Social Consequences of Unemployment

http://esp.sagepub.comJournal of European Social Policy

DOI: 10.1177/095892870101100104 2001; 11; 39 Journal of European Social Policy

Duncan Gallie, Dobrinka Kostova and Pavel Kuchar Social Consequences of Unemployment: an East-West Comparison

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Summary

The paper compares the experience of unem-ployment in Britain with that in three formerstate socialist societies Bulgaria, the CzechRepublic and Slovakia, countries with relativelyrecent welfare systems, providing a low levelof coverage for the unemployed. The analysisexamines the implications of the differenttypes of welfare regime for financial stress, forsocial isolation and for psychological well-being. While it finds that the implications ofwelfare arrangments depend considerably onthe nature of the labour market, it concludesthat the combination of very high unemploy-ment with low welfare coverage exemplifiedby the case of Bulgaria has exceptionallyhigh social and personal costs. There is no evi-dence that these are offset by the emergence ofalternative welfare arrangements based oncommunity solidarities.

Rsum

Cet article compare lexprience du chmageau Royaume-Uni avec celle de trois anciensEtats socialistes: la Bulgarie, la RpubliqueTchque et la Slovaquie, pays avec des sys-tmes de scurit sociale relativement rcentset un bas niveau de couverture pour leschmeurs. Cette analyse examine les implica-tions des diffrents types de rgime de pro-tection sociale sur langoisse financire,

lisolement social et pour le bien tre psy-chologique.Bien que nous trouvons que les implicationsdes diffrents systmes de welfare dpen-dent fortement de la nature du march dutravail, nous concluons que la combinaisondun taux trs lev de chmage avec un bastaux de couverture de scurit sociale, commedans le cas de la Bulgarie, implique des cotspersonnels et sociaux particulirement levs.Il ny a pas de preuve que ceci soit compenspar lmergence darrangments alternatifsbass sur des solidarits de proximit.

Introduction

In general, studies of the social consequencesof unemployment have focused on countrieswith relatively established welfare states. Thevery sharp rise in unemployment that accom-panied the political transformation of thecountries of the former Soviet bloc provides uswith a particularly good test case of the impactof unemployment in societies where there wasonly an embryonic welfare safety net. Do theunemployed in such countries experiencemuch higher levels of deprivation? Or could itbe the case that in the absence of institutional-ized welfare provision, there are other mecha-nisms of support for the unemployed that mayprovide equivalent or even higher levels ofsocial integration? The paper explores theseissues through a comparison of three formerstate socialist societies (Bulgaria, the CzechRepublic and Slovakia) with a West Europeansociety (Britain) which has an extensivesystem of minimal social protection. Usingevidence from representative surveys in thefour countries, it concludes that community

Social consequences of unemployment: an EastWest comparisonDuncan Gallie, University of Oxford, UK

Dobrinka Kostova, Academy of Sciences, BulgariaPavel Kuchar, Institut Sociologichke Studi, Prague, Czech Republic

ARTICLE

Key words

Bulgaria, Czech Republic, Slovakia, socialexclusion, unemployment, welfare regimes

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


support did not effectively compensate forweak welfare protection in conditions of highand persisting unemployment.

The paper begins with a brief considerationof the institutional context and then in subse-quent sections turns to an empirical examina-tion of the implications of unemployment forfinancial deprivation, social isolation and psy-chological distress in the four countries.

The institutional contexts

The sudden rise of unemployment in theformer state socialist societies occurred in asituation where there was relatively weakinstitutional support for the unemployed(Scarpetta and Reutersward, 1994). Socialprotection systems for the unemployed wererelatively recent developments, in part as aresult of the strong policy emphasis in theformer state socialist societies on maintainingfull employment. It had been assumed thatunemployment would not pose a significantsocial problem. It was only in 1989 thatBulgaria and the then Czechoslovakia intro-duced an unemployment benefit system cover-ing people who had lost their jobs through nofault of their own.

The types of protection system that wereintroduced, after legal revisions in 1991, con-tained severe time restrictions on eligibility forbenefits, leading to low levels of overall cover-age. The duration of unemployment benefitvaried between the countries. In Bulgaria, thelength of time for which it could be receivedwas severely constrained by age and length ofservice criteria. Anyone with less than fiveyears service was limited to unemploymentbenefit for six months, while the maximumduration of benefit (for the oldest and longestserving) workers was 12 months. The systemin Slovakia and the Czech Republic was evenmore restrictive in terms of the duration ofpayments, with a maximum limit of sixmonths support (ISSA, 1994: 212, 248).When entitlement ran out, there was little

formal support to fall back upon. Whileembryonic systems of means-tested socialassistance were introduced in the transitioncountries in the early 1990s, not only was thelevel of support offered very low but less thanhalf of the long-term unemployed were able toreceive such benefits (Scarpetta and Reuters-ward, 1994: 302).1 In Bulgaria, the conditionsfor receiving social assistance grants were sorestrictive that only 20 percent of the long-term unemployed were able to make a claim(Bobeva, 1994: 103). Those not covered hadto fall back on resources available from othersin the household or direct self-provision (forinstance with respect to food). This contrastedsharply with the situation in Britain at thetime where the majority of the adult unem-ployed, providing they met the criteria ofseeking work, were eligible for insurancebenefit or income support for as long as theywere unemployed.2

