Good operation and effectiveness of the system of social protection is one of the main factors that contribute to ensuring a decent living standard for any individual.

The increase in electricity and gas tariffs in the reference year, which in its turn pushed up the prices for goods and services, has worsened even more the situation of the population. 

          In this context, the Ombudsperson made a public appeal asking the Government to endeavor to find an acceptable social compromise between sacrifices and benefits, in order to avoid placing the whole burden on the shoulders of the population and pushing them into deeper poverty. In such cases, we believe that it is extremely necessary that the authorities identify mechanism to help the population overcome the crisis, particularly the socially vulnerable groups. The Ombudsperson has mentioned that the effects of price increases are felt by the population, especially if they are not correlated with salary increases and social benefits. 

         The low income and high share of expenses for public utilities incurred by households, couples with the higher prices for essential products and services affect the living standards of the population. Under these circumstances, the purchasing power of the population is decreasing even more, contributing thus to the pauperization of the country.

         This is proven by the large number of applications submitted to the Ombudsperson's Office, and of the requests for hearings on issues of social protection, which, like in previous years, ranked the third in the top of the complaints submitted to the institution in 2015. The petitioners are dissatisfied predominantly with the low income and social benefits, which do not cover the subsistence minimum; with the outdated pension system for the current social realities; with the manner of granting social assistance/aid for the cold season; with insufficient public information about the facilities provided for socially vulnerable groups, the existing social services, etc.

         The National Bureau of Statistics informs that the available income of the population in the third quarter of 2015 were by 12.2% higher than in the same period of 2014. In real terms (adjusted to consumer price index) the population’s income remained practically at the level of the previous year.[1]. Salary payments are the most important source of income (39.2%), followed by social benefits (21.2%)[2].

source: National Bureau of Statistics[3]

According to the same source, the population’s average monthly consumption spending in Q3’2015 increased by 16.7% compared to the same period of the previous year. The bulk of the expenditure is still used for food consumption (41.4%), followed by housing maintenance (18.8%), clothes and shoes (12.1%), health care (6.2%) etc.   The available statistical data show that the consumption spending increased compared to people’s income. The year-on-year increase in expenditures per capita is caused by the increasing price index and higher tariffs for goods and services.

Evolution of Prices and Tariffs for Goods and Services

during 2013-2015 (Q3)

source: National Bureau of Statistics

According to the official data,  the prices and tariffs for goods and services have increased 3 times on the average, compared to 2014, while the prices for services (housing services, drinking water and sanitation, electricity and gas) - about 7 times.

According to the information disseminated in the media with reference to the Inflation Report of the National Bank of Moldova in Q4’2015, the annual inflation rate was 13.4%, by 2.3% higher than in the previous quarter. In December 2015, the inflation reached the value of 13.6%, ranking still above the upper limit of the variation of ± 1.5% from the targeted inflation of 5.0%.[4]

The representatives of the National Bank state that the domestic currency depreciation has also left a significant footprint on the regulated prices by the impact that it had on the prices for medicines. But more than that, it was the primary cause invoked for the approval of new tariffs for electricity and piped gas in the summer of 2015.

       The National Confederation of Trade Unions of Moldova supported the Ombudsperson's concerns. Being alarmed by the 6.7% decrease in the purchasing power of the population’s salary incomes, the trade unions asked the Government to index salaries and set a new minimal salary, aligned to the subsistence level, in order to avoid further impoverishment of the population.

Although the official statistics says that in November 2015 the average monthly salary increased by 5.9% compared to November 2014, this increase was exceeded by the consumer price index so that the real index of salary earnings was 93.3%.

            An average monthly salary of MDL 5,050 is expected in 2016, which is by 9.8% higher compared to 2015, but not enough to cover the increase in the inflation rate, expected to reach 11.4%, thus bringing the real salary down by 1.5%.

State Social Insurance

The public system of state social insurance was reformed in 1999, and is based mainly on the principle of compulsoriness, contributions and solidarity between generations. Meanwhile, several shortcomings and deficiencies have been identified in this system, which were also mentioned in the previous reports.

The most serious problems of the current pension system, which were also stated in the Ombudsperson's annual reports for the previous years[5], are also reflected in the Court of Accounts’ Performance Audit Report on the Pension System in Moldova[6], referring to the difficulties with ensuring decent pensions. The National Development Strategy "MOLDOVA 2020" provides for establishment of a fair and sustainable pension system that would guarantee all categories of employees a decent living after retirement. However, the Court of Accounts shows an extremely cautious attitude in this regard. The strategy envisages achieving some important indicators that will improve the pension system. The Court of Accounts stated that currently there is neither a way of calculating these indicators, nor any possibility to achieve them. 

