For your assigned country collect the following Data/other information:
- Social Security Expenditures: A historical perspective and a graph for it.
The first laws regarding social welfare in Poland were passed in the 18th century that gave each citizen the right to social security. In the late 1980s, the country spent almost 20% of its Gross Domestic Product (GDP) on welfare. After the fall of communism in 1990 and the transition of the People’s Republic of Poland to the current Third Polish Republic, the social security spending in Poland rose. This led to the growth of the welfare state because of large public expectations on social need. The OECD data collected from 2007 to 2012 indicated an increase in spending-to-GDP ratios because of the increase in public spending to address the higher need for social support. The global economic crisis created a major impact towards the share of economic resources in Poland. In the year 2013, Poland experienced a high expenditure on social security because of the emergence of the crisis leading to slow GDP growth. The high expenditure aimed at addressing issues social assistance benefits and unemployment. The above two factors contributed to the increased public social to GDP ratios (Müller, Ryll & Wagener, 2009, pp. 175-176). As seen in figure 1, the real public social spending keeps on increasing with a significance increase in public social spending as the real GDP falls.
Figure 1: Social security expenditure in Poland between 2007 and 2012(Source: OECD 2012)
- Social Security Payment system (Pay-as-you go or fully funded or a mixture), describe
Security payment systems have financing difficulties that every county as a nation must address. Countries use three ways in dealing with pension system problems. In the European Union, countries have adopted continuous subsidies from general revenues. In order to implement the above move, Poland has been making an effort to replace pay-as-you-go benefit system with fully funded system. Beneficiaries in Poland can either enjoy Pay-as-you go payment system, fully funded payment system, or a combination of both social security payment systems. Fully funded social security payment system is the most recommended but has the following two main flaws. Firstly, there is a lack of risk diversification in this system, and secondly it has difficulties to implement in countries with a sizable pay-as-you-go system. With the above regard, Poland government proposed that social security beneficiaries be paid using a mixture of both methods in order to avoid inefficiencies. In addition, the country diversifies future retirement savings. High productivity and capital returns from industries that facilitate pay-as-you-go and fully funded systems of social security payments fund the old age pensions.
- Data for Dependency Ratio (demographic data): changes over time. Show the data on a graph and describe the trend.
Figure 2: Dependency ratio (Source: OECD2012)
Age dependency ratio is the ratio of young dependent people between 0 and 15 years to the working age population, older than 15 years. Figure 2 shows data on total dependency ratio for between populations aged 0-15 years respectively between 2002 and 2012 in Poland. As at 2010, the age dependency ratio was about 40% and over the last 10 years, the value has fluctuated between 38% and 45%. The data shows that the proportion of dependant people per 100 working-age population is almost half. The value decreased during the year 2008 and 2010 because of the financial crisis experienced in the region (Müller, Ryll & Wagener, 2009, pp 122-123).
- Data for Income Distribution among the Aged Population (the beneficiaries’)
Figure 3: Income distribution among the aged population in Poland (Source: OECD2011)
In the late 1989, Poland experienced a sudden economic transformation that led to a change in income distribution among the aged populations. The level of income inequalities in Poland is slightly above the average. The country was ranked 11th position among the countries with the highest amount of disposable income inequalities. Aged population accounts for a major percentage of the total income distribution in Poland. As seen in figure 3, aged income accounts for more than 30% of the total GDP (SOECD, 2012).
- Describe the Structure of Social Security Tax: Employers and Employees contributions. Need also historical data for this.
The share of social security expenditure has been increasing in Poland and other OECD countries. The main causes of this rise are unemployment, high state pensions, and rising cost of healthcare and welfare services. Poland follows a progressive individual income tax process. The higher the income levels the higher the rate of tax payable. Presently, the individual rate id between 18% and 32% whereby individuals can choose between paying a flat rate of 19% on business income with no allowances, or get the tax deducted directly from their income (Świa̜tkowski, 2013). Figure 4 shows the amount of labor supplied by an employee at various levels of contractual wage and the amount of labor demanded by the employer. From figure 4 (a), the introduction of employee’s tax leads to higher contractual wage and employment while in (b), the introduction of employer tax leads to lower contractual wage and employment rate reduces.
(a) (b)
Figure 4: Graph showing the relationship between employer and employee’s tax contribution in Poland
- Collect Data for the Structure of Social Security Benefits (a measure such as the GRR) and show the re-distributional aspect of it (if present) on a graph
The social security benefits structure regardless of their areas of work covers most Polish employees. The social security reforms introduced in 1999 came up with a new general pension system that allowed employees to chose between participating in the new pillar or both the new and the old pillar. The types of social security benefits found in Poland are; Old age pension insurance, disability/survivors pension/funeral grants, work injury, unemployment, guarantees fund, health insurance, and sickness benefits (Świa̜tkowski, 2013).
