Poland: The Social Safety Net During the Transition

Output Decline and Government Expenditures in European Transition Economies

“…Even though, during 1989-92, unemployment went from virtually zero to double digits in both Hungary and Poland, increases in unemployment benefit payments were surpassed by increases in pension payments, largely caused by a retirement "boom." Poland, for example, registered a 36 percent increase in old-age (including early retirement) pensions during the December 1989 to December 1993 time period, and a somewhat smaller, but still pronounced, increase in disability pensions (Maret and Schwartz (1993)). The public's expectations of universality die hard: even the government of former Czechoslovakia, probably the most outspokenly market-oriented government of all European transition economies, provided universal income support to compensate for the removal of retail subsidies on food in 1990 (Schwartz, Stone, and van der Willigen (1994)).…”

Pensions, Price Shocks, and Macroeconomic Stability in Transition Economies: Illustrations From Belarus

“…In many countries of eastern Europe and the former Soviet Union, pensioners form a relatively large and vulnerable group of the population, with pensions fixed in nominal terms. Attempts to "protect" this group have included a revaluation of benefits for those who have retired in the past, as well as the introduction of indexation procedures [See, e.g., Kopits (1992), Ahmad (1992), Ahmad and Schneider (1993), and Maret and Schwartz (1993)]. Full indexation of benefits, however, may have a deleterious effect on pension fund balances (with unchanged contribution rates and declining compliance).…”

“…To underscore the importance of this issue for those FSU economies that have not yet undergone a successful stabilization, the experience of Poland is highly relevant. Briefly, in Poland legislation enacted in October 1991 specified that pensions be calculated on the basis of the average monthly wage in the economy in the previous quarter (Maret and Schwartz, 1993). Inflation accelerated from about 250 percent in 1989 to 585 percent in 1990, before slowing down to 70.3 percent in 1991 and 49 percent in 1992.…”