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Academic sceptical on ‘New Europe’ pensions

EUROPE – An academic at the University of California has told the European Central Bank that the new EU member states are not as advanced in pension reform as sometimes claimed.

Gerard Roland, professor of economics and political science at the Berkeley-based university, said “one should not exaggerate the difference” between the social welfare and pension systems of new and traditional EU members.

“There is no large difference in the need for structural reforms in the new member states,” Roland stated in a paper presented at an ECB conference.

“The latter tend to have very rigid labour markets with the partial exception of the Czech Republic and they will have to make sure that their social welfare and pension systems are sustainable in the long run.”

Roland, who is also a researcher with the Centre for Economic Policy Research, said the perception that new members were “leapfrogging” older members was not borne out by the facts.

“There is a widespread perception that the new member states have gone farther in their structural reforms than ‘old Europe’ but the data show on the whole that this is not the case.

“The new member states will thus also need to participate in the necessary structural reforms ahead and in the long-delayed implementation of the Lisbon agenda.

“While limited progress has been achieved with pension reforms that are sometimes ahead of what existing EU members have done, further labour market reforms will be very much needed in the new member states.”

He questioned the reality of the claim that ‘old Europe’ could learn about structural reform from the new members.

“All in all, there is no big difference between the state of pension systems in the new member states and that in the EU15. High contribution rates and low pension ages indicate that further efforts in pension reform will be needed in the new member states.”

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