Poland: The Social Safety Net During the Transition

IMF Working Papers, May 1, 1993

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The brunt of the reform-induced increase in Polish social expenditures has been borne by social insurance arrangements (mainly pensions and unemployment compensation) rather than by social assistance schemes targeted to the poor or more temporary social safety net schemes.
The shift toward social insurance is largely due to ease of access to social security and its more attractive benefit structure.
Much of recent social expenditure reform had an ad-hoc nature and was driven by the need to alleviate looming financial distress.
Current reform needs are illustrated by using unemployment benefits and pensions as examples.

A major policy challenge is to avoid a further burdening of social security by needs that should be addressed by:
- basic income support and emergency assistance policies, or
- general transfers (e.g., family allowances).
Reform priority is to realign instruments so that social insurance is reserved for contributory risks while targeted assistance and temporary safety nets address poverty and short-term shocks.

Emphasis on the distribution of increased social expenditures across:
- pension spending and pension system adjustments,
- unemployment benefits and unemployment compensation,
- social assistance spending and general transfers.
Illustrative use of unemployment benefits and pensions to demonstrate current reform needs.

Subject: Aging, Expenditure, Income, Labor, Pension spending, Pensions, Population and demographics, Social assistance spending, Unemployment, Unemployment benefits
Keywords: Aging, dependency ratio, early retirement, Eastern Europe, gross income, labor market, occupational pension, Pension spending, pension system, Pensions, retirement age, Social assistance spending, social security, Unemployment benefits, unemployment compensation, Western Europe, WP