Employment possibilities in Central and Eastern Europe

Statistics on unemployment measure only the percentage of people excluded from officially registered systems of labour, that is, those who are outside the legal terms of commodity production. But the data given by this definition do not represent the actual boundaries of productive activity in any society today; and if we try to set social policy according to these figures we run the risk of errors that will have serious economic and political consequences.

The term "unemployment" was appropriate for the context in which it was coined, the highly industrialized Western countries around the time of the second world war. Since "full employment" in this sense seemed within reach for those countries at that time, economists did not concern themselves too much with what this definition left out. But this understanding is not helpful in many societies of the contemporary world.

Even so, the term "unemployment" has been and is being used in the great transition presently taking place in Eastern and Central Europe. Hoping to be rescued by capitalism, these former socialist countries have taken their models from the highly developed Western countries. But since the structure of our economies and labour forces are clearly quite different from those of the industrialized capitalist countries, the latter inadequately reflect substantial components of our reality and offer an inadequate framework for understanding it clearly. More appropriate models for our situation are found at the other rim of Europe -- those Southern European countries whose relative "backwardness" is similar to our own but which are a little further on the way to "Western standards". In the process, they have used -- and suffered from -- the very same models that we are supposed to use to free ourselves.

The fatal symptoms

Our similarities with Southern Europe are as follows:

1. Low employment rates. This is the case whether the official unemployment rate is high (as in Spain, 23.8 percent in 1994), or modest (Turkey, 9.5 percent, or Greece, 8.3 percent) or even low Portugal, 6 percent). These figures are far more indicative of weakly developed commodity production than of the real working part of the society. What they show, in other words, is that part of die society which seeks full and official employment in the modern capitalistic sector. For example, during one hundred years of "modernization" in Naples, the largest city in the south of Italy, employment rates diminished from 57.8 percent in 1871 to 35 percent in 197 1. Unemployment rates show only the changes within this modern stratum. They do not indicate whether or not the greater, traditional part of the work-force (65 percent in Naples in 1971) have jobs or not.

The employment rate in Hungary has diminished rapidly in the last six to eight years as the modern sector of our economy is swiftly and constantly shrinking. The unemployment rate, only 0.44 percent in 1990, had grown to 13.33 percent by 1994. These figures are typical of the tendency in Central and Eastern Europe.

2. A high proportion of long-term unemployed. The size of this group -- about one-third of the Hungarian labour force - reveals that this is not a simple case of structural unemployment. These people who have lost their jobs are unable to gain new employment through direct training in another skill. Broad strata of workers are shut out of regular employment, most of them permanently.

3. A broad mass of insufficiently schooled and under-skilled people make up the long-term unemployed. Yet this insufficiency is not a new phenomenon. It is rooted in a basic family socialization, continued in formal schooling, which is incompatible with commodity production or the capitalistic mentality.

4. A thick layer of informal or "shadow " economy has absorbed many to whom the modern sector is inaccessible. Here they can eke out a meagre livelihood by traditional activities and relations, principally by handicrafts practised in the framework of familial and neighbourly division of labour. It is impossible to know the true extent of these shadow economies, since keeping themselves hidden is part of their essence. Working with an absolute minimum of expenditures, they must fend off such costs as taxes and rents. But Hungarian experts estimate the volume of this shadow economy to be equivalent to about one-third of the entire Gross Domestic Product (although this figure includes the high-level law-breaking committed by the most authentic capitalists). In formerly socialist countries further to the East, it represents an even larger proportion of the economy.

5. A high proportion of smallholders and part-time husbandries. It is very complicated to document this because our system of land ownership has been in continuous change over the past five or six years. But it was generally known already during socialist times that more than half of the population was engaged in small agrarian production. To meet new needs arising since then, it may well have increased. The former household plots of collective farm members, which made up a substantial part of these smallholdings, were propped up by the collective plantings and provided a good income to their proprietors. Now the collectives are unable to bear this burden.