For the short period that people werecovered by the benefit system in the formerstate socialist societies, they received relativelygenerous nominal levels of support. In Britain,where benefits do not take account of previ-ous earnings, estimates of gross replacementrates in the early 1990s were between 23percent and 30 percent, whether the personwas on unemployment insurance or means-tested benefit (see for instance CEC, 1994:57). In Bulgaria, the Czech Republic andSlovakia unemployment benefit was earnings-related but with a maximum figure that wasfixed as a proportion of the minimum wage(ICSER, 1992). In the early and mid-1990s,benefit in Bulgaria could amount to 60percent of former earnings, with a ceiling of140 percent of the minimum wage.3 TheCzech Republic and Slovakia provided bene-fits of 60 percent of previous earnings for thefirst three months and 50 percent for a furtherthree months, with a ceiling of between 150and 180 percent of the minimum wage.However, real replacement rates in the formerstate socialist societies were considerablylower than this suggests. The figures for priorearnings were not adjusted for inflation and,

40 GALLI E , KOSTOVA AND KUCHAR

Journal of European Social Policy 2001 11 (1)


in the early 1990s, inflation was rising veryrapidly, particularly in Bulgaria (EBRD,1995). Adjusting for inflation, it has been esti-mated that the average Bulgarian replacementrate fell to 44 percent, and for those remain-ing unemployed for a year it was as low as 32percent (Scarpetta and Reutersward, 1994:272). After eligibility expired, the minority ofthe long-term unemployed people who wereable to obtain social assistance benefits foundthemselves at a very low replacement rate,even in nominal terms: approximately 22percent in Bulgaria and 35 percent in theCzech Republic and Slovakia (Scarpetta andReutersward, 1994: 272, 295).

The severity of the implications of eligibilityrestrictions will depend on the persistence ofhigh unemployment. This differed consider-ably between the societies, partly reflecting thebroader economic context in which unem-ployment emerged (OECD 1991; 1996a;1996b; 1997; ICSER, 1992). Whereas inBritain high unemployment was caused by aparticularly sharp downturn in the businesscycle, in the former state socialist societies it

was a product of the disintegration of thewider economic system. The extent of unem-ployment in the Central and East Europeancountries reflected the degree of prior integra-tion in the collapsing markets of the formerSoviet Union and the relative success or failurein finding alternative markets in the West. TheCzech economy had a much older history ofindustrial development from the interwarperiod, whereas industry in Slovakia and espe-cially Bulgaria had developed predominantlyduring the Communist era, reflecting theemphasis on heavy industry and tight func-tional integration into the wider economicnetwork of the Soviet bloc (ICSER, 1992;Musil, 1993; OECD, 1997). As a conse-quence, when the Soviet market collapsed,economic disruption was particularly severe inBulgaria and Slovakia.

These differing economic fortunes werereflected in the trends in unemployment rates.Estimates of the precise unemployment rate inany year can vary a good deal for the formerstate socialist societies, reflecting the relativenovelty of collecting such figures in thesecountries. But the general pattern is very clear.In both Slovakia and Bulgaria not only wasthe change in unemployment rates muchsharper than in Britain and particularly thanin the Czech Republic, but unemploymentcame to affect a much higher proportion ofthe workforce. As can be seen in Table 1, reg-istered unemployment rose from about 1percent in the Czech Republic in 1990 to 3.2percent in 1994. In contrast, in Slovakia itrose from about 1 percent in 1990 to a peakof 14.4 percent in 1994. In Bulgaria, it roseover the same period from 1.7 percent to 12.4percent in 1994. At its highest point in 1993,16.2 percent of the workforce was unem-ployed. ILO unemployment data was onlyavailable from 1993. This gave unemploymentrates for 1994 of 9.6 percent in Britain, 4.1percent in the Czech Republic, 13.7 percent inSlovakia and 20.2 percent in Bulgaria.

The implications of limited duration benefits for financial support will depend inparticular on the prevalence of long-term

SOCIAL CONSEQUENCES OF UNEMPLOYMENT 41


Table 1 Unemployment rates (%)

Year Britain Czech Slovakia Bulgaria

Registered unemployed1989 6.3 0a 0a na1990 5.8 0.7a 0.8a 1.71991 8.0 4.1 7.0 11.11992 9.8 2.6 11.7 15.31993 10.3 3.5 12.9 16.41994 9.4 3.2 14.4 12.41995 8.3 2.9 13.8 11.1

ILO unemployed1993 10.3 4.0 21.41994 9.6 4.1 13.7 20.21995 8.6 4.1 13.1 16.2

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 HistoricalSupplement 1997: 9, 155; Czech, Slovak andBulgarian registered and ILO data 198992:ILO (1997: 4739).


