Sacred Heart University

^*I thank James Angresano, Bozena Leven and Horst Brezinsk for comments and suggestions. I remain solely responsible for all possible errors.

Abstract

A critical unresolved task of the ongoing economic transformation in Central European countries is the reformulation of social safety nets and income transfers to prepare for accession to the European Union. Existing programs inhibit productivity of labor, delay structural adjustment and prolong high unemployment. If Central European states adjust their social safety nets to those prevailing among the EU members, the results will involve employment-fostering programs, as well as future income transfers, unemployment benefits and other elements not currently provided. This paper examines policy solutions aimed at reducing unemployment and at improving the pension and other social security systems.