Concern expressed over gender gap in pension reform
The pensions system in Romania has gone through several consecutive stages of reform. The current regulations, representing the outcome of the most recent reform, have apparently generated differences between the position of women and men, such that women are at an obvious disadvantage in certain respects. These discrepancies have caused growing concern among the social partners and civil society organisations.
Socioeconomic context
A decrease in the ratio of employees to pensioners emerged in the years of economic transition preceding Romania’s entry to the European Union in January 2007. The ratio of employees to pensioners decreased from approximately 2.3 employees per pensioner in 1990 to less than one employee for each pensioner (0.82:1) in 2006. In September 2006, women accounted for 45.6% of the total number of employees and 48% of pensioners.
In the same month, a gap of 35.6% was recorded between the monthly average level of the state social security pension for people of pensionable age and the national average net wage. By gender, this ratio was 40.4% for men to 32% for women. Furthermore, the average pension for women was just 68.6% of the pension for men.
The steady increase in the number of pensioners alongside the decrease in the number of employees generated tensions and deficits in the state pension fund which, in turn, triggered an increase of employers’ and employees’ contributions to the respective fund.
One possible solution to these issues is the introduction of private pension funds.
Law on private pension funds
In October 2004, the government endorsed Law No. 411 regulating the establishment, organisation and functioning of private pension funds in Romania. The law aims to ensure a separate private pension for people in addition to the one provided through the state system. The private pension fund is based on individual accounts, conceived as shares of individual social security contributions, which are collected and invested in the interests of participants.
In compliance with the current legislation, this particular contribution is compulsory for employees of up to 35 years of age and voluntary for all other workers under the age of 45 years. At present, the group of employees aged up to 35 years represents approximately one third of the total number of employees.
Law No. 411/2004 was due to come into effect as of 1 July 2006. However, throughout 2006, the law was subjected to a series of amendments and completions, with the result that it became Law No. 23 of January 2007.
Essentially, the latter law also ensures the transposition of the provisions of Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed persons moving within the EU.
Views of trade unions and civil society
The initial law as well as its subsequent completions and amendments drew concerned reactions from the trade unions and civil society, which were voiced through the Centre for Partnership and Equality (Centrul Parteneriat pentru Egalitate, CPE).
Two of the five nationally representative trade union confederations expressed their disapproval of these regulations through the Women’s Commission. The two confederations involved included the National Trade Union Confederation ‘Cartel Alfa’ (Confederaţia Naţională Sindicală ‘Cartel Alfa’, Cartel Alfa) and the National Confederation of Free Trade Union Fraternity of Romania (Confederaţia Naţională a Sindicatelor Libere din România Frăţia, CNSLR Frăţia).
Cartel Alfa together with CPE rejected the regulation from the outset, while it was still in draft form, by maintaining that it could decrease women’s pension rights to approximately half of the relative amount for men. They argued that women work fewer years, earn lower wages and have a higher life expectancy. Overall, Cartel Alfa and CPE brought forward the following arguments:
- men and women have different biometric tables, as women, on average, live another 15 years following retirement while retired men live five years less than women. Trade union members, therefore, demanded that the law should enforce the use of unisex tables;
- in the opinion of trade unions, suspending the payment of contributions during maternity and parental leave leads to negative consequences on the accumulation of pension rights. This issue could be solved by using state budget funds to contribute to compulsory private pensions for the duration of the leave period in order to avoid sanctioning persons who have children;
- men and women contribute over a different number of years to pension funds, as women generally retire five years earlier than men. Consequently, the pensionable age of both sexes should be raised to the same age, so that women subscribing to the private pension scheme qualify for the same amount as men do.
In turn, female members of CNSLR Frăţia requested that the debate be reopened on the regulations because of their negative impact on women’s pension rights.
Commentary
Debates on the issue continued even after the enforcement of the new law in January 2007. Both CPE and the International Labour Organisation (ILO) held a conference in Bucharest on The gender dimension of pension reform in European countries. The conference was also attended by representatives of the European Commission (EC), the Ministry of Labour, Social Solidarity and Family (Ministerul Muncii, Solidarităţii Sociale şi Familiei, MMSSF), all nationally representative trade union confederations, academic professionals and civil society representatives from Romania and other European countries.
Constantin Ciutacu, Institute of National Economy, Romanian Academy