unemployment. It was in Slovakia and mostparticularly in Bulgaria, where unemploymentrates were much higher and exit from unem-ployment more difficult, that it was likely tohave the sharpest effects on family finances.Bulgaria had the worst long-term unemploy-ment problem of all the transition countries,with over 60 percent of the unemployedhaving been without work for over a year.Long-term unemployment was also high inSlovakia (approximately 50 percent of theunemployed). In contrast, in the CzechRepublic, unemployment spells were typicallyof relatively short duration (World Bank,1999: 75, 91) and long-term unemploymentaffected only a minority (35 percent) of theCzech unemployed (Boeri, 1994: 19; OECD,1997: 389). As a result, a higher proportionof the Slovaks and especially the Bulgarianunemployed were ineligible for benefit.Bulgaria had the lowest proportion of unem-ployed people receiving unemployment bene-fits among the transition countries. The effectof the rise in unemployment on coverage rates

is clear. Whereas in 1990, 56.7 percent of theBulgarian unemployed were in receipt of bene-fits, by 1993 this had fallen to 36.1 percent(Bobeva, 1994 : 86). In the Czech Republicand Slovakia, coverage rates in 1992 were46.2 percent and 41.1 percent respectively(Scarpetta and Reutersward, 1994: 289).4

Finally, the different processes underlyingthe growth of unemployment in these societiesgave rise to important differences in the com-position of unemployed people. The systemicquality of the shock that hit the economies ofthe former state socialist societies in 1989meant that job insecurity was spread muchmore evenly across different occupational cat-egories than was the case in Britain. As can beseen in Table 2, the unemployed in Britain wereabove all non-skilled workers (51.6 percent).Only 13 percent were from the professional/-managerial classes. In contrast, in the formerstate socialist societies non-skilled workersconstituted only around a quarter of unem-ployed people, while approximately 20 per-cent came from the professional/managerial



Table 2 Social characteristics of the registered unemployed (%)

Britain Czech Slovakia Bulgaria

Men 80.9 41.9 55.4 40.6Women 19.1 58.1 44.6 59.4

204 18.8 23.2 23.8 17.52544 50.4 55.8 59.4 57.745+ 30.8 21.0 16.8 24.8

Professional/managerial 12.7 18.9 22. 7 21.3Lower non-manual 8.2 8.7 7.1 5.8Technician/supervisory 3.8 2.6 2.7 1.9Skilled manual 20.2 23.7 23.5 26.4Non-skilled 51.6 28.0 23.8 23.6Never worked 3.6 18.1 20.3 21.1

% marriedAll unemployed 48.7 59.9 53.9 74.0Male unemployed 50.8 44.4 49.9 71.1Female unemployed 39.9 71.0 59.0 76.0

Source: Project Surveys (see Note 6).


classes.5 At the same time, a higher proportionof unemployed people in the transition coun-tries were married. In these countries, then,unemployment affected to a greater extentpeople who were likely to have responsibilitiesfor maintaining family income.

In short, there were clearly major differ-ences between the societies in the extensive-ness of coverage of the welfare safety net forunemployed people. All of the former statesocialist societies had less comprehensive pro-vision than Britain, but the lack of coveragewas particularly notable in Slovakia andabove all Bulgaria.

Welfare and the experience of unem-ployment: contrasting views

There could be rather different hypothesesabout the relative severity of the experience ofunemployment in Britain and the former statesocialist societies, depending upon assump-tions about the relationship between welfareprovision and community support. One possi-bility is that welfare state protection is crucialnot just for peoples financial well-being, butalso for their social integration in the commu-nity. Financial deprivation could be seen asplacing everyday social relationships undersuch pressure that there is a tendency forsocial networks to collapse and for unem-ployed people to become increasingly cut offfrom the community. From this perspective,there could be little doubt that it is in theformer state socialist societies that one wouldexpect the effect of unemployment to be mostsevere.

An alternative view, however, would placemuch less emphasis on institutionalized socialprotection in determining the experience ofunemployment. In countries where formalwelfare provision is weak, an alternativewelfare system may emerge based upon familyor other social networks. Previous researchhas emphasized the importance of socialsupport for psychological well-being whether

in employment or unemployment (House,1981; Warr, 1987; Whelan et al., 1991; Gallieet al., 1994; Gallie, 1999). If it were the casethat a less institutionalized system encouragedgreater social solidarity at family and commu-nity level, one might expect higher levels ofpsychological well-being among unemployedpeople in the former state socialist societiesthan in those with more formalized welfareprovision.

