (about 524 euros) per month, that being a nine-times higher amount than the current minimum level of the employment-based pension.

As the law of the Republic of Moldova states, the employment-based pensions are calculated from the average monthly income received after January 1, 1999, until the retirement age is reached, taking into account the total contribution period. For the period worked before 1999, only the contribution period is taken into account, being added to the period after 1999. The same formula is applied for everyone, no matter what position was held. What is important is the average wage received during the contributing period and the term the contribution was made.

Therefore, the pensions received in the Republic of Moldova are calculated, starting from 2017, using the following formula:

P = 1.35% x Tc x As

where P is the total amount of pension, 1.35% – the accrual rate for the contribution years after January 1, 1999, Tc – total contribution period (years), As – the average monthly income from which the contribution was paid.

Also, from July 1, 2017, the retirement age started to be gradually increased both for men and women. In 2020, retirement will be at the age of 59 years for women and 63 years for men. Until 2028, the retirement age for women will equalise that of men (63 years), as the National Social Insurance Authority of the Republic of Moldova provided.

Social and health policies for retired people

The members of the Platform for Active Ageing, which is involved in promoting the needs of aged people in public policy documents and supports the elderly to claim their rights, fight against discrimination and overcome poverty, have monitored the implementation of the National Program for Health Promotion for the years 2016-2020 and the National Program in the field of Food and Nutrition for the years 2014-2020. The platform members concluded that these programs do not integrate the needs of elderly people. A mechanism for monitoring and evaluating the programs lacks, as well as a clear designation of the responsible persons in the institutions that implement health policies, that making the programs’ results have no impact on the elderly population, as zdg.md informed.

Another conclusion of the platform was that the National Strategy on Employment for the years 2017-2021 does not reflect progress regarding the employment of elderly people, the actions reported not indicating elements focused on this category of population. According to the Platform for Active Ageing, the employment policies are mainly oriented towards the younger population segments, aged persons being ignored, as their contribution to the development of the society is not recognised.

Social phenomena influencing retirement

Three years ago, a reform of retirement system in the Republic of Moldova was implemented, bringing new conditions of retirement, new ways of calculating pensions, the equalisation of the retirement age (63 years) and the contribution period (34 years) of women with that of men. Still, the retirement system  is not financially sustainable in the long run due to fast ageing of the population and the migration of the workforce, as a study conducted by the Friedrich Ebert Stiftung Moldova Foundation and the WatchDog.MD Community showed.

The study argued that, over the next few years, there is a risk that fewer people will contribute to the social insurance budget, IPN reports. Oleg Tofilat, the co-author of the study, noted that the even though the average wage increases, the number of employees remains constant, the black economy is shrinking and the retirement age has been raised, the contributions to social insurance have decreased,  as the number of pensioners is rising, while the working population is migrating to other countries.

At the beginning of 2019, there were 558.4 thousand people aged 60 years and over in Moldova, which represented 20.8% of the total number of the population. The share of people aged 60 or more is constantly increasing, as the NBS data shows. In 2019, as compared to 2014, the ageing coefficient of the population registered a 3.3 percentage point increase, which corresponds to a high level of demographic ageing. The average age of the Moldovan population hit 38.7 years in 2019, as compared to 37.2 years in 2014.

On the other hand, 159 118 persons left the country, staying abroad at least 9 months cumulatively, according to the data from 2017. More than 73% of these people were aged between 20 and 59, according to the NBS data.

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The pensioners of the Republic of Moldova seem to receive an equitable payment when retiring. However, the aged people of Moldova don’t have their interests considered and are often marginalised, ignored or even discriminated. For the majority of aged population the received pension is far from being enough for a decent life. A lot of elderly don’t have enough money for food, medicines, utilities or clothes, all the more for entertainment or travelling. The retirement system is improving, but it is estimated that there will be not enough contributions made by the working force in order to pay the future pensions for the retired people of Moldova. The problem is much more deeper, being connected to some other social phenomena that affect the country, so are the solutions to be found.

Photo: moldova.org

Important

EU official: “It’s been a long time we’ve been patient. We will judge the Government’s actions objectively.”

