Implications for Economic Policy
Edited by John Finch and Magali Orillard
Chapter 13: Comparing Post-Socialist Employment ‘Informalization’ in the Czech Republic and Hungary
Cristina Matos INTRODUCTION Post-socialist transformation has entailed important changes in employment relations. In this chapter, I aim to establish that employment ‘informalization’ can be understood as an emergent process. In so doing, I develop a complexity framework in order to explain how processes of employment informalization are emerging differently in Hungary and the Czech Republic through interactions of within-ﬁrm dynamics, network effects and government economic policy. Complexity is deﬁned as self-organization. My framework relies particularly on co-evolution and co-determination of institutions and individuals. Employment informalization is a general process in which employment relations become isolated from the formal institutions of employment law and ‘formalized’ administrative arrangements. This general process can be broken down into three forms of informalization: (1) unrecorded employment, (2) violations of established employment laws, and (3) the ‘externalization’ of employment.1 By ‘externalization’, I mean developments of and within external labour markets, such as the establishing of low wages, low levels of job-speciﬁc skills, and high levels of job rotation or employee turnover. By including external employment informalization in my deﬁnition, I go beyond established deﬁnitions, for example as stated by some development economists (Esim 2001; Schneider 2002). By including externalization, analysis can consider any interdependencies across the internal employment informalization practices of established ﬁrms and externalization. Notwithstanding the signiﬁcant economic and social consequences of externalization, I focus on informalization processes that are internal to established ﬁrms. The main reason for this is that there are at least some 283 Finch 02...
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