Author: Admin
On the Necessity of Pension Reform in Belarus
Belarus has a pay-as-you-go pension system that becomes unsustainable with an ageing population. The country has recently finished the process of increasing the retirement age by 3 years to 63 and 58 for men and women, respectively. In Lvovskiy and Bornukova (2022), we show that this reform is not sufficient for delivering sustainability to the pension system, and further reforms are necessary. We show that the available space for further increasing the retirement age is limited and cannot eliminate deficits. The introduction of a fully-funded component delivers balance and pension gains in the long run but deepens the deficit problem for the first 30 years after its introduction. Reforming the pension system and transitioning to a fully-funded system would be a major policy challenge for Belarus after political change, and possible policy options should be explored now.
Demographic Challenges
Similar to many European countries, the population of Belarus is ageing. The average age is rising both due to increasing life expectancy and low fertility.
Another demographic peculiarity that has contributed to population ageing is the series of strong demographic waves post-WWII, which were entrenched by the fertility crisis 1990s following the dissolution of the Soviet Union. As a result of these waves, one of the largest cohorts is entering retirement in Belarus in the coming years, while being replaced by one of the smallest cohorts in the labor market.
Figure 1. Old-Age Dependency Ratio in Belarus
Due to the combination of population ageing and the demographic waves, old age-dependency (number of people above the retirement age per number of working-age people) is projected to increase from 0.4 in 2020 to around 0.65 in 2055 (see Figure 1).
Status Quo in the Pension System
Currently, the Belarusian pension system is almost entirely pay-as-you-go, with today’s workers paying contributions that are channelled directly into pension benefits. Almost all workers pay 35% to the Social Security Fund, with 27 percentage points dedicated to pension expenditure. There are several exemptions with lower rates applied: agrarians, IT, and individual entrepreneurs. Considering all the exemptions, we have estimated the effective rate of pension contributions to be 18%.
If the pension system does not undergo substantial reform, it would need to go into large deficits (as shown previously in Lisenkova & Bornukova, 2017), or the pensions (as a percentage of the average wage) would have to decrease. Based on current demographic data, our own demographic projections and financial data from the Social Security Fund, we have simulated two scenarios without any reforms.
Figure 2. Two Scenarios under Status Quo.
Base Scenario 1 assumes that the level of pensions remains at the current 39% of the average wage. As seen in Figure 2, under this Scenario the deficit rapidly takes off from the current level of around 0.5% of GDP and surpasses 5% of GDP annually after 2050. Theoretically, it is possible to finance this deficit with budget transfers, but it will require a lot of budget consolidation.
Scenario 2 assumes that the Social Security Fund deficit remains constant at 0.31% of GDP as in 2019, while the size of the pensions adjusts. In this case, by 2050 the replacement rate (the ratio of the average pension to the average wage) falls below 26% from the current level of 39%. While this replacement rate would be similar to the lowest among the OECD countries (31% in Lithuania, OECD 2022), it would put many retirees below the poverty line, given the low earnings in Belarus.
There Is No Easy Way Out
To avoid the negative scenarios that assume either a significant budget consolidation or a deterioration in the well-being of retirees, Belarus would have to reform its pension system. The reforms could either be parametric, like increasing the retirement age; or structural, implying a shift to a fully-funded pension system.
Figure 3. Effects of Retirement Age Increase
Increasing the retirement age is a relatively easy way out, and Belarus is already moving in this direction: since 2017, the retirement age was set to gradually increase by 3 years to 58 and 63 years for women and men, respectively. However, Figure 3 clearly shows that this step alone is not enough. Further increasing the retirement age, especially for men, might be problematic given the low life expectancy (69.3 for men and 79.4 for women). Healthy life expectancy for men is 62.3 years (WHO, 2022), already lower than the retirement age. Hence, while minor retirement age increases are possible in the future, at the moment the potential for such reform would be limited to women only
Figure 3 shows how two different scenarios of the retirement age increase could improve the status quo (63/58). Equalizing the retirement ages for men and women to 63/63 keeps the Social Security Fund deficit below 3% of GDP annually in the long run, while further increasing to 65/65 would keep it under 2%. However, the retirement age increases are not enough to balance the Social Security Fund in the long run and still require additional sources of financing.
Introducing a Fully-Funded Pillar
Introducing a fully-funded pillar is not a panacea as it will not resolve the deficit problem in the next 20-30 years. However, it could provide background for a non-deficit Social Security fund in the future, as well as an increase the well-being of retirees.
When introducing a fully-funded component while keeping the pay-as-you-go system, it is important to find the optimal distribution of social contributions between pillars. Through simulations, we found that the optimal amount of contributions to the fully-funded pillar (the amount that minimizes aggregate deficits of the Social Security Fund by 2100) is one-third of total contributions. This amount is also delivering a zero-sum of discounted deficits by 2100.
Figure 4. Introducing a Fully-Funded pillar
As we can see in Figure 4, introducing a fully-funded pillar in 2025 will initially deepen the deficits (since part of the contributions would now go into saving instead of financing current pensions), but after around 30 years of reform, the pension system would turn into a surplus. The surplus could be used to increase the replacement rate and well-being of retirees and pay back the debt accumulated during the initial stage of the reform.
Conclusion
Population ageing makes the pay-as-you-go pension system in Belarus unsustainable. Without reform, the system would need extra financing from the budget (up to 5% of GDP annually). Alternatively, financial sustainability could be achieved at the cost of a lower replacement rate and lower well-being of retirees.
An increase in the retirement age and the introduction of a fully-funded pillar are two of the most frequently discussed options of reform. Our simulations show that none of the options could help Belarus avoid deficits in the medium run. The fully-funded system delivers long-term sustainability. However, the need to finance large deficits in the process of introducing a fully-funded pillar represents a policy challenge as the policy will deliver benefits only in the long run.
Of course, other policy options are also on the table. Belarus (after political change) could secure loans from IFIs to finance the deficit in the medium run. It could use the proceeds from privatization to cover the deficits, at least partially. The effective contributions rate could be increased by minimizing exemptions and loopholes. Finally, Belarus might decide to finance the deficit of the pension system with the budget expenditure, finding fiscal space elsewhere.
References
- Lvovskiy, Lev and Kateryna Bornukova. (2022). “Pension Reform: Options for Belarus”, unpublished manuscript.
- Lisenkova, Katerina, and Kateryna Bornukova. (2017). “Effects of population ageing on the pension system in Belarus” Baltic Journal of Economics 17, no. 2 : 103-118.
- OECD. (2022), Gross pension replacement rates (indicator). doi: 10.1787/3d1afeb1-en (Accessed on March 7, 2022)
- WHO. (2022), Global Health Observatory: Life Expectancy and Healthy Life Expectancy (Accessed on March 7, 2022)
- Zviniene, Asta, and S. Biletsky. (2011). “Fiscal projections for pension system of Belarus” Washington, DC: World Bank
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Support the Future of Ukraine
The Stockholm School of Economics (SSE) together with the Stockholm Institute of Transition Economics (SITE) and the Embassy of Ukraine in Sweden hosted a hybrid event to learn more about the impact of the war in Ukraine and to support fellow students and faculty members from the FREE Network partner school, the Kyiv School of Economics (KSE) and Ukrainian academics and students more generally.
