Analyzing the Labour Market Situation in the Central and Eastern European Countries - Improvement or Decline?
Keywords:
transition economies, labour market, world economic crisis, Okun’s lawAbstract
This paper presents the labour market situation, in particular the employment and unemployment trends in the Central and Eastern
European (CEE) countries that joined the European Union in 2004 (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland,
Slovakia and Slovenia). A general feature of the ex-socialist countries of the region is that they inherited a relatively developed nonmarket
sector from the era of state-owned economy. My hypothesis states that the labour market position of the CEE transitional
countries differs in terms of employment rates. According to my hypothesis, the economic revitalizing effects of the employment
policy cannot be experienced so strongly in the underdeveloped regions and only temporary results can be achieved in the social
area, because of the short-term focus. Economic and social reforms in the Central-Eastern European economies have induced
important output changes since 1989 (the end of the socialist regime). It is often said that open unemployment was unknown in
socialism and the employment rate was very high; each worker considered his or her job to be secure. Rather, an inverse
disequilibrium was typical. The socialist economy resulted in chronic shortages, one manifestation of which was – at least in the
relatively more developed and industrialised CEE countries – chronic unemployment. This paper focuses on the major forms of
labour market indicators and examines their significance in the Central and Eastern European transitional countries.
The three research questions the paper attempts to answer are:
Is there divergence or convergence between the CEE countries in the prevalence of the labour market situation?
What are the differences between the major labour trends in these countries?
Is Okun’s law valid in these countries?
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