How Economic Inequality Impairments Communities. A Brief Sociological Perspective on Effects of Inequality in Romania

Within a society, inequality is highly corrosive. The main ideas that fuel the debate about inequality are not new. What has changed is that the effects it generates can be much better understood and analysed today. This happens because, in addition to the ongoing creative adaptation of scientific research methods and strategies, we now have a wealth of data with the help of which we compare societies or their different regions. The instrumentation of these data, and the use of these data, not only brings to our attention the heterogeneous dimension of societies (observations which are otherwise quite important and useful for analysis). They bring to light the often hidden, hardly observable effects of inequality. The vast majority of societies are heterogeneous within the meaning that they are different in many ways. But what lies behind heterogeneity shaped by social and economic inequalities? What happens if these differences are widened? How much is the cohesive fabric of society being eroded, and how much is it resisting the attack of inequality? Is it affected in a way that is invisible to the social eye in the absence of scientific tools? Should the absence of inclusiveness of the economic growth be of concern, analysed in terms of tolerance of differentiation? Or the huge disparities present within a society?.

Within a society, revenue is very important. In 2021 Romania's GDP per capita was 73% of the European average, while the individual consumption of Romanians (AIC), expressed in Purchasing Power Standards (PPS), was 82% of the European average [1,2]. In terms of GDP per capita expressed in PPS Romania was in increasing in the European Union (EU-27) in 2021, managing to record higher values than Bulgaria (55%), Greece (65%), Slovakia (68%), Croatia (70%) and Latvia (71%) (Figure 1). Moreover, according to the latest estimates of World Bank representatives, Romania's GDP per capita will soon exceed that of Hungary, and they forecast that at the current pace of economic recovery and growth, it would not be excluded that by 2023 even for Poland to record lower values than Romania [3]. Since 2007 (the year of its integration into the European Union (EU) Romania has experienced strong economic growth, moving closer year by year to the frontier of very high-income countries (Romania has recovered 21% of the European average in the last 12 years, from 52% GDP per capita in 2009 to 73% GDP per capita in 2021 (Figure 2). Seen from the outside, Romania is the fastest growing country in the EU, already integrated into the corporate chains of Europe's richest countries, which has successfully absorbed huge capital and technology investments over the last thirteen years. But seen from the inside, development is uneven. The data show a significant polarisation between urban and rural areas and the growing structure of huge regional and intra-regional disparities, with some of the most serious demographic and social consequences (high external migration rate, decline of fertility rate, high rate of poverty, high infant mortality rate). The recovery of 21% of the European average GDP per capita over the last ten years has not been accompanied by a process of reducing regional and intra-regional disparities, which seem to be widening as the average individual income at national level has risen year by year (the effect of income inequality increase, as the average of well-being of the society is no longer dependent on national income or economic growth). Even if Romania describes itself as a country with huge economic potential, a comprehensive analysis of economic indicators, living conditions or social well-being highlights the distinct, heterogeneous profile of several small countries operating within the same area:

• About a quarter of the population living in and around Bucharest or the country's major cities has a quality of life index well above average; 
• Approximately half of the population lives in the so-called "rural middle of Romania", far from the level of well-being of the population of large developed urban centres [4].
• Nearly a quarter of the population lives in poor peripheral areas, where the values of economic development index and, by extension, the index measuring the standard of living (situated in the vicinity of relevant economic and social difficulties) are modest.
  

In 2021, Eurostat data place Romania in second place within the EU-27 in terms of the "Income Quintile Share Ratio" - 7.13 [5] (Figure 3).

Moreover, in a ranking conducted by the Social Progress Imperative, with the support of Deloitte, Romania ranked 43th out of 169 countries worldwide in 2022 and last but one in the EU in terms of quality of life and social well-being (social progress index), after countries such as Barbados (40th), Argentina (41th) or Hungary (42th). According to the study, Romania scored best globally indicators on nutrition and basic medical care (93,62%), shelter (90,71%), water and sanitation (87,77%), access to communications and information (87,67%) and access to basic knowledge (85,92%), while very low scores were obtained on indicators of inclusiveness (54,69%), health and wellness (58,78%), access to advanced education (65,62%), environmental quality (66,76%) and personal freedom and choice (71,27%). The above data reflect positions obtained by measuring the national average for each category, but within the regions they are highly differentiated, reminding us of the huge disparities that characterise them (for example, if basic knowledge in 2020 was provided for 49.8%% of the population of the South-Muntenia Region, for 43.5% of the population of the North-East Region or for 42.6% of the population of the South-East Region, for the population of the Bucharest-Ilfov Region was 83.5%, a proportion very close to the EU average) [6]. This heterogeneous construction describes an unequal Romania, with growing regional socio-economic disparities, sustained by a whole network of factors, one of the most important being the unequal distribution of income (IQSR - while very high incomes are obtained only in the areas of the capital and the most developed cities of the country, the rural and peripheral areas of the cities still provide the fuel for the migration process of people seeking better income opportunities outside Romania). 

