No. 50, 1998 - The "New Pension Orthodoxy" and Beyond: Transforming Old Age Security in Central Europe

Since the late eighties, the countries of Central Europe (CE) have witnessed sweeping changes in their economies and societies. Compared with this, the area of social security has remained remarkably exempt from structural change. While in the early years of transition, it was assumed that macroeconomic an political reforms were most pressing, leaving the existing set of social security institutions mainly untouched, welfare and distributive issues started to attract greater attention after a wave of election victories of post-communist forces in CE. By then, it turned out that there was considerable disagreement between the main actors of transformation as to the scope and type of reforms needed in the field of social policy.
This has been especially true for the area of old age security. Some sort of reform seemed inevitable in CE countries, as the process of economic transformation was putting great strain on the existing public pension systems. However, there used to be considerable disagreement as to the paradigmatic contents of a comprehensive reform of old age security. To a great deal, local discussion in CE reflected the international pension controversy that has been going on for some years now, triggered by forecasts of population ageing and a novel wave of pension reforms in Latin America.
This paper consists of two main parts. First, the contemporary pension reform debate is reviewed, referring to the Latin American privatization precedents as well as to the World Bank report “Averting the Old Age Crisis” and its critics. The influential World Bank pension reform proposal, which intends to be of worldwide scope, is drawn heavily on the so-called “Chilean Model” and has probably been its major international propagating mechanism.
Starting from the suggestion that “the making of post-communist social policy is a testing ground for the future of social policy elsewhere in the industrialised world”, it will then be examined in how far the “new pension orthodoxy” has succeeded in replicating its radical reform agenda in CE. To this end, the different pension reform experiences of Poland and Hungary, on the one hand, and the Czech Republic, on the other, are analysed. In the comparative analysis, there will be a special focus on the relationship between the set of political actors and the paradigmatic outcome of pension reform in the countries considered.

The paper is available here.