The World of Work and Social Welfare in the New Europe

1
The World of Work and Social Welfare in the New
Europe

• The Central and East European states joined the
  EU in 2004
• What impact has this had on the transformation of
  their welfare systems?
• Have they caught up with the welfare systems of
  the old countries?

2
The World of Work and Social Welfare in the New
Europe

• There is no such thing as Eastern Europe, i.e.
  All the New Europe countries are different
• The New Europe has not followed the patterns of
  the old Cohesion countries (Greece, Spain)
• The differences in social welfare between Old
  Europe and New Europe have increased over the
  past 10 years

3
The World of Work and Social Welfare in the New
Europe

• Developments in three clusters
• 1. Neoliberal welfare states the Baltic states
  and Slovakia
• 2. Dual regimes Hungary, Poland
• 3. Social corporativist regimes Slovenia,
  Czech Republic

4
The World of Work and Social Welfare in the New
Europe

• 1. Neoliberal regimes Estonia, Latvia,
  Lithuania, later Slovakia
• Radical economic reforms resulting in minimal
  states, low welfare spending, low taxes,
  deregulated labour markets, flat tax rate (Latvia
  lowest, 15 per cent). In 2004, Slovakia
  introduced a flat rate at 19 per cent, later also
  Czech Republic

5
The World of Work and Social Welfare in the New
Europe

• 1. Neoliberal regimes Estonia, Latvia,
  Lithuania, later Slovakia
• Record low-tax revenue to GDP ratio in the EU 27
  The EU average 41,2 per cent of GDP collected by
  tax, Slovakia 29,5 per cent, Lithuania 30 per
  cent, Latvia 30,4 per cent, Estonia 31,1 per cent

6
The World of Work and Social Welfare in the New
Europe

• 1. Neoliberal regimes Estonia, Latvia,
  Lithuania, later Slovakia
• Small governments Slovakia government
  expenditure fell from 65 per cent of GDP in 1997
  to 37 per cent of gdp in 2006

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The World of Work and Social Welfare in the New
Europe

• 1. Neoliberal regimes Estonia, Latvia,
  Lithuania, later Slovakia
• Low union membership, weak collective bargaining
• Huge share of working poor
• Huge social inclusion needs
• Relative poverty rates increased between 2000-2007

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The World of Work and Social Welfare in the New
Europe

• 1. Neoliberal regimes Estonia, Latvia,
  Lithuania, later Slovakia
• The Baltic states have the lowest life expectancy
  in the EU 27
• Very high old age poverty
• High income inequalities
• High level of housing deprivation
• Largest prison population in the EU

9
The World of Work and Social Welfare in the New
Europe

• 1. Neoliberal regimes Estonia, Latvia,
  Lithuania, later Slovakia
• Radical economic reforms coupled with minimal
  social commitments, poor welfare performance
• Economic agenda focused on competitiveness
• High social costs

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The World of Work and Social Welfare in the New
Europe

• 1. Neoliberal regimes Estonia, Latvia,
  Lithuania, later Slovakia
• Neoliberal states became highly vulnerable to the
  post 2008 economic crisis

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The World of Work and Social Welfare in the New
Europe

• 2. Dual regimes Poland, Hungary
• Poland, Hungary finance big governments,
  spending 42,4 and 50,1 per cent of GDP through
  their governments
• But both Poland and Hungary, in regional
  competition, reduced corporate taxes to 19 and 16
  per cent, while personal taxes are 38 and 40 per
  cent
• Tax concessions for foreign investors

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The World of Work and Social Welfare in the New
Europe

• 2. Dual regimes Poland, Hungary
• Hungary's fiscal policy has been expansionary,
  rising fiscal indebtedness

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The World of Work and Social Welfare in the New
Europe

• 2. Dual regimes Poland, Hungary
• Poland incongruous capitalist systém
• Heavily regulated products market, large public
  sector, deregulated labour market, strong
  protectionism and high level of openness of the
  Polish economy

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The World of Work and Social Welfare in the New
Europe

• 2. Dual regimes Poland, Hungary
• Poland very high poverty, rising inequality,
  highest rate of the working poor
• Total absence of an active employment policy
• Passive labour markets are weak
• Poland's conservative welfare state has not
  provided an adequate amount of social protection
  and poverty alleviation

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The World of Work and Social Welfare in the New
Europe

• 2. Dual regimes Poland, Hungary
• Hungary
• Welfare state slightly expanded in 1998-2007
• Welfare state oriented towards pensioners
• High child poverty
• Similar structural problems to Poland

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The World of Work and Social Welfare in the New
Europe

• 2. Dual regimes Poland, Hungary
• Poland and Hungary two of the lowest average
  ages for withdrawal from labour market in the EU
• Early retirement schemes widely available

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The World of Work and Social Welfare in the New
Europe

• 2. Dual regimes Poland, Hungary
• Social provision remains fragmented
• Welfare policies locked within a strong
  neoliberal political agenda
• Stop-and-go-attitude to regime formation

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The World of Work and Social Welfare in the New
Europe

• 3. The Czech Republic and Slovenia The
  Corporativist Regime
• Until 2010, Slovenia spent 23 of its GDP on
  social protection, Czech Rep. spent 19 of its
  GDP on social protection
• Relatively high employment rates in both
  countries until 2010

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The World of Work and Social Welfare in the New
Europe

• 3. The Czech Republic and Slovenia The
  Corporativist Regime
• Czech and Slovene social protection was always
  highly valued
• The European social model is compatible with
  indigenous cultural and social history in these
  two countries

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The World of Work and Social Welfare in the New
Europe

• 3. The Czech Republic and Slovenia The
  Corporativist Regime
• Poverty rates and social inequalities in Slovenia
  and the Czech Republic are lower than in the EU
  27
• Life expectancy has dramatically improved in
  Slovenia recently

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The World of Work and Social Welfare in the New
Europe

• 3. The Czech Republic and Slovenia The
  Corporativist Regime
• Strong performance in Slovenia, Czech Republic,
  by the welfare system in reducing poverty.
  Equivalent to Scandinavian states. Czech Republic
  was on top of EU 27 in reducing poverty rates

22
The World of Work and Social Welfare in the New
Europe

• Impact of the financial and economic crisis since
  2008
• Has hit the New Europe countries hard,
  particularly those with low social spending
• Baltic states one of the harshest recessions in
  Europe. Double-digit fall of GDP
• High old age poverty, poor access to health care
• Baltic states sharp downturn in economic income
  for most groups

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The World of Work and Social Welfare in the New
Europe

• Hungary crisis less severe than in the Baltics.
  An IMF loan of US 16 billion
• Poland large recovery package
• Slovenia and the Czech Republic relatively well
  placed to protect the most vulnerable

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The World of Work and Social Welfare in the New
Europe

• Neoliberal model has prevailed in countries with
  little interest representation
• Welfare institutions were adjusted, but survived
  in countries accountable to electoral
  constraints. Particularly in Slovenia.
• The European social model of Slovenia, Czech
  Republic, currently also under threat