Lack of economic growth deepens inequality between citizens, report

The lack of sustainable economic growth and the high level of informal economy determines the lack of a large tax base, puts pressure on the social protection system and widens the gap between different categories of citizens. It is one of the conclusions of the conference "Mitigation of inequalities: a fundamental precondition for sustainable economic growth", organized by "Expert Grup" Independent Analytical Center, reports IPN.

According to the report presented at the conference, the annual growth rates of the Gross Domestic Product have stabilized at around 4%, without producing the structural changes that the economy of the Republic of Moldova needs. Most of the GDP, over 80%, still consists of the consumption that is strongly influenced by remittances.

"Remittances are becoming more and more uncertain, in the long run they tend to decline, and the main factor that has attracted investment - cheap labor - is affected by migration, an inefficient education system and faster growth of wages than of productivity,” stated Adrian Lupușor, executive director of Expert-Grup and co-author of the report.

"Although the level of inequality is not higher than in other countries in the region, the problem stems from the limited capacity of the social system to face medium and long term challenges. The causes are the following: limited tax and budgetary space, tax policies, high level of informal economy, but also demographic aging that diminishes the category of the economically active population and increases that of the pensioners, "said Iurie Morcotîlo, economist at " Expert-Grup ".

Attending the event, Minister of Finance Natalia Gavrilița has mentioned that the steady growth rate of 4% is not enough for people to feel effects, nor to eliminate inequalities. "We will propose for passing in Parliament a solidarity budget as well as other bills meant to increase the income of the population. First of all, we will bring about wage increases between 6% and 10% in the public sector. In addition, we will make amendments to the law to eliminate certain inequities. Some categories, such as mayors, principals and deputy school principals, firefighters, cooks, will receive additional increases to the 6-10 percent, of 400 - 2500 lei,” specified Natalia Gavrilița.

The report was developed in partnership with Friederich-Elbert-Stiftung Moldova Foundation.

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