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Journal of European Social Policy

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Social Consequences of Unemployment: an East-West Comparison


Duncan Gallie, Dobrinka Kostova and Pavel Kuchar
Journal of European Social Policy 2001; 11; 39
DOI: 10.1177/095892870101100104
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ARTICLE
Social consequences of unemployment: an EastWest comparison
Duncan Gallie, University of Oxford, UK
Dobrinka Kostova, Academy of Sciences, Bulgaria
Pavel Kuchar, Institut Sociologichke Studi, Prague, Czech Republic

Summary
The paper compares the experience of unemployment in Britain with that in three former
state socialist societies Bulgaria, the Czech
Republic and Slovakia, countries with relatively
recent welfare systems, providing a low level
of coverage for the unemployed. The analysis
examines the implications of the different
types of welfare regime for financial stress, for
social isolation and for psychological wellbeing. While it finds that the implications of
welfare arrangments depend considerably on
the nature of the labour market, it concludes
that the combination of very high unemployment with low welfare coverage exemplified
by the case of Bulgaria has exceptionally
high social and personal costs. There is no evidence that these are offset by the emergence of
alternative welfare arrangements based on
community solidarities.

Rsum
Cet article compare lexprience du chmage
au Royaume-Uni avec celle de trois anciens
Etats socialistes: la Bulgarie, la Rpublique
Tchque et la Slovaquie, pays avec des systmes de scurit sociale relativement rcents
et un bas niveau de couverture pour les
chmeurs. Cette analyse examine les implications des diffrents types de rgime de protection sociale sur langoisse financire,

Key words
Bulgaria, Czech Republic, Slovakia, social
exclusion, unemployment, welfare regimes

lisolement social et pour le bien tre psychologique.


Bien que nous trouvons que les implications
des diffrents systmes de welfare dpendent fortement de la nature du march du
travail, nous concluons que la combinaison
dun taux trs lev de chmage avec un bas
taux de couverture de scurit sociale, comme
dans le cas de la Bulgarie, implique des cots
personnels et sociaux particulirement levs.
Il ny a pas de preuve que ceci soit compens
par lmergence darrangments alternatifs
bass sur des solidarits de proximit.

Introduction
In general, studies of the social consequences
of unemployment have focused on countries
with relatively established welfare states. The
very sharp rise in unemployment that accompanied the political transformation of the
countries of the former Soviet bloc provides us
with a particularly good test case of the impact
of unemployment in societies where there was
only an embryonic welfare safety net. Do the
unemployed in such countries experience
much higher levels of deprivation? Or could it
be the case that in the absence of institutionalized welfare provision, there are other mechanisms of support for the unemployed that may
provide equivalent or even higher levels of
social integration? The paper explores these
issues through a comparison of three former
state socialist societies (Bulgaria, the Czech
Republic and Slovakia) with a West European
society (Britain) which has an extensive
system of minimal social protection. Using
evidence from representative surveys in the
four countries, it concludes that community

Journal of European Social Policy 0958-9287 (200102)11:1 Copyright 2001 SAGE Publications, London, Thousand
Oaks and New Delhi, Vol 11 (1): 3954; 015841
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40

G A L L I E , K O S T O VA

support did not effectively compensate for


weak welfare protection in conditions of high
and persisting unemployment.
The paper begins with a brief consideration
of the institutional context and then in subsequent sections turns to an empirical examination of the implications of unemployment for
financial deprivation, social isolation and psychological distress in the four countries.

The institutional contexts


The sudden rise of unemployment in the
former state socialist societies occurred in a
situation where there was relatively weak
institutional support for the unemployed
(Scarpetta and Reutersward, 1994). Social
protection systems for the unemployed were
relatively recent developments, in part as a
result of the strong policy emphasis in the
former state socialist societies on maintaining
full employment. It had been assumed that
unemployment would not pose a significant
social problem. It was only in 1989 that
Bulgaria and the then Czechoslovakia introduced an unemployment benefit system covering people who had lost their jobs through no
fault of their own.
The types of protection system that were
introduced, after legal revisions in 1991, contained severe time restrictions on eligibility for
benefits, leading to low levels of overall coverage. The duration of unemployment benefit
varied between the countries. In Bulgaria, the
length of time for which it could be received
was severely constrained by age and length of
service criteria. Anyone with less than five
years service was limited to unemployment
benefit for six months, while the maximum
duration of benefit (for the oldest and longest
serving) workers was 12 months. The system
in Slovakia and the Czech Republic was even
more restrictive in terms of the duration of
payments, with a maximum limit of six
months support (ISSA, 1994: 212, 248).
When entitlement ran out, there was little

