How to mobilise political support and public opinion for reform ? Panel discussionHow to mobilise political support and public opinion for reform ?
The political economy of pension reform
Agnieszka Cho-Domiczak
*
Description
Commitment-building
Objective: to work out a single proposal for the pension reform
Characteristics: extensive bargaining, debate and negotiations.
Crucial: commitment, expressed by politicians, agreement among experts.
Coalition building
Implementation
*
International experience
Fiscal deficit
‘The deficit also acts as a driving force to proceed with the planned reforms and even to take decisions that are not always popular’
‘The reform debate was triggered by the huge deficit. So we must expect only a parametric reform in the PAYG system. A private system is not being considered. There is consensus in the society against private pension plans. So a reform of this kind is politically infeasible.’
‘It is often used as an excuse’
*
Explain reasons for the reform and find allies
Political commitment is crucial
cross-party consensus is an asset
Well-communicated need for and reasons helps to achieve political support
‘The fiscal deficit acts as a driving force to proceed with the planned reforms and even to take decisions that are not always popular’
*
Role of political consensus
Best reform outcomes in longer terms achieved in countries that have build a cross-party political consensus:
In Sweden: a reform coalition was build, covering practically all political parties represented in the Parliament
In Poland:
successive governments follow implementation of the same reform
*
Economic Motives for reform
Source: A.Chlon/M.Mora, Commitment and Consensus in Pension Reform
1,09
1,18
1,53
1,68
2,88
0,0
0,5
1,0
1,5
2,0
2,5
3,0
financial
sustainability
Agreement among experts
12
19
2
7
11
0
5
10
15
20
agreement
disagreement
positive
economics
Definitions of pension reform
Role of actors
*
POLISH WAY OF DIALAGUE
GOVERNMENT
TRADE
UNIONS
FINANCIAL
INSTUTUTIONS
EMPLOYERS
having a core group of friendly journalists is an asset
have a consistent message
Veto and proposal actors
ensure co-operation
*
The role of society
‘Society reacted very intensively. In general, the media, trade unions, and many of professional organisations were strongly opposed to the proposals for radical and substantial changes in the current pension system. The mass media and government regularly presented and/or read the opinion surveys’
‘The civic society played no dominant role. Generally, the main message of the campaign was the necessity to close the deficit of the old system, as well as the opinion and the intern investigation to convince the other political actors about the reform necessity’
Source: A.Chlon/M.Mora, Commitment and Consensus in Pension Reform
*
Social partnership is used in two aspects:
1. The responsibility for the unpopular part of the reform is shared;
2. Experts from union and employer organisations are used. This certainly has its price – compromises have to be made with respect to the radical nature of the reform and the pace of transition.
The tripartite system did influence the reform process. The unions were strongly opposed to the introduction of the mandatory second pillar. They were also strongly opposed to a larger parametric reform of the PAYG system, particularly in the increase of statutory retirement age
Source: A.Chlon/M.Mora, Commitment and Consensus in Pension Reform
*
Main goals: to promote and to educate
“To convince the public of the advantages of the new Pension system.
To provide thorough information on the essence of the new Pension system in a popular language.
To provide thorough information, through seminars and workshops, and educate journalists who would then disseminate the reformers’ message.”
Phases: commitment building and implementation
Most popular media used, but also other initiatives
*
forum for experts’ discussion
Risk of reversing some of the changes (Poland)
Contribution levels and transition costs
Gradual increase of contribution may lead to slower transition (Hungary)
Portfolio structure and investment abroad
Preferences for domestic investments (Poland)
*
Huge informative role at the beginning of 1999
Continuing coverage in 2000
Media and pension reform
Articles with selected keywords
Media interest in ZUS was increasing, peaking in 1999, following the pension reform development
Indexation caused the largest interest in 1995-96, when the rules of indexation were significantly changed
Chart1
1994
1994
1995
1995
1996
1996
1997
1997
1998
1998
1999
1999
GAZETA WYBORCZA
12
17
60
45
13
23
25
9
204
6
0
0
0
0
1
64
142
96
303
12
22
40
62
6
38
83
121
12
1
6
3
11
12
Pracownicze programy emerytalne
0
9
2
1
11
GAZETA WYBORCZA
12
17
60
45
13
23
25
9
204
6
0
0
0
0
1
64
142
96
303
12
22
40
62
6
38
83
121
12
1
6
3
11
12
Pracownicze programy emerytalne
0
9
2
1
11
internal agreement and political will
external ‘push’
Coalition building
society - active and passive
role of public information
Postponing legislative process can become risky
Country