The Cost of a Decent Living

Study on Romanians' purchasing power

Christine Leșcu, 14.11.2018, 14:24

In September, the net average wage of Romanians was around 2,700 lei, which amounts to around 580 Euros. In this edition of Society Today we will be looking at what kind of purchasing power that amount of money currently has. A recent sociology study in Romania came up with an answer, which sparked even more questions. The Friedrich Ebert Romania Foundation, the Quality of Life Research Institute, alongside Syndex, calculated the amount needed for covering living costs in Romania, the so-called basic basket.

The basic basket has 11 categories, among them food, clothing, shoes, habitation, education and culture, healthcare, vacationing, and family savings. In order to live up to the standard, a family of two adults and two children needs a minimum of 6,762 lei per month, which amounts to around 1,450 Euros. Per a single person, the minimum basic basket costs about 2,552 lei per month, around 547 Euros.

We talked to Victoria Stoiciu from the Fredrich Ebert Romania Foundation, who told us about the thinking behind the study: “In the summer of this year, the National Statistics Institute assessed the net average wage to be around 2,700 lei a month. If we add up two such salaries for a family, they dont cover the 6,700 lei needed for the basic basket. The calculation and structure of our basket are not descriptive. Its cost does not describe the reality and day to day consumption for Romanians. It describes what a basic basket should contain for a decent living. I emphasize the word decent. The calculations for the basic basket in previous years, issued by the Institute of Statistics, represented the subsistence level, not a decent living, which covers more than survival needs, not luxury or extravagance.”

In addition, this study is representative for the urban population, but covers some of the rural population as well. Here is Victoria Stoiciu once again: “We have not included in the study retired people, or inactive people. The research and the structure of the basket are relevant and representative only for the urban working population. It is true that this basket is not representative for the rural area, but that does not mean that, as some have insinuated, the cost of a basic basket for a decent living is significantly smaller in the countryside, due to subsistence agriculture and growing ones own food. It is true that that would make the food basked smaller, but that raises expenses for healthcare. Lots of villages dont have a hospital. Also, it would raise education expenses, since villages dont have high schools. In order for a child to go to high school, you have to pay rent in a city or to commute, by car or by train.”

The gap between minimum theoretical expenses for a decent living and the real situation in Romania is blatant for Romanians of an average condition, such as Catalina, whom we have interviewed about this: “These figures are unrealistic for two reasons: most people dont earn on an average a monthly salary to cover this minimum basket, and secondly, the real expenses for a family to cover the elements of the basket are, in reality, much higher for a decent living.”

The examples brought by Catalina in support of her argument refer to recreation and healthcare. The basket provides for an average expenditure for healthcare of around 107 lei a month, about 23 Euro. Here is what Catalina told us: “I think healthcare expenses are under-evaluated, because 107 lei is insufficient. Also, lets say you want to take your child to see a movie. A ticket is a minimum of 15 lei. If you have two kids and get some popcorn and juice, you have already spent a minimum of 100 lei for only one movie outing.”

We also spoke to Daniela, a retired teacher who is supplementing her pension by working part time in various schools. According to her, without supplementary revenue, people would live way below the provisions of the basic basket, and there would be no way in which they could have some savings too.

Here is Daniela, talking about the fact that the basic basket assigns 20.77% of expenses for food: “If we think of the recent price hikes, I dont see how the percentage per month could be 20, especially with two kids. If we cook at home, then the percentage is plausible, but even if you cook at home a lot, you still spend money on the products. If you go into a store today, you can see that prices have gone up about 10% compared to last month. You can spend only 20% on food only with a subsistence menu that excludes meat, and by cooking at home a lot.”

We asked Daniela to give us her conclusion: “My pension is below the minimum wage. I get 1,700 lei as a pension, but I have supplementary revenues, otherwise I could never cover the expenses. For an average wage living, the amount included in the basic basket is very high. The basket is way too expensive. A lot of families live on less than 4,000 lei a month raising two children.”

The authors of the study emphasize the fact that the value of a minimum basket is descriptive, and is only a reference point. They are aware of the discrepancies pointed out by regular people, which are even more obvious when we take into account not only wages, but revenue in general.

Here is Victoria Stoiciu with more: “90% of Romanian adults have a maximum average revenue of 2,100 lei, about 450 Euros, therefore 90% of Romanians have lower revenues than the minimum basket necessary for a decent living, as we have calculated it. We are a country of poor people, and it seems that a decent living is still a luxury for us, set aside for a very small minority.”