THE RETIREMENT RISKS OF ROMANIA’S “DECREE” GENERATION

• Main Author: Adrian Lucian SALA
• Format: Article
• Language: English
• Published: Publishing house of University of Pitesti, Romania 2018-12-01
• Series: Buletin ştiinţific: Universitatea din Piteşti. Seria Ştiinţe Economice
• Subjects: Baby boomer; Decree generation; Birth rates; Pensions; Dependency ratio
• Online Access: http://economic.upit.ro/RePEc/pdf/2018_3_17.pdf
• ISSN: 1583-1809; 2344-4908

After the Second World War, Romania’s population registered a decrease in numbers due to a high male death ration resulting from casualties. As the country started to recover from the social and economic effects of the war, the new political ideology - the socialism, started to steer the country in a new direction. Under its leadership, a boom in growth started occurring resulting in new economic production infrastructure being constructed. Thus, the necessity appeared for a much larger labor force to occupy the rising demand. To address this necessity, legislative changes were introduced to “encourage” childbirth, primarily through signing into law Decree 770 on the 2nd of October 1966. This resulted in approximately 1.5 Million newborns between 1967-1969, which will retire after 2030. In this paper, I will summarise the effects of this large portion of the population will have on the economy by applying the adequate statistical methods. The expected results would generate a rise in social security expenditures and an increase in older dependency ratios resulting in a higher burden on younger generations and causing a more significant drain of public resources. On these perspectives, I underline the main solutions in order to overcome or to reduce them.