Towards Supportable Social Division Consumptions in the New Part Nations of the European Union.


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Towards Practical Social Area Uses in the New Part Nations of the European Union Pradeep Mitra* Keynote presentation at a worldwide meeting on Progressing Monetary Development: Putting resources into Wellbeing Chatham House, London, June 22-23, 2005
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Towards Sustainable Social Sector Expenditures in the New Member Countries of the European Union Pradeep Mitra* Keynote presentation at a global meeting on Advancing Economic Growth: Investing in Health Chatham House, London, June 22-23, 2005 *Chief Economist, Europe and Central Asia Region, World Bank Views communicated are the author’s and don\'t essentially mirror those of the World Bank

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Contents Size of Government Health segment: issues and change choices Pensions: issues and change choices Aging and some strategy choices Conclusions

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New part states EU-15; Other high-wage OECD*; Middle-pay high-performing countries**; *USA, Australia and New Zealand; **The decision of center wage high-performing nations fluctuates starting with one graph then onto the next, to some extent managed by information accessibility. This does not influence the correlations made. Charge income is high for money level, particularly in Central Europe … Source: IMF World Economic Outlook database; IMF Government Financial Statistics database;

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… driven by standardized savings charges * Malaysia, Tunisia, Brazil, Korea and Mexico; ** Greece, Ireland, Portugal and Spain; ***Australia, Japan, New Zealand and USA Source: IMF World Economic Outlook database; OECD in figures 2004 release

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New part states EU-15; Other high-wage OECD*; Middle-wage high-performing countries**; *USA, Australia and New Zealand; **Costa Rica, Israel, Korea, Malaysia, Singapore, Thailand and Tunisia Public spending high for money level in Central Europe … Source: IMF World Economic Outlook database; IMF Government Financial Statistics database; OECD in figures 2004 version

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… driven by social advantages, while … Source: IMF World Economic Outlook database; IMF Government Financial Statistics database; OECD in figures 2004 release

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New part states EU-15; Other high-pay OECD*; Middle-pay high-performing countries**; *USA, Australia and New Zealand; **Costa Rica, Chile, Israel, Korea, Malaysia, Mauritius, Singapore and Tunisia … capital spending moderately low, … Source: WB SIMA; IMF World Economic Outlook database

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New part states EU-15; Other high-salary Europe* *Switzerland and Norway … wellbeing spending is practically identical to other European nations, and may even be on the low side in some new part states… Source: WB SIMA; IMF World Economic Outlook database

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New part states EU-15; Other high-wage Europe*; Middle-pay high-performing countries**; *Switzerland and Norway; **Costa Rica, Chile, Israel, Korea, Malaysia, Mauritius, Singapore and Tunisia Amongst a more extensive gathering of comparators including great performing center pay nations wellbeing spending is not out of line … Source: WB SIMA; IMF World Economic Outlook database

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New part states EU-15; Other high-pay OECD*; Middle-pay high-performing countries**; *USA, Australia, New Zealand, Canada, Switzerland and Norway; **Chile, Costa Rica, Israel, Korea, Malaysia, Mauritius, Singapore, Thailand and Tunisia … while wellbeing results are comprehensively with regards to wage level Expected years spent in weakness (for guys during childbirth) Source: IMF World Economic Outlook database; WHO Statistical Information System

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Issues in the Health Sector However, responsibilities are higher than real spending - wellbeing division obligation is developing – and is especially extreme in the Visegrad nations. Just Estonia and Latvia, among the Baltic states, and Slovenia in Central Europe have figured out how to practice satisfactory consumption control Amongst the Visegrad nations, Slovakia has figured out how to lessen the repeating shortfall in the wellbeing framework (through presentation of client charges, changes in pharmaceutical acquisition, and doctor\'s facility rebuilding) Going forward, advances in medicinal innovation, bury alia, will produce weights for higher spending