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Director for Russia, Eastern partnership, Central Asia and OSCE, and Deputy Managing Director for Europe and Central Asia at the European External Action Service (EEAS), Luc Pierre Devigne, paid a visit to Chișinău today to participate in the 5th meeting of the EU-Moldova Association Committee.

He addressed a message to the Moldovan government during a press conference, criticising the way the reforms were implemented in the country, especially the way the famous bank fraud from Moldova, called also “the theft of the century” was investigated. Devigne considers inadmissible the fact that, after five years, the persons and companies that were involved in the fraud were not held accountable.

“It is unacceptable that after the theft of the billion was uncovered and deeply investigated by a leading financial investigation team – the Kroll company, whose findings were made publicly available, the investigation was still not finalised on various pretexts. We cannot believe that it is legally not possible to prosecute such a fraud.[…] It is the responsibility of the Government to ensure that justice works in the country. We want to see an open and transparent process that includes not only the Government, but also the consultation of opposition, civil society and the EU institutions recommendations.” said Devigne.

The EU official told the Moldovan politicians: “It’s time for actions. It’s been a long time we’ve been supportive, we’ve been patient. Now, we will judge the Government’s actions objectively.”

“The EU has always supported the Republic of Moldova, but the EU cannot substitute for good governance and the actions that should be taken by the Government. Our support is not unconditional.”

He said that European assistance will depend on how laws and democratic standards will be respected in Moldova. Particularly, Luc Pierre Devigne mentioned that the Republic of Moldova should join the Anticorruption Network for an effective fight against corruption, strengthen independent media and improve the quality of life in the case of the Moldovan citizens.

Luc Pierre Devigne also referred to the subject of the Citizenship by Investment Law, on which the Government applied a moratorium, but only until February 24, 2020. The official was disappointed that people who obtained such kind of citizenship remained anonymous. “We do not see this as compatible with a serious and secure visa liberalisation regime. It’s a security issue.” highlighted Devigne.

One of the central messages of the EU delegation to Moldova concerned the importance of boosting the cooperation between Moldova and the community bloc.

At the same time, the Moldovan authorities reiterated their commitment to comply with the recommendations of international organisations such as the OSCE and the Venice Commission, and to ensure public consultations on major projects.

Photo: cotidianul.md

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Economy

Global Talent Competitiveness Index: Moldova when it comes to Artificial Intelligence

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The 7th edition of the Global Talent Competitiveness Index (GTCI) addressed the topic Global Talent in the Age of Artificial Intelligence. The index is used to rank 132 national economies, across all groups of income and levels of development, that representing 97% of the world’s GDP and 94% of its population. The report referred, first of all, to the level of innovation and technology development, exploring how the development of Artificial Intelligence (AI) is not only changing the nature of work but also forcing a re-evaluation of workplace practices, corporate structures and innovation ecosystems.

This year, Moldova ranked 86th out of 132 analysed economies, being ranked behind the neighbouring countries such as Ukraine and Romania, which ranked 66th and 64th, respectively.

The countries that are best positioned to benefit from the AI revolution are also the most developed countries in the world, especially when it comes to the competitiveness and potential of attracting and training best professionals. Top ten countries in the ranking are Switzerland, the United States of America, Singapore, Sweden, Denmark, the Netherlands, Finland, Luxembourg, Norway and Australia.

New York, London, Singapore, San Francisco, Boston, Hong Kong, Paris, Tokyo, Los Angeles and Munich are among the most developed cities in this regard.

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source: insead.edu

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source: insead.edu

GTCI highlights

One of the most important observations made in the GTCI report for 2020 is that the gap between talent champions (almost all of them high-income countries) and the rest of the world is widening. Still, AI may provide significant opportunities for emerging countries to leapfrog.

The top of the GTCI rankings is still dominated by Europe, including the Nordic countries – a significant number of small high-income economies, many of them being either landlocked, island or quasi-island economies, including Switzerland (1st), Singapore (3rd), Luxembourg (8th), Iceland (14th) or Austria (17th).

According to the report, the key factor is developing relatively open socio-economic policies in which talent growth and management are central priorities in the age of AI.

Moldova

Moldova managed to get a score of 36.64, being ranked 86th out of 132 countries. It was classified as lower-middle income country and ranked 7th out of 32 countries included in this category. The country’s talent competitiveness index weakened as compared to the period between 2015-2017, when it was listed around the 61st position.