Paving the Road to Disparities?

Romania has eight development regions [7]:

• North-East Region;
• South-East Region;
• South-Muntenia Region;
• South-West Oltenia Region;
• West Region;
• North-East Region;
• Centre Region;
• Bucharest-Ilfov Region.

As an important step we collected regional data on several issues with social variations, comparable at European level (EU-27/2020). Practically it used 27 variables:

“Equal opportunities”

• Early leavers from education and training (ELET) [8]
• Young people neither in employment nor in education and training (NEET, 15-29) [9]
• Gender employment gap (GEG) [10]
• Adult participation in learning in the past 4 weeks (APET) [11]
• Tertiary educational attainment (age group 30-34) (TEA) [12]
• Income quintile share ratio (IQSR)

“Fair working conditions”

• Employment rate (ER) [13]
• Unemployment rate (UER) [14]
• Long term unemployment rate (LTUER) [15]
• Activity rate (AR) [16]
• Youth unemployment rate (YUER) [17]
• Employment in current job by duration (0-11 months, age group 20-64) (ECJ) [18]

“Social protection and inclusion”

• At risk of poverty or social exclusion (AROPE) [19]
• At risk of poverty rate (AROP) [20]
• Severe material and deprivation rate (SMDR) [21]
• Persons living in a household with a very low work intensity (0-59) (PLHLWI) [22]
• Impact of social transfers on poverty reduction (ISTPR) [23]
• Self-reported unmet need for medical care (SRUNMC) [24]

Others variables

• Vaccination rate (VR) [25]
• Infant mortality rate (IMR) [26]
• Hospital Beds – HB [27]
• Health Personnel – HP / Doctors [28]
• Migration (Population Change 2016-2020 - PC) [29]
• Life expectancy at birth (LEB) [30]
• Economic growth (GDP)
• Average number of rooms per person (ANR) [31]
• Local Human Development Indicator” (LHDI) [32]
• Advanced Education (AE) [33]

Variations in Social Support (Comparable Social Support in Regions)

As a first step, it was sought to identify the extent to which that the more unequal the regions are, the worse they deal with all types of social problems (Figure 4).

Figure 4 confirms some important results of our approach:

