Moldova Poverty Assessment 2016

Moldova has experienced rapid growth and increases in living standards in the past decade. The economy has grown by an average 5 percent a year in the past 15 years, while the national poverty rate declined from 26 percent in 2007 to 11 percent in 2014; there are sharp declines observed in the early 2000s as well. However, Moldova’s growth model has relied on remittances, with limited job creation. The World Bank (2016) report Moldova: Paths to Sustained Prosperity finds that Moldova’s growth model triggered a cycle in which men and women migrated in search of better economic opportunities and sent remittances home that continued to support consumption-driven growth, and that this contributed to poverty reduction and welfare improvement among the less well off, particularly those in rural areas. The 10 facts presented in the note are as follows: fact one: job losses are increasing overall, with productivity-driven economic growth since the 2000s benefitting a smaller number of people who were able to find jobs; fact two: workers left agriculture and industry for services, but the 2009 global crisis dampened the job prospects in services; fact three: out-migration means that Moldova failed to fully capture a demographic dividend for the economy, and is now an aging country; fact four: employment and wage patterns show that job outcomes are becoming less inclusive; fact five: despite their rising educational attainments, young people face significant challenges finding non-farm jobs; fact six: as inequality in earnings widens, post-secondary education still earns more, but is becoming less of a guarantee of a better job; fact seven: efficient firms are raising their productivity by shedding jobs, not creating them, while firm entry and survival rates are low; fact eight: the most productive firms (small, young, foreign, and private) firms have the most productive jobs, but they are not increasing their share in employment; fact nine: while productivity is increasing, a growing share of jobs is in less-productive firms; fact ten: firms providing employment are typically larger and older, while younger firms are struggling, and fewer new firms have been launched since the crisis. It is key to continue monitoring these trends over time and, after the release of the 2014 census data, the labor market and demographic challenges that the country faces will need to be revisited to reflect a more current picture of the situation and the prospects.