Analyzing the Labour Market Situation in the Central and Eastern European Countries - Improvement or Decline?

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?