Unemployment and the Labor Market in Czechoslovakia and the Czech Republic, 1990-1992

Abstract

The transformation of the Czechoslovak and subsequently Czech economy was inevitably accompanied by slowly declining employment, and sharply rising unemployment. For the Czechoslovak population, emerging unemployment was a new phenomenon; for five decades, unemployment was nonexistent in this country. As opinion polls show, citizens fear unemployment more than inflation. Keeping unemployment within acceptable limits is, and will be, of vital importance for the feasibility of the whole transformation process. In 1990, after the start of the economic transformnation, the first changes occurred in the labor market. Owing to political and institutional changes, such as the abolition of central planning and the approval of the basic outline for economic transformation by the federal parliament, the first unemployed appeared. In June 1990, the unemployment rate was 0.2 percent; at the end of 1990, it had reached I percent. During the course of the year, the basic legal and organizational framework was prepared for the social safety net: the Law on Employment was passed, introducing unemployment allowances. In mid1990, a network of regional labor offices was established, whose basic task is to organize passive and active employment policy in the regions under the supervision and guidance of the Ministry of Labor and Social Affairs (at the time there were two ministries, the Czech and the Slovak). According to Law No. 1, 1991 (Law on Employment), an unemployment allowance in 1991 was paid for one year. In the first six