Transformation at Work in the New Market Economies of Central Eastern Europe

Citation

Martin, R. (2000), "Transformation at Work in the New Market Economies of Central Eastern Europe", Employee Relations, Vol. 22 No. 5, pp. 523-527. https://doi.org/10.1108/er.2000.22.5.523.1

Anna Pollert’s book examines developments in employment relations in four countries in Central Europe – Poland, Hungary, Slovakia and the Czech Republic – with the main emphasis on the Czech Republic. The work has both a theoretical and an empirical objective. The theoretical objective is to provide an historical materialist account of the transition from Socialism to capitalism, covering a much broader canvas than conventional definitions of employment relations. The empirical objective is to analyse the transformation in employment relations in the four countries, with a particular focus on labour organisation. Fieldwork was carried out in the Czech Republic.

The book is well written and clearly structured, bringing together much dispersed material. Although the author writes as a sociologist, trends in labour organisation are related to economic and political changes, both historically and since 1989. The significance of the pre‐Socialist period for current developments is well brought out, especially the historical importance of pre‐war democracy and capitalist development for the Czech Republic (her treatment of Hungarian and Polish history is less extensive). For example, Czech workers were proud of the skilled engineering tradition from the pre‐Second World War period, but saw it to be under threat from privatisation and multinational corporate restructuring responding to global not local requirements.

Pollert provides a very negative evaluation of the transition process: “there is little to show, after ten years, that the transition agenda has been a success either in economic or human terms” (p. 80). The interests of CEE have been subordinated to those of international capital by the neo‐liberal “Washington consensus”. This consensus has justified foreclosing potentially rewarding avenues for state owned CEE enterprises and prioritised privatisation rather than investment. Western capital has viewed CEE as a new product market and as a source of cheap labour. CEE has become an integrated but peripheral part of global capitalism. Despite changes in property ownership, there has been only limited structural transformation, primarily where there has been significant foreign investment. Where firms have been restructured following Western investment the result has often been the adoption of short‐term measures (reducing employment levels, extending working hours, reducing training), rather than long‐term investment in new technology, plant and equipment. This general conclusion is supported by her Czech case studies.

The position of labour was marginalised in the early years of transition. Pollert characterises the industrial relations system established after the transition as “a hybrid system of fragile tripartism, fragmented enterprise unionism, and weak intermediary, industry level regulation” (p. 153). Union membership declined, but remained higher than in Western Europe. However, union members were sceptical of the union’s ability to exercise influence, and gave little credence to the development of collective bargaining, despite its formal adoption. Wage determination became increasingly individualised. Trade unions continued to view their role as the maintenance of “order” in the enterprise, and the development of shop floor organisation remained weak. After a period of turnover in personnel in the early years after 1989, the Czech case studies show a return to office of pre‐1989 union officials (paralleling a similar process amongst managers).

The most interesting part of the book is the case study of the Czech engineering firm CKD. The case study gives an insight into the continuing processes of transition: transition is a process, rather than a jump from Socialism to capitalism. The author provides solid evidence on the ways in which adjusting to the market has proved painful, and in the end unsuccessful for CKD, which has been merged with another firm. Pollert shows that the firm might have survived if senior management had adopted different policies. With regard to employment relations, she shows a process of individualisation associated with human resource management. Personnel management was no more respected in the Czech Republic than in the UK, although for different reasons: as one Czech production manager said, “everyone is allergic to personnel managers”. Research for Pollert’s other case studies – of two retail companies and a brewery – was cut short because of access difficulties.

The negative evaluation of the overall transition process reflects Alice Amsden’s influential and convincing analysis (Amsden et al., 1994). However, her analysis requires some modification. First, Pollert attaches a dominant role to the interests of Western capital and the Washington consensus; she gives little weight to attitudes and interests within CEE itself. However, there has been considerable support for neo‐liberalism amongst CEE leaders such as Leszek Balcerowicz because of their perceptions of national needs (Balcerowicz, 1995). Western capital has operated in alliance with local interests, if in an alliance of unequals, and does not exercise total dominance. Attributing responsibility for regional difficulties to foreign influence has been a long‐term historical tradition. Second, to over‐simplify, the analysis appears to represent the Czech rather than the Hungarian viewpoint on foreign investment (FDI): the Czech Republic retained a more sceptical and conditional attitude towards FDI than Hungary, although there were critical voices in both countries. Third, proponents of the transition can point to emerging investment in advanced technology in the region, as in Tungsram in Hungary. (The account of the Volkswagen‐Skoda development is distinctly one‐sided, neglecting Volkswagen’s impact on production quality in Skoda as well as amongst suppliers.) Fourth, the Washington consensus no longer exercises the dominant influence in international policy making that it exercised in the early 1990s. Fifth, the transition process has undoubtedly had major negative effects. But the Socialist system of the late 1980s could not have continued indefinitely anyway: the question would have become, what was to succeed it?

The emphasis upon the negative aspects of the transition process provides a corrective to the optimistic “boosterism” of the neo‐liberal consensus in the early 1990s – a corrective now largely accepted. But it would be equally misleading to replace the complacent neo‐liberal view that “it will be all right in the end” with a wholly negative judgement.

Overall, Transformation at Work provides a valuable insight into the realities of the transition process at the enterprise level. The attempt to provide a historical materialist analysis of the transition process is less successful.