In seeking to assess the experience of unem-ployment in these countries, we have beenable to draw on directly comparable data setsfor the four countries. The data for Bulgaria,the Czech Republic and Slovakia are drawnfrom surveys of employed and unemployedpeople carried out in 1994 and 1995. Thesecontained a wide range of questions that hadbeen included in surveys carried out in Britainin 1992.6

The surveys of employees were directlycomparable representative national surveys,with the sampling based on residential areas.The achieved samples of employed peoplewere 3,869 in Britain, 2,202 in Bulgaria,2,009 in the Czech Republic and 1,001 inSlovakia. The unemployed were selected frompeople who were registered at unemploymentbenefit or labour offices. The samples ofunemployed people in Britain and Bulgariawere drawn from comprehensive registers ofthe unemployed. This was not possible in theCzech Republic and Slovakia, because thedata protection legislation prohibited access tothis type of registration list. These twosamples were drawn on a random basis frompeople leaving the labour offices. The samplenumbers for unemployed people were 1,003in Britain, 1,002 in Bulgaria, 736 in the CzechRepublic and 785 in Slovakia. The responserates were in all cases at the 70 percent levelor better.7

The data available are cross-sectional anddo not allow tests of causality. When we referto effects, these should be interpreted as sta-tistical effects or effects of association. Ideally,there should be comparative data over time,allowing us to contrast the patterns in a




society before and after changes in the struc-ture of welfare and, at the individual level,making it possible to follow chronologicallythe changes in peoples experiences in theaftermath of unemployment. Until such evi-dence is available we are necessarily restrictedto testing the plausibility of particular viewsabout the implications of welfare arrange-ments in the light of evidence at a particularpoint in time.

In assessing the impact of unemployment inthe four societies, we will focus in turn onthree main areas of peoples experience. Thefirst is that of financial stress; the second is theimplications of unemployment for family rela-tions and for wider social networks; and thethird is its consequences for psychologicalwell-being.

Financial stress

Did the low level of financial protection pro-vided by the weakly developed welfaresystems of the former state socialist societiesmean that unemployed people in those coun-tries suffered much higher levels of anxietyabout money? Our main measure of financialstress was a question asking people how oftenthey found themselves worrying about money.The responses ranged from almost all the time

to almost never. A comparison of levels offinancial stress across the countries (Table 3)lends little support to the view that there is astraightforward divide between the protectedsystems of Western Europe and the unpro-tected systems of the former state socialistsocieties.

Financial stress among the British unem-ployed was higher than in either the CzechRepublic or Slovakia. Overall, 42 percent ofthe British unemployed were worried abouttheir financial situation almost all of the time,while this was the case for 25 percent of theCzechs and for 30 percent of the Slovaks. Itwas only in Bulgaria that we found a higherlevel of financial stress than in Britain, with48 percent worried almost all of the time.

One possibility is that these patterns areheavily influenced by the very different dura-tions of unemployment. It was certainly thecase that in all of the former state socialistsocieties those who were unemployed for overa year were more likely to experience financialstress than those with shorter spells of unem-ployment (Table 3). The duration effect wasparticularly marked in Slovakia and Bulgaria.As was seen earlier, these societies combinedrelatively generous benefits for the short-termunemployed with the virtual absence of bene-fits for the long-term unemployed. In Slovakiaonly 27 percent of those unemployed for less



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


Employment statusEmployed 8.8 19.5 25.6 17.1Unemployed 42.1 24.5 29.5 47.6

SexMen 40.9 25.1 32.5 51.0Women 46.5 23.6 27.3 45.6

Duration of unemployment

than six months had a high level of financialanxiety, but the figure rose to 42 percentamong those unemployed for over three years.In Bulgaria, the comparable figures were 33percent and 57 percent. The experience offinancial anxiety of the very long-term unem-ployed was very much higher in Bulgaria thanin any of the other countries.

Nonetheless, duration of unemployment initself is insufficient to account for the overallpattern of differences between countries. TheBritish had high levels of financial anxietyeven when they had been unemployed for lessthan six months and there was little change asdurations grew longer. On the one hand, thismay reflect a pattern characteristic of morehighly developed consumer societies in whichworking households come to rely on highlevels of debt as a normal part of family budg-eting. Where families are supporting largemortgages or substantial hire purchase pay-ments, then the financial impact of unemploy-ment is likely to be felt almost immediately.On the other hand, the nature of British wel-fare provision may help to explain why finan-cial anxiety did not increase with duration of

unemployment as occurred in the former statesocialist societies.

The Czechs were distinctive for the oppositereason: even those with lengthier durations ofunemployment showed relatively low levels offinancial stress. It is important to keep inmind the overall level and composition ofunemployment. This category was particularlysmall in the Czech Republic. It also seemslikely that, in such a highly dynamic labourmarket, where the major difficulties related toskill shortages rather than to lack of jobs, thelonger-term unemployed were a much morehighly selected group, consisting of peoplehaving alternative sources of financial supportor with a preference for relatively inexpensivelifestyles.