Speakers
Speakers and participants from all over the world, including of course colleagues from the Kyiv School of Economics (KSE), joined the event. A number of highly distinguished speakers discussed the matter, among them:
- Tymofiy Mylovanov, KSE President
- Andrii Plakhotniuk, Ambassador of Ukraine to Sweden
- Tobias Thyberg, Ambassador of Sweden to Ukraine
- Jenny Ohlsson, State Secretary to Minister for International Development Cooperation
- Lars Strannegård, SSE President
- Anders Paalzow, SSE Riga President
- Yuriy Gorodnichenko, KSE board member and UC Berkeley Professor
- Hanna Anisimova, SITE Research Assistant,
- and students from KSE and SSE
- Torbjörn Becker, Director of SITE and Board Member of KSE together
- Wilma Liewendahl, President of the Student Association (SASSE) at SSE.
During the evening, funds were raised for the newly formed Swedish nonprofit organization, the Friends of KSE, to help provide intellectual and humanitarian support to researchers and students at KSE, working within and outside Ukraine’s borders.
About “Friends of KSE“
Friends of KSE is a Swedish nonprofit (“Ideell förening”) with the purpose to support academics with links to Ukraine and in particular, though not exclusively, those at the Kyiv School of Economics. This will be done through fundraising and financial as well as intellectual support. The funds raised will only be used to support Ukrainian academics and faculty, staff, and students at KSE. The administrative cost of the association is capped not to exceed 5% of the funds raised. Anyone that wants to support KSE is welcome, and there is also an opportunity to join the association.
Disclaimer: Opinions expressed during events and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Social Norms, Conspiracy Theories and Vaccine Scepticism: A Snapshot from the First Year of the Covid-19 Pandemic in Poland
In January 2022, Poland experienced the highest rate of SARS-CoV-2 transmission since the beginning of the COVID-19 pandemic. Considering the widespread consensus among experts about the efficacy of vaccines in preventing hospitalisation and death resulting from the virus, low vaccination rates and widespread anti-vaccine sentiments in Poland are of great concern. We use data from the DIAGNOZA+ Survey to demonstrate the relationship between various demographic characteristics, opinions around certain gender norms, the propensity for conspiratorial thinking, concern about the pandemic, and vaccine scepticism. While controlling for exogenous demographic characteristics, we measure the strength of the relationship between various beliefs that people hold and how they feel about the COVID-19 vaccine. Our analysis indicates that while respondents who hold more traditional views on gender roles are 6 percentage points less likely to get vaccinated, those who agree with a variety of conspiratorial statements are 43 percentage points less likely to vaccinate against COVID-19.
Introduction
As of January 2022, Europe finds itself well into the 4th wave of the COVID-19 pandemic, with some countries, including Poland, experiencing the highest rates of transmission since the virus was first detected. There are a few tools available to policymakers and healthcare professionals for combating the spread of the virus, ranging from preventative measures to strict social lockdowns aimed at reducing interpersonal interaction. A comprehensive literature review of 72 academic studies conducted by the BMJ found that the implementation of preventative measures such as hand washing, mask wearing, and social distancing decreased the risk of transmission by 53% (Talic et al., 2021). But even though such measures reduce transmission, the shortcomings in adherence and enforcement make high vaccination rates much more effective in diminishing the risk of hospitalization and death (Moline et al., 2021). With a consensus among experts reaffirming the effectiveness of vaccines in minimising the more severe cases of COVID-19 illness, the widespread availability of the vaccine has become the most effective and cost-efficient tool in limiting morbidity while avoiding future instances of economically unsustainable lockdowns. The drawbacks of the alternative scenario have already been made evident in 2020, before the development and distribution of COVID-19 vaccines. Over the course of the year, hospital capacities were overwhelmed in many countries around the world, leading to significant spikes in excess deaths. Poland saw an increase of over 18% in all-cause mortality in 2020 (OECD, 2021), the fourth-highest in the OECD and second-highest in the European Union (Eurostat, 2021).
Considering the central role that prevalent vaccination plays in combating the impact of COVID-19, it is important to understand the underlying factors and demographic characteristics of individuals who are driving the low vaccination rates in countries such as Poland. With this in mind, we use an online survey: DIAGNOZA+ (DIAGNOZA Plus, 2020-2021), conducted on a representative sample of adults in Poland throughout the pandemic, allowing for the identification of characteristics that are most strongly correlated with vaccine scepticism. This kind of analysis can provide useful indicators for the targeting of certain policies and information campaigns that encourage vaccinations, and thereby suppress future outbreaks of SARS-CoV-2, as well as any other future pandemics. Below, we first outline the key features of the DIAGNOZA+ data, describe the methodology adopted in this study, and present results on the relationship between key demographic characteristics, social norms, views of respondents, and attitudes towards COVID-19 vaccination. We show a strong correlation between traditional family values, conspiratorial views, and reservations relating to the vaccination programme. Having traditional family values (expressed by about 40% of the sample) is associated with an over 10 percentage point (p.p.) lower probability to declare a willingness to get vaccinated. This drops to about 6 p.p. when we extend the model to account for conspiratorial thinking, which strongly dominates the relationship. Individuals who express strong conspiratorial and anti-establishment views (about a quarter of the sample), conditional on other demographic characteristics, were more than 40 p.p. less likely to declare a willingness to get vaccinated.
Methodology
The following analysis is based on data from DIAGNOZA+, an online survey collected in seven waves over the course of the COVID-19 pandemic (DIAGNOZA Plus, 2020-2021). The panel survey was conducted with the purpose of assessing changes in the labour market situation of adults in Poland between April 2020 and July 2021. The survey consistently included standard questions on individual and household characteristics such as age, gender and education, as well as questions on as well as questions about the respondent’s labor market status, hours worked, and financial situation. Waves 3 and 4 included additional modules where respondents were asked to express their opinions on a variety of statements surrounding gender norms such as “In general, fathers are as well suited to look after their children as mothers”, “A pre-school child is likely to suffer if his or her mother works” and “When jobs are scarce, men should have more right to a job than women”. The questions were answered on a scale of 1 (strongly agree) to 4 (strongly disagree). For the analysis, these categorical variables are dichotomised, with a value of 1 assigned to responses 1 and 2 (strongly agree or agree) and a value of 0 assigned to responses 3 and 4 (disagree or strongly disagree). Thus, for each question, we develop a binary variable that categorises respondents as either having a progressive or traditional reaction to each particular gender norms statement.
In consecutive waves, the same respondents were asked questions surrounding their willingness to vaccinate against the virus (in wave 5) and their trust in experts and the government response to the COVID-19 pandemic (in wave 6). For this analysis, we select questions that may influence an individual’s likelihood to vaccinate, starting with their level of concern about the pandemic or their fear of the virus itself. Furthermore, we identify individuals with a high predisposition for conspiratorial beliefs based on information from wave 6. Each variable included in this module is converted into a binary measure of agreement or disagreement, as outlined above for the social norms questions. We consider seven statements from the survey related to conspiratorial views, including “Secret organisations influence political decisions” or “I trust my intuition more than the so-called experts” (see the full list of statements in Figure 2). For each of them, the variable is converted into a binary measure of agreement or disagreement, similarly to the social norms questions above. Those who agreed or strongly agreed with all seven statements are classified as having conspiratorial views.
