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Economy

ORIGINAL FRENCH ARTICLE: Europe de l’Est, la violence de la transition économique

by Paul Falzon

The Violent Effects of Economic Transition in Eastern Europe

Translated by Patrick Bolland

Translated Wednesday 1 February 2006, by Patrick Bolland

The shocks absorbed by Central and Eastern European states in the 1990s have plunged a significant number of people into extreme destitution, according to a study by the French National Institute for Statistics and Economic Studies

A comparative study published by the French National Institute for Statistics and Economic Studies (INSEE) in December 2005 entitled “The poor and poor life-styles in European countries” (1) compares the poor and their living conditions in seven European states (2). This report provides a striking picture on poverty in the Countries of Central and Eastern Europe (CCEE). Neighbours of a Western Europe where extreme destitution remains marginal, the authors, Nicolas Herpin et Fabien Dell, point out that “ ... in the CCEE, the poorest people have life-styles comparable, in some ways, to those that characterize the deep poverty ... in Africa or Asia”.

The poorest 10% of Romanians have an annual revenue of 873 € per capita, barely more than the per capita income in Madagascar, one of the poorest countries in the world (790 € per capita ). They lack access to the most basic comforts, such as a refrigerator or indoor toilets. Added to the material hardship, these people are victims of health problems (pollution, lack of hygiene) and social exclusion.

While it is difficult to give a precise figure to the number of people affected - criteria vary from one country to the next - the drift towards poverty of a significant proportion of the population in the last 15 years is clear. The INSEE researchers attribute this situation to “the transition to an unregulated or poorly-regulated market economy that has exposed the poorest people in the CCEE to the most violent economic dislocations”. If this transition at first created a dynamic for the economy, the negative effects soon became predominant. Job insecurity has also been an addition burden on these populations, who have also been victims of the progressive dismantling of the health-care and social-service systems: “Few unemployment benefits and/or inadequate pension schemes - the social protection net has not replaced life-time employment”, the authors argue.

The destruction of economic facilities, and particularly of State enterprises, has been another violent shock, one that traditional solidarities have not been able to absorb. In Romania and Poland, where 20% of the population say they live off the land, “the closure of numerous industrial establishments after the change of political regimes has generated a return of a number of city-dwellers to the country-side ... [Yet] small-scale family farms, lacking financial resources to adopt technological changes, have not been in a position to benefit from this influx of new workers.”

Any hopes to see real economic growth in the CCEE in the next few years - which could be made, particularly given by high levels of education - can only, at the best, “counteract the worst destitution”, the INSEE concludes. Poverty in these countries threatens to create a permanent “brutal consequence of a transition towards a market economy”, all the more so since the life-styles inspired by countries to the West - high levels of consumption, paid vacations, etc. - only serve to accentuate the fracture between the Rich and the Poor.

(1) “Pauvres et modes de vie pauvre dans des pays européens”, 39 pages, available in French only on the INSEE site: http://www.insee.fr/fr/ffc/docs_ffc/es383-384-385c.pdf
(2) France, the United Kingdom, Spain, Portugal, Poland, Romania and Russia


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