• The Bucharest-Ilfov region, which has the lowest income inequality index (IQSR=4.0), the highest tertiary level of education (TEA=53%) and the highest human development index (LHDI=77.5%), also has the lowest at-risk-of-poverty rate (AROP=2.4%), the highest income per capita (GDP per capita=160% of the European average), the highest rate of access to advanced education (AE=49.10), the highest number of doctors per hundred thousand inhabitants (HP=618), the highest number of hospital beds per hundred thousand inhabitants (HB=1026), and the highest vaccination rate in the country (VR=44.72%);
• Also, Bucharest-Ilfov Region is the only region that in the last 4 years had a population surplus (+1.45%), has the lowest infant mortality rate (IMR=2.70% per thousand live births), as well as the highest life expectancy at birth (LEB=77.2 years);
• The North-West region, which also has the lowest income inequality index compared to the other regions (IQSR=5.2), a tertiary education level of 30.30% and a fairly high Human Development Index (LHDI=59.7%) has comparably much lower values of the at-risk-of-poverty and social exclusion rate (AROPE=18.5%) and the at-risk-of-poverty rate (AROP=15.5%), has the third highest per capita income among Romania's eight regions (GDP per capita=60% of the European average) and the second highest rate of access to advanced education (AE=27.30%);
• The North-East region, which has the highest income inequality index (IQSR=8.9), the lowest tertiary level of education (TEA=16.7%) and the lowest high human development index (LHDI=48%) has the highest at-risk-of-poverty rate (AROP=35.5%), the lowest income per capita (GDP per capita=44% of the European average) and the lowest number of vaccinated people in Romania (VR=24.76%);
• The North-East region also has very low values for the number of doctors per 100,000 inhabitants (HP=255), the number of hospital beds per 100,000 inhabitants (HB=664), and a very low rate of access to advanced education (AE=18%);
• The South-East region, which also has a very high-income inequality index (IQSR=7.1), a very low tertiary level of education (TEA=17.2%), and a very low human development index (LHDI=54.5%) has the highest rate of risk of poverty and social exclusion (AROPE=43. 2%), the highest rate of severe material deprivation (SMD=22.7%), the highest infant mortality rate (IMR=8.5 per 1,000 live births), the highest gender gap in employment (GEC=25.5%), the highest underemployment rate (UER=7.2) and the lowest life expectancy at birth (LEB=74.4 years);
• The South-East region also has very low values in terms of the number of doctors per hundred thousand inhabitants (HP=219), the number of hospital beds per hundred thousand inhabitants (HB=623) and a very low rate of access to advanced education (AE=20.10%);
• The South-West Oltenia region, which also has a very high income inequality index (IQSR=7.7), a modest tertiary level of education (TEA=22%), a low human development index (LHDI=52.6%) has a very high at-risk-of-poverty rate (AROP=32.7%), a very low income per capita (GDP per capita=54% of the European average) and a low number of vaccinated people (VR=28.88%). The region also has very low values for the number of doctors per 100,000 inhabitants (HP=311), the number of hospital beds per 100,000 inhabitants (HB=674) and a very low rate of access to advanced education (AE=21.70%).

Dynamic of gaps – gdp per capita, income quintile share ratio, at risk of poverty rate and at risk of poverty or social exclusion

As a second step, a closer look at Figure 2 suggests that in the period 2009-2021 Romania has recovered in a relatively short period of time a gap of about 21% of the European average in terms of income per capita (from 52% in 2009 to 73% in 2021 compared to the European average). This favourable development, which best describes the huge impact that EU accession has had on the Romanian economy, signals on the one hand a complex process of rapid catching up of Romania's gaps with the EU's strong market democracies. But on the other hand at the same time with the rapid economic growth at the national level, an almost invisible process has been developing which describes the establishment of significant gaps between Romania's regions and micro-regions.

Practically:

Gap (2011) < Gap (2021)

Where

Gap (2011) = 2011Maximum (reg.m) – Minimum (reg.n) / GDP per capita, IQSR, AROP, AROPE

Gap (2021) = 2021Maximum (reg.m) – Minimum (reg.n) / GDP per capita, IQSR, AROP, AROPE

(2011)Max (reg.m) – Min (reg.n)(N)  <  (2021)Max (reg.m) – Min(reg.n)(N)

Where N could be GDP per capita, IQSR (income quintile share ratio index), AROP (at-risk-of-poverty rate), and AROPE (at-risk-of-poverty and social exclusion rate). Figure 5 exemplifies the dynamics of the gaps annually constructed within the IQSR, GDP per capita, AROP and AROPE. All four have decisive implications in explaining the specific social problems of Romania's eight regions. As can be seen, the gaps have widened rather than narrowed in the last decade of the 21th century (Figure 5 - Figure 10).

Figure 5 best illustrates as follows: over the last decade the value of the index describing income inequality (IQSR) has increased and the regional GDP per capita gap has widened:

Gap IQSR (2021) > Gap IQSR (2011)

(4.3>3)

And in the same time:

GapGDP per capita (2021)>GapGDP per capita (2011)

(118%>94%)

GapAROPE(2021)>GapAROPE (2011)

(33.90%>22%)

GapAROP(2021)>GapAROP(2011)

(32.7%>28.7%)

Table 1 is eloquent for our explanatory approach, highlighting the dynamics of annual regional gaps (differences) measured since 2011 for four of the variables that decisively influence their installation and preservation:

