Reforms praised but needy grow poorer, new report says

A RECENT living standards assessment report published by the World Bank praised Slovakia for the structural reforms implemented after the 2002 general elections that sharply increased the country's economic competitiveness.

A RECENT living standards assessment report published by the World Bank praised Slovakia for the structural reforms implemented after the 2002 general elections that sharply increased the country's economic competitiveness.

According to the report, presented to the Slovak media on October 11, "the Slovak Republic was something of a latecomer to the economic transformation that swept through Central and Eastern Europe in the 1990s. However, since 1998 the country has implemented an extensive and far-reaching package of social and structural reforms."

The report admits to concerns "about the potential negative effect of the reforms on the drive for social inclusion to which the government is committed."

Individuals who face strong and complex barriers to employment are at an economic disadvantage in a country that increasingly emphasizes work as an individual's right, duty and main ticket out of poverty, reads the report.

The World Bank assessment also suggests that while the Slovak government's reforms have not increased the numbers of poor in Slovakia, the poor have grown even poorer.

Slovak officials welcomed the World Bank report, saying that it weakens unwarranted claims that the number of needy people has been increasing as a consequence of reforms in Slovakia.

The World Bank report noted that Slovakia's economic response was generally positive, with economic growth reaching 5.5 percent last year and inflation dropping. The overall result has been an increase in consumption and the regeneration of domestic consumption, which suggests a positive trend.

However, the assessment suggested that the Slovak government should have made more efforts to monitor the impacts of the reform process.

"Given the government's determination to curb social exclusion and reduce poverty, it is somewhat surprising that little systematic effort has been made to monitor the impact of the reform process begun in 1998 - and the growth it generated on the incidence, depth and profile of poverty in the Slovak Republic," stated the report.

"Data limitation is the main reason why such a systematic evaluation has not been attempted. While this is a significant limitation, it is extremely important for the sustainability of the reform process that its effects to date be quantified, even if in an imperfect manner."

Among EU countries, Slovakia had the one of the highest shares of long-term unemployed and the smallest share of short-term unemployed. (The long-term unemployed make up 65 percent of all those out of work; the short-term unemployed make up 10 percent.)

The report acknowledges that Slovakia has made great progress in applying employment strategies and even surpasses new EU members. But there are huge gaps in employment figures and education levels between different regions and ethnic groups.

A sociologist with the Slovak Academy of Sciences, Zuzana Kusá, warns that the World Bank report is not an opinion of the World Bank, which published the document, but of the authors who wrote the assessment.

"The bank has a disclaimer added that the document which says the report expresses the opinion of the authors who created it," Kusá told The Slovak Spectator.

According to Kusá, the report was reviewed by the creators of the reform and those with an interest in showing Slovakia's reforms in a good light.

"The document is recycling the opinions of the current Slovak government and the creators of the reform," she said.

To the question how people in Slovakia view the reforms, Kusá responded that a majority, at least two-thirds, of Slovak citizens do not see any improvements in their living standards and continue to face economic difficulties.

"The number of people who claim that their living standards are improving is still very low, maybe only one third. Others see their situation worsening or stagnating," she said.

The sociologist contends that people are surrounded by media discourse on a daily basis that suggests the reforms are a positive step ahead. "Our politicians say that the current situation might feel difficult but that the country has taken a good path and that if someone subverts this development the situation will get even worse," Kusá said. "At this point, it is very hard to say what the reforms will bring."

Kusá thinks the primary goal of the reforms is to improve the lives of Slovak businesspeople. "In the long run, this might bear fruit for the whole nation. But the primary goal is not to improve the lives of the average citizen."

Meanwhile, a 2005 World Bank report entitled "Growth, Poverty and Inequality in Eastern Europe and the Former Soviet Union" claims that some 40 million people were moved out of poverty in Central and South-eastern Europe and the countries of the former Soviet Union during 1998-2003 as a result of rapid growth and narrowing inequality.

According to Shigeo Katsu, World Bank vice president for Europe and Central Asia: "The report shows how countries already stressed by transition managed to pull millions of people out of poverty in the wake of the 1998 financial crisis in Russia. This turn-around highlights the importance of growth in creating conditions for a better life. To sustain this, more jobs are needed to help those left behind, especially in rural areas and some of the region's many secondary cities."

Magdalena MacLeod
contributed to the report

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