DOC PREVIEW
ENTERPRISE SOCIAL BENEFITS AND THE ECONOMIC TRANSITION IN HUNGARY

This preview shows page 1-2-16-17-18-34-35 out of 35 pages.

Save
View full document
View full document
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 35 pages.
Access to all documents
Download any document
Ad free experience

Unformatted text preview:

page 1page 2page 3page 4page 5page 6page 7page 8page 9page 10page 11page 12page 13page 14page 15page 16page 17page 18page 19page 20page 21page 22page 23page 24page 25page 26page 27page 28page 29page 30page 31page 32page 33page 34page 35TITLE: ENTERPRISE SOCIAL BENEFITS AND THE ECONOMICTRANSITION IN HUNGARYAUTHOR: MARTIN REIN: Massachusetts Institute of TechnologyBARRY L. FRIEDMAN: Brandeis UniversityTHE NATIONAL COUNCILFOR SOVIET AND EAST EUROPEANRESEARCHTITLE VIII PROGRAM1755 Massachusetts Avenue, N.W.Washington, D.C. 20036PROJECT INFORMATION:'CONTRACTOR:New York UniversityPRINCIPAL INVESTIGATOR:Barbara HeynsCOUNCIL CONTRACT NUMBER:808-06DATE:October 10, 1994COPYRIGHT INFORMATIONIndividual researchers retain the copyright on work products derived from research funded byCouncil Contract. The Council and the U.S. Government have the right to duplicate written reportsand other materials submitted under Council Contract and to distribute such copies within theCouncil and U.S. Government for their own use, and to draw upon such reports and materials fortheir own studies; but the Council and U.S. Government do not have the right to distribute, ormakesuchreports and materials available,outside theCouncil orU.S. Government without thewritten consent of the authors, except as may berequiredunder the provisions of the Freedom ofInformation Act 5 U.S. C. 552,orotherapplicablelaw.The work leading to this reportwassupported inpart by contract funds provided by the National CouncilforSoviet andEastEuropean Research, made availableby the U. S. Department of State under Title VIII(theSoviet-Eastern European Researchand Training Act of 1983). The analysis and interpretations contained in thereport arethoseofthe author.ENTERPRISE SOCIAL BENEFITS AND THE ECONOMIC TRANSITION INHUNGARYMartin ReinProfessorDepartment of Urban Studies and PlanningMITCambridge, MassachusettsBarry L. FriedmanHuman Services Research ProfessorHeller SchoolBrandeis UniversityWaltham, MassachusettsSeptember 1994The authors would like to acknowledge the immense assistance provided by Andre Gacs,Ministry of Finance of Hungary; Judit Lakatos, Central Statistical Office of Hungary; andAgnes Simonyi, Elte University, Budapest. Any errors, of course, are the responsibility of theauthors.ABSTRACTThis essay is about non-wage compensation in enterprises during the period of transition inHungary since 1989. Following the Section which provides a conceptual framework, the essayproceeds in three steps. Section II reviews trends in spending. Section III offers aninterpretation of what accounts for the trends in different social functions of non-wagecompensation. Number IV explores the social significance of the expanding, stable anddeclining social functions of non-wage benefits.We conclude that social benefits offset much of the decline in real per worker wages. Sincesome benefits go to workers who are no longer employed, the offset function is somewhatoverstated. Although aggregate real per worker benefits have increased, this general trendobscures the patterns of ups and downs of different social benefits as well as variation acrossfirms. There has, for example, been a trend to switch from in-kind to cash benefits, but thistrend is by no means uniform across enterprises. Enterprise benefits play a limited role insocial protection, but this role has increased as enterprises have provided early retirementbenefits and compensation for dismissed workers. Further increases may occur in this area asthe state passes on more social protection functions to firms in the area of health and pensions.However the enterprises' role in social service appears to be in decline as local governmentand some nonprofit organizations absorb some of these functions. This exploration suggeststhat the social functions of enterprise may contribute to facilitating the transition of stateenterprises to market-oriented production.IntroductionIn Hungary as in other East Bloc countries, enterprises have given a variety of non-wage benefits to their workers, sometimes called the "social wage." We explore what hashappened to non-wage compensation during the economic transition which began in 1989.During this period, the real wage has fallen, and many aspects of enterprise operations haveundergone change. This paper considers three broad questions. (1) How has total compensationand its composition changed during this period of restructuring? Have changes in non-wagecompensation offset or reinforced changes in wages and which elements have been increasing,which decreasing? (2) What factors can account for the change? (3) Have enterprise non-wagebenefits in fact served social functions in addition to their business functions, and, if so, hasthe social role of benefits changed during this period? This paper offers an exploratoryinvestigation of these questions.We have assembled several sources of data on non-wage compensation in Hungary. Thedata are generally aggregative. We supplemented these with six case studies of individualenterprises.1 These data are not sufficient for a rigorous investigation of our questions, butthey help suggest aspects of these issues. Moreover, they help identify complications relevantto a full analysis and the data that would be required to deal with them. The paper is basicallyan initial exploration of the available data and of a framework that could help analyze it.We first suggest a framework for thinking about the determinants of non-wagecompensation and its possible social functions. Then, we use our framework to explore ourquestions using the various data sources. Finally, we consider the requirements for a morecomplete analysis.I.FRAMEWORK FOR ANALYSISA.THE DETERMINANTS OF NON-WAGE COMPENSATIONThe primary actors whose behavior determine non-wage compensation are employers,workers, and government. A current textbook approach to benefits and wages comes fromhedonic wage theory which provides an equilibrium analysis of the behavior of employers andworkers.' This model can help with our question concerning the determinants of benefits,although it also has some limitations in the context of economic transition in Hungary. It isparticularly useful in explaining benefits intended to attract and retain workers. It can deal withthe transition issue on a comparative static basis, predicting the changes in equilibrium wagesand benefits resulting from changing exogenous factors. However, the transition has alsoaffected benefits in a


ENTERPRISE SOCIAL BENEFITS AND THE ECONOMIC TRANSITION IN HUNGARY

Download ENTERPRISE SOCIAL BENEFITS AND THE ECONOMIC TRANSITION IN HUNGARY
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view ENTERPRISE SOCIAL BENEFITS AND THE ECONOMIC TRANSITION IN HUNGARY and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view ENTERPRISE SOCIAL BENEFITS AND THE ECONOMIC TRANSITION IN HUNGARY 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?