• • While in 2011, the difference between the highest index describing income inequality (IQSR) at the level of Romania's 8 regions was of 3.0 (Bucharest-Ilfov Region IQSR - 4.5 versus South West Muntenia Region IQSR - 7.5), in 2021 it was of 4.3 (Bucharest-Ilfov Region IQSR - 4.1 versus NorthEeastern Region ADOP - 8.4);
  • While in 2011, the gap between the highest GDP per capita at the level of Romania's 8 regions was of 94% of the European average (Bucharest-Ilfov Region GDP per capita - 123% versus North-eastern Region GDP per capita - 29%), in 2020 it was of 118% of the European average (Bucharest-Ilfov Region GDP per capita - 164% versus North-eastern Region GDP per capita - 46%);
  • While in 2011, the difference between the highest at-risk-of-poverty rate (AROP) in Romania's 8 regions was 28.7% of the European average (Bucharest-Ilfov Region AROP - 3.5% versus North-Eastern Region AROP - 32.2%), in 2021 it was of 32.7% of the European average (Bucharest-Ilfov Region AROP - 2.9% versus North-Eastern Region AROP - 35.6%);
  • While in 2011, the difference between the highest at-risk-of-poverty-and-social-exclusion rate (AROPE) at the level of Romania's 8 regions was of 22% of the European average (Bucharest-Ilfov Region AROPE - 29.7% versus North-Eastern Region AROPE - 51.7%), in 2021 it was 33.9% of the European average (Bucharest-Ilfov Region AROPE - 16.4% versus South-Eastern Region AROPE - 50.3%) (Table 1).
• 
  

• In the last decade of the 21st century we see an increase in regional gaps of 24% for GDP per capita (118%-94%), of 4.0% for the at-risk-of-poverty rate AROP (33.7%-28.7%), of 11.9% for the at-risk-of-poverty and social exclusion rate AROPE (33.9%-22%) and of 1.3 for the social inequality index IQSR (4.3-3).
• We notice the biggest increase of GDP per capita inside of the regions where the IQSR had very low values.
• Bucharest-Ilfov Region, which in 2021 had an income inequality index of IQSR=4,1 had a GDP per capita increase of 41% in the last nine years;
• North-Eastern Region, which in 2021 had an income inequality index of IQSR=8.4, had a GDP per capita growth of only 17% in the last ten years.
• On a scale of inter-regional income differences, we see in Romania more than twice as large differences (IQSR=4.1 Bucharest-Ilfov Region versus IQSR=8.4 North-Eastern Region);
• Income inequality has consequences for society - the more unequal the regions are, the worse they deal with the whole range of social problems:
• Very low tertiary level of education (limited access to advanced education, ATR=16.7%, AE=18% North-eastern Region),
• Low Local Human Development Index values (LHDI=48%),
• High at-risk-of-poverty rate (AROP=35.5%, North-eastern Region),
• High at-risk-of-poverty and social exclusion rate (AROPE=43.2% South-eastern Region),
• High rate of severe material deprivation (SMD=22.7%, South-eastern Region),
• Low access to health services (HP=255, HB=664 North-eastern Region),
• Very high gender gap in employment (GEC=22.5% South-eastern Region),
• Low level of income per capita (GDP per capita=44% of European average, North-eastern Region),
• High infant mortality rate (IMR=8.5 per thousand live births, South-eastern Region),
• High unemployment rate (UER=7.2%, South-eastern Region),
• Low life expectancy rate at birth (LEB=74.4 years, South-eastern Region).
• It is likely that beyond the development effect "other factors also to act in the local differentiation of the vaccination" [34]. One such factor may be "local culture" or even "previous life experiences with the vaccination” [35]. But vaccination rates were in Romania much lower in the poorest regions, where the income inequality index is very high (VR=24.76 North-eastern Region, VR=29.46 South-eastern Region);
• Moreover, in the South West Oltenia Region, where IQSR=7.7, the vaccination rate was VR=27.78%.
• The data show that individual well-being is no longer dependent on national income and economic growth (regional gaps widened during the period of 20% national GDP growth);
• The data show an increase and especially a widening of regional gaps rather than a narrowing;
• In absence of some relevant public policies, it is possible the process of the deepening inequalities will continue.
• At least of two working hypotheses hold: 
• Where inequalities are already structured, social problems are more intensely felt (high at-risk-of-poverty and social exclusion rates) and their effects more diverse (vaccination rates against Covid-19 were on average much higher in developed regions with no intra-regional disparities).
• With persistently large income gaps (persistently high-income inequality index) both economic growth and GDP per capita no longer influence average societal well-being. Once regional and intra-regional disparities have taken hold, the process of deepening or maintaining them becomes more pronounced.