As a final step, we carried out a regressionanalysis to explore the significance of countrydifferences. Given the differences noted earlierin the composition of unemployed peoplebetween the countries, this controlled for sex,age and class. The results are shown in Table4. In Model 1 the analysis focuses on differ-ences in financial anxiety between unem-ployed people in each country, contrasting the



Table 4 Unemployment effect on financial anxiety relative to Britain, with controls (ordered logitmodels)

Model 1 Model 2Country effects Country unemployment

among unemployed effects relative to employedCoefficient Sig Coefficient Sig

Britain Ref. Ref. Czech .29 ** 1.44 ***Slovakia .03 n.s. 1.44 ***Bulgaria .41 *** 0.41 ***

N = 2,973 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 modelchi2 (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 theinteraction 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 overallmodel chi2 (d.f. 16) = 1,568.51.Source: Project Surveys (see Note 6).


three former state socialist societies withBritain. The results confirm that the differ-ences noted earlier (the relatively low level offinancial anxiety of the Czech unemployedand the high level of anxiety of the Bulgarianunemployed) are of a high level of statisticalsignificance. The coefficient (0.41) indicatesthat the Bulgarian unemployed had muchhigher levels of financial anxiety than unem-ployed people in any of the other countries.Model 2 is concerned with how far unem-ployed people in each country differ in theirlevel of financial anxiety from employedpeople, once account has been taken of sex,age and class differences. The sample is thepooled sample of the employed and unem-ployed and the country coefficients shown areinteraction effects representing the unem-ployed. This reveals an altogether differentpattern. The relative difference between theunemployed and the employed is greatest inBritain (the reference country) with each ofthe former state socialist countries having asignificant negative coefficient. The relativedifference is least in the Czech Republic andSlovakia.

Overall, there is no simple relationshipbetween the nature of welfare provision andfinancial anxiety. The Bulgarian unemployedwere more anxious about their finances thanunemployed people in any other country, fol-lowed by the British. Even in terms of theabsolute differences, then, account also needsto be taken of the structure of householdfinances in different countries, the generallevel of unemployment and the fluidity of thelabour market. Moreover, relative differencesbetween the unemployed and employed wereparticularly marked in Britain, partly reflect-ing the low levels of anxiety among those whohad jobs in that country but also possibly thedifficulties for unemployed people in adjustinglifestyles in a developed consumer society.

The household and social networks

The European discussion of social exclusion

has increasingly focused on the central role ofsocial isolation in the process of exclusion. Ifloss of employment is reinforced by social iso-lation, then it seems likely that unemployedpeople will enter into a downward spiral inwhich their contacts with the labour marketwill become increasingly weakened. Whileresearch on social isolation has tended tofocus on social networks, it is important tobear in mind that the nature of the householdmay also be an important factor.

The household An initial issue with respectto social isolation is the structure of thehousehold. To what extent were unemployedpeople single or married? It was seen in Table2 that there were substantial differencesbetween the countries in the proportion ofunemployed people who were married. InBritain, just under half were married; in theCzech Republic and Slovakia just over half;while in Bulgaria nearly three-quarters of allunemployed people were married.

The household situation of unemployedpeople was then very different between thesocieties. However, the implications of havinga partner for financial security are likely tovary substantially depending on the employ-ment position of the partner. A consistentfinding in British unemployment research isthe great difference between employed andunemployed people in the probability thatthey will have a partner in work. This patterncan be seen clearly in Table 5. Whereas 72percent of employed British men who weremarried had a wife with a job, this was thecase for only 24 percent of unemployedmarried men. A similar pattern, although con-siderably less strong, can be seen for women.This implied a marked tendency towardspolarization between two-earner and no-earner families.

Turning to the former state socialist soci-eties, the picture is very different. In the CzechRepublic and Slovakia, if the husband isunemployed he is more likely to have a wife with a job than if he is employed. InBulgaria there is virtually no difference in the




likelihood that women will have a jobwhether the husband is employed or unem-ployed. Taking instead the employment statusof the woman, broadly the same pictureemerges. Where a woman is unemployed, sheis only a little more likely to have a husbandwithout work in the Czech Republic, and inboth Slovakia and Bulgaria she is a little morelikely to have a husband in work than anemployed person.

There is then a fundamental differencebetween Britain and the former state socialistsocieties in the extent to which householdsbecome polarized in terms of labour marketstatus. Such polarization is very marked inBritain, whereas it appears to be largelyabsent in the former state socialist societies.We can only offer tentative suggestions as towhy this might be the case. Apart from thedifferences in financial pressure on the fami-lies of the unemployed due to the limitedduration of coverage, the type of benefitspeople received in the former state socialistsocieties were more conducive to the partnersemployment. In Britain a majority of theunemployed (59 percent) were in receipt ofmeans-tested income support, which takesaccount of all household income. There issome evidence that this leads to the with-drawal of wives from employment, due to thelack of financial incentives (Davies et al.,1994). In contrast, in the former state socialistsocieties, where means-tested benefits wererelatively rare, benefits were mainly allocatedon an individual basis irrespective of other

household income. Further, there have beenactive policy measures to prevent cumulativeunemployment in families. For instance, inBulgaria, when redundancies were scheduled,people who had an unemployed partner hadpriority to retain their jobs.