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formal support to fall back upon. While


embryonic systems of means-tested social
assistance were introduced in the transition
countries in the early 1990s, not only was the
level of support offered very low but less than
half of the long-term unemployed were able to
receive such benefits (Scarpetta and Reutersward, 1994: 302).1 In Bulgaria, the conditions
for receiving social assistance grants were so
restrictive that only 20 percent of the longterm unemployed were able to make a claim
(Bobeva, 1994: 103). Those not covered had
to fall back on resources available from others
in the household or direct self-provision (for
instance with respect to food). This contrasted
sharply with the situation in Britain at the
time where the majority of the adult unemployed, providing they met the criteria of
seeking work, were eligible for insurance
benefit or income support for as long as they
were unemployed.2
For the short period that people were
covered by the benefit system in the former
state socialist societies, they received relatively
generous nominal levels of support. In Britain,
where benefits do not take account of previous earnings, estimates of gross replacement
rates in the early 1990s were between 23
percent and 30 percent, whether the person
was on unemployment insurance or meanstested benefit (see for instance CEC, 1994:
57). In Bulgaria, the Czech Republic and
Slovakia unemployment benefit was earningsrelated but with a maximum figure that was
fixed as a proportion of the minimum wage
(ICSER, 1992). In the early and mid-1990s,
benefit in Bulgaria could amount to 60
percent of former earnings, with a ceiling of
140 percent of the minimum wage.3 The
Czech Republic and Slovakia provided benefits of 60 percent of previous earnings for the
first three months and 50 percent for a further
three months, with a ceiling of between 150
and 180 percent of the minimum wage.
However, real replacement rates in the former
state socialist societies were considerably
lower than this suggests. The figures for prior
earnings were not adjusted for inflation and,

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SOCIAL CONSEQUENCES

Table 1
Year

Unemployment rates (%)


Britain

Czech

Slovakia

Bulgaria

Registered unemployed
1989
6.3
0a
1990
5.8
0.7a
1991
8.0
4.1
1992
9.8
2.6
1993
10.3
3.5
1994
9.4
3.2
1995
8.3
2.9

0a
0.8a
7.0
11.7
12.9
14.4
13.8

na
1.7
11.1
15.3
16.4
12.4
11.1

ILO unemployed
1993
10.3
1994
9.6
1995
8.6

13.7
13.1

21.4
20.2
16.2

4.0
4.1
4.1

Note: a = former Czechoslovakia as a whole.


Source: British data, registered unemployed:
ONS Labour Market Trends, November, 1997.
ILO unemployed: Labour Force Surveys
(Spring), unadjusted figures from LFS Historical
Supplement 1997: 9, 155; Czech, Slovak and
Bulgarian registered and ILO data 198992:
ILO (1997: 4739).

in the early 1990s, inflation was rising very


rapidly, particularly in Bulgaria (EBRD,
1995). Adjusting for inflation, it has been estimated that the average Bulgarian replacement
rate fell to 44 percent, and for those remaining unemployed for a year it was as low as 32
percent (Scarpetta and Reutersward, 1994:
272). After eligibility expired, the minority of
the long-term unemployed people who were
able to obtain social assistance benefits found
themselves at a very low replacement rate,
even in nominal terms: approximately 22
percent in Bulgaria and 35 percent in the
Czech Republic and Slovakia (Scarpetta and
Reutersward, 1994: 272, 295).
The severity of the implications of eligibility
restrictions will depend on the persistence of
high unemployment. This differed considerably between the societies, partly reflecting the
broader economic context in which unemployment emerged (OECD 1991; 1996a;
1996b; 1997; ICSER, 1992). Whereas in
Britain high unemployment was caused by a
particularly sharp downturn in the business
cycle, in the former state socialist societies it

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41

was a product of the disintegration of the


wider economic system. The extent of unemployment in the Central and East European
countries reflected the degree of prior integration in the collapsing markets of the former
Soviet Union and the relative success or failure
in finding alternative markets in the West. The
Czech economy had a much older history of
industrial development from the interwar
period, whereas industry in Slovakia and especially Bulgaria had developed predominantly
during the Communist era, reflecting the
emphasis on heavy industry and tight functional integration into the wider economic
network of the Soviet bloc (ICSER, 1992;
Musil, 1993; OECD, 1997). As a consequence, when the Soviet market collapsed,
economic disruption was particularly severe in
Bulgaria and Slovakia.
These differing economic fortunes were
reflected in the trends in unemployment rates.
Estimates of the precise unemployment rate in
any year can vary a good deal for the former
state socialist societies, reflecting the relative
novelty of collecting such figures in these
countries. But the general pattern is very clear.
In both Slovakia and Bulgaria not only was
the change in unemployment rates much
sharper than in Britain and particularly than
in the Czech Republic, but unemployment
came to affect a much higher proportion of
the workforce. As can be seen in Table 1, registered unemployment rose from about 1
percent in the Czech Republic in 1990 to 3.2
percent in 1994. In contrast, in Slovakia it
rose from about 1 percent in 1990 to a peak
of 14.4 percent in 1994. In Bulgaria, it rose
over the same period from 1.7 percent to 12.4
percent in 1994. At its highest point in 1993,
16.2 percent of the workforce was unemployed. ILO unemployment data was only
available from 1993. This gave unemployment
rates for 1994 of 9.6 percent in Britain, 4.1
percent in the Czech Republic, 13.7 percent in
Slovakia and 20.2 percent in Bulgaria.
The implications of limited duration
benefits for financial support will depend in
particular on the prevalence of long-term
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42

Table 2

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Social characteristics of the registered unemployed (%)


Britain

Czech

Slovakia

Bulgaria

Men
Women

80.9
19.1

41.9
58.1

55.4
44.6

40.6
59.4

204
2544
45+

18.8
50.4
30.8

23.2
55.8
21.0

23.8
59.4
16.8

17.5
57.7
24.8

Professional/managerial
Lower non-manual
Technician/supervisory
Skilled manual
Non-skilled
Never worked

