The Welfare System

Poland Table of Contents

The communist central planning system made a wide variety of payments to subsidize citizens in certain categories and encourage or discourage the activities of citizens in other categories. By the mid-1980s, the planning labyrinth created by such payments was such a fiscal burden that severe cuts were made in some payments. Like the health system, Poland's welfare system underwent substantial decentralization and restructuring, and all parts of the system suffered from limited funding in the transition period that began in 1989. Although a higher percentage of the population needed welfare services because of high unemployment in that period, the need to reduce the government's budget deficit caused drastic cuts in many services. Eventual reversal of this trend depends upon the speed with which Poland's economy rebounds from its transition crisis and upon the efficiency of the new welfare bureaucracies.

Structural Change

Until 1989 social policy making was centralized in the Planning Commission of the Council of Ministers. The postcommunist reforms placed social policy responsibility in the Ministry of Labor and Social Policy and the Ministry of Health and Welfare, with the aim of liberating social policy from its communist-era linkage with economic policy considerations. The social welfare policy of the postcommunist governments was planned in two phases. The first stage included short-term measures to offset the income losses of certain groups resulting from government antiinflation policy. These measures varied from the setting up of soup kitchens and partial payment of heating bills to reorganization of the social assistance system. The second, long-term policy aims at rebuilding the institutions of the system to conform with the future market economy envisioned by planners. Communal and regional agencies are to assume previously centralized functions, and authority is to be shared with private social agencies and charities.

Welfare Benefits

In the late 1980s, Poland spent about 22 percent of its gross national product (GNP) on social benefits in the form of monetary payments or services. At that time, over 5 million Poles received retirement or disability pensions, and about 100,000 were added yearly in the latter category. In the years of labor shortage, government incentives encouraged pensioners to continue to work past retirement age (sixty-five for men, sixty for women). In the early 1980s, the number of invalids receiving benefits increased from 2.5 million to 3.6 million, straining the welfare system. The communist system also paid benefits to single mothers with preschool children, sickness benefits for workers, income supplements and nonrepayable loans to the poor, and education grants to nearly 75 percent of students, in addition to providing nominally free health care, cultural and physical education facilities. By the mid-1980s, however, all the free, state-funded services were being considered for privatization, fees, or rationing.

In the first postcommunist years, social support programs for the unemployed underwent important changes. The initial postcommunist policy guaranteed unemployment benefits and retraining regardless of the reason for a person's unemployed status. Benefits were to be paid indefinitely and were based on previous pay or on the national minimum wage for those who had never worked. Benefits included old-age, disability, and survivors' pensions and compensation for work injuries, sickness, maternity, and family-related expenses. Although the system covered both industry and agriculture, enterprises in the industrial sector paid much higher surcharges (usually 45 percent of the worker's salary) to the benefit fund than did either the agriculture or housing sectors.

In 1991 and early 1992, a series of laws drastically reduced the coverage of the unemployment program. Under the modified policies, benefits no longer went to those who had never been employed; a twelve-month limit was placed on all payments; and benefit levels were lowered by pegging them to income the previous quarter rather than to the last salary received. This reform immediately disqualified 27 percent of previous beneficiaries, and that percentage was expected to rise in ensuing years.

In 1992 the Warsaw welfare office divided its benefit payments among 4,500 recipients of permanent benefits, 8,500 recipients of temporary benefits, and 25,500 recipients of housing assistance. The public assistance law entitled one person per family to permanent benefits at the official minimum subsistence level. Throughout Poland, the demand for welfare assistance grew steadily between 1990 and 1992, well beyond the financial and organizational capabilities of the state system. The shortage affected a wide range of social categories: the homeless and unemployed, AIDS victims, families of alcoholics, and the elderly. According to a 1991 study, 18 percent of Polish children lived in poverty. Thus, the postcommunist conversion of a state-sponsored and state-controlled economy reverberated strongly in the "social security" that communism had promised but very often failed to deliver in the 1980s.

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Source: U.S. Library of Congress