(Reuters) - Romania could enjoy a more productive economy and gain hundreds of millions of euros a year in tax receipts if it integrated its young and impoverished Roma minority, a World Bank study showed on Monday.
Human rights groups have criticized Romania - home to up to 2.5 million Roma, or roughly a sixth of the population - for not doing enough to improve their living standards or job prospects.
The government in Bucharest commissioned the study to help it reach poverty reduction targets agreed with the European Commission, which has earmarked funds in the next EU budget for integrating the Roma better across the entire region.
The Roma are Europe's largest ethnic minority. Out of an estimated 10-12 million, some six million live in the EU. Despite the fact that EU countries have banned discrimination, many are victims of prejudice and social exclusion.
In Romania, nine out of 10 live in severe material deprivation, the study said. Children under 14 years make up almost half of their number and only a third of Roma boys will still be in school at 16, and even fewer girls. A third of Roma who seek work will experience discrimination.
If Roma unemployment rates fell and wages rose, Romania could reap productivity gains between 887 million euros and 2.9 billion euros per year - up to 2 percent of GDP - and up to 675 million of extra taxes, the study found.
A better educated Roma workforce would also fill an employment gap in the EU's second poorest state, where the population has shrunk and aged rapidly since the fall of Communism in 1989, as younger Romanians left in search of a better life elsewhere.
"Inadequate education and skills and poor health hamper one's access to earning opportunities," said Kosuke Anan, a World Bank expert and co-author of the report. "At the same time, the lack of earning opportunities results in insufficient resources."
In neighboring Hungary, Roma number some 600,000-700,000, or around 7 percent of the population. As in Romania, most are unemployed, poor and relatively uneducated.
Mistrust among Hungarians towards the Roma has been fuelled by the far-right Jobbik party, which won an unprecedented 21 percent in Sunday's national election.
BETTER OFF BEGGING ABROAD?
Many Romanian Roma have flocked to western European cities since the country joined the EU in 2007. According to police, some are involved in petty crime or begging on the streets, and outbursts of anti-Roma sentiment are now common.
France has deported thousands of Romanian and Bulgarian Roma from illegal camps, prompting criticism from the EU.
Even so, some prefer begging abroad to being at home.
"At least here people give me food and medicine," said Ana Ferariu, a 65-year-old Roma woman begging outside a convenience store on London's crowded Oxford Street.
Ferariu, who doesn't speak English, said she left the impoverished town of Botosani in eastern Romania after her husband died and her house was destroyed in a flood. She sleeps in parks and has been picked up by police at least ten times.
"I am harmless, if people want to give me something that's ok, but if they don't that is also fine. If I die over here, the queen will bury me, but who will bury me at home?" she said.
In common with other countries, Romania has Roma inclusion programs in place but the results have been not be monitored properly to gauge their effectiveness, the World Bank said.
The study recommended building up local capacities to manage pro-Roma projects and better tap EU development funds, making more realistic budget estimates and strengthening anti-discrimination laws.