Due to sample attrition and after dropping respondents who did not answer one (or more) of the questions needed for our analysis, the sample reduces to 726 individuals (see table A1 in the Annex). Although each wave of the DIAGNOZA+ survey is carefully weighted to ensure population representativeness of the survey, these cross-sectional weights are only relevant to each independent wave of the survey. Therefore, for our sample, we develop frequency weights by sex and age using population data from Statistics Poland (Statistics Poland, 2021), which are utilised throughout the analysis. Given the low number of participants in the oldest age groups (those above 60 years old), we limit the sample to individuals aged between 21 and 60. Unfortunately, calibrating the weights according to additional characteristics such as education and municipal population is not feasible with a sample of this size. Clearly, the requirement of consistent consecutive participation in at least three waves of the survey has implications for its representativeness. For example, after the sample of respondents that participated in wave 6 is cut to include only those who also participated in waves 3, 4 and 5, we observe a bias in favour of conspiratorial views among the remaining observations, indicating that individuals who hold these views were more likely to continue their participation in the survey. For example, while 18.1% of the total cross-sectional sample of individuals in wave 6 hold conspiratorial views, the proportion is 23.4% in the sample we analyse (falling slightly to 23.2% when weights are applied). From this perspective, while indicative of existing correlations, the results ought to be treated with some caution.
Limiting the sample to respondents who answered all sets of questions across several rounds of the survey allows us to study vaccine scepticism and respondents’ susceptibility to conspiracy theories in relation to a number of personal characteristics. Furthermore, we consider the relationship between a respondent’s attitudes towards certain social norms (asked in waves 3 and 4), their individual response to COVID-19 (asked in wave 5), and their trust in the government’s response to the pandemic (asked in wave 6). We begin the analysis by assessing the relationship between respondents’ demographic characteristics and their opinions on gender roles, their propensity to hold conspiratorial beliefs, and their concern about the pandemic. This is followed by two models measuring respondents’ willingness to vaccinate. In the first of these models, demographic characteristics and traditional family values are used as explanatory variables, while in the second model conspiratorial views are included as well. Finally, we conclude with a summary of results and policy considerations.
Survey Results
Traditional Family Values in Poland
The respondents of the DIAGNOZA+ survey vary, on average, in the ‘traditionality’ of their attitudes towards gender and family depending on the selected indicator. The shares of answers to the three questions about gender norms are presented in Figure 1. The results demonstrate that progressive views on gender norms in Poland were more common in relation to the workplace than the home and family. For example, the statement to which most respondents were opposed was “When jobs are scarce, men have more right to a job than women”, with 37.2% of respondents disagreeing and 50.3% of respondents strongly disagreeing. On the other hand, slightly fewer respondents disagreed (50.5%) or strongly disagreed (34.8%) with “In general, fathers are not as well suited to look after their children as mothers”. Finally, respondents were most ‘traditional’ in their views in reaction to the statement “A pre-school child is likely to suffer if his or her mother works”, with 28% agreeing and 10% strongly agreeing. There is a natural correlation between these different views, and in our analysis, we examine the significance of different combinations of the three indicators. Given the relatively small sample, only the last indicator proved to be significantly related to our main outcome of interest and we use this one to represent the view on the ‘progressive-traditional’ spectrum
Figure 1. Gender norms in the survey sample
Conspiratorial Views
In wave 6 of the DIAGNOZA+ survey respondents were asked seven different questions relating to trust in government, politicians, media, and the recommendations of experts. As shown in Figure 2, for five out of the seven statements, a majority of respondents agreed or strongly agreed that the government or media are dishonest, intentionally share misinformation, or have ulterior motives. Nearly three quarters of respondents agreed that “politicians and the media deliberately hide certain information”. This result supports data published by the OECD in 2020 showing that, out of the 38 member countries, Poland had the second-lowest trust in government, with only 27.3% of the population expressing confidence (OECD, 2022). However, the DIAGNOZA+ survey goes further to find that nearly half of respondents in our sample reported that they trust their own intuitions more than the experts during the pandemic, while the least widespread belief out of the seven was that “secret organisations influence political decisions”. Still, even this statement, which suggests deep-seeded nefarious behaviour behind the scenes of government, found 39.8% of respondents to be in agreement. Note that we aim to identify individuals who have a general propensity for conspiratorial thinking, rather than those who simply find some of the statements particularly compelling. To this end, we only categorise those respondents who agreed with all seven statements as having a high propensity for conspiratorial thinking, which was the case for 23.2% of our sample after reweighting.
Figure 2. Conspiratorial beliefs and trust in authority
Analysis
Table 1 presents regression results on the relationship between specific beliefs reported in the different waves of the survey and a number of individual characteristics. We show these results for three dependent variables: traditional family values, as defined by the opinion that a pre-school child is likely to suffer if his or her mother works; propensity for conspiratorial views, which identifies the respondents that agreed with all seven statements presented in Figure 2; and concern about the pandemic, a binary variable that identifies individuals who expressed great worry or fear about the pandemic. The results indicate that parents who live with their children are 10.1 p.p. more likely to hold traditional family values. After controlling for age, gender and education, living in a small town or village is associated with a 10.9 p.p higher probability of ascribing to more traditional gender norms, while individuals holding a tertiary degree are 18 p.p. less likely to agree that “a pre-school child is likely to suffer if his or her mother works” compared to those with primary education. Interestingly, neither age nor gender significantly correlates with family values, suggesting that the DIAGNOZA+ survey did not capture an intergenerational or gender-driven divide on these issues. This might relate to the online nature of the survey and the implied sample selection, in particular among older individuals.
Table 1. Regression results on views and attitudes
The results presented in Table 1 also demonstrate a relationship between some demographic characteristics and the likelihood to hold conspiratorial views (as defined by expressing agreement to the seven related statements in wave 6). A number of characteristics strongly correlate with conspiratorial thinking: being a parent living with their children aged 0-17, and living in small cities, towns and villages. Each of these characteristics is associated with a higher probability of believing in secret organisations and mistrusting experts. A number of characteristics strongly correlate with conspiratorial thinking: holding such views are 9.3 p.p. more likely among parents living with their underaged children and 10 p.p. more likely among individuals living in smaller towns or villages compared to those living in cities of over 500 thousand inhabitants. Higher education is strongly negatively correlated with the likelihood of holding conspiratorial views – those with tertiary education are 14.5 p.p. less likely to have these views compared to individuals with primary education.
One simple explanation for the increased vaccination rates among certain demographic groups in Poland could be that some segments of the population are more worried about the virus, and thus choose to take greater precautions. The analysis presented in Table 1 demonstrates that people were increasingly likely to be concerned about the pandemic in higher age groups. When asked “To what extent are you concerned about the COVID-19 pandemic?”, the probability of expressing serious concern increases progressively with age. This is an intuitive result considering the strong relationship between age and the severity of COVID-19 symptoms and the associated risk of mortality (CDC, 2021). Respondents aged between 31 and 40 were 10 p.p. more likely to report being very concerned or frightened than respondents between the age of 21 and 30, while in the age groups 41-50 (12.6 p.p.) and 51-60 (21.4 p.p.) the probability was even higher. There is also a weak but positive correlation (7.7 and 8.6 p.p.) between living in a city with a population of 10,000 to 500,000 inhabitants and expressing fear about the pandemic, as compared to respondents who lived in cities with a population of more than 500,000 people. The relationships between the remaining demographic characteristics and the probability of being seriously concerned about the pandemic are not statistically significant. Below, we use this data to examine the link between people’s beliefs and the likelihood of getting vaccinated.