       The manner and conditions of establishing the pension by the National Social Insurance House are regulated in multiple laws and regulations, the provisions of which, in some cases, are not complete, which leaves room for interpretation. The pension calculation formulas are outdated and do not correspond to reality. The indicators on the base of which the pension is calculated have not been updated since 2002.

A part of the Moldovan population, having reached the retirement age, are in a state of  confusion when the amount of their pension is calculated, particularly those who had worked prior to 1999 and now must submit the necessary documents relating to that period to have their pension calculated and approved. There is no comprehensive database for this period, because in the nineties many businesses were liquidated and the necessary papers were not submitted to the State Archive, and in some cases the documents were lost irretrievably. The employment period after 1999 is easier to calculate because there is a database. In such conditions, the period prior to 1999, for which documents are not identified, is not taken into account when establishing the pension. Currently, due to lack of clear regulations, if any documents required for pension establishment are lost or business operators are liquidated, the pension calculation is done randomly, which affects the pension size. Thus, the formula for calculating the pension is misleading, and does not provide the future beneficiary the opportunity to know how the right to an adequate pension is achieved. 

Note  that the UN Committee on Economic, Social and Cultural Rights[7] recommended that the State increases the quantum of pensions so as to provide an adequate standard of living, and as a first step, to achieve the subsistence minimum level.  Until 30 June 2016, Moldova should report on the actions taken to implement the recommendations submitted by the Committee in 2011.

        Analysis of data published by the National Social Insurance House on the situation of 01 January 2016 reveals that the situation has not changed compared to the previous years in terms of number of beneficiaries with the average pension under the subsistence minimum level. According to the data of National Bureau of Statistics for the first semester of 2015, the subsistence minimum for old age pensioners was set at MDL 1444.6.    

                 Source: National Social Insurance House

                Source: National Social Insurance House

       An audit carried by the Court of Accounts identified that migration, aging of population and the informal salaries are the most important factors that influence the financial sustainability of the pension system. The inability of the system to ensure a decent standard of living after retirement and the long-term sustainability risks require measures that would mitigate the pension system vulnerabilities.

       As in the previous years, citizens report problems with the issuance of the retirement decision, especially with reference to the timeliness of the pension awarding, which is 15 days from the date of submitting all the necessary documents[8]. This is also confirmed by the Court of Accounts, which reviewed the retirement files and found that this deadline was exceeded from 1 to 120 days in 47% of the retirement decisions from the selected sample.

Another problem is the failure to inform the retired how their pension is calculated. Although the law provides that the decision rejecting the request for retirement and the reason for rejection shall be sent to the applicant within 5 days from the date of issuance, it does not have the same requirement for the decision establishing the pension. Given the complex formula for pension calculation, it is important to sent the decision to the beneficiary, in order to inform them about the indicators included in the calculation, and to allow a possible appeal. It should also be noted that if the individual statements are not submitted or the social security contributions are not paid by business operators, the incomes of the insured are not confirmed, which influences the contributory period and the insured income, and respectively, the pension size.

        One of the issues addressed in Moldova 2011 Human Rights Report[9] refers to women who gave birth and educated five and more children until the age of eight. Although the legislator offered them the possibility to retire at the age of 54, this category of women often do not meet the second requirement - the general contributory period of 33 years. Therefore, the Ministry of Labour, Social and Family Protection was recommended to conduct a study and consider the opportunity to review the legislation in this respect.

         When examining a request received from an employee of Border Police Department, a legal void was found with regards to the right to social security during the leave granted to take care of a child up to 3 years of age. As a result, on the basis of a Decision of the Constitutional Court, the legislation governing activity of Ministry of Internal Affairs, Ministry of Defence, National Anticorruption Center was amended, but the regulatory framework governing the activity of their subordinated institutions was not amended accordingly. Therefore, the Ombudsperson sent to the Government the proposal to amend Law No 283 of 28 December 2011 on the Border Police in order to close the legislative gap and ensure equal and fair treatment for all persons working in national security institutions..

