The influence of populism on the budget balance of the Pension Fund of Ukraine
-
DOIhttp://dx.doi.org/10.21511/pmf.07(2).2018.03
-
Article InfoVolume 7 2018, Issue #2, pp. 24-38
- Cited by
- 1355 Views
-
117 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The experience of states with limited democracy shows that populist manipulations often result in a collapse of the pension insurance system, and then – in an escalation of economic, political and social instability. Accordingly, the development of tools for identifying and preventing economic populism manifestations does not become irrelevant.
Through analyzing the changes in pension legislation, as well as studying economic indicators’ dynamics, the article shows that pension insurance issues are widely used as tools for populist policy in Ukraine. This ultimately results in the formation of an abnormally low financial stability of the pension system. In particular, during the 2004 presidential election campaign and parliamentary election in 2007, there was a sharp short-term increase in the gap between growth rates of average pension and nominal GDP; significant deviation of replacement rate from its long-term average trajectory; and with some temporary lag, there emerged a substantial increase in transfers from the state budget.
It is noted that the main tools for economic populism in Ukraine are: (1) permanent procrastination of retirement age raising; (2) “manual” pensions indexation; (3) the existence of a VIP pensions and early retirement system for certain population categories; (4) transfer of burden to lower-income social contribution payers as a result of limiting the maximum value of unified social tax base.
The paper suggests a number of measures, the implementation of which could reduce the negative impact of populist decisions on budget balance of the Pension Fund of Ukraine
- Keywords
-
JEL Classification (Paper profile tab)E71, H55, H62
-
References36
-
Tables3
-
Figures2
-
- Figure 1. The growth rate of some macroeconomic indicators in Ukraine in 1997–2017
- Figure 2. Indicators of transfers in 2001–2017
-
- Table 1. Quantitative and relative indicators of Ukrainian pension system in 1995–2017
- Table 2. Statistical analysis of relative indicators of Ukrainian pension system in 1995–2017
- Table 3. Election campaigns, significant changes in pension legislation and economic populism indicators in 2001–2017
-
- Adam, Z., & Simonovits, A. (2017). From democratic to authoritarian populism: Comparing pre- and post- 2010 Hungarian pension policies.
- Andrews, E. S. (2015). Pension Reform. Pillar II Preconditions: Implications for Ukraine.
- Banyar, J. (2017). European handling of implicit and explicit government debt as an obstacle to the funding-type pension reforms. European Journal of Social Security, 19(1), 45-62.
- Barr, N., & Diamond, P. (2009). Reforming pensions: Principles, analytical errors and policy directions. International Social Security Review, 62(2).
- Barr, N. (2002). Reforming pensions: myths, truths, and policy choices. London: LSE Research Online.
- Barr, N., & Diamond, P. (2008). Reforming pensions: Principles, and Policy Choices. Oxford, Oxford University Press.
- Beattie, R., & McGillivray, W. (1995). A risky strategy: Reflections on the World Bank Report Averting the old age crisis. International Social Security Review, 48(3/4), 5-22.
- Berezina, S. (2017). Perspectives of accumulation of funds in the accumulative pension insurance system of Ukraine. Investment Management and Financial Innovations, 14(2), 128-138.
- Boeri, T., Bovenberg, L., Coeure, B., & Roberts, A. (2006). Dealing with the New Giants: Rethinking the Role of Pension Funds. In Geneva Reports on the World Economy (2006), CEPR and International Center for Monetary and Banking Studies.
- Bovenberg, A. (2008). Grey New World: Europe on the Road to Gerontocracy? CSEifo Economic Studies, 54(1), 55-72.
- Dornbusch, R., & Edwards, S. (1990). The Macroeconomics of Populism in Latin America.
- Drahokoupil, J., & Domonkos, S. (2012). Averting the funding-gap crisis: East European pension reforms after 2008. Forthcoming in Global Social Policy, 12(3).
- European Commission (2016). Pension Reforms in the EU since the Early 2000’s: Achievements and Challenges Ahead (European Economy Discussion Paper, 042).
- Fox, L. (1998). Pension Reform in the Post-Communist Transition Economies. In Transforming Post- Communist Political Economies (1998).
- Galasso, V. (2006). The political future of social security in ageing societies (257 p.) Cambridge, Mass., London: MIT Press.
- Galasso, V. (2008). Ageing and the skew risk in collective choices. Revue Economique, 59(5).
- Gidron, N., & Bonikowski, B. (2013). Varieties of Populism: Literature Review and Research Agenda (Weatherhead Working Paper Series, 13-0004).
- Horbunova, O., Kartseva, V., Pedchenko, N., & Ostapenko, M. (2018). Financial sustainability of the state pension system of Ukraine. Investment Management and Financial Innovations, 15(2), 17-28.
- ICPS (2017). Pension reform: challenges and prospects.
- IMF (2017). Ukraine: Selected Issues (Country Report No. 17/84).
- Kay, S. J. (2013). Political Risk and Pension Reform in Latin America and Central and Eastern Europe.
- Kozmenko, O., & Mospanova, Y. (2016). Priority directions of improvement of state of pension coverage in Ukraine. Investment Management and Financial Innovations, 13(3-2), 300-310.
- Kussy, M. (2017). Current volatility as a measure of market risk. International Journal of Risk Assessment and Management, 20(4), 333-349.
- McGuinn, P. (2014). Pension Politics: Public Employee Retirement System Reform in Four States.