Vaccine Scepticism, Demographic Characteristics and Conspiratorial Views
In light of the widespread scientific consensus on the safety and effectiveness of COVID-19 vaccines, low vaccination rates in Poland are difficult to explain. In this section, we analyse to which extent they may be driven by the underlying beliefs, on top of the socio-demographic characteristics. Overall, 54% of respondents in the selected sample from the DIAGNOZA+ survey planned to be or had already been vaccinated. Thus, the survey sample closely reflects the actual proportion of the population that was fully vaccinated in Poland as of January 2022. (ECDC, 2022). In Model A of Table 2, we present the relationship between the response to the question “Do you plan to get vaccinated against COVID-19 or are you already vaccinated?” and traditional family values, alongside the usual demographic characteristics. We find that those in the 51-60 age group were 14.5 p.p. more likely to plan to vaccinate than those aged between 21 and 30. This also reflects the higher level of concern about the virus expressed by those over the age of 50, as presented in Table 1, and the risk of serious illness associated with increasing age. However, the relationship between age and the probability of vaccination was much weaker than the relationship between age and the probability of expressing general concern about the pandemic, implying that concern does not translate directly into a willingness to vaccinate. We also find that tertiary education has a particularly strong effect, and respondents who have a university degree were much more likely (17.7 p.p.) to get vaccinated than those with less than secondary education.
Through this analysis we also discover several less intuitive relationships between individual characteristics and the propensity to vaccinate. We find that women are 11.5 p.p. less likely to plan to vaccinate against COVID-19 than men. Moreover, individuals living in a city with less than 500,000 inhabitants were much less likely to vaccinate, with the strongest correlation (-23.5 p.p.) observed for respondents living in medium-sized cities of 100,000 to 500,000 people. However, a strong relationship can also be seen for smaller cities of 10,000 to 100,000 inhabitants (-19.3 p.p.) and small towns and villages (-17.2 p.p.). Respondents’ expressions of traditional family values are also a strong predictor of their propensity to vaccinate. After controlling for gender, age, education and municipality size, those categorised as holding traditional views are 10.6 p.p. less likely to plan to vaccinate against COVID-19. Our findings demonstrate that while population density, education, age and gender, are all strong indicators of vaccine scepticism in Poland, so is the degree of traditionalism in people’s beliefs.
Table 2. Regression results on vaccination: probability of being vaccinated or planning to get vaccinated
A commonly cited explanatory factor for vaccine scepticism is the susceptibility to conspiratorial beliefs, as well as scepticism towards information disseminated by figures of authority (Hornsey et al., 2018). Thus, in Model B, we seek to identify a relationship between conspiratorial beliefs and scepticism towards the COVID-19 vaccine in Poland. When adding to our model a binary indicator for agreement with all seven of the conspiratorial statements included in the survey, we find that those who agreed across the board were 43.3 p.p. less likely to get vaccinated. Therefore, it seems that the propensity for conspiratorial thinking is a very strong correlate of willingness to vaccinate, and the characteristic most strongly associated with vaccine scepticism. The impact of the demographic factors goes in the same direction for both models, although the scale diminishes in Model B after controlling for conspiratorial views, reflecting the higher propensity of older individuals to hold such views. Furthermore, the effect of traditional family values is much weaker in Model B, suggesting a positive correlation between traditional family values and conspiratorial beliefs (Figure A1 in the Annex shows how values and views in the analysis views overlap with each other). This is in line with past research that ties traditional moral values and conservatism with conspiratorial beliefs, both before and during the COVID-19 pandemic (Pennycook et al., 2020; Romer and Jamieson, 2021).
One explanation for the strong relationship between conspiratorial beliefs and vaccine scepticism could be that respondents who do not trust the media and figures of authority believe that the dangers of the pandemic have been exaggerated and would thus not be concerned about its consequences. We account for this possibility in Model C by including the indicator for fear of the pandemic. We find that those who are very concerned or frightened are 21.1 p.p. more likely to vaccinate than those who are not. However, including this variable in the model has little effect on the estimates of the relationship between traditional gender views or conspiratorial thinking and the likelihood to vaccinate. Further research is needed to understand what is driving these relationships in this particular context. These findings demonstrate that while individuals that believe in conspiracies are the most susceptible to vaccine scepticism, other elements such as fear of the pandemic, education attainment, and where people live play an important role as well.
Conclusion
By January 2022 most European countries have reached a plateau in their vaccination rates, with free vaccines readily available since the summer months of 2021 to all those who are willing to take them. Not only have the high rates of hospital admissions among the non-vaccinated population proven the epidemiological models about the efficacy of vaccines in reducing hospitalisation and death to be true (a study in the United States showed a more than tenfold reduction in the risk of each measure; Scobie et al., 2021), but disparities between countries in the proportion of the population that is vaccinated have created a natural experiment that further substantiates this hypothesis. Poland, a country with a vaccination rate that is 15 p.p. lower than neighbouring Germany, had virtually the same number of cases per 100,000 people in the first two weeks of December, but almost threefold the number of deaths from COVID-19 (ECDC, 2021). Due to the burden COVID-19 related hospitalisations place on healthcare systems, the issues arising from the significant scale of vaccine scepticism are not only related to physical well-being, but also directly impact economic and fiscal stability.
Despite a fairly small sample size available for our analysis from the DIAGNOZA+ survey, a number of important correlations are identified in this study. We find that people living in cities and towns smaller than 500,000 people are less likely to vaccinate than those living in big cities. We show that women, those with less than secondary education, and young people are less likely to be vaccinated. Moreover, those believing that pre-school-aged children suffer when their mothers work are less likely to vaccinate compared to those with more progressive gender views. The most significant predictor of vaccine scepticism, however, is whether a respondent expressed low trust in authority and belief in the conspiracy theories presented in the survey, which was the case for 23.2% of the sample. These individuals are more than 40 p.p. less likely to express willingness to get vaccinated than the rest of the population. This suggests that the low rate of vaccination in Poland can, in part, be attributed to widespread distrust of government, the media, and scientific experts. Poland has already suffered the consequences of the high magnitude of anti-vaccine sentiments in the population, with the severity of the fourth wave of COVID-19 being one of the harshest in Europe (ECDC, 2021). If the government intends to prevent future outbreaks and protect the healthcare system and the economy, it must present a consistent, clear, and transparent message about the safety and efficiency of vaccines to minimise the misinformation that is driving vaccine scepticism among certain demographic groups.
References
- Centers for Disease Control and Prevention, (2021). Hospitalization and Death by Age.
- DIAGNOZA Plus, (2021). https://diagnoza.plus/
- European Centre for Disease Prevention and Control, (2021). Data on 14-day notification rate of new COVID-19 cases and deaths
- Eurostat, (2021). Excess mortality by month.
- Hornsey, M., Harris, E., &. Fielding, K., (2018). “The psychological roots of anti-vaccination attitudes:
A 24-nation investigation”, American Psychological Association. - Moline H. et al., (2021). “Effectiveness of COVID-19 Vaccines in Preventing Hospitalization Among Adults Aged ≥65 Years – COVID-NET, 13 States, February-April 2021”, Morbidity and Mortality Weekly Report.
- Organisation for Economic Co-operation and Development, (2021). “The impact of COVID-19 on health and health systems”.
- Organisation for Economic Co-operation and Development, (2022). “Trust in Government, OECD data”.
- Pennycook, G., Cheyne J.A., Koehler, D., & Fugelsang, J.(2020). “On the belief that beliefs should change according to evidence: Implications for conspiratorial, moral, paranormal, political, religious, and science beliefs”, Judgement and Decision Making
- Romer D. & Jamieson K. H., (2021). “Conspiratorial thinking, selective exposure to conservative media, and response to COVID-19 in the US”, Social Science & Medicine
- Scobie H. et al., (2021). “Monitoring Incidence of COVID-19 Cases, Hospitalizations, and Deaths, by Vaccination Status — 13 U.S. Jurisdictions, April 4–July 17, 2021”, Morbidity and Mortality Weekly Report.
- Statistics Poland, (2021). “Demographic Yearbook of Poland 2021”.
