World Bank Alerts European Governments to Steep Economic Costs of Roma Exclusion

April 14, 2010

Investing in education for Roma -
an economic necessity for European countries

Cordoba, April 8, 2010 - European countries are losing hundreds of millions of Euros annually in productivity and in fiscal contributions as a result of economic and fiscal costs of Roma exclusion, according to the World Bank’s ongoing study "Economic Costs of Roma Exclusion", whose preliminary findings were presented today at the Second European Roma Summit.

Addressing the Summit, Ted Ahlers, Director of Strategy and Operations for the World Bank’s Europe and Central Asia Region, acknowledged the progress made on Roma inclusion in recent years, but also pointed out that when so many of the 10-12 million Roma in Europe still continue to be excluded from opportunities available to most citizens, "any progress looks like a drop in the ocean." He underscored the World Bank’s view that "fostering inclusion of the Roma makes sense, not only from a human rights point of view, but also from an economic perspective."

In presenting the preliminary findings of the "Economic Costs of Roma Exclusion" report, Ms. Tamar Manuelyan-Atinc, Director for Human Development Department in the World Bank’s Europe and Central Asia Region, said that, "Roma are one of the poorest communities in Europe and lack essential skills necessary for accessing the formal labor market."

The study focuses on the economic and fiscal costs of the exclusion of Roma in the Czech Republic, Bulgaria, Romania and Serbia, and finds that the vast majority of working-age Roma lack sufficient skills to participate successfully in the labor market. Only 1 in 5 Roma of working age in the Czech Republic, and as few as 1 in 8 in Bulgaria, Romania, and Serbia are equipped with the necessary skills. Working age members of the majority of populations in these countries are 4 to 6 times more likely to have these educational qualifications.

Low educational attainments are reflected in low employment rates, which are on average 22 percentage points below those of the majority of populations in the four countries, and low earnings, with working Roma earning 31 percent less in Bulgaria, 48 percent less in Serbia, 55 percent less in Romania, and 58 percent less in the Czech Republic than the majority populations.

For example, estimates – on the low end – of annual productivity losses range from 231 million Euro in Serbia, 367 million Euro in the Czech Republic, 526 million Euro in Bulgaria, to 887 million Euro in Romania. Lower bound annual fiscal losses range from 58 million Euro in Serbia, 202 million Euro in Romania, 233 million Euro in the Czech Republic, and 370 million Euros in Bulgaria. Using other – higher – Roma population estimates (UNDP, 2006), the economic losses for the four countries combined are estimated to be as much as 5.7 billion Euros annually, and the fiscal losses 2 billion Euros annually.

Toward Inclusive Growth: Bridging the Education Gap is the Economically Smart Choice to Make

According to Manuelyan-Atinc, "Investing in education for everyone - Roma and non-Roma - is key to turning these economic and fiscal losses into gains that will take Roma families out of poverty and benefit European societies generally, especially in view of the rapidly aging populations in the Region."

The study reports that better educated Roma can expect much higher earnings. Compared to Roma with primary education, Roma who complete secondary education can expect to earn 83 percent more in Bulgaria, 110 percent more in the Czech Republic, 144 percent more in Romania, and 52 percent more in Serbia.

Better employment translates into higher government revenues. The study shows that the cost of the necessary investments in education is much smaller than the government revenues which will be generated following this step. If all the fiscal gains from equal labor market opportunities were invested into public education for each Roma child aged 3-17, governments would be able to spend on each Roma child between two-and-a-half and eight times the amount that they currently spend on public education per pupil in the country. In other words, the potential gains of inclusion far exceed the necessary investment costs, even if these are higher than current per pupil spending.

Add to this the fact that the demographically younger Roma population will account for an increasingly large share of the working age population, who in turn will need to shoulder the economic challenges of rapidly aging populations, and it quickly becomes clear that the social and economic argument against inaction is too strong to be overlooked, says the report.

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