Visit of the World Bank team to work on social protection and pension reform issues

February 10, 2010

A World Bank team visited Minsk in the first week of February to hold a series of events covering social protection and pension reform issues. The experts shared knowledge and experience on pension reform around the world and its specifics in Belarus and discussed population aging and social insurance related issues.
"Belarus spends a relatively high share of GDP – 1.5% - on social benefits which is comparable with other countries in the region. This is sufficient to effectively provide assistance to low-income households. However, only 40% of GDP goes to the poorest 20% of the population while the desirable share is 60%", – said Katerina Petrina, WB Senior Social Protection Specialist/Specialist on Social Benefits Reform in Eastern Europe and CIS. Katerina Petrina believes that "efficiency of social benefits system in Belarus can be improved through redistribution of funds from the non-poor towards the poorest households and, in some cases, to mid-income families". She emphasized the need for increasing the number of targeted social benefits with respective reduction of the number of categorical programs.
Zoran Anušić, WB Senior Economist/Specialist on Pension Reform in Eastern Europe and CIS, who is one of the designers of the Croatian pension system, believes that the growing share of old-age population is one of the reasons why Belarus needs to review its pension system. "The proportion of population aged 65+ will be much higher by 2025 and the number of pensioners will thus increase", – said Zoran Anušić. "Belarus is already among the oldest countries in the world by relative share of elderly people and the increasing number of old-age people is a global trend. By 2050 the number of old-age people will grow by 100 times. Possible implications include aging labor force, insolvent pension systems, inadequate health care systems and unaffordable costs on social services", – said Aleksander Sidorenko, Senior Advisor of the European Center for Social Security and Surveys, at a workshop attended by over 70 officials representing the Government and various ministries.
Population is both aging and declining and, consequently, the number of pension system contributors is decreasing. Though "the Belarusian Government has implemented many programs related to demographic security of the country which, above all, have influenced birth rate because birth rate as such does not influence population growth, – noted Svetlana Shilova, Deputy Head of the Permanent Commission of the House of Representatives of Belarus’ National Assembly - the country is observing a syndrome of postponing childbirth which results in additional problems and increased health care spending".
Experts discussed one more demographic trend, notably that people tend to live longer. "Male life expectancy is relatively low but increasing while female life expectancy is relatively higher and continues to increase, and it is roughly the same in Belarus and countries of the region. In Belarus retirement age for men is 60 compared, for example, with 61 in Latvia and 62 in Moldova", – said Zoran Anušić. Retirement age for women is 55 in Belarus compared with 61 and 57 in Latvia and Moldova, respectively. "So, there is inconsistency here: women in Belarus retire 5 years earlier than men while female life expectancy is 8 years higher, – noted Zoran Anušić, – therefore, based on cross-country comparison it can be concluded that Belarus needs to increase retirement age for women".
This is not the only option for pension reform in Belarus which was outlined at the workshop. Pension reform is a long-term reform, its outcome will be seen in 10-15 years and the reform should take into consideration not only the population size but, also, its capacities, knowledge and health status.
Valentina Koroleva, Deputy Minister of Labour and Social Protection, summarized that "sound pension system capable to withstand demographic and financial shocks is a guideline for the future constituting a social development goal of our country".
A series of events were organized during a visit of the team led by Katerina Petrina to Belarus including a roundtable with the Association of Employers of the Republic of Belarus, a workshop for MPs and Government officials attended by international experts and a presentation for students of the Management Academy under the President of the Republic of Belarus.
The experts worked within the framework of a mission for strengthening social assistance programs supported by the Development Policy Loan. The World Bank’s loan granted to Belarus in December 2009 is intended to support reforms aimed at strengthening social assistance programs through their better targeting at the poor who may be particularly hard-hit by the impact of the global economic and financial crisis on Belarus’ economy.