- Talic S. et al., (2021). “Effectiveness of public health measures in reducing the incidence of covid-19, SARS-CoV-2 transmission, and covid-19 mortality: systematic review and meta-analysis”, The BMJ.
Annex is available in the PDF version.
Disclaimer
This Policy Paper was prepared under the FROGEE project, with financial support from the Swedish International Development Cooperation Agency (Sida). FROGEE papers contribute to the discussion of inequalities in Central and Eastern Europe. For more information, please visit www.freepolicybriefs.com. The views presented in the Policy Paper reflect the opinions of the authors and do not necessarily overlap with the position of the FREE Network or Sida.
Sergei Guriev: Spin Dictators, Information Wars, and the Conflict in Ukraine
In recent decades, a new breed of media-savvy strongmen has been redesigning authoritarian rule for a more sophisticated, globally connected world. What do we know about these “Spin Dictators”?
Sergei Guriev, Professor of Economics at the Department of Economics at Sciences Po, and Maiting Zhuang, Assistant Professor at the Stockholm Institute of Transition Economics, discuss the strategies of “Spin Dictators”, how Putin is turning into a “Fear Dictator” and what the war in Ukraine means for Russia’s economy and media freedom.
Sergei Guriev is a Russian economist and Professor of Economics at the Department of Economics at Sciences Po. From 2016 to 2019, he was the Chief Economist at the European Bank for Reconstruction and Development. Prior to that, he was a Morgan Stanley Professor of Economics and Rector of the New Economic School (NES) in Moscow.
Sergei Guriev has been an outspoken critic of the Russia-Ukraine war and co-founded the organisation True Russia which collects donations for Ukrainian refugees.
Maiting Zhuang is an Assistant Professor at the Stockholm Institute of Transition Economics and an Affiliated Researcher at the Mistra Center for Sustainable Markets. She received her PhD from the Paris School of Economics in 2020. Her research interests cover Political Economy, Development Economics, and Economics of Media.
Gender Gap Widens During COVID-19: The Case of Georgia
Gender inequality has been a persistent (albeit steadily improving) problem for years. The COVID-induced crisis put women in a disproportionately disadvantaged position, jeopardizing decades of progress achieved towards equality between men and women. However, these effects of the pandemic were not universal across countries. This policy brief aims to evaluate the gender-specific effects of the COVID-19 crisis in Georgia, looking at labor market outcomes and entrepreneurial activities. As expected, the impact of the pandemic was not gender-neutral in this regard, being especially harmful for women. As the Georgian economy rebounds after the crisis, we show that the widened gender gaps are partially offset only in certain aspects. In order to countervail the disproportionate effects of the pandemic, targeted policy measures are needed to stimulate women’s economic activity.
Introduction
Past economic recessions, including the COVID-induced crisis, have never been gender-neutral (e.g., Liu et al., 2021; Ahmed et al., 2020). While economic crises are usually associated with disproportionate negative impacts on labor market outcomes of men compared to women, the impact of the crisis is, debatably, more severe for women-led businesses as compared to their male-led counterparts (e.g., Torres, 2021; Nordman and Vaillant, 2014; Grimm et al.,2012).
The disproportionate labor market outcomes of economic crises are claimed to be due to the fact that men are predominantly employed in cyclical sectors such as construction or manufacturing; therefore, women have to increase their employment during economic downturns as a means of within-family insurance (Alon et al., 2021). The recent COVID-induced crisis, due to its unique nature, turns out to be an exception in this regard. The pandemic and the subsequently-adopted measures primarily adversely affected contact-intensive sectors (where the worker is required to perform tasks in close physical proximity to other people) that predominantly employ women (Mongey, Pilossoph, and Weinberg 2020; Albanesi and Kim 2021). Moreover, large-scale lockdowns increased the burden of unpaid care, which is generally shouldered by women disproportionately (Babych, 2021), leaving less available time for them to work. It should be noted that gender gaps in the labor market were a persistent (albeit steadily improving) problem even before the pandemic (Eurofound, 2016). Therefore, COVID-19 poses a threat jeopardizing the progress achieved in this direction and worsening gender inequality.
COVID-19 brought unprecedented adverse consequences for not only employed workers but entrepreneurs as well. Increased unpaid care and housework pose additional burdens on female top managers, making women-led businesses more vulnerable to the crisis.
The unequal gender implications of the COVID-19 crisis have been widely debated. Growing evidence (Albanesi and Kim 2021; Torres et al., 2021; Alon et al., 2020; Caselli et al., 2020, Fabrizio et al., 2021) attests that, on average, the effects of the pandemic put women in a disproportionately disadvantaged economic position. However, the extent of this effect varies across countries and is absent in some cases (Campa et al., 2021; Torres et al., 2021).
This policy brief aims to examine the gender-specific nature of the COVID-19 crisis in Georgia. With this aim, we study the differential effects of the pandemic on the economic activity of women in terms of labor market outcomes and entrepreneurship. First, we contrast labor market outcomes for Georgian men and women during the COVID-19 crisis. Secondly, we try to assess the magnitude of the disproportionate impact on women-led businesses compared to men-led ones. We calculate gender gaps across different measures of firm-level performance, such as sales revenue, liquidity and owners’ expectations of falling into arrears. Finally, we examine whether there are any signs of recovery yet in 2021 and draw policymakers’ attention to emerging issues.
Labor market highlights
The adverse effects of the pandemic on female employment were conditioned by both supply and demand-side factors. The latter include decreased economic activity, mainly in service-related sectors (hospitality, personal care, etc.) that are dominated by women (Eurofound, 2021). In Georgia, as of 2019, women constituted the majority of workers in sectors such as hospitality (56%), education (83%) and activities of households as employers of domestic personnel (99%) that experienced some of the sharpest declines in employment during 2020. Moreover, women are more likely to be employed in part-time and temporary jobs (14% of women, as opposed to 11% of men, were employed part-time as of 2019, Geostat Labor Force Survey 2019), leaving them more vulnerable during times of crisis. Supply-side factors were triggered by the unequal burden of unpaid work generally undertaken by women in Georgia, mainly due to cultural reasons as well as the higher opportunity cost of time for men (women in Georgia on average earned 64% of men’s salaries in 2019, Geostat). School and daycare closures and decreased childcare involvement of grandparents increased household responsibilities for women. A UN Women survey-based study showed that in the midst of the pandemic in Georgia, around 42% of women reported spending more time on at least one extra domestic task as opposed to 35% of men (UN Women, 2020). This would naturally lead to more women than men leaving the labor force. Indeed, looking at the data, we see that in one year after the COVID-19 outbreak, women contributed to 98% (48,000 individuals) of the decrease in the Georgian labor force in 2020 (Geostat). Moreover, a close look at the percentage point difference between the labor force participation rates of Georgian men and women reveals a notable growth in the gender gap starting from 2020. The same can be said about employment rates (Figure 2).
Figure 1. Difference between male and female labor force participation and employment rates
To further elaborate on the tendencies in employment, Bluedorn et al. (2021) look at the differences between employment rate changes among male and female workers in 38 advanced and emerging economies. Replicating the exercise with the Georgian data, we can observe results similar to those obtained in Bluedorn et al. (2021). In Figure 2, we see differences between female and male employment rate changes. For each gender group, the latter is computed as an absolute difference between the quarterly employment rate and its annual average level from the previous year. Once the difference takes a negative value, implying that the drop in employment was sharper for women, one could say that we observe a “She-cession” phenomenon as termed by Bluedorn et al. (2021). As we can see, in 2020, the employment rate of women fell more than that of men. This widened gender gap was partially offset in 2021.
