Life grows hard in the world of commodities

April 24, 1991

By Peter Annear

PRAGUE — The steady world in which the ordinary people of Mala Strana (Prague's "Lesser Town") "lived for 40 years has all of a sudden been transformed into something uncertain, something that has lost its contours and its minute, yet unchanging, certainties", Czechoslovak author Jaroslav Veis says .

"Since time immemorial butter cost 10 crowns for a quarter, medical attention was free, and work was secure. The butter did contain some PCBs, the doctor did from time to time require encouragement with a pound of coffee, and wages were nothing much, but everything was in place, almost stable, and could hardly be any worse.

"We speak of the market economy but the only thing we have in mind is shops full of goods. We are not willing to reconcile to the fact that our work and our abilities will be but one more commodity on the market, and that only high quality commodities will be in demand."

The first full year of the Velvet Revolution looked economically bad for most Czechoslovaks. Private savings have all but disappeared, jobs are evaporating, real wages are declining, and the old social welfare system is bending under the strain.

The economy worsened again, seriously, in the first three months of 1991. With price liberalisation in January, prices rose by 30% in three months, and unemployment has nearly doubled to an average 3% (5.5% in Slovakia).

Since January real wages had plunged by 14-15% economics minister Vladimir Dlouhy told television viewers on April 3, while a "general agreement" negotiated with the unions in January accepted a 10% drop in real wages for the whole year.

An April public opinion poll revealed living costs rose 45% in 1990, a quarter of respondents feared they would not cope with the new economic conditions, 89% were dissatisfied with the effects on living standards, and one in five used savings to pay food and other bills.

Inflation is also threatening the general agreement's guaranteed minimum indexed monthly wage of 2000 crowns (A$93). Dlouhy said the government would renegotiate the agreement because the indexed minimum would now be 2600 crowns, and this was unacceptable. The government subsequently enforced only the 2000 crown minimum.

"The architects of reform indicate that a joblessness of around 8-10% would be tolerable", according to a government Statistical Office report, but it is still early days, and when the privatisation reforms bite, unemployment is likely to be much higher.

Czechoslovakia's was the most thoroughly nationalised society in the eastern bloc and therefore the most thoroughly working-class. Complete unemployment and hardship were unknown. The government is therefore fearful of the political consequences of its economic program and is busily creating a "social safety net", a euphemism borrowed from the depressed Western economies.

The elements of this safety net will include: pensions indexed to either estimated inflation (20%) or the minimum wage, improved child allowances, prevention of evictions where rent cannot be paid as a result of unemployment and a new network of job centres.

Through "psychological guidance" and other means, the job centres must create a new work ethic. According to the director of the Prague job centre, "We hope that people in this country will begin to appreciate their work and that their work achievement will be such as to persuade their employer that he could not and should not lose them".

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