Slovakia - Global Report on the State of Society (Preview from the Global report 2002)

The annually published Global Report on the State of Society monitors and analyzes the basic development trends in many areas of society (politics, economy, foreign policy, education system, social policies, defense, ethnic relations, public opinion, the nonprofit sector, media, etc.). The first Global Report was published in 1997. The publication is available in both the Slovak and English languages.

Text below is from Global Report 2002.

Information about other annual reports are here.

One of the principal problems of Slovak society, I believe, is that we don’t call things by their proper names. For instance, we like to say that we have a market-oriented economy, although the amount of money redistributed by the state from tax and fund contributions is almost identical to the period before the Velvet Revolution. Even the "serious press" continues to publish stories whose headlines do not correspond to the content of the stories that follow. We like to moan that we were better off during communism, but we do not vote for communists in parliamentary elections.

Given this situation, a man like me is extremely pleased every time he lays his hands on an honest product. A product whose namefully corresponds to its content. Like, for instance, A Global Report on the State of Society. In the following pages I will dwell on the purpose of this product; at the same time, and perhaps very immodestly, I would like to interweave my thoughts with personal opinions about the enlightening things the year 2002 showed us all, especially those who truly care about the well-being of our country.

They say that progress usually makes one thousand steps forward and nine hundred ninety-nine steps backward. These steps forward and backward are usually mixed together, coming either in single strides or in alternating sequences. If society has been moving backwards for too long, it accumulates within itself an increasingly potent energy that may be changed into an accelerated motion forward. During this period, society stands a real chance of making up all the arrears and even making a significant move ahead. Slovakia 2002: A Global Report onthe State of Society is a report whose authors, I venture to say, prevailingly share a moderate optimism regarding the future of this country. They tentatively believe that forty and then ten years of moving backwards, of wandering and groping, are now behind us, while ahead of us lies a journey in a relatively clear direction, a journey defined by the values of "standard" countries and cultures whose inhabitants enjoy a high standard of living.

The problems of Slovak society, as identified by most chapters of this book, are identical with those facing standard countries; the authors define and examine them in a standard way and propose standard solutions. Back in 2001, it was not yet wholly certain what Slovakia would look like, and especially where it would be heading in the first decade of the third millennium. But in 2002 it became certain. The Global Report for 2002 captures in detail this crucial change and the beginning of Slovakia’s long and strenuous steeple chase.

When considering fundamental changes in any country’s orientation, analysts often discuss the influence of government, the public and interest groups in pushing or hindering this change. Naturally, these influences cannot change reality, but they can influence the way society copes with this reality. For instance, while a country might have to come to terms with a public finance deficit, if it is also burdened by irresponsible politicians, an uninformed public and interest groups with bad motives, the coping process may be far more difficult.

The government, the public and interest groups create a "mist" of factors, some of them clearly visible and others obscure like icebergs awaiting their Titanic, some of them catalyzing reforms whith others inhibiting them. If we are convinced that the current administration is honestly prepared to stay at the helm while navigating through troubled waters, if we believe that the crew – Slovak citizens – are beginning to share the values of the modern world, if we are assured that interest groups are not toying with the idea of mutiny, then we can safely assume that the ship called the Slovak Republic will have a safe voyage. But are we truly convinced?

The 2002 parliamentary elections produced an unexpected result – a government consisting entirely of reform-oriented political parties. This term usually refers to parties determined to make changes that increase citizens’ feeling of responsibility, enhance their freedom, strengthen market principles in the economy, introduce conservative fiscal policies, and spur the country’s integration to the European Union and NATO. The government itself talks most frequently of changing Slovakia’s pension system, reforming its education system and health service, and making its labor market more flexible. The ministries that will be directly responsible for these changes are now headed mostly by people who are publicly known as exponents of reform, and whose professional and sometimes even personal fates are directly connected to reform.

However, it is somewhat troubling that the chairmen of three out of four ruling coalition parties (as has become standard practice during Slovakia’s transformation process) were not nominated to executive posts directly connected to reforms. While the SDKÚ party chairman, Mikuláš Dzurinda, was appointed the new prime minister, the chairmen of other coalition parties (SMK, KDH, ANO) remained outside the executive branch. In other words, the most important political figures largely refused to shoulder direct political responsibility for preparing and implementing essential but painful reforms. While the current administration’s reform nature cannot be doubted, it will be interesting to see to what extent the government links its own political fate with the fate of its reforms.

For a long time, the Global Report has featured analyses of the values professed by the Slovak population. These analyses suggest that those values do not change quickly in Slovakia, and that this country is in principle conservative. If the forthcoming social changes require popular support, this support is likely to be granted only if the envisaged outcome of reform corresponds to current or past values. This is relatively unlikely, especially given the complexity of the changes expected. Just as privatization and price liberalization were not carried out with the blessing of the Slovak population, it is safe to assume that the values shared by the Slovak population will not be the driving force behind future reforms either.

