From Austerity to Austerity: The Political Economy of Public Pension Reforms in Romania and Bulgaria

CPS Junior Researcher Dragos Adascalitei  has recently published an article in the journal Social Policy & Administration (early view). The article discusses the trajectory of pension reforms in Romania and Bulgaria, arguing that, over the past two decades, the two countries have opted for increasingly divergent reforms.

Abstract

This article discusses the trajectories of pension system reforms in two of the latecomers to the EU: Bulgaria and Romania. It finds that over the past two decades, the two countries pursued increasingly dissimilar public pension reforms for managing their respective public pay-as-you-go pension systems. Using a political institutionalist theoretical framework, I argue that the divergence between the two cases is attributable to multiple factors. First, different temporary political compromises between national and international actors generated reforms that retrenched public pensions and introduced mandatory private accounts. Second, pension reforms often had unintended consequences that limited their intended impact. Third, incremental adjustments introduced by governments in response to political pressures caused alternating phases of austerity and generosity that catered to different constituencies in each country. In Romania, reform outcomes amounted to a moderately generous pension system, financed through relatively high contribution rates with a small funded component, while in the case of Bulgaria, the pension system evolved into a meagre programme, financed through low contribution rates and a larger private pillar.

Keywords: Pension reform; Eastern Europe; Transition; Institutional transformation; Economic crisis

Available at: http://onlinelibrary.wiley.com/doi/10.1111/spol.12173/full