Social networks and social support Withrespect to wider social networks, our firstapproach was to ask people how frequentlythey met up socially with relatives (other thanthose they lived with) and with friends, pro-viding an eight-point response set rangingfrom several times a week to never. Table 6shows the proportion of employed and unem-ployed people who saw their relatives or theirfriends several times a week, a measure thatprovides a reliable guide to the overall patternof response.

The picture is very consistent. As has beenfound more generally in Western Europe(Gallie and Paugam, 2000), far from becom-ing more cut off from contact with otherpeople, unemployed people were generallymore likely to meet up with both relatives andfriends. The increased frequency of seeing rel-atives was particularly marked in Britain andBulgaria. Sociability with friends rose consid-erably in all countries, though the differencewas least in the Czech Republic.

However, while sociability was not under-cut, there may have been important changes inthe qualitative nature of peoples networks, inparticular in the level of support that friendscan give. We developed a measure of social



Table 5 Percentage of married (employed and unemployed) with partner in work


All Employed 81.5 82.2 70.5 57.9Unemployed 30.1 83.6 84.6 60.0

Male Employed 72.3 70.4 61.4 51.3Unemployed 23.7 76.5 83.3 49.5

Female Employed 90.5 92.6 80.8 64.2Unemployed 64.0 86.5 88.7 67.1



support based upon a question asking peoplewhether there was anyone that they could relyon from outside their own household if theyneeded help in three situations. These were: ifthey were feeling depressed; if they neededhelp in finding a job for themselves or for amember of the family; and if they needed toborrow money to pay for an urgent bill likeelectricity, gas, rent or mortgage.

In each country unemployed people wereless likely than employed people to getsupport with respect to all three problems(Table 7). Indeed, the difference between thesupport levels of the employed and unem-ployed is remarkably similar across the coun-tries. However, the combination of generallylow levels of support (affecting even the

employed) with the specific disadvantage ofbeing without work put the Bulgarian unem-ployed in a remarkably isolated positionwhere less than half could count on assistanceon two of the three issues. It seems clear that,in conditions of exceptionally severe unem-ployment, informal social networks wereunable to handle the burden of deprivation.This is likely to have reflected not only the rel-ative impoverishment of the networks them-selves, but the difficulty of effective assistancewith job search in conditions of very highunemployment where job opportunities werelow for everyone.

An overall measure of social support wasconstructed by adding together the scores onthe three different measures. The regression



Table 7 Percentage with social support from people outside the household

Could get help if: Britain Czech Slovakia Bulgaria

Needed money Employed 69 71 77 59Unemployed 52 62 69 55

Depressed Employed 78 66 69 52Unemployed 68 62 59 45

Looking for a job Employed 52 65 67 33Unemployed 48 57 62 24


Table 6 Sociability and network structure of employed and unemployed people


% meeting relatives outside the household several times a weekEmployed 18.4 18.7 23.1 13.1Unemployed 34.6 24.5 27.0 25.4

% meeting friends several times a weekEmployed 24.6 24.7 29.0 32.8Unemployed 47.0 35.1 48.4 46.8

% with half or more of their friends unemployedEmployed 13.7 5.9 20.3 28.6Unemployed 48.7 21.3 38.1 42.3



analyses in Table 8 show the country effects,once sex, age and class differences have beencontrolled. Model 1 compares countries interms of the absolute differences between theunemployed, while Model 2 compares coun-tries in terms of the relative differencesbetween employed and unemployed people. Inboth analyses, Bulgaria stands out sharply forthe low level of support provided by unem-ployed peoples networks.

The results then provide little support forthe view that in a situation of deficient statewelfare provision, the community will providehigher levels of social support. While therewas no evidence that unemployed people inany of the countries became socially isolated,the support provided by peoples social net-works was clearly weakened. It was particu-larly weak in Bulgaria where the problemspresented by high unemployment and lowwelfare provision were most severe.

Psychological distress

As a last step in the examination of the conse-quences of unemployment, we have examined

its impact on the individuals psychologicalwell-being. The measure used is the twelve-item version of the General HealthQuestionnaire (GHQ). This is a measure ofpsychological well-being, developed byGoldberg, that has been tested in a wide rangeof surveys and that has been validated as ameasure 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 ofself-confidence and feelings of self-worth.

Table 9 shows the mean scores on themeasure for employed and unemployed peoplein each country. Higher scores indicate higherlevels of psychological distress. Taking firstthe employed, it can be seen that the least dis-tressed are the British employed, followed bythe Bulgarians. In contrast, both the Czechand the Slovak employees appear to experi-ence relatively high levels of tension. Arguablythis reflects the particularly rapid changes thathad been occurring in the organization ofwork that meant that many of the taken-for-granted practices of work life had come underthreat with new patterns of ownership andnew technologies (Gallie et al., 1999).



