Cover Image


View/Hide Left Panel

will follow suit, but only as they complete both sides of this policy equation. Thus social-sector reforms will be critical. Most countries in Africa, meanwhile, with a few exceptions, have yet to implement the macroeconomic reforms that can make social-sector reforms economically and politically possible.


The record of safety nets and social policy reform in the developing world is relevant for the transition economies, although the contexts are quite different. First, the macrotransformations in the transition economies are necessarily far more extensive than are the adjustments in developing countries. In many cases entire work forces must be deindustrialized. Existing social welfare systems, many of which are run by public enterprises rather than the central government, are fiscally unsustainable and are not designed to cope with poverty and unemployment resulting from the transition to the market. This obviously makes it more difficult to provide effective safety nets. One potential approach for safety net policies in such a context is to concentrate specific programs on pockets of high unemployment, where social funds or public works could alleviate negative welfare effects, and at the same time to target the universal system of social welfare benefits, such as monetary allowances, to particularly vulnerable groups, such as children in large families. Under the current structure, these benefits are universally provided, but because of fiscal constraints, their real value is marginal and eroding further. Targeting these benefits to vulnerable groups would allow governments to raise the benefit levels enough to reduce poverty without adding to the fiscal burden.

Second, the politics of the process are more complex in the transition economies: there are higher expectations of the state; reform has stalled in many cases; and the concerns of some politically influential groups, such as pensioners, dominate the public debate, while very little attention is paid to the situation of even needier and more vulnerable groups, such as the children of the working poor. The public debate on social welfare in the transition economies has mistakenly focused on two issues—the plight of pensioners and the pace of reform—while excluding several equally critical concerns. Pensioners have fared worse than the average in some countries (most notably the countries of the former Soviet Union) and better than the average in others (the Eastern European countries). In general, not all pensioners are vulnerable, and it is elderly pensioners living alone who are at risk. In contrast, children in large families, most of which have at least one parent working, are the group most likely to be poor in all the transition economies (Milanovic, 1997; Braithwaite, 1995).

The debate about rapid versus gradual reform has focused on the high

The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement