Ministry of Labour and Social Protection

About

The mission of the Ministry of Labour and Social Protection of the Republica of Moldova is to develop, promote, and implement state policies in labor, family, equal opportunities, and social protection. This aims to create a high-quality and equitable social system that is accessible to all citizens of the Republic of Moldova. Since October 2021, Moldova has experienced a significant increase in gas prices due to tight global energy markets and reliance on external suppliers. The situation worsened with the war in Ukraine, leading to reduced gas supply and further price hikes. Moldovan households now face gas prices six times higher than the previous year and double those in Romania, with electricity prices following a similar trend. Energy vulnerability and poverty have emerged as significant concerns in Moldova, exacerbated by the energy crisis and its potential impact on the incomes of Moldovan families. Early simulations by UNDP indicate that an additional quarter of households (about 250,000 people) risk falling below the poverty line due to high inflation.

In response, with UNDP’s technical support, the Ministry of Labour and Social Protection introduced the Energy Vulnerability Reduction Fund (EVRF) to mitigate the adverse effects of energy inflation on Moldovan households. The EVRF is connected to an Energy Vulnerability Information System that allows households to apply online, directly or through a social assistant or librarian. Applicants are automatically classified into one of seven energy vulnerability categories, from extremely vulnerable to non-vulnerable, using a dedicated algorithm. This ensures transparency in the categorization and compensation process. Reduced tariffs are applied to natural gas, electricity, or centralized heating bills. Additionally, the most vulnerable households, those using firewood or coal for heating, receive a monthly cash transfer.

Key achievements include:

• UNDP’s assistance led to the inclusion of an energy poverty definition in Law 241 on Energy Vulnerability, approved by the Moldovan Parliament.
• In the 2022-2023 heating season, approximately 895,000 households benefited from on-bill compensations, covering 57% of natural gas bills and 59% of heating bills.
• The UNDP impact assessment of the Fund showed a 43% reduction in energy poverty levels, with the most significant impact on the most vulnerable families.
• By the end of November 2023, over 740,000 households applied for the 2023-24 heating season compensation through the Energy Vulnerability Information System.
• The EVRF has initiated crucial modernizations in the national social protection system, with the Ministry of Labour and Social Protection embarking on digitalizing its services, inspired by the EVRF experience.