Moldova was evaluated with the highest scores for such aspects as gender development gap, ease of doing business, number of female graduates, competition intensity and political stability, while the lowest scores were given for its share of R&D expenditure, robot density, university ranking, number of registered researchers, scientific journal articles, labour productivity per employee, new business density and collaboration across organisations.

This year’s model of the GTCI index includes a total of 70 variables, up from 68 indicators used in the GTCI 2019.

source: insead.edu

Photo: cambridgealert.com

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Society

How corrupt Moldovan citizens are? Comparative figures

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When talking about corruption, most of Moldovan citizens blame the ‘system’ built by politicians and their political regimes throughout history. And that may be true, but only to some degree. When looking deeper, it can be actually observed that little corruption acts are perceived as a normality by a lot of individuals and legal entities in the country. That is what is shown in a recent study conducted by by the Center for Social Studies and Marketing “CBS – Research”. The study assessed the impact of the National Integrity and Anticorruption Strategy for the years 2017-2020.

 516 million lei – this is the total amount of bribes offered by Moldovans in 2019. On average, a Moldovan citizen has offered at least five bribes, while an enterprise has been involved in about three corruption acts. Businesses paid bribes worth 197,3 million lei, while individuals offered a total of 319,4 million lei as bribes during the last year, estimated the study. The value of the one illegal payment ranged from 50 to 20 thousand lei.

The research was carried out on the basis of a national survey where 1 120 persons, 506 companies and 606 civil servants from central, district and local public administration participated. The data were presented in comparison to the situation in 2017, when the first such survey was conducted. It was carried out within the project “Fight against corruption by strengthening integrity in the Republic of Moldova”, implemented by UNDP in collaboration with the National Anticorruption Center, and the support of the Norwegian Ministry of Foreign Affairs.

The total value of the bribes offered by Moldovans is lower, however, compared to those from two years ago, when the amounts varied between 100 and 500 thousand lei in the case of companies and between 50 lei and 8 thousand lei in the case of individuals, as the study stated.

Even though the study affirmed that corruption remains a serious problem for the Moldovan society, the level of intolerance of the population towards corruption has increased. Thus, about 62% of individuals (compared to 45% in 2017) and 83% of businesses (compared to 61% in 2017) consider any corruption situations unacceptable and declare that they do not accept to offer or receive bribes, regardless of the situation and implied personal benefit.

Moreover, both individuals (73% of respondents) and companies (80% of them) are aware that bribery entails punishment of both parties involved, and 87% of them, on average, would report the corruption acts to the anti-corruption agencies in the event of such a situation.

In the opinion of the civil servants participating in the survey, among the main causes of corruption are the low salaries in the public sector and the mentality of demanding and giving bribes in money and /or goods.

The same causes for corruption acts were emphasised by a survey conducted by Transparency International (TI) Moldova throughout the employees of 13 central public authorities. The survey results revealed that a quarter (24.6%) of civil servants who work in public institutions, and answered the survey, consider that their workplace is affected by corruption. More details about the survey can be found here.

Although the legislation obliges civil servants to report corruption cases and other abuses to the head of the public entity or to the responsible authority, a considerable part of the respondents (about 27%) are openly not willing to do it for reasons of personal security and lack of trust in empowered bodies, according to the TI-Moldova report.

Thus, the main factors that could determine the involvement of citizens in corruption abatement activities are the confidence that they will be protected if they denounce a public official for corruption acts, as well as the trust in the independence of the justice, showed the Center for Social Studies and Marketing study, as being reported by TV8.

“Committing acts of corruption must become non-profitable. But to drive forward those reforms, independent, effective, and incorruptible leaders of the judiciary and law enforcement bodies are urgently needed,” said Stanislav Pavlovschi, a Moldovan judge formerly at the European Court of Human Rights (ECHR), for the Global Voices portal.

In 2019, Moldova registered a score of 32 points for the Corruption Perception Index for 2019 released by Transparency International, being ranked 120th out of 180 countries. The score for Moldova worsened as compared to the 2018 year, when the country recorded 33 points, whereas improved when confronted to the data from 2017 – 31 points. More details here.

Photo: freepik.com

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