Analyzing Labor Markets in Central and Eastern Europe

Article excerpt

Political and economic reform is proceeding rapidly in much of Central and Eastern Europe. Beginning in the 1988-89 period in Hungary and Poland, and later in other countries, a series of radical changes has been introduced to dismantle old systems of central planning and lay the foundations for the development of Western-style market economies. Now a new triannual publication of the Commission of the European Communities, Employment Observatory: Central and Eastern Europe,(1) helps track these changes by providing up-to-date information on labor market and social conditions in five nations--Bulgaria, Czechoslovakia, Hungary, Poland, and Romania--making the transition from centrally planned economies to market economies.

The Employment Observatory series comprises several regular reports covering the labor markets of the European Community (EC). The Central and Eastern Europe bulletin is an addition to the series. Although these nations are not part of the EC, production of the bulletins indicates how important developments in these countries are to the EC.

The three 1992 bulletins on Central and Eastern Europe present the most current labor market statistics and analysis on employment, unemployment, wage, and price developments. Officials, statisticians, and economists in the five countries provide the data on, and interpretations of, what is happening in their countries. Alphametrics, a private research organization under contract to the European Commission's Directorate General for Employment, draws the information together into a comparative analysis.

The Central and Eastern Europe bulletins will help readers understand the nature and scale of economic developments in these nations. The bulletins also provide background information for technical and financial support from the EC, the United States, and other non-EC countries. In addition, policymakers in the transition countries will benefit from information about developments in other parts of the region and how their countries compare with others going through this difficult process. Combining information may help forewarn officials and economists about potential problems and help improve the design of policies.

The January 1992 bulletin describes how officials are modifying data systems to meet the requirements of emerging market economies. It warns readers that existing statistics on employment, unemployment, wages, and prices must be interpreted with caution. Much remains to be done before all the required statistics necessary for labor market analysis are in place. The analytical sections of the bulletins are careful to point out the shortcomings in the data and the directions of bias.

The January and July bulletins contain between 30 and 40 pages, including 10 to 12 pages of labor and economic statistics and numerous comparative graphs showing data for the five transition countries separately, and averages for the EC. Contrasts between the EC and the transition countries are highlighted.

The International Labour Office (ILO) and Organization for Economic Co-operation and Development (OECD) also have begun to track labor market developments in Central and Eastern Europe. But the ILO'S quarterly Bulletin of Labour Statistics includes only data for a few of the five transition countries; for example, unemployment data are shown for Bulgaria and Hungary, and employment data are presented for Czechoslovakia, Hungary, and Poland. Both the employment and unemployment figures are grossly understated, compared with those in the Central and Eastern Europe bulletin. The ILO data on employment are confined to the state sector, and no analysis is provided.

The OECD'S annual Employment Outlook publications of 1991 and 1992 present analyses of labor market developments in the five transition countries. The OECD intends to continue this annual monitoring. The new Central and Eastern Europe bulletins combine the advantages of the up-to-date ILO bulletin with the more comprehensive coverage and analysis of the OECD'S annual reviews. …