Transformation of the Public Sector
                                    Changes in the Social Policy

                                         Katarina Poluncova

                                       katarina@econ.muni.cz

                                    Department of Public Economy

                                      Social Policy components

n   social security policy

n   healthcare policy

n   education policy

n   housing policy

n   family policy

n   employment policy

                                 The objectives of Social Policy   

I. "care objectives"

n    dimension of risks

    n   poverty relief

    n   insurance

    n   income smoothing

n    dimension of equality

    n   vertical equity

    n   horizontal equity

n    social integration dimension

    n   dignity

    n   social solidarity



II. "instrumental" objectives

n    administrative feasibility

  n    intelligibility

  n    absence of abuse and fraud

n    efficiency dimension

  n    macro efficiency

  n    micro efficiency

  n    incentives

                     The Development of the Social Policy in the Czech Republic

We should take into account following factors:

n    the political environment

n    the economic environment

n    the social environment

n    cultural factors

n    diffusion of cultural and institutional patterns from abroad

n    influence of strong, politically active personalities inside and outside the system

                                   Communistic Period- till 1989

  u   social policy centralized and bureaucratized      ineffective economy

  u   full  compulsory employment

  u   state paternalism        citizens became the passive recipients of social services

  u   publicly providing services free of charge

  u   existence of "extra services" for the privileged population

  u   many subsidies prices of energies and goods

  u   social security schemes financed from the state budget- various types of payments made this
  system unclear and economically inefficient.

  

                                  Transformation period- 3 parts:

n     Emergency period- December 1989-1992

    n   replacing state paternalism

    n   objective- protect population against all risks- development of the social safety net

    n   active labour market policy

    n   implementation of social benefits

    n   new institutions and institutes

n     Institutional building 1992-1997

    n   neo-liberal approach

    n   pension supplementary insurance act

    n   state social support act- implemetation of income-tested benefits

n     Adjustment within existing institutions 1998- present

    n   social democratic government- "making work pay"

                                       Social security policy

Build on 3 tiers:

n    social insurance system

  n    pension system

  n    sickness system

  n    state employment policy system

n    state social support system

  n    income tested benefits

  n    benefits provided without regard to income

n    social assistance system- for people who find themselves in:

  n    material need

  n    social need

                            Contributions to the social insurance scheme

                                      Pension system in the CR

2 tiers:

n    basic obligatory system of pension insurance

  n    system is uniform, based on social solidarity with relatively high redistribution of income,
  current financing- PAYG

  n    allowances replacing income in case of old age, disablement and death

  n    state guarantees the system

  n    retirement age since 31^st of December 2012 will be 63 for men and 59-63 for women

n    voluntary additional pension insurance with a state contribution



                                   The tree of life of CR in 1998

                                The tree of life in 2030- prognosis

                                Age structure of population in 2001

                       The problem of PAYG financed pension system in the CR

Dependence rate indicator



                         Pensions as a proportion of the average gross wage

                               Supplementary pension insurance scheme

                                     Sickness insurance scheme

4 benefits:

n   sickness benefit

n   family member care benefit

n   pregnancy and compensation benefit

n   cash maternity benefit

                                        State social support

n    income tested benefits:

    n   child allowance

    n   social allowance

    n   housing benefit

    n   transport benefit (canceled since September 2004)

n    benefits provided without regard to income (flat-rate benefits):

    n   parental allowance

    n   maintenance contribution

    n   benefits for foster-parent care

    n   birth allowance

    n   burial allowance

                                         Social assistance

n   residual system for the people who fall into difficult social situation, 2 types:

  u  material need

  u  social need

n   state guarantees living standard at the minimum level- socially accepted poverty limit

  

                     The development of the minimum level in the Czech Republic

                                    Child allowance calculation

                                    Development of minimum wage

                                    The unemployment since 1995

                Public expenditures in active labour market policy (in thousands Kč)