- Mény, Y., & Surel, Y. (2002). The Constitutive Ambiguity of Populism. Democracies and the Populist Challenge, 1-21. New York: Palgrave.
- Mudde, C., & Kaltwasser, C. R. (2017). Populism: A Very Short Introduction. New York, NY: Oxford University Press.
- Mudde, C. (2004). The Populist Zeitgeist. Government and Opposition, 39(4), 541-563.
- Müller, J.-W. (2016). What is Populism? (136 p.). Philadelphia: University of Pennsylvania Press.
- Müller, K. (2003). Towards contributory approaches: pension reform in the transition countries.
- OECD (1997). Fiscal Alternatives of Moving from Unfunded to Funded Pensions.
- Orszag, P., & Stiglitz, J. (1999). Rethinking Pension Reform: Ten Myths About Social Security Systems.
- Rooduijn, M. (2013). A populist Zeitgeist? The impact of populism on parties, media and the public in Western Europe.
- Sinn, H.-W. (1999). Pension Reform and Demographic Crisis: Why a Funded System is Needed and why it is not Needed (CESifo Working Paper, 195).
- Takayama, N. (2016). The Funded Pensions: The Japanese Experience and Its Lessons.
- Tkachenko, L. (2018). Пенсійна система та пенсійна реформа в Україні [Pensiina systema ta pensiina reforma v Ukraini].
- World Bank (1994). Averting the old age crisis: policies to protect the old and promote growth. Washington DC: World Bank.
-
Empirical study of the fiscal policy impact on economic growth
Mykola Pasichnyi
doi: http://dx.doi.org/10.21511/ppm.15(3-2).2017.01
Problems and Perspectives in Management Volume 15, 2017 Issue #3 pp. 316-322 Views: 1327 Downloads: 380 TO CITE АНОТАЦІЯThe challenges of economic globalization, recession, and the essential changes in market conditions, as well as the financial institutionalization, determine the expediency of the new studies to explore the impact of fiscal instruments on the dynamics of economic growth and social stability. This paper examines the role of fiscal policy in the economic growth ensuring in advanced and emerging market economies over the period from 2001 to 2015. The research indicates the growing role of the state (in general) and the budget (in particular) in regulation of social and economic processes. Based on the methods of economic regression, the interrelations between government spending and GDP growth in different groups of countries were evaluated. The study emphasized the directions to increase the positive influence of budget policy on economic development for countries with emerging market economies. This can be achieved by harmonization of the tax burden and structure, improving the use of budget funds, conducting structural optimization of budget expenditures, further development of financial and budget institutions, implementation of the fiscal constraints and rules while forming the basic indicators of fiscal policy.
-
Factors of macroeconomic growth in Nigeria: wages demand, taxes, and entrepreneurship development
Fedir Zhuravka ,
Olena Shkarupa ,
John O. Aiyedogbon ,
Olure-Bank Adeyinka ,
Ivan Shkarupa
doi: http://dx.doi.org/10.21511/imfi.17(1).2020.21
Investment Management and Financial Innovations Volume 17, 2020 Issue #1 pp. 242-252 Views: 978 Downloads: 119 TO CITE АНОТАЦІЯThis paper contributes to clarifying the scientific debate on the impact of entrepreneurship development and wages increases on Nigeria’s macroeconomic development. The main purpose of this research is to estimate the impacts, problems, and consequences between wages growth and the growth of a long-term relationship between wages and investment. The article deals with the current state of Nigeria’s macroeconomic indicators. The methodological tools for the research are the ARDL and DOLS methods, which were used to study the relationships between the macroeconomic indicators. The research period is 1987–2019. The research empirically confirms and theoretically proves that the country operates under unstable and uncertain conditions, so it is difficult to achieve macroeconomic stability. Also, the article presents the results of the analysis, which has shown a positive and statistically significant effect of raising the minimum wages on economic growth both in the long and short term. The study results can be useful for state authorities, private sector, as well as for the researchers.
Acknowledgements
This research was prepared as a part of the Scientific Project “Modeling the Transfer of Eco-Innovations in the Enterprise-Region-State System: Impact on Ukraine’s Economic Growth and Security” (No. 0119U100364), that is financed by the state budget of Ukraine. -
The impact of globalization challenges on pension provision development
The article analyzes pension provision development in the world and the problems of its implementation under the globalization challenges. The main reasons for considering pension provision as a global problem are specified. It is noted that the negative manifestations of globalization are inherent in the Ukrainian practice of pension provision. The purpose of the paper is to study the world’s experience in reforming national pension systems under increasing global negative trends. The research was conducted using the methods of scientific knowledge: comparison and generalization – to establish the essential differences in approaches to the globalization processes studying; analysis and synthesis – to identify regularities in economic development and their determination of social consequences; historical and logical, as well as statistical methods. The article considers some countries’ experience in improving the practice of pension provision. It was established that pension reform was aimed at making the pension age most upon the individual achievements of an employee (pension insurance record, salary, deductions, other personal preferences). In most developed countries, pension funds are provided from three sources: state pension funds, corporate sector pensions and individual pensions received under a contract of personal voluntary pension accumulative insurance. Further development of the pension system in Ukraine should be provided due to the introduction of its second level. As a result of the study, it was found out that global challenges are problems that hinder the normal course of human development. They make a particular negative impact on pension provision. The search for methods to neutralize or mitigate the effects of global challenges has led many countries to introduce a three-tier pension system that involves funding from various sources.
