This paper begins by describing the origins of a social security system tha
t was based on a series of institutional splits that resulted in the develo
pment of a fragmented system characterized by inequity and incomplete cover
age. The entitlements embedded in this system have proved difficult to revi
se in the light of changing circumstances and the pressures associated with
economic transition, demographic change and the newly emerging Problems of
open unemployment and urban poverty. These developments, particularly tire
latter, are creating new demands on a system already struggling to adjust
to structural problems of coverage and financial soundness. A series of ext
ensive reforms in the areas of pensions and unemployment insurance and a ra
tionalization of administrative arrangements and responsibilities have been
introduced over the last two decades, but further reform seems inevitable
as external pressures and policy Priorities change. A key goal of the refor
m process has been to transfer responsibility for social security from ente
rprises to the state, bus the system still suffers from a series of serious
financial problems. Despite the extensive reforms that have already been i
ntroduced these problems and the structural imbalances underlying them will
require further action. The most important of these imbalances relate to B
e split between the nature and role of social security in the urban and rur
al sectors, the role of the commercial provision and its relationship with
the state, and the extension of programmes aimed at poverty alleviation.