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The privatization of
large state enterprises in Central and Eastern Europe has proved slow,
since their closure requires the displacement of large numbers of
workers. In Discussion Paper No. 746, Research Fellow Michael Burda
attributes the recent sharp rise in these countries' unemployment to
major structural changes with which normal labour force attrition is
unable to cope: job losses in agriculture and heavy industry and the
drastic reorientation of trade towards the West. Many labour market
institutions must be developed from scratch, and the appropriate
relative levels of unemployment benefit or degrees of severance
protection or trade union representation during radical structural
change may differ from those in the advanced industrial economies.
Unemployment benefit levels range from penurious in Bulgaria and the
CSFR to over-generous in Hungary, while collective bargaining is highly
corporatist in the CSFR but fragmented in Hungary and Romania. Severance
benefits and prior notice regulations are relatively modest, while
active employment measures are widely neglected, but this largely
reflects budgetary restraints. |