ABSTRACT
Lithuania constitutes an interesting case to study social policy, as the country was incorporated into the former Soviet Union and had experienced the authoritarian Communist rule. In 1990 Lithuania regained its independence and has returned to being a democracy with a market economy. As with other central eastern European countries, Lithuania went through massive privatization during the first years of independence, suffered from high inflation and growing unemployment, and consequently people felt there had been a decrease in their material well-being (see EBRD, 1999). However, Lithuania managed to stabilize its economy, and was experiencing the fastest growing gross domestic product (GDP) in Europe up to 2008 (Embassy of the Republic of Lithuania, 2003). The success of its transition made it possible for Lithuania to join the European Union and NATO in 2004. According to Tiirinen (2000), financial structures, private services, telecommunications and higher education are some of the successful areas with a high level of performance. However, various social problems (ageing, low fertility, inequality and poverty) suggest that issues like social security require further efforts to be made in order to reach the appropriate standard of western European countries. The relatively higher poverty level, as is illustrated by Table 16.1, and lower wages1 than the ‘old’ EU countries show that Lithuania still has some way to go before catching up with the other developed European welfare states. The socio-economic changes took place together with the changes to the social security
system of Lithuania. As Deacon (1992b) has pointed out, the collapse of the Communist regime brought to an end not only a particular type of political and economic system, but also a specific type of welfare state. According to Aidukaite (2004), the social security system of Lithuania can be referred to as a distinct post-socialist welfare regime. This regime deviates from the other three delineated by Esping-Andersen (1990) and is already gaining acceptance within comparative welfare state research (see, for example, Aidukaite, 2004; Deacon, 2000; Kääriäinen and Lehtonen, 2006; Oorschots and Arts, 2005). On the basis of the example of the three Baltic States, Aidukaite (2004: 81-85) has indicated the main features of the post-socialist welfare state regime. The post-socialist welfare state is
characterized by such features as high coverage, but relatively low benefit levels. Insurancebased schemes play a major part in the system of social protection and this is not surprising considering the fact that the former Soviet system was based on employment. However, the same programmes cover everyone. In many cases, universal benefits still overshadow means-tested ones. Nevertheless, the relatively low benefit levels do not create enough incentives for people to be honest and declare their income for taxation. Even if the state plays a vital role in protecting its citizens from social risks, the market and the family are still two of the most important agents for guaranteeing an adequate standard of living for the population. Thus, the current Lithuanian welfare system theoretically should reflect basic features of the ideal typical post-socialist welfare state regime. In order to review the current welfare system, it is necessary to know what kind of
social welfare system Lithuania had in the past. Previous studies (Aidukaite, 2004; Macinskas, 1971) indicate that the first social security programmes appeared in Lithuania as early as in 1919. It can be claimed that social security in Lithuania before the Second World War (1919-40) resembled the Bismarckian system of social insurance. However, the number of insured persons was low and only permanent state employees had a right to a state pension. The money that went into the pension fund was mainly obtained from employer and employee contributions. Farmers were totally excluded from the social insurance system (Macinskas, 1971). After the Second World War, when Lithuania was incorporated into the Soviet Union, it was subjected to the same social policy regulations as the whole Soviet Union. Thus, Lithuania has experienced a Soviet social protection system during the period 1940-91. The legacies of the Soviet protection system can be felt in Lithuania up to the present day. Thus, it is worth mentioning some of the major features of the Soviet welfare system. The Soviet system can best be thought of as a form of authoritarian welfare state, based on compulsory employment with a huge redistributive mechanism. The state was the main provider of welfare for its citizens. Thus, the coverage of the social security system was universal in the Soviet Union, with rather low
old age, and (full employment, free education and health care) and social security with its huge redistributive mechanism promoted equality within classes and various social groups (Aidukaite, 2004). Some studies, however, indicate (Poldma, 1999; Deacon, 1992a; Ferge, 1992) that there was an upper class, a so-called nomenclature, that profited more from the benefits of the authoritarian welfare state than other social groups. Other studies (Hartl and Vecernik, 1992) have also underlined the negative side of the former Soviet system, such as no indexation of benefits, poor quality of health care and other services, and housing shortages. Nevertheless, according to Deacon (1992a), there was job security for many in the former socialist countries, workers’ wages represented a high percentage of the average wage, and cheap housing and free health care were available to everybody. After the collapse of the Soviet regime, Lithuania, like many other east European coun-
tries, has undergone a process of social policy reform. However, social policy issues have never belonged to that group of issues, which were given top priority in the Baltic States. Instead, they revolved around the necessity of establishing a market economy and reinforcing political independence. Thus, social issues were left behind, believing that the market economy might solve them automatically as soon as it started to function. The negative attitudes towards the paternalistic Soviet state, which saved everybody in every situation without leaving any space for individual initiatives, created favourable conditions to move from a universal form of social provision to one more fragmented in nature (Aidukaite, 2004). Since social policy was not at the forefront of the Lithuanian political agenda, it could be difficult to define the main leitmotif of the welfare system. The emphasis since the 1990s was placed on combating poverty by increasing individual initiative and reducing dependency on welfare. The EU enlargement through its promotion of social values and generous social policies
has brought the social dimension into the political agenda of contemporary Lithuania.