          Another outstanding issue is related to the realization of the right to social security of persons serving their sentence in prisons. The Ombudsperson found that a social security methodology for penitentiary institutions has not been developed yet[10]. Criminal punishment does not ban the right to social security, and hence we recommend that the Government considers the appropriateness of identifying mechanisms for implementing the provisions of Article 47 (1) of the Constitution of Republic of Moldova also in respect to persons that carry out remunerated activities in penitentiary institutions.  

Social Assistance

As for the social assistance, difficulties have been identified in relation to the maintenance and development of community services. The off-site review of a notification about a possible closure of the Elderly Center from Ochiul Alb village, Drochia district (this case had a large media coverage[11]) established that the main cause was the insufficient funds allocated from the state budget. The financial resources allocated to the Centre covered only the expenses for the first half of the year. The presented circumstances were examined from the perspective of securing the right to social assistance for the elderly. The Ombudsperson recommended to the Ministry of Finance to find the necessary resources for the Center’s activity. The Ministry of Finance[12] assured that an amount of MDL 318,900 would be transferred to the budget of Ochiul Alb village from the compensation fund created in the state budget to cover certain discrepancies related to the reform of the inter-budgetary relationship.

This is one of the few cases that could been solved. Due to the budget austerity, a big part of the community centers and community-based social services cannot operate to the necessary extent, which influences negatively the social inclusion of persons at social risk.  It should be noted that the issues raised in the Ombudsperson's Report for the previous year with regards to the maintenance and development of social services are still topical. 

         Due to the inability of the State to cover all social protection needs, the contribution of civil society in this respect is undeniable. Currently and during a number of years, resources have been allocated from the state budget to the Ministry of Labour, Social and Family Protection to support the Society of the Blind, the Association of the Deaf and the Society of Persons with Disabilities. These organizations carry out effective activities to support people with disabilities and are made up mostly of people with such disabilities. Meanwhile, over the years a number of NGOs were set up to assisting people with disabilities. These NGOs have a varied and equally effective activity, and sometimes cover areas where the above public organizations are less involved.  However, although fully proving their effectiveness, these NGOs do not enjoy any financial support from the State. The current situation is favorable only for the consecrated non-governmental organizations, which have been cooperating for many years with MLSPF, but it is inequitable compared to other NGOs providing social services to socially vulnerable people.

        For this reason, the Ombudsperson recommended to the Ministry of Justice and the Ministry of Labour, Social and Family Protection to develop an effective strategy for the cooperation of NGOs with state institutions providing social assistance to socially vulnerable people (persons with disabilities, elderly, orphans, children at risk, victims of domestic violence, victims of torture, etc.) by setting out clear and fair conditions of their selection.  We also believe it is important to establish a mechanism for monitoring the use of these funds.[13]

         Though the issues related to granting social aid have been raised in the previous Ombudsperson’s reports, the socially vulnerable people[14] continue to request the ombudsperson’s intervention in order to obtain the right to social aid/support for the cold season. Based on the above, the Ombudsperson calls the competent authorities supervise better this area and identify effective solutions for each separate case. 

As stated in the Annual Report of 2014[15], the Ministry of Regional Development and Construction of the Republic of Moldova launched the Project for the Construction of Housing for socially/economically vulnerable walks of life. According to the information provided by the Ministry of Regional Development and Construction, the construction works are in full swing at the objects in Soroca (72 apartments), Nisporeni (93 apartments) and Ialoveni (93 apartments). Homes in 15 localities of the Hânceşti district (56 apartments) are being prepared for commissioning. The objective of Leova to launch the project for construction of social housing (92 apartments), preparation for tendering and contracting for turnkey solutions has been approved[16]. By 2018, it is planned to build 700 homes for about 2,500 people.

         The Ombudsperson welcomes this initiative, given that it will help reduce homelessness and provide decent living conditions.

  Recommendations:

• Review the mechanisms of indexation/compensation of population income in connection with the changes in prices and tariffs for goods and services, and find levers to help the population, especially the socially vulnerable groups.
• Review the regulatory framework in order to update the indicators used in the formula for retirement pension calculation and issue the decision establishing the pension in order to inform beneficiaries about the indicators used to calculate the pension (periods of activity included in the contributory period, the ensured income taken into account).
• Review the regulatory framework/internal instructions governing the retirement system by establishing explicit regulations on the confirmation of the contributory period for specific situations (liquidation of business operator, loss of documents, natural disasters, emergencies, etc.).
• Identify sources to increase the social benefits to the level of subsistence minimum;
• Improve the human resource management in the area of social security.