12.7
8.2
3.8
20.2
51.6
3.6

18.9
8.7
2.6
23.7
28.0
18.1

22. 7
7.1
2.7
23.5
23.8
20.3

21.3
5.8
1.9
26.4
23.6
21.1

% married
All unemployed
Male unemployed
Female unemployed

48.7
50.8
39.9

59.9
44.4
71.0

53.9
49.9
59.0

74.0
71.1
76.0

Source: Project Surveys (see Note 6).

unemployment. It was in Slovakia and most


particularly in Bulgaria, where unemployment
rates were much higher and exit from unemployment more difficult, that it was likely to
have the sharpest effects on family finances.
Bulgaria had the worst long-term unemployment problem of all the transition countries,
with over 60 percent of the unemployed
having been without work for over a year.
Long-term unemployment was also high in
Slovakia (approximately 50 percent of the
unemployed). In contrast, in the Czech
Republic, unemployment spells were typically
of relatively short duration (World Bank,
1999: 75, 91) and long-term unemployment
affected only a minority (35 percent) of the
Czech unemployed (Boeri, 1994: 19; OECD,
1997: 389). As a result, a higher proportion
of the Slovaks and especially the Bulgarian
unemployed were ineligible for benefit.
Bulgaria had the lowest proportion of unemployed people receiving unemployment benefits among the transition countries. The effect
of the rise in unemployment on coverage rates

is clear. Whereas in 1990, 56.7 percent of the


Bulgarian unemployed were in receipt of benefits, by 1993 this had fallen to 36.1 percent
(Bobeva, 1994 : 86). In the Czech Republic
and Slovakia, coverage rates in 1992 were
46.2 percent and 41.1 percent respectively
(Scarpetta and Reutersward, 1994: 289).4
Finally, the different processes underlying
the growth of unemployment in these societies
gave rise to important differences in the composition of unemployed people. The systemic
quality of the shock that hit the economies of
the former state socialist societies in 1989
meant that job insecurity was spread much
more evenly across different occupational categories than was the case in Britain. As can be
seen in Table 2, the unemployed in Britain were
above all non-skilled workers (51.6 percent).
Only 13 percent were from the professional/managerial classes. In contrast, in the former
state socialist societies non-skilled workers
constituted only around a quarter of unemployed people, while approximately 20 percent came from the professional/managerial

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SOCIAL CONSEQUENCES

classes.5 At the same time, a higher proportion


of unemployed people in the transition countries were married. In these countries, then,
unemployment affected to a greater extent
people who were likely to have responsibilities
for maintaining family income.
In short, there were clearly major differences between the societies in the extensiveness of coverage of the welfare safety net for
unemployed people. All of the former state
socialist societies had less comprehensive provision than Britain, but the lack of coverage
was particularly notable in Slovakia and
above all Bulgaria.

Welfare and the experience of unemployment: contrasting views


There could be rather different hypotheses
about the relative severity of the experience of
unemployment in Britain and the former state
socialist societies, depending upon assumptions about the relationship between welfare
provision and community support. One possibility is that welfare state protection is crucial
not just for peoples financial well-being, but
also for their social integration in the community. Financial deprivation could be seen as
placing everyday social relationships under
such pressure that there is a tendency for
social networks to collapse and for unemployed people to become increasingly cut off
from the community. From this perspective,
there could be little doubt that it is in the
former state socialist societies that one would
expect the effect of unemployment to be most
severe.
An alternative view, however, would place
much less emphasis on institutionalized social
protection in determining the experience of
unemployment. In countries where formal
welfare provision is weak, an alternative
welfare system may emerge based upon family
or other social networks. Previous research
has emphasized the importance of social
support for psychological well-being whether

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43

in employment or unemployment (House,


1981; Warr, 1987; Whelan et al., 1991; Gallie
et al., 1994; Gallie, 1999). If it were the case
that a less institutionalized system encouraged
greater social solidarity at family and community level, one might expect higher levels of
psychological well-being among unemployed
people in the former state socialist societies
than in those with more formalized welfare
provision.
In seeking to assess the experience of unemployment in these countries, we have been
able to draw on directly comparable data sets
for the four countries. The data for Bulgaria,
the Czech Republic and Slovakia are drawn
from surveys of employed and unemployed
people carried out in 1994 and 1995. These
contained a wide range of questions that had
been included in surveys carried out in Britain
in 1992.6
The surveys of employees were directly
comparable representative national surveys,
with the sampling based on residential areas.
The achieved samples of employed people
were 3,869 in Britain, 2,202 in Bulgaria,
2,009 in the Czech Republic and 1,001 in
Slovakia. The unemployed were selected from
people who were registered at unemployment
benefit or labour offices. The samples of
unemployed people in Britain and Bulgaria
were drawn from comprehensive registers of
the unemployed. This was not possible in the
Czech Republic and Slovakia, because the
data protection legislation prohibited access to
this type of registration list. These two
samples were drawn on a random basis from
people leaving the labour offices. The sample
numbers for unemployed people were 1,003
in Britain, 1,002 in Bulgaria, 736 in the Czech
Republic and 785 in Slovakia. The response
rates were in all cases at the 70 percent level
or better.7
The data available are cross-sectional and
do not allow tests of causality. When we refer
to effects, these should be interpreted as statistical effects or effects of association. Ideally,
there should be comparative data over time,
allowing us to contrast the patterns in a
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G A L L I E , K O S T O VA

