Although Moldavia's official standard of living had long been below the average for the Soviet Union, there were two mitigating factors. The rural character of the country accounted for many households receiving goods (mainly food) as well as cash wages. In addition, Moldavian industry was based on consumer goods (including textiles, consumer appliances, and processed agricultural goods), making them relatively plentiful throughout the republic.
The hostilities in Transnistria and the turmoil surrounding the demise of the Soviet Union were the major reasons for the falling standard of living in Moldova in the early 1990s. The outbreak of hostilities in Transnistria interrupted not only the flow of fuels and goods from former Soviet republics through Transnistria into right-bank Moldova but also cut off valuable inputs (for example, fertilizer) that were produced in Transnistria. These, in turn, indirectly affected such indicators as food consumption, a sign that everyday life was affected.
In 1991 Moldova set up the Social Assistance Fund (to provide assistance to the needy) and the Social Security Fund (SSF). The SSF is composed of the Pension Fund, the Social Insurance Fund, the Unemployment Fund, and the Reserve Fund. Funding for the SSF comes mainly from a payroll tax and from direct budget transfers.
The Pension Fund includes old-age pensions (age fifty-five for women who have worked at least twenty years, and age sixty for men who have worked for twenty-five years), pensions for invalids, pensions for women who have raised three or more children, military and special merit pensions, and pensions for people of retirement age or for people who receive disability pensions yet continue to work.
In early 1994, approximately 900,000 people (about 20 percent of the total population) received pensions. Legislation increased both benefits for dependent children and the minimum pension in 1992, and a law was passed to index benefits to inflation, but it had not been fully implemented by the end of the year. Many felt that passage of this law would add significantly to the demands on an already overburdened budget.
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