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Some choices to contain upward weights on wellbeing spending Address oversupply of doctor\'s facility foundation (obligation development is especially obvious in districts with inordinate or thought oversupply of doctor\'s facility beds) – this on the plan in many nations yet advance moderate in most Rationalize advantages bundle (as of now liberal by European models), including through confining administrations accessible for nothing (co-installments for consideration are constrained in the Visegrad nations aside from Slovak Republic) Better administration of pharmaceutical use – most nations manage cost however not very many have gained ground in restricting amount (utilization)

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New part states EU-15; Other high-salary Europe* *Switzerland and Norway While annuity spending does not give off an impression of being high in the European context… Source: “International Patterns of Pension Provision” by Palacious and Parrales-Miralles, 2000; IMF World Economic Outlook database; EUROSTAT

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New part states EU-15; Other high-pay Europe*; Middle-pay high-performing countries**; * Switzerland and Norway; ** Chile, Costa Rica, Israel, Korea, Malaysia, Mauritius, Singapore and Tunisia ….amongst a comparator bunch which incorporates well-performing center pay nations annuity spending looks high in Central Europe Source: “International Patterns of Pension Provision” by Palacious and Parrales-Miralles, 2000; IMF World Economic Outlook database; EUROSTAT

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Some Issues in Pension Spending: High spending is halfway a legacy of move – benefits frameworks were utilized to ease monetary rebuilding, bringing about high recipient to populace proportion Unlike wellbeing, annuity changes in new part states (aside from Czech R and Slovenia) have set them on way to manageability notwithstanding changes in these two nations, choices for further benefits changes included: further raising retirement ages (as of now among least in Europe), checking advantages every year of administration (as of now among most elevated in Europe), and changes to indexation to give more prominent weight to securing genuine livelihoods of beneficiaries)

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Curbing high work assessment and social advantages is made more critical by contracting work compel and developing Elderly populace Working age populace Source: UN Population Prospects 2004; WB staff gauges

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Senior reliance proportions break down ceaselessly and are like EU-15, more terrible than US and superior to anything Japan Note: Senior reliance proportion is equivalent to share of those above 65 to working age (15-64) Source: UN Population Prospects 2004; WB staff gauges

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notwithstanding raising retirement age, relocation could be fractional answer for most new EU individuals … Current migrant* offer and extra stock to keep up 2020 general reliance ratio** at current level * Any remote conceived inhabitant is characterized to be a vagrant. ** Overall reliance proportion is equivalent to kids (under 15) or more seniors (more than 65) separated by working age (15-64) Source: UN Population Prospects 2004; WB staff gauges

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… together with expanded work power interest rates Changes in labor power investment rates to keep up 2020 general reliance proportion at current level Source: UN Population Prospects 2004; WB staff gauges

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CONCLUSIONS The extent of government in the Visegrad nations and Slovenia is too vast inferable from liberal social advantages financed by high standardized savings commitments, and can possibly moderate salary union Health results, while poorer than EU-15, are extensively with regards to pay levels. So is wellbeing spending, however ... Containing weight on wellbeing spending emerging from populace maturing and propelling medicinal innovation and enhancing the adequacy of spending obliges changes, for example, (i) tending to oversupply of doctor\'s facility base, (ii) legitimizing the liberal advantages bundle gave free and (iii) enhancing administration of pharmaceutical uses.

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CONCLUSIONS (cont.) Pension spending, while not high in an European connection, is high for money levels, especially in Central Europe (the Visegrad nations and Slovenia). In any case, annuity change in everything except Czech Republic and Slovenia has enhanced financial manageability. Notwithstanding change in these two nations, further changes in all nations could incorporate (i) further raising retirement ages, (ii) checking advantages every year of administration, and (iii) changes to indexation to give more noteworthy weight to ensuring genuine wages of beneficiaries. Proceeding with wellbeing and benefits changes are expected to make the monetary space for capital spending (counting base), which is low contrasted with well-performing center pay nations. More extensive arrangement choices to contain the reliance proportion at current levels despite a maturing populace in the new part states incorporate an increment in movement and

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