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Table 3 Percentage worrying almost all the time about money by sex, unemployment status and
unemployment duration
Britain

Czech

Slovakia

Bulgaria

Employment status
Employed
Unemployed

8.8
42.1

19.5
24.5

25.6
29.5

17.1
47.6

Sex
Men
Women

40.9
46.5

25.1
23.6

32.5
27.3

51.0
45.6

Duration of unemployment
<6 months
12+ months
36+ months

50.0
40.5
45.8

21.2
31.7
28.9

27.0
34.0
42.3

33.4
53.7
56.8

Source: Project Surveys (see Note 6).

society before and after changes in the structure of welfare and, at the individual level,
making it possible to follow chronologically
the changes in peoples experiences in the
aftermath of unemployment. Until such evidence is available we are necessarily restricted
to testing the plausibility of particular views
about the implications of welfare arrangements in the light of evidence at a particular
point in time.
In assessing the impact of unemployment in
the four societies, we will focus in turn on
three main areas of peoples experience. The
first is that of financial stress; the second is the
implications of unemployment for family relations and for wider social networks; and the
third is its consequences for psychological
well-being.

Financial stress
Did the low level of financial protection provided by the weakly developed welfare
systems of the former state socialist societies
mean that unemployed people in those countries suffered much higher levels of anxiety
about money? Our main measure of financial
stress was a question asking people how often
they found themselves worrying about money.
The responses ranged from almost all the time

to almost never. A comparison of levels of


financial stress across the countries (Table 3)
lends little support to the view that there is a
straightforward divide between the protected
systems of Western Europe and the unprotected systems of the former state socialist
societies.
Financial stress among the British unemployed was higher than in either the Czech
Republic or Slovakia. Overall, 42 percent of
the British unemployed were worried about
their financial situation almost all of the time,
while this was the case for 25 percent of the
Czechs and for 30 percent of the Slovaks. It
was only in Bulgaria that we found a higher
level of financial stress than in Britain, with
48 percent worried almost all of the time.
One possibility is that these patterns are
heavily influenced by the very different durations of unemployment. It was certainly the
case that in all of the former state socialist
societies those who were unemployed for over
a year were more likely to experience financial
stress than those with shorter spells of unemployment (Table 3). The duration effect was
particularly marked in Slovakia and Bulgaria.
As was seen earlier, these societies combined
relatively generous benefits for the short-term
unemployed with the virtual absence of benefits for the long-term unemployed. In Slovakia
only 27 percent of those unemployed for less

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SOCIAL CONSEQUENCES

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Table 4 Unemployment effect on financial anxiety relative to Britain, with controls (ordered logit
models)
Model 1
Country effects
among unemployed
Coefficient
Sig
Britain
Czech
Slovakia
Bulgaria
N=

Ref.
.29
.03
.41
2,973

**
n.s.
***

Model 2
Country unemployment
effects relative to employed
Coefficient
Sig
Ref.
1.44
1.44
0.41

***
***
***

10,104

Notes: ** = p < 0.01; *** = p < 0.001; n.s. = non-significant.


Model 1. Sample of unemployed. Country coefficients are the main country effects. The overall model
chi2 (d.f. 15) = 278.94. Control variables included sex, age, class and duration of unemployment.
Model 2. Sample of employed and unemployed. The country coefficients for the unemployed are the
interaction terms unemployed*country. The unemployment coefficient for the reference country
(Britain) was 1.74 (p < 0.001). Control variables included country, sex, age and class. The overall
model chi2 (d.f. 16) = 1,568.51.
Source: Project Surveys (see Note 6).

than six months had a high level of financial


anxiety, but the figure rose to 42 percent
among those unemployed for over three years.
In Bulgaria, the comparable figures were 33
percent and 57 percent. The experience of
financial anxiety of the very long-term unemployed was very much higher in Bulgaria than
in any of the other countries.
Nonetheless, duration of unemployment in
itself is insufficient to account for the overall
pattern of differences between countries. The
British had high levels of financial anxiety
even when they had been unemployed for less
than six months and there was little change as
durations grew longer. On the one hand, this
may reflect a pattern characteristic of more
highly developed consumer societies in which
working households come to rely on high
levels of debt as a normal part of family budgeting. Where families are supporting large
mortgages or substantial hire purchase payments, then the financial impact of unemployment is likely to be felt almost immediately.
On the other hand, the nature of British welfare provision may help to explain why financial anxiety did not increase with duration of

unemployment as occurred in the former state


socialist societies.
The Czechs were distinctive for the opposite
reason: even those with lengthier durations of
unemployment showed relatively low levels of
financial stress. It is important to keep in
mind the overall level and composition of
unemployment. This category was particularly
small in the Czech Republic. It also seems
likely that, in such a highly dynamic labour
market, where the major difficulties related to
skill shortages rather than to lack of jobs, the
longer-term unemployed were a much more
highly selected group, consisting of people
having alternative sources of financial support
or with a preference for relatively inexpensive
lifestyles.
As a final step, we carried out a regression
analysis to explore the significance of country
differences. Given the differences noted earlier
in the composition of unemployed people
between the countries, this controlled for sex,
age and class. The results are shown in Table
4. In Model 1 the analysis focuses on differences in financial anxiety between unemployed people in each country, contrasting the
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46