1. 1. Gross domestic product, abbreviated as GDP, is a basic measure of the overall size of a country's economy. As an aggregate measure of production, GDP is equal to the sum of the gross value added of all resident institutional units engaged in production, plus any taxes on products and minus any subsidies on products. Gross value added is the difference between output and intermediate consumption.
   2. The purchasing power standard, abbreviated as PPS, is an artificial currency unit. Theoretically, one PPS can buy the same amount of goods and services in each country. However, price differences across borders mean that different amounts of national currency units are needed for the same goods and services depending on the country. PPS are derived by dividing any economic aggregate of a country in national currency by its respective purchasing power parities. PPS is the technical term used by Eurostat for the common currency in which national accounts aggregates are expressed when adjusted for price level differences using PPPs. Thus, PPPs can be interpreted as the exchange rate of the PPS against the euro.
   3. The World Bank in Romania.
   4. Fina S, Heider B, Rat C, Unequall Romania. Regional socio-economic disparities in Romania, Foundation for European Progressive Studies. 2020; 2-10.
   5. IQSR is calculated as the ratio of the total income received by the 20% of the population with the highest income (= 1st or top quintile) to that income received by the 20% of the population with the lowest (= 5th or bottom quintile)) and in fourth place in terms of the "Gini coefficient" - 34.3% (the extent to which the distribution of income or consumption expenditure between individuals or households in an economy deviates from a perfectly equal distribution).
   6. European Social Progress Index.
   7. The development regions of Romania refer to the eight regional divisions created in Romania in 1998 in order to better co-ordinate regional development as Romania progressed towards accession to the European Union (EU). The development regions correspond to NUTS II-level divisions in EU member states. Despite becoming increasingly significant in regional development projects, Romania's development regions do not actually have an administrative status and do not have a legislative or executive council or government. Rather, they serve a function for allocating EU PHARE funds for regional development, as well as for collection of regional statistics. They also co-ordinate a range of regional development projects and became members of the Committee of the Regions when Romania joined the EU. 2007.
   8. Early leaver from education and training, previously named early school leaver, refers to a person aged 18 to 24 who has completed at most lower secondary education and is not involved in further education or training.
   9. The indicator young people neither in employment nor in education and training, abbreviated as NEET, corresponds to the percentage of the population of a given age group and sex who is not employed and not involved in further education or training. The numerator of the indicator refers to persons meeting these two conditions:
   10. The gender employment gap is defined as the difference between the employment rates of men and women aged 20-64. The employment rate is calculated by dividing the number of persons aged 20 to 64 in employment by the total population of the same age group. The indicator is based on the EU Labour Force Survey.
   11. The adult learning indicator refers to participation in formal and non-formal education and training and the reference period for the participation is the four weeks preceding the interview as is usual in the labour force survey.
   12. Tertiary educational attainment by sex, age group 30-34 is defined as the percentage of the population aged 30-34 who have successfully completed tertiary studies (e.g. university, higher technical institution, etc.). This educational attainment refers to ISCED (International Standard Classification of Education) 2011 level 5-8 for data from 2014 onwards and to ISCED 1997 level 5-6 for data up to 2013. The indicator is based on the EU Labour Force Survey.
   13. The employment rate is the percentage of employed persons in relation to the comparable total population. For the overall employment rate, the comparison is made with the population of working-age; but employment rates can also be calculated for a particular age group and/or gender in a specific geographical area (for example the males of age 15-24 employed versus total in one European Union (EU) Member State).
   14. An unemployed person is defined by Eurostat, according to the guidelines of the International Labour Organization, as someone aged 15 to 74 without work during the reference week who is available to start work within the next two weeks and who has actively sought employment at some time during the last four weeks.
   15. Long-term unemployment refers to the number of people who are out of work and have been actively seeking employment for at least a year. An unemployed person is defined as being aged 15 to 74 (or aged 16 to 74 in Spain, Iceland and Norway as well as the United Kingdom) who was without work during the reference week, was currently available for work and was either actively seeking work in the last four weeks or had already found a job to start within the next three months. The unemployment period is defined as the duration of a job search, or as the length of time since the last job was held (if shorter than the time spent on a job search).