Figure 2. Employment rate changes by gender (deviation from the previous year average)
Remote work: a burden or a blessing for women?
One important aspect of the COVID-19 crisis was a wide-scale switch to remote work. This development had some gender-specific implications as well. The evidence shows that the prevalence of the switch to remote work was higher among women compared to men (41% vs. 37%) in the EU (Sostero et al., 2020). This tendency also holds in Georgia, where 11% of women as opposed to only 3% of men reported usually working from home in the last three quarters of 2020 (Julakidze and Kardava, 2021). It is not clear whether this tendency can be explained by gender-related occupational differences of male and female jobs (Dingel and Neiman, 2020; Boeri and Paccagnella, 2020; Sostero et al., 2020) or, rather, different personal choices of men and women working in the same occupations. Interestingly, across different countries, we observe a positive correlation between gender inequality (as measured by the Gender Inequality Index) and gender differences in the switch to remote work (measured by the ratio of the share of remote workers among female and male workers). To account for this observation, we can stipulate that gender differences in switching to remote work might be explained by differing gender roles in households, and in society at large, across countries (as proxied by the gender inequality index).
Figure 3. Relative prevalence of remote work among female and male workers
Regardless of the reason, remote work is likely to have some important implications on gender roles. However, the directionality of these implications is not straightforward. On the one hand, remote work offers flexibility for women to juggle household and work responsibilities. On the other hand, since women compared to men have been shown to be more likely to use the time saved from commuting to engage in housework, the switch to remote work might increase their “total responsibility burden” (Ransome, 2007) and lead to time poverty (Peters et al., 2004; Hilbrecht, Shaw, Johnson and Andrey, 2008). Indeed, according to CARE International South Caucasus (2020), around 48% of female survey participants in Georgia placed additional effort into housework and childcare in the midst of the pandemic. Moreover, as women are more likely and expected to use remote working as a means of balancing work-life responsibilities (Moran and Koslowski, 2019) their bargaining power at work decreases relative to their male counterparts. This could have some adverse career implications for female workers. Recent enforced lockdowns might pose an opportunity in this regard, as once-remote work becomes something close to a “new normal” employers will likely decrease the penalty for remote workers.
Spotlight on women-led business performance during the COVID-19 crisis
Calamities brought by the pandemic worsened financial outcomes for enterprises, affecting their ability to operate and have stable financial income. Similar to other crises, the pandemic has not been gender-neutral (Liu et al., 2021; Ahmed et al., 2020) in terms of the effect on business performance.
Gaps in the performance of women- and men-led businesses have been prevalent beyond any economic crisis as well, and have been documented in a number of studies (e.g., Amin, 2011; Bardasi et al., 2011), registering gender differences in sales and productivity in favor of men-owned enterprises. As suggested by Campos et al. (2019), these performance gaps may be due to lower levels of capital owned by women as opposed to men, a smaller number of employees hired by women-owned firms, as well as different practices in using advanced business tools and innovation. In addition, the existence of these gender gaps has also been explained as stemming from the prevailing social norms that assign certain obligations to women. Nordman and Vaillant (2014) and Grimm et al. (2012) suggest that unpaid housework and family-care led to a constrained number of hours women could afford to spend on the work and management of firms, negatively affecting their productivity.
According to the Women Entrepreneurship Report (Global Entrepreneurship Monitor (GEM), 2021), the pandemic imposed an additional burden in terms of increasing family-care duties on women. The GEM survey (2021) conducted in 43 countries worldwide shows that the likelihood of enterprise closure is 20% higher for women-led compared to men-led businesses. The higher likelihood of closure reflects the adverse factors that may have hindered the operating capacity of firms. For example, a survey conducted by UNIDO (2020) suggests that, as a result of the Coronavirus crisis, African and Middle Eastern women-led firms experienced diminished revenues. In addition, 41% of women-led firms were short of cash flow and unable to fulfill financial obligations, while only 32% of male entrepreneurs were exposed to the same problem.
More rigorous analysis on this matter has been conducted by Torres et al. (2021) and Liu et al. (2021). They try to examine the asymmetric effects of the COVID-19 crisis on women-led firms in several dimensions utilizing new datasets from the World Bank: COVID-19 Follow-up Enterprise Survey and the World Bank Business Pulse Survey. The findings of Liu et al. (2021) for 24 countries from Central Europe & Central Asia and Sub-Saharan Africa confirm that during the pandemic women-led businesses are subject to a higher likelihood of closure than men-led businesses and that female top managers are more pessimistic about the future than their male counterparts. Finance and labor factors were mentioned to be the major contributors to these disadvantages; for example, women-led businesses were found to be less likely to receive bank loans compared to men-led businesses. Lastly, the disadvantages experienced by women-led firms were claimed to widen in highly gender-unequal economies and developing countries. Torres et al. (2021) study the impact of the early phase of the COVID-crisis on gender gaps in firm performance for 49 mostly low- and middle-income countries. The results demonstrate that women-led businesses experienced a greater reduction in sales and lower liquidity compared to their male counterparts, which has been reflected in a higher likelihood for women-led companies in several sectors to fall into arrears. On the other hand, as a response to changing circumstances, women-led firms were found to be more likely to increase the utilization of online platforms and make product innovations. Nevertheless, they struggled to obtain any form of public support.
The impact of the pandemic on firms was not gender-neutral in Georgia
The pandemic-induced fragile environment had an adverse impact on entrepreneurs in Georgia– the effects of the shock were significantly more severe for female entrepreneurs than for their male counterparts. In order to assess the gender differences in the impact of the pandemic on firms, we utilize firm-level data on Georgian enterprises from the second round of the World Bank COVID-19 Follow-up Enterprise Survey, conducted in October – November 2020.
Following the methodology as presented in Torres et al. (2021), we assess whether there are differences in the magnitude of reduction in sales revenue (self-reported percentage change in sales revenue one month before the interview as compared to the same period of 2019) and available liquidity for women- and men-led businesses, and whether falling into arrears in any outstanding liabilities is more expected by female top managers (in the next six months from the interview).
Depending on the type of dependent variable, continuous or binary, either Ordinary Least Squares (OLS) or Probit models are estimated, respectively. Along with the gender of the top manager of firms, we also control for sector and firm size. The Georgian database contains a total of 701 enterprises (581 SMEs and 120 micro-businesses).
Table 1. Magnitude of the disproportionate impact of COVID-19 on women-led businesses in Georgia, October-November 2020
Table 1 presents the results of the regression analysis of gender differences among Georgian enterprises in terms of the impact of the pandemic. As observed, women-led businesses reported larger declines in sales, revenues, and liquidity. The predicted drop in sales was 18 percentage points (pp) higher for enterprises with a female top manager than for men-led firms. The larger drop in sales should have been reflected in the reduced cash flow availability and in hardship to cover operating costs. Indeed, as the results demonstrate, women-led enterprises are on average 12.9 pp more likely to have reduced availability of liquidity. This may explain women’s negative future expectations. Moreover, the average predicted probability of expecting to fall into arrears is 11.3 pp higher for women-led firms in Georgia as compared to men-led businesses.
The unequal effect of the COVID-19 crisis on women-led businesses might have been fueled by the disproportionate burden of unpaid care and housework shouldered by women in Georgia, leaving less time available for work and managing enterprises. On the other hand, as Torres et al. (2021) claim, female business owners tend to employ more female workers (the social group more exposed to the unequal burden of the pandemic) than male owners. This, in turn, could further hamper the productivity of women-led businesses and increase their vulnerability to economic shocks.
