The World of Work and Social
Welfare in the New Europe
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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?
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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1. Neoliberal regimes: Estonia, Latvia,
Lithuania, later Slovakia
Low union membership, weak collective
bargaining
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Huge share of working poor
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Huge social inclusion needs
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Relative poverty rates increased between
2000-2007
The World of Work and Social
Welfare in the New Europe
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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
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High income inequalities
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High level of housing deprivation
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Largest prison population in the EU
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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1. Neoliberal regimes: Estonia, Latvia,
Lithuania, later Slovakia
Neoliberal states became highly vulnerable
to the post 2008 economic crisis
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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2. „Dual regimes“: Poland, Hungary
Hungary's fiscal policy has been
expansionary, rising fiscal indebtedness
The World of Work and Social
Welfare in the New Europe
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2. „Dual regimes“: Poland, Hungary
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Poland: incongruous capitalist systém:
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Heavily regulated products market, large
public sector, deregulated labour market,
strong protectionism and high level of
openness of the Polish economy
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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2. „Dual regimes“: Poland, Hungary
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Hungary:
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Welfare state slightly expanded in 19982007
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Welfare state oriented towards pensioners
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High child poverty
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Similar structural problems to Poland
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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
The World of Work and Social
Welfare in the New Europe
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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