Labor Relations in Communist Countries

Legacy of Communist Labor Relations

Abstract

• The paper contrasts International Social Science Programme (ISSP) surveys for Hungary, East Germany, Poland, and Slovenia, with ISSP data for Western countries.
• It examines how workers in traditionally communist societies differ in their attitudes toward:
  • Work conditions.
  • Wage inequality.
  • The role of unions.
  • The state's role in determining labor market outcomes.
• The study finds differences suggesting that communism left a common legacy in the labor area.
• Citizens of former communist countries:
  • Desire egalitarianism.
  • Are less satisfied with their jobs.
  • Support state interventions in the job market and economy more than Westerners.
• These differences suggest a move to a market economy will be marked by social issues due to the past.

Introduction

• Labor relations in communist economies differed from those in free market economies.
• Under communism:
  • Nearly all workers joined official unions that acted as an arm of the state.
  • The state set wages, prices, and enterprise budgets.
  • There were huge job vacancies with no open unemployment.
  • Low real wages and narrow pay differentials existed.
  • Inefficient labor allocations resulted (Freeman, 1992).
• The paper uses ISSP surveys for Hungary, East Germany, Poland, and Slovenia, and ISSP surveys from Western countries to answer questions.
• The topics most relevant:
  • Social inequality (1987).
  • Work orientation (1989).
  • Role of government (1990).
• It finds differences suggesting communism left a common legacy in the labor area.

Characteristics of Data Samples

• Most data for formerly communist countries is for Hungary, which has been a regular participant in the ISSP since 1986.
• The sample size declines from 1747 in 1986 and 2606 in 1987 to 1000 in 1989 and 977 in 1990.
• Hungarian data are imperfect:
  • Unionization data isn't available for 1990 and 1991.
  • No income data for the 1991 survey.
  • Over 90% of respondents are public sector employees.
• Data for other formerly communist countries are more limited, consisting largely of responses to attitudinal questions.
• For the comparison group, data were gathered from sixteen ISSP countries as well as from Switzerland in 1987 with 93,000 individual responses.
• Comparing the former communist states with a set of Western countries avoids attributing differences to the distinct characteristics of any one Western country.

Unionism

• By 1989-1991, unionization rates in the three countries with data are markedly below the 100% unionism that existed under communism, though still relatively high.
• The unionization figures for Hungary show a sharp fall in union membership from 1986 to 1989.
• In 1989, Hungary passed laws establishing freedom for association along Western lines.
• In 1993, Hungary held union elections.
• The difference between compulsory unionism under communism and freely chosen unionism suggests a change from 1mm 0% to 30-40% of genuine unionization.
• Hungarians are less likely to view unions favorably than Westerners.
• Hungarians overwhelmingly thought that unions had too little power, whereas Italians disapproved of unions as having too much power.
• The proportion of Hungarians who believe that strong trade unions are needed to protect workers exceeds that in any other country.
• These responses reflect:
  • The past role of unions as transmission belts of the state in Hungary.
  • The weakness of newly emerging or changing traditional unions, with ambiguous attitudes toward marketization of the economy.

Earnings and Attitudes Toward Earnings

• The compression of earnings differentials under communism leads to an expected increase in the returns to skill as the economy moves to more market-based transactions.
• The coefficient on the years of schooling rises from 1986 to 1989-90 in both specifications, and the coefficient on being a supervisor also rises.
• In contrast to schooling and position, experience paid off less in 1989-90 than in 1986-88.
• People in the former communist countries perceive a much narrower wage distribution than those in the West.
• Persons in Poland and Hungary favor markedly smaller differentials than persons in the West.
• People in former communist countries favor more egalitarian wage distributions because:
  • They are imbued with the ideology of socialist justice.
  • Existing differentials affect ought to differentials.

Job Satisfaction

• Comparisons of responses to satisfaction questions across countries are fraught with even greater dangers.
• Still, the responses of people who lived under communism to questions about job satisfaction offer some clue as to how that system affected their working lives.
• Relatively few Hungarians are completely or very satisfied with their job (13%) compared to large proportions of Westerners, ranging from 33% in Eire to 50% in the U.S.
• Workers who report that their income is low are less likely to be satisfied.
• Hungarian workers are far less likely to regard their jobs as interesting than Western workers, are far more likely to see their workplace as involving dangerous conditions, and are far more likely to see their workplace as involving unhealthy conditions.
• Workers in Hungary seemingly lacked