Living standards, unemployment, and poverty

Social transformation opened the previously closed societies in hardline countries of the Soviet bloc and abolished state controls and regulations as well as paternalistic patronage in the entire region. The overwhelming atmosphere of freedom filled the air. No sooner was the window of opportunity opened wide to people long dissatisfied with strict limitations than they were hit by the decline of state socialism.

For the majority, however, the negative effects were felt first: erosion and collapse of the social safety net, and the rise of permanent unemployment and poverty. These new phenomena replaced security and egalitarianism and generated social polarization according to the market capitalist pattern.

There were both unavoidable and avoidable dangers on the road of social transformation. There were suggestions that it would be sensible to establish – and there were attempts to do so – an appropriate institutional framework in the form of a social safety net and a corporatist social contract system. It was hoped that these would pave the way for self-restraint and compromise. In turn, necessary reform would follow, and social pain would be mitigated in the process. As one of the experts noted: