Reform by the numbers – i.e. aim for about 50%

Here’s the real truth of what I wrote then: the measure of this government's ability to act boldly, to risk poll numbers to pursue a reformist agenda is the plan to trim bridge pensions. Recall: Poland today allows a long list of workers to retire 5 years early. The list is now around 1.1 mln, although no exact count has been made since 2002. Costs are staggering.
The first reason I mention this: I still get signals that many foreign investors who hinge sentiment on bold reformist movements are barking up the wrong tree. They ask: When will Poland reform KRUS (a farmer pension system in which farmers pay nearly no premiums and which the state subsidizes nearly entirely)? And they ask even though the junior coalition partner PSL is an agrarian party. And they ask even after the PM says that he doesn't expect PSL to commit suicide.
Now hear this: all signs on heaven and on earth say that the pending KRUS reform will not save real money, that the government doesn't wish to draw attention to the issue and that attention is being directed elsewhere. I increasingly suspect that KRUS is to be pseudo-reformed so that PSL can better hide the issue moving forward.
Watch the news for even a moment and the casual observer becomes well versed on pensions. That Poland has the lowest employment rate for the over-50 crowd in all Europe. That Poland has the fewest workers per pensioner in all of Europe save for here or there. The machine is working to sell the story that early pension benefits are a luxury that even Europe's richest can't afford.
But search the news in vain for talk of how KRUS works. That PR machine is not working. For those in the know, the facts of KRUS are a cry for justice (or a reason to buy land to qualify). The first estimate now says Poland will save PLN 300 mln (nothing in budget terms) in the first year of reform as Poland cuts non-farming small-holders and finds a tiny slice of wealthy farmers to press for higher premiums.
The second reason I mention it is this: if anyone really thought KRUS is going to be reformed, despite the coalition concerns and despite the PM's presidential hopes, then they really ought to reset their expectations for bridge pension reform as well.
Recall Poland’s last reform movement: a multi-faceted program called the Hausner Plan. Then deputy PM Jerzy Hausner was in the media regularly to give his estimate of what portion of his plan was implemented. I do not recall ever hearing a figure above 60%. When populists later came to power, Hausner several times offered the percentage remaining. I recall 30-40%.
Recall also how that plan was received then and now. Protests bore a political price tag. Yet, the sentiment-setting reform-minded crowd was unimpressed, calling the plan an insufficient collection of half measures. Then central bank chief Leszek Balcerowicz was highly critical then, but compare his more recent press comments, with outright nostalgia and praise for Hausner.
So I sat down with the list of qualifying workers, the report of the expert group told to cut that list down to those where work conditions and medical/safety risks actually warrant early retirement and I offer you this little top-of-the-head armchair analysis: on 1) What does Poland have to do on this to avoid massive protests that cut poll numbers? 2) What do they have to do to please even the toughest reform-minded, albeit perhaps with a several year delay? 3) Is there any overlap?
Of the exclusions planned, I’d say 25% are slam dunks. Current rules expire at end-08 and if no bill is passed, everybody falls off the list. That’s no proposal, just a reason to count out the groups that can’t fight for re-inclusion. Another 20% of the list has a wildcard element and the government might have to bargain, but should be able to walk away with 75% of its goals without drawing blood. Total – 40%.
Trying to crack the hardest nuts, teachers and rail workers, means facing protests that strand passengers or force parents to find sitters on short notice. That is exactly the kind of backbone which critics of all stripes say this government (or pretty much any government) doesn’t have.
If they accomplish 20% of their plan vis-à-vis teachers and rail workers (by the way – low paid teachers are less crucial for the reform than their sheer numbers imply) to hit 50% of the total plan, then I say that the reform minded will wax poetic about this government three years out.
Even that Gomulka guy – you know the guy that quit the government because it was too wimpy on reforms. Or was he the guy that got canned for speaking loosely in the press about which groups had to pay hard to fund government reforms?