TRANSFORMING SOCIAL-SECURITY IN AGRICULTURE IN TRANSITION COUNTRIES -THE CASE OF EAST-GERMANY

In this paper practical and political problems concerning the transfor mation of the social security system in agriculture of the 'old' Feder al Republic of Germany to the New Federal States are discussed. The in tention is to analyse the impacts of transferring this system to East Germany, especially concerning social security matters and their finan cial and distributive effects. Furthermore some conclusions from the E ast German experiences for the transformation of the social policy sys tems for the agricultural sectors in Central and Eastern European coun tries (CEECs) are drawn. Since insight into the interdependencies of p olity politics and policies are important for a successful guidance th e political determinants of policy-making in this sector in unified Ge rmany are examined too. In comparison with the CEECs the transformatio n process in East Germany has to Se dealt with as a special case. The very rapid transition from a planned economy to a market economy lead to a drastic reduction of jobs particularly in the agricultural sector of East Germany. But unlike other CEECs in transition, a whole string of government programmes has been adopted and contributed a lot to ma ke this process socially acceptable. The transfers from the federal bu dget to the New Lander amounted to 615 billion DM from 1991 to 1995; a pproximately 40 per cent (215 billion DM) has been spent on social pol icy measures, mainly for the labour market policy measures. In this re spect, the New Federal States found themselves in a unique situation w hich gave them a rather privileged position, facilitating and mitigati ng the required changes. A further consequence of this general framewo rk of transition was that the transformation in the New Federal States meant in almost every economic sector the transfer of the West German institutions. The structure of agricultural enterprises in East Germa ny differed, however, considerably from the West German family farms. Therefore, a sob adoption of West German institutions of social securi ty policy for the agricultural sector in the New Federal States was pr oblematic: On the one hand it seemed questionable whether this scheme was applicable to the special situation and particular social security demands of the farm population in the New Federal States. On the othe r band the agricultural social security system in the Federal Republic of Germany had become an important instrument of agricultural income policy at the national level. Since it is highly subsidised the questi on arised how this would influence the competitiveness between differe nt legal forms of farm enterprises. Hence political decision makers we re in a dilemma: introducing the special agricultural insurance system without any significant changes in the financing system would exclude many registered cooperatives from subsidies of considerable amount. S o an alternative policy-option was to reform the system by decoupling the social security policy for agriculture from income: policy objecti ves and reforming it using the social insurance systems for employees as a point of reference. Politicians have chosen different options in transferring the social security system in agriculture of the Old Fede ral States to the New Federal States. In health and accident insurance the policy-option of an unchanged transfer of the West German institu tions was preferred. In the old age pension scheme the policy-option o f a transfer was linked with a partial reform of the system, reducing the distributive advantages of the sectoral system. With the exception of the agricultural accident insurance covering an types of farm ente rprises the working population in agriculture is treated in accordance to their status as self employed or employees. Whereas agricultural e ntrepreneurs are included into the sectoral systems, agricultural empl oyees remain in the general statutory systems. This was a reasonable s olution in terms of the different social needs of both groups. Compari ng the distributive effects of the two systems however shows, that the re are still considerable advantages for the farmers' system, despite a remarkable reform of the farmer's old age pension scheme. Explaining these policy outcomes in social security policy in agriculture has to focus on changing policy networks before and after German unification . The path-dependency and in some way contingency of the policy proces s and its results make it almost impossible to draw general conclusion s, in order to provide guidance as to how to manage reform processes i n agricultural policy. Due to the fact that all CEECs are undertaking or initiating reforms of their social security systems, however, these countries do have a particular interest to find the best possible sol utions for the social problems they are involved, bearing in mind, how ever, that a social security system cannot simply be copied from anoth er country. A look at social security systems in West European countri es demonstrates the wide range of possibilities available for organizi ng social security. In Central and East European countries too there w as not one single socialist system of social security policy. Hence, C EECs have to reform their own schemes due to the overall conditions an d the historical backgrounds in each country. This does not, however, imply that experiences from social security in western democratic coun tries or the transformation process in East Germany may not be of inte rest to the other states undergoing transformation. In all 15 member c ountries of the EU employees in agriculture and self-employed farmers as well are covered by comprehensive compulsory insurance schemes. But especially the insurance schemes for farmers, obligatorily insured in old age pension schemes in all states, are very heterogenously organi zed. Partly, farmers are insured in special agricultural systems or in social security systems for self-employed persons, partly, farmers ar e members of the general social security systems. Despite great variet ies in entitlement rules, insured persons, level of benefits etc. all sectoral systems for farmers have the following in common: more old ag e pensioners than contributors; a high dependency on state subsidies; a low level of pensions and problems of compatibility with other old a ge pension schemes, if a farmer decides to change occupation. Up to no w among the CEECs only Poland has a special system of old age pensions for farmers. In the other CEECs, farmers as well as the ent