Social Changes in Postcommunist Societies

Prior to the politico-economic transformation, several hypotheses were put forward about the possible social effects of the changes. A significant majority of sociologists argues that, in conjunction with the emergence of a market economy, postcommunist societies must expect larger and more extensive inequality. Indeed, around the time of the change of regime, income inequalities were already increasing steadily in Hungary. In 1988, the average income, calculated on the basis of household per capita income, of the upper decile was 5.8 times that of the lowest decile. In the following two years, this ratio stood at sixfold, in 1992, the average income of the upper decile was six-and-a-half times as high as that of the lowest, and in 1995, per capita income among the wealthiest Hungarian families was more than seven times (7.26 times) that of the poorest (Kolosi and Róbert, 1992, Kolosi and Sági, 1996).

This growth can be ascribed to the fact that incomes in the upper income groups grew faster and deviated more from the average, while the relative position of lower income groups did not change compared to the average. In the period after 1989, it was not the poor who dropped below the average, but the average itself which "slipped" - growth in average income stood below the rate of inflation in every period studied. Between 1990 and 1995, real incomes of households diminished by an average of more than 20 per cent. This was primarily at the expense of the middle-classes - including the upper income groups; the most spectacular deviation from the average involved families in the middle-income group in the post-communist period (in 1992 and 1993). Here, real income fell at a greater rate than it did in the lower income groups, but in the following two years, middle-income families also experienced an accelerated decline in their standard of living, relative to the two upper-income deciles.

Growth in inequality was accompanied by a transformation of the structure of inequality. The rearrangement of incomes clearly shows a movement towards ratios common in Western market economies. Income differentials between executives and staff, between professionals and the unskilled, and between those employed in the private and the public sectors all grew. More professionals were made redundant, but fewer unskilled workers (Kolosi, Bedekovics, Szívós, 1995).

All in all, in the post 1989 period, and with a concurrent economic crisis, a general decline in incomes occurred in Hungary. The relative position of the poorest did not change greatly, the middle-class and the upper middle class showed a considerable slide, while a very narrow social group, the upper-income decile, and especially a narrower section within that, acquired strikingly high incomes, which come close to the income of their counterparts in Western societies. The explanation for this lies both in the transition to a market economy and in the fact that Hungary opened economically towards the more developed West; higher (average) incomes in the West greatly influenced the size of the increase in income enjoyed by the uppermost-income strata. All those who succeed on the international market - major businessmen, executives and those holding key positions in wholly or partly foreign-owned companies as well as a small number of professionals, who sell their expertise entirely or partly on the international market - possess incomes close to (though still below) those of their Western counterparts. These incomes derive mainly from Western sources (Tóth, 1995). As opposed to this thin upper crust, the lower social strata have to survive in a narrow and underdeveloped home market, which does not offer high incomes. Growing inequality is therefore explained by the centre-periphery relationship and by the fact that in the socialist period ideological objections to inequality meant that an unnaturally low level of income was maintained for those who would have best been able to sell their skills and qualifications in the already open international arena. Thus the income at the top end of the scale was augmented by two "push" factors, creating the large difference in incomes which will probably be present until the economy pulls up to those market economies in Hungary's immediate neighbourhood and for as long as the gap here between Western level incomes and the average remains acutely significant.

[...]

Matild Sági

is a Research Fellow, Tamás Kolosi heads the TÁrki Social Research Information Centre in Budapest. The above is the English version of an article in Társadalmi riport 1996 (Report on Society 1996), published by TÁRKI in 1996.