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Speeches & Transcripts

World Bank Country Manager in Romania Elisabetta Capannelli on Poverty Alleviation in Romania

January 21, 2015

Elisabetta Capannelli Opening Plenary - Poverty Alleviation: Issues and Challenges Bucharest, Romania

As Prepared for Delivery

Your Excellencies,

Dear Ministers,

Distinguished guests,

I am happy to join you today at the launch of the Norway grant ‘Programme for Poverty Alleviation in Romania. The World Bank is a very active player in this area of the world and a long standing partner of Romania. This is a good opportunity to discuss the challenges of poverty alleviation with our counterparts in the Government of Romania, our Norwegian friends, and with the experts and stakeholders present here.

We share the view that poverty is one of the most important challenges for our societies today. Poverty, extreme poverty especially is not only a personal drama for millions of families around the world. Poverty, social exclusion and lack of opportunities are all major determinants to a country’s instability, economic and political backwardness, all lead to a huge loss of creative potential.

Significant progress has been achieved in the last several decades in fighting poverty in the world. The share of population living on less than US$1.25 a day (the international definition of poverty) has fallen from 30% in 2000 to 10% in 2009.

Unfortunately, after 2008, progress in alleviating poverty has stalled in many regions of the world as the economic growth - which is the natural antidote to poverty – stagnated due to the crisis. Worse still, increasing income inequalities enhanced the problem of relative poverty even in developed countries. There are 80 million people in the European Union that live under the poverty threshold, defined at 60% of the national median income. These are unacceptable figures.

Romania has made major progress in the last 25 years to fight poverty and promote measures that alleviate it. However, the country still registers the highest poverty rate in the European Union. Over 21% of Romanians live below the national poverty threshold. Three-quarters of the poor have been poor for at least three years, which means that poverty is persistent. Poverty is also persistent across generations - children born in poor families have fewer opportunities for a better life, partly because they do not attend school, or if they do attend they drop out of school early.

Lacking the basic skills required for getting a job as young adults they join their parents and communities in informal employment, inactivity and at times delinquency. To further complicate matters, many poor families have a precarious health and therefore reduced labor ability, while their medical coverage is inadequate.

Poverty is also concentrated in rural areas and in the Eastern part of the country. The Roma population has a ten-time higher risk of being in poverty than the general population in Romania. There is a significant number of deprived communities in which all of these problems come together, making it very hard for the poor to break the exclusion cycle. Sustained and integrated external support targeted to these communities is a must.

I visited several times marginalized and deprived communities and I really feel that the large number of people there deserve better. Birth circumstances should not dictate the fate of the children in poor communities in Romania.

Alleviating poverty and promoting social inclusion requires a lifecycle approach. Because children who grow up in poor households face a higher risk of poverty in the future, breaking the intergenerational cycle of poverty makes it essential for the government to adopt programs that can tackle both child and adult poverty in the same household simultaneously.

First - it is critical to equip all Romanian children with the education, skills, and experience they need to achieve their full potential, including as contributors to the country’s future economic success.

Second - it is equally important to ensure that every adult has the opportunity to fully participate in the economic, social, and cultural life of their community. Whether or not parents are employed has huge implications for their children’s prospects – both in terms of the income they generate and the example they create.

As a country with an aging and shrinking population, Romania cannot afford to tolerate that a single child is deprived of opportunities. Extra measures have to be taken to enhance access to quality education especially for children from disadvantaged background.

Our experience from Romania, Europe and the world provides clues as to the ingredients of successful poverty alleviation policies. A holistic approach is required for the poor in Romania.

To name a few:

  • Quality early childhood development services - this includes programs for parents of children below the age of 3 as much as quality preschool programs for children between the age of 3 and 6 to prepare them effectively for primary school.
  • Quality primary and secondary general education which is mindful of the specific challenges of poor kids resulting from household background and poverty - this includes the need to adequately resource and staff schools with large shares of poor and disadvantaged children and using Roma education mediators.
  • Adequate housing and access to basic infrastructure services are urgently required.
  • Quality health services catering to marginalized communities, adequately staffed with experienced and well trained personnel.
  • High quality employment services with the capacity to effectively support the most disadvantaged job seekers.
  • Social work outreach into marginalized communities to better understand the nature and dimensions of deprivation and to better integrate necessary services.

Romania is lacking in these areas due to reasons of inadequate policy, low capacity and resource constraints. However, the forthcoming National Strategy on Social Inclusion and Poverty Reduction provides a candid assessment of shortcomings and a strong commitment to tackle multiple challenges. Growth cannot be achieved without this.

We at the World Bank feel privileged to have had the opportunity to advise the Romanian Government in preparation of the new National Strategy and being able to support Romania on critical reforms and investments in education, health and social protection.

One major conclusion of our work is that the Romanian Government’s objective of reducing the population at risk of poverty by 580,000 people - as committed in view of the EU2020 Strategy - is not easy to achieve, excluding the optimistic scenario of high growth.

Active policies - such as those mentioned above - are required to increase the employment and wage rates of the poor and improve social protection for the poorest quintile of the population.

The World Bank’s twin goals are to reduce extreme poverty and boost shared prosperity. Throughout our activity in Romania - technical assistance and lending - the World Bank has committed to foster sustainable income growth for the bottom 40% of the population and support poverty reduction in key sectors and areas of intervention such as education, social protection, labour market, health, social inclusion, aging population, etc.

We will continue to partner with you all and with the Government of Romania to achieve such objectives.

I look forward to today’s interventions and discussions to help us improve our understanding of the issues, challenges and solutions applicable to alleviating poverty in Romania.  

Thank you very much!