Abstract
This paper is based on evidence from interviews in 1997 with 400 young (aged up to 30) self-employed people, and parallel studies of the support being offered to the self-employed by state services and non-governmental organisations (NGOS), in four East-Central European countries (Bulgaria, Hungary, Poland and Slovakia). The samples represent the New Easts better- established young business people. The evidence presented in this paper explains why, in turn-of-the-century conditions, the New Easts new businesses are in danger of becoming locked into low-productivity, low wage niches. It is argued that the prospects of the new market economies in the twenty-first century depend largely on the ways in which their relationships with the European Union develop, and forms of assistance that will promote the development of the more capable SMEs into quality businesses are identified: e.g. encouraging inward investors to become mentors and customers of local enterprises; encouraging banks to become small business-user-friendly; conglomerating assistance to small enterprises within regional support centres.
Highlights
Small and medium-sized enterprises (SMEs) have been the heart, the main source of dynamism and growth, in the New East's new labour markets
It has become clear that SMEs are at the heart of the New East's most serious and persistent labour market problems
It is not merely unemployment, and the general degradation of employment in much of the New East, which is responsible for most people in all the transition countries remaining worse-off over 10 years on than they were before any reforms commenced
Summary
Small and medium-sized enterprises (SMEs) have been the heart, the main source of dynamism and growth, in the New East's new labour markets. Up to now the New East's SMEs have been at the heart of the countries' labour market problems but they could simultaneously become part of the solution This will happen if the SMEs grow, help to regenerate the national economies, soak up unemployment and create competition for labour which bids up wage levels and other quality thresholds that need to be met if labour is to be attracted and retained. All this will happen if a sufficient number of the new enterprises evolve into quality companies, producing and marketing quality goods and services, whose high value-added enables the firms to become quality employers who can offer quality jobs. Is this likely? We will explain that the answer will depend at least partly, and possibly largely, on the policies towards the New East that the Old West adopts and implements
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