This is a book edited and written by social policy academics on the state pensions systems of the “Visegard four” central European states (Czech Republic, Hungary, Poland and Slovakia) and the three Baltic republics (Estonia, Latvia and Lithuania). It provides a brief overview of their respective social security systems before and during the communist era, the effect of the economic retraction following the end of communism on benefits, and the transformation of the state pensions system. Slovenia, which would have completed the package of the eight central and east European countries set to be invited into the European Union this year, is unfortunately missing.
The immediate effect of the collapse of communism was the collapse of the economy. The decline was more dramatic in the highly centralised former USSR and at its worst in Baltic states. All the countries experienced a period of high to hyperinflation as their respective governments liberalised prices.
In the immediate post-communist years governments had little choice but to reform their pensions systems as part of the task of stabilising the economy and budget. Pensions and other benefits were separated from the budget and notional accounts introduced. Hungary in 1993 and the Czech Republic a year later introduced supplementary private pensions. Although pre-retirement was used initially to soak up some of the many workers left unemployed by the industrial collapse, thereafter each state has introduced a progressive raising of the retirement age. In a region of high unemployment, this has not been popular, but despite occasional attempts to reverse the law even now, all the states to varying degrees face the demographic pressures of decreasing birth-rates, increasing life expectancy and fewer future workers to fund pensions.
As is inevitably the case with individually authored chapters, each has strengths and weaknesses, and some standardisation at either the commissioning or editing stage, including the reference tables and the pensions benefits formulae, would have made it easier for readers to draw comparisons. Despite the fact that the region’s pensioners are a sizeable constituency, there has been little attempt to cover the political dimension. The chapter on the Czech Republic does cover the various political parties’ pensions policies, but it fails to even mention the Velvet Divorce in 1993 when the Czechs and Slovaks parted company. It is left to the reader to turn to the Slovakian chapter, to learn of how Slovak pensioners’ incomes have increasingly lagged those of their more economically prosperous neighbour and inevitably re-read another description of the same system up to 1993 but in greater detail.
Likewise, the common systems of the Baltic states prior to 1991 could have been unified in a single section. It would also have been worthwhile to make at least some comparison between the westward looking Baltic states, and the rest of the former Soviet Union, where pensioners paid the price for governments incapable of designing realistic budgets by having their benefits delayed, in some cases for more than a year.
The major criticism of this book is that it seems to have been finished sometime in 1997, making those sections that focus on the forthcoming World-Bank style multi-pillar reforms obsolete, and the economic reviews dated. A second, compulsory but privately managed second pillar has since been implemented by Hungary, Poland, Latvia and Estonia, is about to in Lithuania and Slovakia, and has so far been rejected by the Czech Republic.