On the road to recovery
2021 has been characterized by a rather rapid recovery for the Georgian economy, as evidenced by the 10.6% (preliminary estimate) annual growth rate of real GDP. Signs of recovery can also be observed in the labor market – the labor force increased by 4% (YoY) in the 3rd quarter of 2021, while employment was also characterized by a growing trend (1%, YoY).
Along the lines of economic recovery, the gender gap in the labor market also seems to be narrowing. For instance, the steadily growing gap between male and female labor force participation rates seems to stagnate over 2021 (Figure 1). Moreover, as is illustrated in Figure 2 above, the difference between women’s and men’s employment rate changes is positive in 2021, meaning that the employment rate was increasing more (or decreasing less) for women. If this tendency persists, we might stipulate that the disproportionate effects of the COVID-19 crisis on female employment are on the way to recovery.
To examine whether Georgian firms have experienced concurrent movement in their performance along with the economic recovery, we utilize third-round data (from September 2021) of the World Bank COVID-19 Follow-up Enterprise Survey and scrutinize whether the gender differences have narrowed since the previous round of the survey (Table 2).
Table 2. Magnitude of the disproportionate impact of COVID-19 on women-led businesses in Georgia, September 2021.
Although the third-round survey data suggests that the predicted percentage drop in sales sharply declined for both men- and women-led businesses, the findings are not statistically significant and therefore cannot claim any signs of recovery in the gender gap in this respect. No signs of recovery are observed in terms of average predicted probability of reduced liquidity of firms and expectations of falling into arrears, either. Gender gaps in these two indicators still persist and are as strong in magnitude as in the second-round survey estimates (from October-November 2020). It seems that despite the economic rebound, not all traces of the pandemic crisis for firms have been eradicated from a gender perspective.
Conclusion
The pandemic came with high economic costs. It hit women disproportionately harder, adversely affecting their employment and entrepreneurial prospects. The unequal burden of the COVID-crisis shouldered by women in Georgia could be one of the reasons for the massive labor force dropouts among female workers and poor performance of women-led businesses. Georgian enterprises with female owners experienced a significantly larger decline in sales compared to their male-owned counterparts, consequently suffering from a shortage of cash flow and fears of falling into arrears.
Despite the great rebound in growth after the initial COVID-19 shock, the pandemic-associated increase in the gender gap seems to have been only partially offset in Georgia. In particular, there is a larger positive upsurge in women’s employment rate, as well as a diminishing difference between male and female labor force participation and employment rates. Following the ongoing recovery in sales revenue of Georgian enterprises (though the predicted gender difference was statistically insignificant), the gender gap in sales is shrinking too. But, in spite of the economic rebound, differences in available liquidity and expectations of falling into arrears have not yet been eradicated, indicating that the adverse influence of the pandemic on women still persists. It leaves female entrepreneurs a still more vulnerable group, which could be of special interest to policymakers to ease their liquidity problems.
Policies should also be directed towards encouraging women to become more economically active. In this regard, remote work seems to pose an opportunity if coupled with affordable childcare support policies.
References
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Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
German Dependence on Russian Energy, Economic Stress and Green Transition
The invasion of Ukraine has created a reassessment in many European governments of the risks that Russia inflicts on countries and the current world order. This has implications for both the military buildup and the reliance on trade and exchange with Russia in particular in the area of oil and gas.
Perhaps nowhere has this turnaround been more significant than in Germany. Probably the country within Europe that has maintained the closest business ties with Russia since 1991.
Anders Olofsgård, Deputy Director at the Stockholm Institute of Transition Economics, and Associate Professor at the Stockholm School of Economics discusses the turnaround of German policy towards Russia with Guido Friebel, Professor at the Goethe University in Frankfurt.
Professor Guido Friebel is also a Fellow at CEPR, IZA, a VP of SIOE, a founding member of the Organizational Economics Committee of the German Economic Association (VfS), and a member of the Scientific Advisory Board of Sciences Po, and of ConTrust at Goethe University. He also serves as a Scientific Director of CLBO. Before joining Goethe, I held positions at the Toulouse School of Economics and EHESS, and at SITE, Stockholm School of Economics.
#AcademicsStandWithUkraine
The Forum for Research on Eastern Europe and Emerging Economies (FREE Network) stands for peace, security and democracy and condemns Russia’s invasion of the independent and democratic nation of Ukraine and violation of international law.
The FREE Network has an extensive history of building networks and partnerships with leading academic experts on economic issues in Central and Eastern Europe and emerging markets.
The FREE Network invites academics from the region and beyond to express their solidarity with the Ukrainian people, academics, educators, and students suffering from Russia’s invasion into the democratic nation of Ukraine.
To speak out on Russia’s aggression against Ukraine, please use the hashtag #AcademicsStandWithUkraine.
Donations for humanitarian aid are organized by the Kyiv School of Economics, a member of the FREE Network.
Ukrainian Refugees in Poland: Current Situation and What to Expect
The 2022 Russian invasion of Ukraine has forced millions to flee from the war zone. This brief addresses Ukrainian refuge in Poland. It provides an overview of the current situation, discusses the ongoing solutions and potential future challenges, and stresses the key areas for urgent policy intervention. It is based on a presentation held at the FREE Network webinar Fleeing the war zone: Will open hearts be enough?, which took place on March 14, 2022. The full webinar can be seen here.
The latest data (from March 15, 2022) shows that since February 24, 1.8 million refugees have already crossed the Polish-Ukrainian border. This number represents over 60 percent of Ukrainians who have fled the country thus far. Among this group that relocated to Poland, approximately 97 percent were people with Ukrainian citizenship. Most of the foreign nationals living in Ukraine before the war, and who came to Poland after its outbreak, have already returned to their countries of origin.
Figure 1. The influx of refugees from Ukraine to Poland since February 24, 2022.
Our estimates show that there are currently about 1.1 million Ukrainian war refugees in Poland. Many stay in large cities such as Warsaw, Kraków or Wrocław. The rest of those who crossed the Polish border transited to the other EU Member States or countries outside of Europe, such as Canada or the USA, reuniting with their families and friends.
In the first days after the outbreak of the war, refugee assistance in Poland was mostly provided by Polish families and households, as well as owners of guesthouses and hotels who made them available for the purpose of providing accommodation.
A similar situation took place at the border and at railway and bus stations where refugees were arriving, with a majority of support coming from volunteering citizens. This assistance largely consisted of the provision of basic necessities such as food, hygiene products, and medical or psychological first aid. The level of mobilization among non-governmental organizations, grass-roots initiatives, private citizens, and civil society, in general, is extremely commendable and should be accredited with providing the safe welcome refugees received upon arrival. For example, during the first days, Polish families sheltered several hundred thousand refugees, often in their own houses or apartments. There are currently two main Ukrainian social groups arriving in Poland: women with children and older persons over the age of 60. This is a result of Ukraine’s internal regulations, which prohibit men aged between 18 and 60 from leaving the country.
Among those who have managed to escape the war, there is a large group of people requiring very specialized support, e.g. children suffering from oncological diseases, and elderly with a high degree of disability. So far, these groups have been provided with the necessary support, but if these needs become more frequent, a review of the capacity of the Polish healthcare system and the system of support for the disabled will be needed.
In the first days after the war broke out, the situation at the border was very difficult. The waiting time for crossing reached up to 70 hours. However, this was related to problems with the information system and the limited number of border guards on the Ukrainian side. Currently, crossing the border is quick and seamless. Every day the Polish Border Police register 80 to 100 thousand individuals, a vast majority of them crossing into Poland. This is a many-fold increase compared to pre-war migration flows, which fluctuated around 12-15 thousand people per day. At the same time, over 80.000 people, mainly men, have crossed the Polish border to Ukraine in the last 20 days with the goal of joining the army or territorial defense.
