Welfare State Classification: The Development of Central Eastern European Welfare
Download 374.54 Kb. View original pdf
|
| 6.2 Pension system As addressed in the introduction, Slovakia shared the same history of social security with the Czech Republic. Since the collapse of the Berlin Wall, the predominant model is Bismarckian (Cerami 2005: 83). The institution responsible for collecting and administrating the contribution of employees, employers and self-employed is the Social Insurance Agency. In line with Poland and most CEE countries, one can observe special provisions which apply for different categories of worker, especially for members of armed forces and police (Cerami 2005: 83). The most radical and permanent reform of the pension system in Slovakia has taken place in 2003 and 2004. The Slovakian Republic inherited a public pay-as-you-go system from Czechoslovakia which incorporated elements of redistribution within a social insurance system. Since the collapse of the Berlin Wall gradual declines in contribution revenues could be observed. These declines were the result of the loose link between contributions and benefits and the increased informality in the labor market which was the result of the easing of state-dominated labor markets. Hence, the most important structural reform was the result of the emerge of fiscal deficits which emerged in the system. These deficits were caused, again, by the fact that the contributions declined towards only 7 percent of the GDP in 2002, while at the same time the expenditures held steady at 7,5% of the GDP (World Bank 2004). In the longer term these deficits would increase to more than 11%. Given the context of the entry into the European Union, these long-term deficits would be completely unfeasible. Thus, as said before, funding and feasibility problems are the main cause of the radical reforms which took place in 2003 and 2004. The pension system in Slovakia thus went through a major structural reform. The Slovak pension system has been reorganized into both a traditional pay-as-you-go system pension system, which can be considered to be the first pillar, and a mandatory privately managed pension savings system, which is referred to as the second pillar (ILO 2008). The World Bank (2004) concludes that the progress made by the Slovakian Republic concerning the improvement of the sustainability, affordability, fundability and thus feasibility of the pension system can be considered to be good (World Bank 2004). According to Cerami (2005) the system is work-related in scope, but universal in coverage. He states that, because of Article 39 of the Slovak Constitution, pensioners are guaranteed a minimal income. In other words, the state is obliged to pay for those citizens who are unable to take part in social insurance, thus people who are unemployed or disabled (Cerami 2005: 84). This means that the pension system in the Slovakian Republic can be considered to include elements of both Bismarckian and Beveridgean welfare systems. The contribution to the first and second pillar of the pension system is work-related and thus Bismarckian, while the coverage of the system can be considered to be universal and thus Beveridgean due to Article 39 which guarantees all citizens a minimum income. One can also conclude that the main reforms were, in line with Poland, the result of feasibility and fundability problems. The heritage of the classic pay-as-you-go pension system was the basis of the fundability problems. Hence, an analysis of the pension systems of Slovakia and its reforms, shows that elements of both welfare systems and typologies can be distinguished. Download 374.54 Kb. Share with your friends:
|