G A L L I E , K O S T O VA

three former state socialist societies with


Britain. The results confirm that the differences noted earlier (the relatively low level of
financial anxiety of the Czech unemployed
and the high level of anxiety of the Bulgarian
unemployed) are of a high level of statistical
significance. The coefficient (0.41) indicates
that the Bulgarian unemployed had much
higher levels of financial anxiety than unemployed people in any of the other countries.
Model 2 is concerned with how far unemployed people in each country differ in their
level of financial anxiety from employed
people, once account has been taken of sex,
age and class differences. The sample is the
pooled sample of the employed and unemployed and the country coefficients shown are
interaction effects representing the unemployed. This reveals an altogether different
pattern. The relative difference between the
unemployed and the employed is greatest in
Britain (the reference country) with each of
the former state socialist countries having a
significant negative coefficient. The relative
difference is least in the Czech Republic and
Slovakia.
Overall, there is no simple relationship
between the nature of welfare provision and
financial anxiety. The Bulgarian unemployed
were more anxious about their finances than
unemployed people in any other country, followed by the British. Even in terms of the
absolute differences, then, account also needs
to be taken of the structure of household
finances in different countries, the general
level of unemployment and the fluidity of the
labour market. Moreover, relative differences
between the unemployed and employed were
particularly marked in Britain, partly reflecting the low levels of anxiety among those who
had jobs in that country but also possibly the
difficulties for unemployed people in adjusting
lifestyles in a developed consumer society.

The household and social networks


The European discussion of social exclusion

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has increasingly focused on the central role of


social isolation in the process of exclusion. If
loss of employment is reinforced by social isolation, then it seems likely that unemployed
people will enter into a downward spiral in
which their contacts with the labour market
will become increasingly weakened. While
research on social isolation has tended to
focus on social networks, it is important to
bear in mind that the nature of the household
may also be an important factor.
The household An initial issue with respect
to social isolation is the structure of the
household. To what extent were unemployed
people single or married? It was seen in Table
2 that there were substantial differences
between the countries in the proportion of
unemployed people who were married. In
Britain, just under half were married; in the
Czech Republic and Slovakia just over half;
while in Bulgaria nearly three-quarters of all
unemployed people were married.
The household situation of unemployed
people was then very different between the
societies. However, the implications of having
a partner for financial security are likely to
vary substantially depending on the employment position of the partner. A consistent
finding in British unemployment research is
the great difference between employed and
unemployed people in the probability that
they will have a partner in work. This pattern
can be seen clearly in Table 5. Whereas 72
percent of employed British men who were
married had a wife with a job, this was the
case for only 24 percent of unemployed
married men. A similar pattern, although considerably less strong, can be seen for women.
This implied a marked tendency towards
polarization between two-earner and noearner families.
Turning to the former state socialist societies, the picture is very different. In the Czech
Republic and Slovakia, if the husband is
unemployed he is more likely to have a
wife with a job than if he is employed. In
Bulgaria there is virtually no difference in the

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Table 5

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47

Percentage of married (employed and unemployed) with partner in work


Britain

Czech

Slovakia

Bulgaria

All

Employed
Unemployed

81.5
30.1

82.2
83.6

70.5
84.6

57.9
60.0

Male

Employed
Unemployed

72.3
23.7

70.4
76.5

61.4
83.3

51.3
49.5

Female

Employed
Unemployed

90.5
64.0

92.6
86.5

80.8
88.7

64.2
67.1

Source: Project Surveys (see Note 6).

likelihood that women will have a job


whether the husband is employed or unemployed. Taking instead the employment status
of the woman, broadly the same picture
emerges. Where a woman is unemployed, she
is only a little more likely to have a husband
without work in the Czech Republic, and in
both Slovakia and Bulgaria she is a little more
likely to have a husband in work than an
employed person.
There is then a fundamental difference
between Britain and the former state socialist
societies in the extent to which households
become polarized in terms of labour market
status. Such polarization is very marked in
Britain, whereas it appears to be largely
absent in the former state socialist societies.
We can only offer tentative suggestions as to
why this might be the case. Apart from the
differences in financial pressure on the families of the unemployed due to the limited
duration of coverage, the type of benefits
people received in the former state socialist
societies were more conducive to the partners
employment. In Britain a majority of the
unemployed (59 percent) were in receipt of
means-tested income support, which takes
account of all household income. There is
some evidence that this leads to the withdrawal of wives from employment, due to the
lack of financial incentives (Davies et al.,
1994). In contrast, in the former state socialist
societies, where means-tested benefits were
relatively rare, benefits were mainly allocated
on an individual basis irrespective of other

household income. Further, there have been


active policy measures to prevent cumulative
unemployment in families. For instance, in
Bulgaria, when redundancies were scheduled,
people who had an unemployed partner had
priority to retain their jobs.
Social networks and social support With
respect to wider social networks, our first
approach was to ask people how frequently
they met up socially with relatives (other than
those they lived with) and with friends, providing an eight-point response set ranging
from several times a week to never. Table 6
shows the proportion of employed and unemployed people who saw their relatives or their
friends several times a week, a measure that
provides a reliable guide to the overall pattern
of response.
The picture is very consistent. As has been
found more generally in Western Europe
(Gallie and Paugam, 2000), far from becoming more cut off from contact with other
people, unemployed people were generally
more likely to meet up with both relatives and
friends. The increased frequency of seeing relatives was particularly marked in Britain and
Bulgaria. Sociability with friends rose considerably in all countries, though the difference
was least in the Czech Republic.
However, while sociability was not undercut, there may have been important changes in
the qualitative nature of peoples networks, in
particular in the level of support that friends
can give. We developed a measure of social
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G A L L I E , K O S T O VA