For a long time, the Polish government held the position that there would be no need to build refugee centers. However, the government recently reversed this decision and decided to open a dozen centers, located in market and sports halls. Currently, over 100,000 people are staying in these types of temporary accommodation facilities. However, these centers are not sufficiently adapted for stays longer than a few days. It is necessary to prepare housing infrastructure (temporary accommodation centers equipped with habitable containers) in which refugees can stay for two or three months until they find another place to live.
So far, Poland has essentially dealt with two of three possible migratory waves. In the first, people with family members or friends living in Poland or in other EU Member States arrived. Before the war, there were already approximately 800 thousand Ukrainians working or studying in Poland. In the second wave, after the bombing of civilian facilities in large cities, people without family or friends living in Poland started arriving. They require full assistance. A third wave is possible, and this one may be much larger than the previous two. It may occur if the situation at the front worsens and the repressions by Russian troops become harsher. Such reports are already coming from eastern Ukraine. If the situation worsens, Poland could even face a couple of additional million people that would leave Ukraine. Under these circumstances, we should assume that the third wave would include young men in addition to women, children, and the elderly. This scenario is currently very unlikely, but cannot be completely ruled out.
Since the beginning of March, Poland has seen an increase in the activity of both local representatives of the government administration and the central government. Information has been gathered about vacancies in smaller cities and local communities where refugees could be accommodated. This is because large cities are on the verge of reaching their capacity for the number of refugees they are able to manage. In addition, a special law entered into force on March 13, which provides for a catalogue of support tools for refugees. The main issues are:
1. The possibility of obtaining an individual identification number, which will enable the opening of a bank account and grant access to the labor market, education, and social benefits. It will be possible to apply for the ID number from March 16. Certainly, large queues can be expected in the first days, as the procedure is complicated and rather bureaucratic. The government decided to require all the necessary information at the start of the application process, which could be complicated for some applicants and lead to additional delays. Based on recent numbers, up to 1 million Ukrainians may apply for an individual identification number in the near future.
2. Reimbursement of the costs of hosting refugees from Ukraine in Polish family homes and in private hotels. The government has agreed to cover the value of around 8 euros per day for each person. However, receiving this refund requires submitting a special application to the local administration offices, which may again cause various kinds of perturbations, and even resignation from obtaining such support.
3. Ukrainian children can be enrolled in Polish schools. It will also be possible to open school branches in temporary accommodation centers, as well as parallel Ukrainian classes inside Polish schools. At present, however, the preferred model is the inclusion of Ukrainian children in Polish classrooms. Currently, no major problems have been reported with this process, but only around 10% of Ukrainian children have entered Polish schools so far. Numerous challenges connected with this integration process are expected. Part of the solution could be distance learning or hybrid learning. The priority is to involve children in education as fast as possible so that they do not lose time while living in Poland from an educational development point of view.
4. A simplified system of qualifications recognition has been implemented for nurses and doctors. Unfortunately, contrary to the advice of experts, the act does not provide guidelines for a simplified qualification recognition of teachers, educators or psychologists from Ukraine. In his media statements, the Minister of Education and Science did not rule out introducing a simplified procedure in the near future. Such recognition could, to some extent, solve the problem of understaffing in Polish schools.
5. All adults from Ukraine who arrived after February 24 have open access to the labor market.
Until early March, the Polish government did not apply for support from other EU member states. Now, this position has changed. Over the first weekend of March alone, more than 20 trains were organized that made it possible for refugees interested in moving from Poland to countries such as Germany or other destinations within the EU. Additional relocation measures are expected in the near future. However, in contrast to the European migrant crisis in 2015, the relocation scheme of Ukrainian refugees is carried out on a voluntary, rather than a compulsory basis.
It is very difficult to predict what will happen in the next days or weeks. While it should be emphasized that Poland is managing the migration challenge well, this is not least due to the exceptional commitment of civil society. Certainly, in the coming months, Poland will not be able to cope with the integration of more than 800.000 people into the labor market and education system. Of course, it is possible to provide ad-hoc support, but that is completely different than integrating refugees into Polish society. Ukrainians are still treated as guests who are expected to return to their homes when possible. Such an assumption should not be changed until May when the situation in Ukraine will be more predictable. We must also be aware that we are dealing with dispersed families who will want to reunite as soon as possible. It is not known, however, whether this will take place in Poland or in Ukraine. It depends on how the situation develops in the weeks and months to come.
In the coming weeks, the key issue will be the relocation of Ukrainian refugees from large to smaller cities within not only Poland but also the European Union. It is absolutely necessary to coordinate activities both at the level of the Polish government and the European Commission. As far as the Polish government is concerned, a task force should be established to maintain constant contact with the European Commission and the EU Member States regarding the ability to relocate refugees from Poland to other countries. This team should be composed mainly of civil servants from the Ministry of Foreign Affairs and the Ministry of the Interior. It is also necessary to appoint a team coordinating the actions of voivodes, who are responsible for crisis management in accordance with Polish law. It is also critical to ensure the flow of information between local administrations and the government, as well as to coordinate the activities of non-governmental organizations, whose activity is key in dealing with the challenges related to the migration crisis. In the next stages, it will be necessary to adopt a systemic approach to the inclusion of Ukrainian children in the education system (Polish and Ukrainian, but functioning in Poland – remote learning), and adult refugees to the labor market.
In the end, I would like to recall my opinion, which is now popular in the media and among representatives of the central government, local governments and non-governmental organizations: “Helping refugees and managing migration crises is a marathon, not a sprint.” We must keep this in mind.
The webinar “Fleeing the war zone: Will open hearts be enough?”, was hosted by the FREE Network together with the Stockholm Institute of Transition Economics (SITE) and can be seen here.
Russian Oil and Gas: What to Expect?
For decades Russian oil and gas have been an essential part of European energy imports. But due to the Russian invasion of Ukraine, oil and gas toward the west will be sharply curtailed or even stopped, by an initiative of either party.
How oil and gas flow reduction can affect global energy markets? And how big a problem is it for the EU and Russia?
Experts discussed what the Russian oil and gas flow reduction means for global markets
- Julius Andersson, Assistant Professor at the Stockholm Institute of Transition Economics (SITE)
- Chloé Le Coq, Professor at the Université Paris 2 Panthéon-Assas and Research Fellow at SITE,
- Sergej Gubin, Research Fellow at BICEPS, and
- Paweł Wróbel, Managing Director of the BalticWind.EU
Disclaimer: Opinions expressed during events, seminars and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Fleeing the War Zone: Will Open Hearts be Enough?
The invasion of the Russian Federation in Ukraine has resulted in the loss of lives and destruction of infrastructure and has forced millions to flee from the war zone.
By March 14th 2022 over 2,8 million people have found refuge outside of Ukraine and many more have been displaced within its borders. The UNHCR estimates the total number of those forced to flee Ukraine may grow to 4 million.
Program
On March 14, 2022 experts from Ukraine, Sweden and Poland discussed the consequences of the invasion for the Ukrainian population.
- Maciej Duszczyk (University of Warsaw)
- Hanna Vakhitova (Kyiv School of Economics)
- Jesper Roine (Stockholm Institute of Transition Economics)
- Annika Sunden, (Migration Studies Delegation)
- Moderated by Michal Myck (Centre for Economic Analysis)
Disclaimer: Opinions expressed during events, seminars and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.