   16. Activity rate is the percentage of active persons in relation to the comparable total population. The economically active population comprises employed and unemployed persons.
   17. According to the International Labour Office, a young unemployed has to fit the following conditions: being between the age of 16 and 25, not having a job (which means he has no work during the reference week), being available to work in 15 days and being actively looking for a job.
   18. Statistics on employment based on the EU Labour Force Survey (EU-LFS). It shows the level of employment by sex, age, educational attainment level and occupation for the EU as a whole (0-11 months, age group 20-64).
   19. At risk of poverty or social exclusion, abbreviated as AROPE, corresponds to the sum of persons who are either at risk of poverty, or severely materially and socially deprived or living in a household with a very low work intensity. People are included only once even if they are in more than one of the situations mentioned above. The AROPE rate is the share of the total population which is at risk of poverty or social exclusion.
   20. The at-risk-of-poverty rate is the share of people with an equalised disposable income (after social transfer) below the at-risk-of-poverty threshold, which is set at 60 % of the national median equalised disposable income after social transfers. This indicator does not measure wealth or poverty, but low income in comparison to other residents in that country, which does not necessarily imply a low standard of living.
   21. The material deprivation rate is defined as the proportion of the population that is unable to afford three or more out of this list of nine items. The severe material deprivation rate is defined as the proportion of the population that is unable to afford four or more of the above-mentioned items.
   22. The indicator persons living in households with very low work intensity is defined as the number of persons living in a household where the members of working age worked a working time equal or less than 20% of their total work-time potential during the previous year.
   23. Social transfers cover the social help given by central, state or local institutional units. They include:
   24. Self-reported unmet needs for medical care concern a person’s own assessment of whether he or she needed examination or treatment for a specific type of health care, but did not have it or did not seek it because of the following three reasons: ‘Financial reasons’, ‘Waiting list’ and ‘Too far to travel’. Medical care refers to individual healthcare services (medical examination or treatment excluding dental care) provided by or under direct supervision of medical doctors or equivalent professions according to national healthcare systems.
   25. Vaccination situation in Romania.
   26. The infant mortality rate is the number of deaths under one year of age occurring among the live births in a given geographical area during a given year, per 1,000 live births occurring among the population of the given geographical area during the same year.
   27. Hospital bed numbers provide information on healthcare capacities, in other words on the maximum number of patients who can be treated by hospitals. Hospital beds are those which are regularly maintained and staffed and immediately available for the care of admitted patients. They cover beds accommodating patients who are formally admitted (or hospitalised) to an institution for treatment and/or care and who stay for a minimum of one night. These include: beds in all hospitals, including general hospitals, mental health and substance abuse hospitals, and other specialty hospitals, irrespective of whether the bed is occupied or not.
   28. Medical doctors provide information on the number of doctors per hundred thousand inhabitants by regions.
   29. Population change, defined generally, is the difference in the size of a population between the end and the beginning of a given time period (usually one year). Specifically, it is the difference in population size on 1 January of two consecutive years.
   30. Life expectancy at birth is the mean number of years a new-born child can expect to live if subjected throughout his or her life to the current mortality conditions, the probabilities of dying at each age.
   31. A room is defined as a space in a housing unit, or in living quarters other than housing units, enclosed by walls reaching from the floor to the ceiling or roof covering, or at least to a height of 2 metres above the ground, of a size large enough to hold a bed for an adult (4 square metres at least) and at least 2 metres high over the major area of the ceiling. Thus, normal bedrooms, dining rooms, living rooms, habitable cellars and attics, servants' rooms, kitchens and other separate spaces used or intended for habitation all count as rooms. Passageways, verandas, lobbies, bathrooms, and toilet rooms should not be counted as rooms, even if they meet the criteria (United Nations, 2008).
   32. Sandu D. Updating the Index of Local Human development: why, how ans with what result, in Urban Policies in Romania, Ionescu Haroiu Publishing House, M. World Bank. Res report 2020.
   33. Advanced education means education or training above the secondary school level.
   34. Sandu D. Vaccination between place opportunities and Institutional (dis)trust, published in Contributors. ro. 2021.
   35. Sandu D. Social Worlds on anti-Covid-19 vaccination: Romanian in the European context, published in Contributors. ro. 2021.