Pension Reforms in Poland since Transition – From Path Departure to Path Dependence
| DOI | 10.1177/138826270700900402 |
| Date | 01 December 2007 |
| Author | Paula Aleksandrowicz |
| Published date | 01 December 2007 |
| Subject Matter | Article |
European Jour nal of Social Secu rity, Volume 9 (2007), No. 4 323
PENSION REFORMS IN POLAND
SINCE TRANSITION FROM PATH
DEPARTURE TO PATH DEPENDENCE
P A*
Abstract
Poland, traditionally a country with a Bismarckian pension s ystem, implemented
a reform in 1999 that transformed it into a multi-pillar system. However, som e
features of the new pension system are characterised by path dependent development.
Privileges for cert ain beneciaries, like a lower retirement age, were abolished in the
new pension s ystem, but were subsequently restored in part. is avoided the social
and political costs that woul d have arisen if these privileges h ad been completely
abolished. i s paper analyses the process and outcome of the 1999 pension reform
in Poland from the pe rspective of path d ependence. It describes the political and
economic framework in which the reforms took place, identies the organi sed
interests that were involved and ar gues that, while the introduction of the second
and third pillar can be under stood as path shaping, the change of the PAYG pillar is
an incomplete path departure .
Keywords: p ension reform; old-age pension; early retirement; retirement age; path
dependence; path depart ure; Poland
* Research Assoc iate a t t he C entre on Li felong Learning and Inst itutional Development, Jacobs
University Bremen, Campus Ring 1, D-28759 Bremen, Germany; tel: +49 (0)421 200 4705, fax:
+49 (0)421 200 4793, e-mail: p.aleksa ndrowicz@jacobs-u niversity.de or P_A leksandrowicz@
hotmail.com . An earlier version of this paper was prese nted at the 4th Annual ESPAnet Conference,
held in Bremen on 21–23 September 200 6.
Paula Aleks androwicz
324 Intersentia
1. OUTLINE OF THE PATH DEPENDENCE CONCEPT AND
THE STRUCTURE OF THE PAPER
e pension systems of Central and Eas tern European cou ntries (CEEC) have
undergone far-reaching cha nges in recent years. ese cha nges, which in some case s
amount to paradigmatic shi s, pose a challenge to the concept of path dependence,
which is f requently employed to explain pension reforms (for example by Myles a nd
Pierson 2001; Müller 2004; Horstman n and Schmähl 2002).
e concept of path dependence argues that his tory matters. us, in the political
arena, the pat h along which a certain institution has developed denes the tracks
along which it may evolve in the future a nd accounts for its stability. Instit utional
change is pre-determined bec ause of the positive feedback and the increasing returns
enjoyed when following the chosen path: “each step along a path produces consequences
which make that path more attractive in the next round and raises the costs of shi ing
to an alternative path” (Myles and Pierson 2001: 312). e costs of shiing to a pre-
funded scheme are e specially high for mature PAYG pension schemes due to the
double payment problem. Myles and Pierson (2001) use path dependence to refute the
neo-classical belief that institutions head in the direction of a ‘ best model’, which, in
the realm of the pension reform, would be t he World Bank model. Myles and Pierson
(2001: 330) described the World Bank’s expectation that its pension reform proposals
would be followed 100 per cent as “utopianism”. e authors did not rule out the
possibility of system ic changes, but stated that “particular departures are available
only under particular con ditions inherited from the past” (ibid.: 306).
Müller (2004) cha llenged the assertion that pension systems are hard to reform
taking Lat in America and CEEC, which thorough ly re-modelled their PAYG pension
schemes, as examples. e CEEC were inspired in th is endeavour to a la rge extent
by World Bank models. In Müller’s (2004 : 386) opinion, “the Latin American an d
East Europe an pension privati sations indicate th at, contrary to conventional wisdom
in social policy research, a radical paradigm shi in the area of old age sec urity can be
politically feasible”. However, the less radical reforms in the CEEC, which are attributed
to a larger implicit pension debt, seem to conr m the path dependence thesis.
Nielsen, Jessop and Hausner (1995: 8) introduced another concept to the analysis
of transformations i n the CEEC: “path-dependent path-shaping”. Nielsen et al. take a
middle position and argue t hat: “Whereas th e path-dependency a pproach serves well
to highlight certain crucia l features of th e state socialist past, the key features of state
socialist p resent would seem to be well captured through the notion of ‘path-shaping’”
(ibid.: 8). is paper deploys “path departure” as a ‘so’ concept that describes changes
within former trajectories, and “path shaping” as a ‘hard’ concept which describes the
situation when a new path is struck .
To continue reading
Request your trial