Comparative Analysis of Determinants and Effects of Social Protection Spending in the New EU Member States

Abstract

Differences between the welfare states within the European Union are a perennial topic. The recent enlargement brought the new member states into the picture. The paper looks at differences between the new and the old member states as groups as well as within the new member state group. It focuses social protection expenditure and poverty profile, looking in detail at three dimensions of social spending in the new member states – the overall size of the social protection expenditure, its impact on poverty and their mutual relationship. As a result of this analysis, it is clear that the welfare states of the EU-10 countries are much smaller than those in the western half of the continent and generally demonstrate much stronger emphasis on redistribution to prevent poverty. As a result, they achieve roughly the same redistributive result at the lower end of the income ladder with much smaller resources. However, the paper also shows that much of this effect is related to redistributive pensions and that this mechanism is threatened in several countries by a combination of recently introduced private pillars and changing demographics. At the same time, the paper argues that while the new member states share some common characteristics, particularly when compared to the welfare states of Western Europe, their mutual differences are also very important and equal to those between, for example, conservative continental and liberal states in the traditional welfare state typologies. The Czech Republic, Hungary, Poland and Slovenia on one hand, and the Baltic states and Romania on the other, form two very distinct groupings, with Bulgaria and Slovakia falling in between.