The retirement benefit law passed in 2013 ruled that the retirement age for male workers is 65 years and for female workers is 60 years. Every retired person is eligible for retirement benefits such as pensions according to the following rules. Firstly, people born after December 31, 1948 and are insured are eligible for old age pension after reaching the retirement above mentioned age. Additionally, insured persons born after January 1, 1949 are eligible for old age pension if they are 60 and 65 years old for female and male employees respectively. The employee must have been contributed to social security benefits from the age of 25 years for male and 20 years for female. Women with 30 years of contribution are entitled to a full compensation at the age of 55. In 2009, the government of Poland passed the capital pension and the life capital pension. The following acts regulate the benefits paid to persons born after January 1, 1949 providing rules for pension for these persons and employers entitled to pay such pensions (Świa̜tkowski, 2013, pp. 40-45).
- Facts and data for Benefits for Family Relations: Spouses/domestic partners Benefits, Dependent Children’s Benefit, Widowers’ Benefits, etc.
Family members are also entitled to social security benefits. The State budget funds family benefits, and the eligibility depends on the financial situation of the concerned family. The family benefits available in Poland are; family allowance and allowance supplements, single payment birth grant, and attendance benefits.
The spouse or domestic partner is entitled to the benefits accumulated by a husband or wife in the work period. A person has the right to property of the deceased spouse and the state grants the insurer or bank permission to issue the spouse with relevant details of compensation. In addition, a supplement in respect to bringing up a child as a single parent is granted to the living spouse, or the actual guardian of the children. On the other hand, dependent children enjoy family benefits from social security funds. A dependent child enjoys family benefits if he or she is the actual child of the parents, or is adopted and his or her name is registered under the person contributing the benefits. The government reserves the right to the family benefits and benefits paid upon request by any of the three parties above (Świa̜tkowski, 2013, pp. 32-33).
- Unemployment Insurance Benefits Program.
In Poland, unemployed people also enjoy an insurance benefit program that helps them receive means-tested unemployment insurance for12 months. The condition for receipt under the unemployment insurance act requires that the claimant be registered as an unemployed person and ready to perform full-time duties, and aged from 18 to retirement age. In addition,a person must not possess an agricultural land of more than 2 hectares. Calculations on gross benefits are done at a flat rate of 36% of the national average wage and fully indexed on a quarterly basis. The benefits are taxable by the government. The benefits are paid six days per week for 12 months after a one-day processing period.
- Health Care Coverage for the eligible recipients and their dependents.
Statistical data from OECD shows that about 13.5 per cent of a Polish population is over the age of 65 years and 3.2 per cent over the age of 80 years. About 1 per cent of aged people and other eligible individuals receive health care coverage each year since 2008. The country mostly relies on traditional provisions of informal care offered to families. The health sector conducts the health care coverage. Three types of benefits are available for eligible recipients and their families. These are nursing and care facilities, care and treatment facilities, and palliative care homes. The health sector makes a standard assessment in order to determine the eligibility of an individual to receive health care coverage. Persons with less than 40 percent of independence on Barthel index are eligible for Health care coverage for the duration of 6 months. Disabled individuals over 16 years of age are also eligible only if their disability was certified before they attained 21 years of age. The state social insurance caters for nursing supplements for eligible people and their dependants, especially for people over the age of 75 or those who cannot leave independently (OECD, 2011).
- Social Security Reforms: pending or implemented.
The government of Poland has introduced social security reforms, with some reforms implemented while others still pending. The first modification concerns the social insurance old-age pensions. The proposed changes required the increment of the retirement age and longer contribution periods introduced. Secondly, the reform on lower replacement rates for short-term benefits was introduced, especially for maternity and sickness, the reform was implemented. In addition, the reform on replacing general housing with housing allowances to target low-income households was proposed but still pending. Finally, a reform requiring personal health benefits to be integrated with new health insurance systems was proposed. The following move aimed at ensuring public health services were managed by the government, but it has not been implemented yet (Müller, Ryll & Wagener, 2009, p. 53).
- Problems and issues with the system.
The social security system of Poland has many problems and issues that require an immediate response from the concerned parties because of many problems received from complainants. To start with, employees complain of high rates of taxes whereas they receive little salaries. From question 5, the amount of income offered to an employee by an employer depends on the rate of taxation of that specific employer. Employees have been calling upon the government to introduce policies that prevent employers from paying taxes using their salaries. On the other hand, the pension system has an issue because people wait for a long time before receiving their grants. The problem comes because of lack of proper record keeping, and inefficient of some security scheme employees (Świa̜tkowski, 2013).
References
Müller, K., Ryll, A., & Wagener, H.-J. (2009). Transformation of social security: Pensions in
Central-Eastern Europe. Heidelberg: Physica-Verlag.
OECD. (2012). Social Spending during the crisis: Social Expenditure Data Update 2012. OECD
OECD (2011), Help Wanted? Providing and Paying for Long-Term Care, Paris. Retrieved from:
www.oecd.org/health/longtermcare
Świa̜tkowski, A. (2010). Social security law in Poland. Alphen an den Rijn: Kluwer Law
International.
