Belarus Pension System Needs an Unpopular Reform
Published: 08 June 2012
In his annual address Lukashenka outlined the essence of his relationship with the official unions. Stalin would call the official Belarus trade unions driving belts of his policies. But the form of expression does not change the reality - in Belarus, the so-called trade unions constitute a specific substructure of the state apparatus.
Lukashenka, as the official press is not particularly sensitive to political niceties, proudly reported that the Chairman Leanid Kozik of the Federation of Trade Unions of Belarus performs his orders in the organisation entrusted to him. Therefore, all ideological, political and practical impact by the official trade unions should be considered to be an adapted version of higher-up state policy. Pension reform is just one example of it.
Sometimes these ideas are presented almost as a result of discussions between trade union bosses and employers. In particular, last October Deputy Prime Minister Anatoly Tozik spoke in favour of a pension reform: "I can personally express my opinion. I think that we should think about raising the retirement age, so that people would be interested in retiring later, because the pension would be much higher. "
Interestingly, the deputy prime minister spoke a month later his original statement at a meeting with Lukashenka and stated that the retirement age would not increase.
This looks like a democratic pluralism. The president with the trade unions clashed in the loop of outright populism, and the government is concerned about the real state of affairs. After all, Belarusian society faces real problems in light of its aging, shrinking population, and declining birth rates. The number of elderly grows, that is to say people collecting pensions, at the expense of a reduction in the proportion of working-age population.
Belarusian Population is Declining and Aging
Perhaps for these reasons, Anatoly Tozik spoke about the urgent reform of the pension system - the country already has 2.5 million pensioners and 4.5 million working people, and this proportion will only get worse.
The active nature of the demographic and social policy of Belarusian authorities is constantly emphasised by state propaganda. On the eve of the most important political campaigns they somehow always seem to manage to find many positives. In reality this policy does not offer solutions but rather represents the inadequate attempts to mitigate the negative effects of the real demographic and social processes.
Several years ago, when those born in the mid 1980s reached reproductive age many began to talk about the baby-boom. And now officials express concern about the low numbers of students and pupils in schools. Just one year ago there was a surplus. Similar to the demographic statistics, the process of developing a rather unpretentious.
A natural decline in population because of the excess of deaths over births continues to this day for the nineteenth year in a row.
The Government Needs to Reform
Those currently working will have to be supported by today's youth, whose numbers have been steadily declining.
Something must really be done, because the content of the growing army of retirees is daunting for workers. In the pension system of Belarus, current pension contributions go to the current pensioners. Those currently working will have to be supported by today's youth, whose numbers have been steadily declining. Today men in Belarus retire at 60 and women at 55.
The need to increase the retirement becomes evident. Most democratic states take measures to alleviate this problem. Of course, such measures are unpopular, and they are introduced very slowly. For example, increasing the retirement age takes place over a long period of time and increases for several months a year. In particular, this has been done in Poland and Latvia.
The fewer people retire, the more people work, the higher are the pensions in the long-run. But at any given moment popular dissatisfaction with the reform can rise to dizzying heights. If democratic procedures actually work and the political elite is changing, these reforms are more likely to be implemented. If the procedures do not work, as in Belarus, the government can not dare openly undertake such unpopular measures.
Therefore, the "fiscal intentions" are clothed in verbal husks and are implemented in a rather contradictory way. A good example is Decree No 136 "On measures to improve pensions to citizens" which established a scheme promoting late retirement. It is likely that the documents would be of considerable interest of pensioners, who are able and willing to continue working. They can abandon their pension and continue to work for five years, so that to get a much higher pension later.
The Gender Gap
Obviously, the decree is addressed primarily to women who have a greater life expectancy. Those who agree to play by the new rules, in fact, will retire when they reach the age of 60. If the experiment is successful, it will be extended to other categories.
about two fifths of all the men we did not reach the age of 60. They are NOT using the pension system, but funding it in the course of their entire working life
This is the logic. However, it should be noted that about two fifths of all the men did not reach the age of 60. They are NOT using the pension system, but funding it in the course of their entire working life. Our state does not have a very delicate attitude to individual life, but here we are talking about reversing people’s pockets. Thus, simply increasing the retirement age can not be a problem to solve. In many ways, this measure can be considered the abolition of the pension system at all.
Second, everyone knows that after one reaches 40 it is very difficult to find a job in Belarus in accordance with one’s profession, and after 50 – it is nearly impossible. Although the legislation prohibits age discrimination, nearly all employment ads contain age restrictions. Even those which the public employment agencies disseminate.
Legal nihilism in Belarus beats the rule of law. For this reason, increasing the retirement age is associated with risk of increased long-term unemployment among the elderly.
Kanstantsin Skuratovich, the Agency of Political Expertise. This article originally appeared in Russian on Nashe Mnenie web site and is a part of a new collaborative arrangement with the Agency of Political Expertise.