48

Table 6

AND

KUCHAR

Sociability and network structure of employed and unemployed people


Britain

Czech

Slovakia

Bulgaria

% meeting relatives outside the


household several times a week
Employed
Unemployed

18.4
34.6

18.7
24.5

23.1
27.0

13.1
25.4

% meeting friends several times a week


Employed
Unemployed

24.6
47.0

24.7
35.1

29.0
48.4

32.8
46.8

% with half or more of their friends


unemployed
Employed
Unemployed

13.7
48.7

5.9
21.3

20.3
38.1

28.6
42.3

Source: Project Surveys (see Note 6).

Table 7

Percentage with social support from people outside the household

Could get help if:

Britain

Czech

Slovakia

Bulgaria

Needed money

Employed
Unemployed

69
52

71
62

77
69

59
55

Depressed

Employed
Unemployed

78
68

66
62

69
59

52
45

Looking for a job

Employed
Unemployed

52
48

65
57

67
62

33
24

Source: Project Surveys (see Note 6).

support based upon a question asking people


whether there was anyone that they could rely
on from outside their own household if they
needed help in three situations. These were: if
they were feeling depressed; if they needed
help in finding a job for themselves or for a
member of the family; and if they needed to
borrow money to pay for an urgent bill like
electricity, gas, rent or mortgage.
In each country unemployed people were
less likely than employed people to get
support with respect to all three problems
(Table 7). Indeed, the difference between the
support levels of the employed and unemployed is remarkably similar across the countries. However, the combination of generally
low levels of support (affecting even the

employed) with the specific disadvantage of


being without work put the Bulgarian unemployed in a remarkably isolated position
where less than half could count on assistance
on two of the three issues. It seems clear that,
in conditions of exceptionally severe unemployment, informal social networks were
unable to handle the burden of deprivation.
This is likely to have reflected not only the relative impoverishment of the networks themselves, but the difficulty of effective assistance
with job search in conditions of very high
unemployment where job opportunities were
low for everyone.
An overall measure of social support was
constructed by adding together the scores on
the three different measures. The regression

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SOCIAL CONSEQUENCES

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49

Table 8 Unemployment effect on social support relative to Britain, with controls (ordered logit
models)
Model 1
Country effects
among unemployed
Coefficient
Sig
Britain
Czech
Slovakia
Bulgaria

Ref.
.14
.05
1.12

N=

3,007

n.s.
n.s.
***

Model 2
Country unemployment
effects relative to employed
Coefficient
Sig
Ref.
.04
.31
.42

n.s.
*
***

8,638

Notes: * = p < 0.05; *** = p < 0.001; n.s. = non-significant.


Model 1. Sample of unemployed. Country coefficients are the main country effects. The overall model
chi2 (d.f. 14) = 359.20. Control variables included sex, age, class and duration of unemployment.
Model 2. Sample of employed and unemployed. The country coefficients for the unemployed are the
interaction terms unemployed*country. The unemployment coefficient for the reference country
(Britain) was 1.74 (p < 0.001). Control variables included country, sex, age and class. The overall
model chi2 (d.f. 16) = 963.32.
Source: Project Surveys (see Note 6).

analyses in Table 8 show the country effects,


once sex, age and class differences have been
controlled. Model 1 compares countries in
terms of the absolute differences between the
unemployed, while Model 2 compares countries in terms of the relative differences
between employed and unemployed people. In
both analyses, Bulgaria stands out sharply for
the low level of support provided by unemployed peoples networks.
The results then provide little support for
the view that in a situation of deficient state
welfare provision, the community will provide
higher levels of social support. While there
was no evidence that unemployed people in
any of the countries became socially isolated,
the support provided by peoples social networks was clearly weakened. It was particularly weak in Bulgaria where the problems
presented by high unemployment and low
welfare provision were most severe.

Psychological distress
As a last step in the examination of the consequences of unemployment, we have examined

its impact on the individuals psychological


well-being. The measure used is the twelveitem version of the General Health
Questionnaire (GHQ). This is a measure of
psychological well-being, developed by
Goldberg, that has been tested in a wide range
of surveys and that has been validated as a
measure of minor psychiatric morbidity.8 It
is based on a set of twelve items involving
a range of symptoms such as peoples
ability to concentrate, loss of sleep, loss of
self-confidence and feelings of self-worth.
Table 9 shows the mean scores on the
measure for employed and unemployed people
in each country. Higher scores indicate higher
levels of psychological distress. Taking first
the employed, it can be seen that the least distressed are the British employed, followed by
the Bulgarians. In contrast, both the Czech
and the Slovak employees appear to experience relatively high levels of tension. Arguably
this reflects the particularly rapid changes that
had been occurring in the organization of
work that meant that many of the taken-forgranted practices of work life had come under
threat with new patterns of ownership and
new technologies (Gallie et al., 1999).
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50

Table 9

G A L L I E , K O S T O VA

AND

KUCHAR

Psychological distress scores (GHQ) for employed and unemployed people


Britain

Czech

Slovakia

Bulgaria

All

Employed
Unemployed

0.87
1.22

1.03
1.21

1.02
1.28

0.91
1.42

Male

Employed
Unemployed

0.86
1.18

1.02
1.19

1.00
1.29

0.90
1.39

Female

Employed
Unemployed

0.93
1.38

1.09
1.22

1.06
1.27

0.95
1.43

Source: Project Surveys (see Note 6).