Formally and informally organized interest groups seem to be powerful players in putting change into practice. For the sake of illustration, let’s take a closer look at the recent election results. Since independent Slovakia’s emergence in 1993, the values professed by Slovak citizens have changed only slightly. The ratio between supporters of "standard" and "non-standard" political parties has changed more perceptibly, but probably not enough in itself to move the country all the way from the political leadership of the mid-1990s – Mečiar, Slota and Ľupták – to that of the current Dzurinda, Bugár, Hrušovský and Rusko administration.

Indeed, election results for the past dozen years have seemed to depend less on political leaders’ charms and abilities or the values shared by the voters, and more on changes within or among interest groups. At the beginning of the 1990s, domestic interest groups represented by the managerial "captains" of industrial flagship companies wanted to privatize the state property available under the most favorable conditions: the political scene accommodated that need. Current interest groups want primarily to protect and develop their property: the political scene has again protected that interest.

It seems that interest groups have a decisive impact on this country’s fate. This is not because democracy is not working properly, but because these groups have undergone and continue to undergo great changes. If we ask whether recent developments in our country have set any long-term trends, we should not look for answers from political leaders or in values professed by their voters, but rather examine the shifting needs of interest groups. In this respect, it seems that 2002 did produce an answer: The future will be determined primarily by interest groups, which increasingly represent the interests of people who earn their living honestly. Associations of employers, employees, tradesmen, property administrators, and so on are replacing interest groups representing profitseekers, privatizers and asset-strippers.

The year 2002 brought another important but less optimistic finding. While not yet fully visible, in the light of this Global Report, its contours are becoming increasingly recognizable in the mist of reform factors: Further changes will be very costly.

The first sign was the cost of restructuring the country’s banking sector, which still arouses discussion over whether it made economic sense to invest over a hundred billion crowns into restructuring three banks and subsequently sell them off for a fraction of these costs. It is painful to explain to people that the country’s banking sector was working on an immense internal deficit, that the authorities have since the mid-20 th century let all kinds of fortune hunters to strip them of their assets, and that if we were to have a functioning banking sector in Slovakia, we had no choice but to sink the country into debt and pay off these banks’ debts.

Unfortunately, problems very similar to those in the banking sector can be identified in other areas as well. For instance, the government has tried to quantify the costs of the pension system reform. It seems that the Sk 65 billion generated by privatization will be enough to sponsor the new system during the initial four years. Unless further changes are made, though, the entire system will collapse: If people who are now gainfully employed begin to put aside half of their compulsory fund contributions for future retirement benefits, the government must compensate current pensioners with the same sum. A truly radical change to the country’s inefficient and unjust pension system would, according to some estimates, cost approximately a trillion crowns, about the size of last year’s GDP.

It appears that further billions will be needed to implement essential changes in the health and education systems, for the same reasons as in the case of Slovakia’s banks: These systems have been systematically stripped of assets since the 1950s. Borrowing a term from pension reform, one could say that communism was a pay-as-you-go economic system, within which people paid minimal attention to financing their own retirement benefits, their own medical care or the education of their children. Savings accumulated for these purposes before the arrival of communism were simply "consumed" by the state to subsidize its own system.

If we are to return the system to efficient and just foundations, we have no choice but to pump the missing funds back into the system. Without these funds it will be impossible to give a satisfactory answer to the fundamental question of these reforms: If people begin putting aside money for their own pensions, for their and their children’s education, for their medical care, for their possible unemployment, etc., who will take care of those whose money was consumed by the country’s previous governments?

The previous year also highlighted the need for true decentralization and increased fairness in the country’s social security system. That system’s generosity has long been sustained by plunging it into debt and consuming onetime privatization revenues. The years 2001 and 2002 clearly showed that Slovakia’s economy does not generate sufficient money to finance welfare benefits at the existing level. While the government has introduced across-the-board cuts, if this policy is thoroughly implemented, it may cause tensions from people’s legitimate demands to have at least their basic human needs looked after.

The Global Report on the State of Society has gained a strong foothold on the market because it provides reliable, clear, timely and complex information about our country. In doing so, it creates the basis for tackling the most pressing social problems. Opinions regarding future problems and their solutions will undoubtedly differ. However, this year’s Global Report indicates that the country has finally begun to move in the same direction successful countries usually move. No longer are we running in the opposite direction; no longer are we straying from the desired path.

At this point, I have no idea what the cover of this year’s Global Report will look like. But I believe that a modest stripe of damask, expressing cautious optimism, would not do any harm.