Table 8 Unemployment effect on social support relative to Britain, with controls (ordered logitmodels)



Britain Ref. Ref.Czech .14 n.s. .04 n.s.Slovakia .05 n.s. .31 *Bulgaria 1.12 *** .42 ***

N = 3,007 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 modelchi2 (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 theinteraction 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 overallmodel chi2 (d.f. 16) = 963.32.Source: Project Surveys (see Note 6).


The picture for unemployed people wasaltogether different. The least distressedamong the unemployed were the Czechs andthe British, followed by the Slovaks. TheBulgarian unemployed, however, were clearlysuffering from exceptionally high levels of dis-tress. The pattern is particularly interesting inthat it seems very unlikely to be due to arte-facts of method (for instance, a failure toallow for cultural differences in the intensityof expression). This would have affectedemployed and unemployed people equally. Butthe same measure shows that in Bulgaria dis-tress is relatively low among employed people,

while it is exceptionally high among theunemployed.

The pattern stands out clearly from theregression analyses shown in Table 10, whichcontrol for differences in sex, age and class.Model 1 shows the absolute differencesbetween unemployed people in the differentcountries. The level of psychological distressof the unemployed in the Czech Republic isnot statistically different from that of theunemployed in Britain. But unemployedpeople in Slovakia and particularly Bulgariahave much higher levels of distress. Model 2compares countries in terms of the distress of



Table 9 Psychological distress scores (GHQ) for employed and unemployed people


All Employed 0.87 1.03 1.02 0.91Unemployed 1.22 1.21 1.28 1.42

Male Employed 0.86 1.02 1.00 0.90Unemployed 1.18 1.19 1.29 1.39

Female Employed 0.93 1.09 1.06 0.95Unemployed 1.38 1.22 1.27 1.43


Table 10 Unemployment effect on psychological distress relative to Britain, with controls (models)



Britain Ref. Ref.Czech .02 n.s. .17 ***Slovakia .09 ** .06 *Bulgaria .21 *** .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. AdjustedR2=.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 theinteraction 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 modeladjusted R2=.17.Source: Project Surveys (see Note 6).


the unemployed relative to the employed. Thisonce more shows unemployed people inBulgaria suffered from exceptionally highlevels of distress. However, relative to theemployed, the British unemployed were worseoff than either their Czech or Slovak equiva-lents.

Further analysis showed that this lower rel-ative impact of unemployment on the Czechsand Slovaks could be largely explained interms of differences in financial anxiety,marital position and the availability of socialsupport. Once these factors were controlledfor, unemployed people in both countriesceased to be significantly different from theBritish unemployed in terms of relative psy-chological distress. However, the Bulgarianunemployed still stood out as experiencingsignificantly greater distress than others. Thispossibly reflects the deep insecurity linked tothe pervasiveness of the economic crisis. Thepsychological distress of unemployed people islikely to reflect in part their sense of the futureprospects of the economy and its ability toemerge from crisis in the foreseeable future.

Conclusions

The paper has focused on whether the rela-tively low coverage of welfare state protectionin the former state socialist societies led to anaccentuation of the personal and social prob-lems associated with unemployment orencouraged the growth of other types of socialsolidarity, rooted in the community, that couldhelp offset deprivation and possibly provide ahigher level of social integration than wouldbe found in societies with more extensiveformal welfare provision.

A first point to note is that there was nostraightforward relationship between thefinancial anxiety caused by unemploymentand the level and duration of benefit protec-tion. In part this is because the effects ofwelfare provision have to be consideredtogether with the severity of unemployment.

All of the former state socialist societies pro-vided income support for unemployed peoplefor only relatively short periods. But whereasthis was not associated with high levels ofanxiety in the Czech Republic, where the levelof unemployment was low and unemploymenttended to be of short duration, it was associ-ated with very high levels of anxiety inBulgaria, which was confronted by high andvery persistent unemployment.

While unemployed people in Bulgaria suf-fered more than the unemployed in any of theother countries, it was the British unemployedwho were the next most subject to financialstress despite the greater coverage of welfareprovision. This may have reflected the lowlevel of benefits even at the outset of unem-ployment and possibly the high levels ofhousehold debt associated with the con-sumerism of Western societies. This suggeststhat, as well as the extent of welfare provi-sion, the severity of unemployment and thenature of consumption practices in a societyare likely to affect the relationship betweenunemployment and financial stress.

The structure of the welfare systems wasassociated with different patterns of financialanxiety by duration of unemployment. In theformer state socialist societies, which providedrelatively high benefits in the early months ofthe unemployment spell, but virtually nosafety net for long-term unemployed people,there was a sharp rise in financial anxiety byduration of unemployment. In contrast, theBritish were distinctive in their very high levelsof financial anxiety immediately upon becom-ing unemployed. This may well result fromthe fact that the British system provides rela-tively low replacement ratios at the onset ofunemployment. The indefinite nature of bene-fits in the British system, however, may havebeen an important factor in preventing finan-cial anxiety from rising sharply with longerunemployment as happened in the formerstate socialist societies.

