European Policy Analysis Volume 2, Number 1, Spring 2016 | Page 70

Policy and Decision to Retire in Central and Eastern European Countries

As defined by Bukodi et al. (2006)
in former socialist states such as Hungary
and Estonia, the labor markets of these
countries are less flexible; for example, in
Hungary an increasing proportion of newly
created jobs are temporary and this type is
widespread among less educated, unskilled
workers. Bukodi et al. (2006) summarized
that all post-socialist countries spend
significantly less on measures of active and
passive labor market policies. Hungary and
Estonia experience a relatively low degree of
employment security.

According to Bohle and Greskovits
(2007), three capitalisms emerged in CEE
societies: a neoliberal type in the Baltic
states, an embedded neoliberal in Visegrád
states and neocorporatist in Slovenia.
According to them, Hungary’s social welfare
system is among the most generous in the
region. The Czech and Slovak Republics
also have relatively encompassing systems
of welfare; these countries supported a large
number of enterprises and can control the
dynamics of unemployment. In the Baltic
states, labor markets are flexible, wages are
low, work conditions are unregulated, and
workers are less demanding of protectionist
state intervention.

Saar, Unt, and Kogan (2008) stated
that the degree of labor market regulation
influences the employers’ decision making
when hiring workers. According to them,
with respect to employment protection,
there are variations within CEE countries.
Hungary has the most flexible labor
legislation, closely followed by Czech
Republic and Slovak Republic, and then
by Poland. The Baltic countries are in the
middle, and Slovenia has most restrictive
labor relations regulation. The common
features among the CEE countries are as
follows: employers do not always enact
regulations, the low coverage of trade
unions, and employees do not initiate

individual claims against employers for
fear of losing their jobs. A fixed term work
is a widespread form of employment there.
In the Baltic states, there are a significant
proportion of employees without a written
contract. Saar et al. (2008) referred to the
previous analysis, which shows that the
CEE countries have different employment
protection models. In Slovenia, there is
a strong employment protection policy,
and, a relatively low mobility rate. In
Czech Republic and Hungary, employment
protection is quite low, whereas in Baltic
states there is high employment protection.

Specific rules for workers reaching
or approaching the age of retirement
were distinguished by Tonin (2009) while
analyzing employment protection legislation
in Central and Eastern European countries.
For example, in Hungary, an additional
severance payment is prescribed for older
workers, while no payment is due to workers
already qualifying as pensioners. Bulgaria
has particularly favorable conditions for
these workers, while separate rules on the
severance pay policy exist in Slovakia. A
peculiarity of the Slovak labor code is that
entitlement to severance allowance develops
only if the employee agrees with the
termination of the employment relationship
prior to the commencement of the notice
period, thus making notice and severance
pay substitutes rather than complementary
for each other, unlike other countries. A
notice period is longer in Croatia for workers
who are over 50 and 55. In Lithuania,
workers within five years before old age
pension also have a longer notice. Besides
a longer notice period, older workers can
usually get a higher severance payment.
Cheron, Hairault, and Langot (2011) also
noted that older workers are usually more
protected than younger ones by tenurerelated provisions: workers with a longer
tenure (more likely to be older workers)
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