Knowledge Brief: Economic Costs of Roma Exclusion
Read the this publication in English and download English, Bulgarian, Czech, Romanian and Serbian versions (PDF files) on the World Bank Website

This Knowledge Brief, released at the Second European Roma Summit in April 2010, summarizes the initial findings of an ongoing study and dialogue by the World Bank on the economic costs of Roma exclusion.

The Roma are perhaps the largest trans-national minority in Europe. They are also one of the poorest communities in Europe, being frequently excluded from the formal labor market. This note focuses on the economic and fiscal costs of exclusion of Roma in four Central and Eastern European countries: Bulgaria, the Czech Republic, Romania, and Serbia. Economic costs arise because of low levels of Roma employment and low earnings among those working. Fiscal costs arise because low employment and low earnings translate into substantially lower tax receipts and higher net social security expenditures. To estimate the extent of the economic and fiscal costs, detailed nationally representative survey data are used and official Roma population estimates from national censuses.
 

According to national census data, there are 370,000 Roma living in Bulgaria, 535,000 in Romania, and 108,000 in Serbia . In the Czech Republic, a sample of Roma in identified marginal communities put the population of Roma at 70,000. Other estimates place the number of Roma living in these countries from two to four times higher . By relying on the much smaller official population estimates, the economic and fiscal losses reported in this note are lower bounds of the overall losses.

The challenges posed by the economic and fiscal cost of Roma exclusion are particularly acute in light of the declining and quickly aging populations. Between 2000 and 2025, the national populations of the four countries in this study are expected to decline by as much as 18% in Bulgaria, 5% in the Czech Republic, 10% in Romania, and 3% in Serbia . The countries will also experience substantial increases in the proportion of elderly people (65+ years).

These factors put extra demands on the declining working age population (15-64 years) which must shoulder the greater fiscal burden as expenditures on, for example, pensions and health care rise. This can only be achieved with a working age population in which all communities are full participants in the labor market. The Roma population represents already a sizeable share of the working age population in many European countries, including the four countries in this study. This share will continue to increase given the relatively younger age profile of the Roma community. As such, substantially increasing the participation and productivity of Roma is an economic necessity for everyone.