Were the differences in the welfare systemsassociated with differences in the responses to unemployment of the household and the




community? Unemployed people in the formerstate socialist societies were clearly able to relyto a greater extent on the resources of otherpeople in the household. To begin with, theywere more likely to be married. But, in addi-tion, those who were married were morelikely to have partners in work. Whereas inBritain, the wives of unemployed men weremuch less likely to have a job than the wivesof men in employment, in the former statesocialist societies they were just as likely as thepartners of the employed to have a job (and,in the Czech Republic and Slovakia, evenmore likely). It is plausible that an importantfactor behind this relatively high employmentof the partners of unemployed people was thepressure exerted by the short duration ofwelfare cover and the limited importance ofmeans-tested benefits with their negativeincentives for the partner to work.

There was little evidence, however, that theless generous welfare systems in the transitioncountries led to a resurgence of communitysupport in conditions of high unemployment.Sociability was not higher among unemployedpeople in the former state socialist societies.Further, there is no evidence that these net-works provided people with greater support inthe societies where welfare was less developed.As in Britain, the social networks of unem-ployed people in these countries were less sup-portive than those of the employed. In thecountry where welfare coverage was weakest,Bulgaria, the support that people could relyupon from people outside the household wasalso weakest. The pattern of high sociabilitybut relatively low levels of support suggeststhat peoples local social networks simply didnot have the capacity to relieve the burden ofdeprivation produced by the combination ofhigh unemployment and weak welfare provi-sion.

The strongest test of the implications ofunemployment for peoples experience is theway it affects their psychological well-being.This is both because of its intrinsic importanceand because of the way it captures the diverseforms of strain to which people are subject.

Unemployment was associated with signifi-cantly higher levels of psychological distress inall countries. But Bulgaria stands out as thecountry in which the effects of unemploymentwere most severe. In part, this reflected thefact that the Bulgarians suffered from thegreatest financial anxiety and the lowest levelsof social support.

The implications of the nature of thewelfare regime clearly will depend on the stateof the labour market. But the example ofBulgaria points to the potential risks of lowcoverage and low duration welfare systems inconditions of high and persisting unemploy-ment. Short-duration benefits did not lead themarket to clear, but they were associated withmarkedly greater deprivation among long-term unemployed people who largely fell out-side any welfare safety net. There may havebeen greater pressure on the partners of theunemployed to find jobs, but this was clearlyinsufficient to prevent exceptionally high levelsof financial stress. Community sociability didnot collapse, but peoples social networks didnot provide an adequate alternative system ofwelfare. The outcome of high levels of finan-cial pressure and low levels of social supportwas that the Bulgarian unemployed had excep-tionally high levels of psychological distress.

Notes

1 Overall household income had to be below theminimum living standard, which in the early1990s was lower than the minimum wage (forinstance in the Czech Republic in 1992 Kcs1,700 compared to Kcs 2,200). The systemoffered better protection for families with severaldependent children. In Bulgaria, eligibility crite-ria also included housing space (not more thanone room per person) and savings (not morethan the equivalent of 70.00). The maximumsocial assistance grant was 50% of the minimumwage.

2 Of the registered unemployed 86% (our data)and 66% of the ILO unemployed (Departmentof Employment, 1993: 45).

3 The minimum wage was approximately a thirdof the average wage.




4 Our own sample estimates for 1994 provide avery similar picture for Bulgaria and the CzechRepublic, but suggest a marked deteriorationover the previous two years in Slovakia. InBulgaria only 34.3% of the unemployed were inreceipt of benefit and in Slovakia 31.7%. In con-trast, in the Czech Republic, the level of cover-age was considerably higher at 51%.

5 The occupational class estimates are drawn fromour own survey data (for details see later), wherecare has been taken to ensure cross-nationalcomparability in occupational coding. They are,however, supported by national data. ICSER(1992: 115) states that in 1992 technical profes-sionals, engineers and economists accounted for 15.8% of all those without work. Bobeva(1994: 105) gives figures for January 1993showing 20% of the Bulgarian unemployed werespecialists.

6 The question formats were made as similar as possible using a back-translation technique.The British survey was co-directed by DuncanGallie and Michael White. It was funded by aconsortium of industrialists, the EmploymentDepartment, the Employment Service and theLeverhulme Trust. The surveys in Bulgaria, theCzech Republic and Slovakia were carried out byDobrinka Kostova and Pavel Kuchar and fundedby the EU (DGXII). Michael White of the PolicyStudies Institute gave very valuable assistancewith the design of the sampling of the EastEuropean Surveys. Full details of the survey pro-cedures are available from the authors.

7 For the employee surveys the response rateswere: Britain, 72%; Bulgaria, 72%; CzechRepublic, 74%; Slovakia, 78%. For the surveysof unemployed people: Britain, 70%; Bulgaria,71%; Czech Republic, 78%; Slovakia, 83%.

8 The adequacy of the psychometric properties ofthe GHQ-12 has been established by Banks et al.(1980).

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Social Consequences of Unemployment