Table 10

Unemployment effect on psychological distress relative to Britain, with controls (models)


Model 1
Country effects
among unemployed
Coefficient
Sig

Model 2
Country unemployment
effects relative to employed
Coefficient
Sig

Britain
Czech
Slovakia
Bulgaria

Ref.
.02
.09
.21

n.s.
**
***

Ref.
.17
.06
.17

***
*
***

Constant

1.02

***

.72

***

N=

2,968

10,121

Notes: * = p < 0.05; ** = p < 0.01; *** = p < 0.001; n.s. = non-significant.
Model 1. Unemployed sample only. Country coefficients are the main country effects. Adjusted
R2=.05. Control variables included sex, age, class and duration of unemployment.
Model 2. Sample of employed and unemployed. The country coefficients for the unemployed are the
interaction terms unemployed*country. The coefficient for unemployment in the reference country
(Britain) was .36 (p = 0.001). Control variables included country, sex, age and class. The overall model
adjusted R2=.17.
Source: Project Surveys (see Note 6).

The picture for unemployed people was


altogether different. The least distressed
among the unemployed were the Czechs and
the British, followed by the Slovaks. The
Bulgarian unemployed, however, were clearly
suffering from exceptionally high levels of distress. The pattern is particularly interesting in
that it seems very unlikely to be due to artefacts of method (for instance, a failure to
allow for cultural differences in the intensity
of expression). This would have affected
employed and unemployed people equally. But
the same measure shows that in Bulgaria distress is relatively low among employed people,

while it is exceptionally high among the


unemployed.
The pattern stands out clearly from the
regression analyses shown in Table 10, which
control for differences in sex, age and class.
Model 1 shows the absolute differences
between unemployed people in the different
countries. The level of psychological distress
of the unemployed in the Czech Republic is
not statistically different from that of the
unemployed in Britain. But unemployed
people in Slovakia and particularly Bulgaria
have much higher levels of distress. Model 2
compares countries in terms of the distress of

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SOCIAL CONSEQUENCES

the unemployed relative to the employed. This


once more shows unemployed people in
Bulgaria suffered from exceptionally high
levels of distress. However, relative to the
employed, the British unemployed were worse
off than either their Czech or Slovak equivalents.
Further analysis showed that this lower relative impact of unemployment on the Czechs
and Slovaks could be largely explained in
terms of differences in financial anxiety,
marital position and the availability of social
support. Once these factors were controlled
for, unemployed people in both countries
ceased to be significantly different from the
British unemployed in terms of relative psychological distress. However, the Bulgarian
unemployed still stood out as experiencing
significantly greater distress than others. This
possibly reflects the deep insecurity linked to
the pervasiveness of the economic crisis. The
psychological distress of unemployed people is
likely to reflect in part their sense of the future
prospects of the economy and its ability to
emerge from crisis in the foreseeable future.

Conclusions
The paper has focused on whether the relatively low coverage of welfare state protection
in the former state socialist societies led to an
accentuation of the personal and social problems associated with unemployment or
encouraged the growth of other types of social
solidarity, rooted in the community, that could
help offset deprivation and possibly provide a
higher level of social integration than would
be found in societies with more extensive
formal welfare provision.
A first point to note is that there was no
straightforward relationship between the
financial anxiety caused by unemployment
and the level and duration of benefit protection. In part this is because the effects of
welfare provision have to be considered
together with the severity of unemployment.

OF

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51

All of the former state socialist societies provided income support for unemployed people
for only relatively short periods. But whereas
this was not associated with high levels of
anxiety in the Czech Republic, where the level
of unemployment was low and unemployment
tended to be of short duration, it was associated with very high levels of anxiety in
Bulgaria, which was confronted by high and
very persistent unemployment.
While unemployed people in Bulgaria suffered more than the unemployed in any of the
other countries, it was the British unemployed
who were the next most subject to financial
stress despite the greater coverage of welfare
provision. This may have reflected the low
level of benefits even at the outset of unemployment and possibly the high levels of
household debt associated with the consumerism of Western societies. This suggests
that, as well as the extent of welfare provision, the severity of unemployment and the
nature of consumption practices in a society
are likely to affect the relationship between
unemployment and financial stress.
The structure of the welfare systems was
associated with different patterns of financial
anxiety by duration of unemployment. In the
former state socialist societies, which provided
relatively high benefits in the early months of
the unemployment spell, but virtually no
safety net for long-term unemployed people,
there was a sharp rise in financial anxiety by
duration of unemployment. In contrast, the
British were distinctive in their very high levels
of financial anxiety immediately upon becoming unemployed. This may well result from
the fact that the British system provides relatively low replacement ratios at the onset of
unemployment. The indefinite nature of benefits in the British system, however, may have
been an important factor in preventing financial anxiety from rising sharply with longer
unemployment as happened in the former
state socialist societies.
Were the differences in the welfare systems
associated with differences in the responses
to unemployment of the household and the
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52

G A L L I E , K O S T O VA

community? Unemployed people in the former


state socialist societies were clearly able to rely
to a greater extent on the resources of other
people in the household. To begin with, they
were more likely to be married. But, in addition, those who were married were more
likely to have partners in work. Whereas in
Britain, the wives of unemployed men were
much less likely to have a job than the wives
of men in employment, in the former state
socialist societies they were just as likely as the
partners of the employed to have a job (and,
in the Czech Republic and Slovakia, even
more likely). It is plausible that an important
factor behind this relatively high employment
of the partners of unemployed people was the
pressure exerted by the short duration of
welfare cover and the limited importance of
means-tested benefits with their negative
incentives for the partner to work.
There was little evidence, however, that the
less generous welfare systems in the transition
countries led to a resurgence of community
support in conditions of high unemployment.
Sociability was not higher among unemployed
people in the former state socialist societies.
Further, there is no evidence that these networks provided people with greater support in
the societies where welfare was less developed.
As in Britain, the social networks of unemployed people in these countries were less supportive than those of the employed. In the
country where welfare coverage was weakest,
Bulgaria, the support that people could rely
upon from people outside the household was
also weakest. The pattern of high sociability
but relatively low levels of support suggests
that peoples local social networks simply did
not have the capacity to relieve the burden of
deprivation produced by the combination of
high unemployment and weak welfare provision.
The strongest test of the implications of
unemployment for peoples experience is the
way it affects their psychological well-being.
This is both because of its intrinsic importance
and because of the way it captures the diverse
forms of strain to which people are subject.

AND

KUCHAR

Unemployment was associated with significantly higher levels of psychological distress in


all countries. But Bulgaria stands out as the
country in which the effects of unemployment
were most severe. In part, this reflected the
fact that the Bulgarians suffered from the
greatest financial anxiety and the lowest levels
of social support.
The implications of the nature of the
welfare regime clearly will depend on the state
of the labour market. But the example of
Bulgaria points to the potential risks of low
coverage and low duration welfare systems in
conditions of high and persisting unemployment. Short-duration benefits did not lead the
market to clear, but they were associated with
markedly greater deprivation among longterm unemployed people who largely fell outside any welfare safety net. There may have
been greater pressure on the partners of the
unemployed to find jobs, but this was clearly
insufficient to prevent exceptionally high levels
of financial stress. Community sociability did
not collapse, but peoples social networks did
not provide an adequate alternative system of
welfare. The outcome of high levels of financial pressure and low levels of social support
was that the Bulgarian unemployed had exceptionally high levels of psychological distress.

Notes
1 Overall household income had to be below the
minimum living standard, which in the early
1990s was lower than the minimum wage (for
instance in the Czech Republic in 1992 Kcs
1,700 compared to Kcs 2,200). The system
offered better protection for families with several
dependent children. In Bulgaria, eligibility criteria also included housing space (not more than
one room per person) and savings (not more
than the equivalent of 70.00). The maximum
social assistance grant was 50% of the minimum
wage.
2 Of the registered unemployed 86% (our data)
and 66% of the ILO unemployed (Department
of Employment, 1993: 45).
3 The minimum wage was approximately a third
of the average wage.

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SOCIAL CONSEQUENCES

4 Our own sample estimates for 1994 provide a


very similar picture for Bulgaria and the Czech
Republic, but suggest a marked deterioration
over the previous two years in Slovakia. In
Bulgaria only 34.3% of the unemployed were in
receipt of benefit and in Slovakia 31.7%. In contrast, in the Czech Republic, the level of coverage was considerably higher at 51%.
5 The occupational class estimates are drawn from
our own survey data (for details see later), where
care has been taken to ensure cross-national
comparability in occupational coding. They are,
however, supported by national data. ICSER
(1992: 115) states that in 1992 technical professionals, engineers and economists accounted
for 15.8% of all those without work. Bobeva
(1994: 105) gives figures for January 1993
showing 20% of the Bulgarian unemployed were
specialists.
6 The question formats were made as similar
as possible using a back-translation technique.
The British survey was co-directed by Duncan
Gallie and Michael White. It was funded by a
consortium of industrialists, the Employment
Department, the Employment Service and the
Leverhulme Trust. The surveys in Bulgaria, the
Czech Republic and Slovakia were carried out by
Dobrinka Kostova and Pavel Kuchar and funded
by the EU (DGXII). Michael White of the Policy
Studies Institute gave very valuable assistance
with the design of the sampling of the East
European Surveys. Full details of the survey procedures are available from the authors.
7 For the employee surveys the response rates
were: Britain, 72%; Bulgaria, 72%; Czech
Republic, 74%; Slovakia, 78%. For the surveys
of unemployed people: Britain, 70%; Bulgaria,
71%; Czech Republic, 78%; Slovakia, 83%.
8 The adequacy of the psychometric properties of
the GHQ-12 has been established by Banks et al.
(1980).

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