Human Resource Management in Emerging Economies

Piotr Zientara

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9781138787131
• eBook ISBN: 9781317661474
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The demise of communism in 1989 in eastern Europe, followed by the break-up of the Soviet Union and the spectacular rise of China and India in the 1990s, brought about a new world order. In eastern Europe communism not only caused large-scale impoverishment and technological slowing, but also signified managerial wastefulness and disregard for employee voice. Yet, since the collapse of the old system, 25 years has passed and things have dramatically improved. Crucially, much has changed in the workplace: a transfer of modern HRM thought led to a shift in the way employees were treated.

Human Resource Management in Emerging Economies explores – by means of qualitative and quantitative research methods – the problematics of human resource management in post-communist emerging economies. It also focuses on such interrelated issues as privatisation, trade-unionism, corporate social responsibility, work-life balance and senior employment. The book adopts a multidisciplinary perspective, referring to theories and concepts associated with management, economics, occupational psychology and sociology. Moreover, it contextualises the discussion by including a politico-historical background, and substantiates its claims with findings from empirical research.

This book's multi-faceted approach reflects the complex nature of the subject matter, allowing readers to develop a better understanding of the idiosyncrasies of employment relations in eastern Europe.

1
Communist-Era Workplace Realities and the Systemic Transformation

1.1 Ideological Underpinnings and Practical Ramifications of Communism

Marxism and Communist Thought

It is true that the exact definitions of communism varies, but the fact remains that it is ideologically rooted in the thought of Marx and Engels (Hyman, 1971; Forman, 1972; Balibar, 1995). Specifically, Marxism holds, among other things, that the intrinsic feature of a capitalist society is conflict between classes and that the main characteristic of human life (in class society) is alienation. In other words, capitalism, which deifies the market mechanism, enables owners of the means of production (capitalists) to exploit workers (the proletariat), who thus experience inequality and alienation (Balibar, 1995). Of course, the recognition of the capitalist system’s inherent unjustness— and the consequent need to put an end to it—take centre stage in broadly understood socialist thinking. Yet, unlike other socialists (with Owen and Fourier at the fore) who advocated incremental social reform, Marx and Engels unambiguously favoured popular revolution that would establish a communist (classless) society in which free markets and private ownership of the means of production would be abolished (Forman, 1972). For them, socialism was just a transitional stage on the road to communism, which was the ultimate phase of societal progress.¹ It follows that communism would, at the same time, warrant equality (through fair share of the product) and liberate the workers, thereby ensuring the full realization of human freedom and the elimination of suffering (and hence alienation).

It is worthwhile to note that Marx conceived freedom not only in terms of absence of restraints but also as action with content. More precisely, the Marxist conceptualization of freedom (indebted to Hegel’s philosophy) drew on the triadic construct of agent, obstacle and goal. Thus, to follow this line of reasoning, the proletariat was the agent; capitalism-induced socioeconomic inequalities constituted the obstacles, while the fulfilment of basic human needs constituted the goal (which, in practice, was supposed to mean that in the communist reality everyone gave according to their abilities, and received according to their needs). Lenin, who was inspired by Marx and who actually performed the proletarian revolution in Russia², introduced the notion of a vanguard party whose principal objective was to secure all political power for the working class, with a view to developing universal class consciousness and ultimately to paving the way for the so-called dictatorship of the proletariat (Hyman, 1971).

Communist Socio-Economic Reality

The imposition of the communist system on Eastern European countries after 1945 had far-reaching political and economic implications. On the one hand, the introduction of one party rule meant the abolition of democracy, and, on the other, the abolition of the market mechanism signified the establishment of a command-and-control (or centrally planned) economy (Hayek, 1944, 1948). Of course, the state was conflated with the Communist Party (or, depending on the actual wording, the Workers’ Party or the People’s Party), which—in the name of the working class—kept a tight grip on all aspects of everyday life. Accordingly, censorship was introduced and pluralism—together with independent grass-roots activism—was suppressed (Zientara, 2009a). This was achieved by the extensive apparatus of the state in general and the secret police in particular (since the state provided almost all jobs, lack of subordination or independent thinking on the part of an employee always resulted in subtle or ruthless punishment). To put it in a nutshell, a system that emerged behind the Iron Curtain after the Second World War was a form of totalitarian state that had little to do with Marx’s vision of the workers’ paradise (there is no gainsaying that freedom—so dear to the author of The Communist Manifesto—was the last thing workers in communist countries enjoyed).

On the economic front, Leninist precepts were applied equally meticulously. Above all, the whole idea of development was based on central planning and promotion of state-owned heavy industry. In practice, this meant that the authorities regularly came up with high-flying (and often unfeasible) five-year plans and expected state-owned enterprises to carry them out (this point is more thoroughly discussed in the next section). Furthermore, the centralization of decision-making and the elimination of private ownership of the means of production struck at the heart of individual enterprise, thereby throttling private entrepreneurship (Balcerowicz, 1995; Siemianowicz, 2006; Zientara, 2009a). Worse, brutal attacks, in the form of property confiscations and inordinately heavy tax burdens, were levelled at small-scale individual entrepreneurial activity (bakeries, grocery shops, shoe-repairing outlets, etc.). Admittedly, the intensity of (officially sanctioned) hostility towards entrepreneurs varied from country to country and assumed different proportions in particular periods of time. In this respect, the situation was most drastic in the Soviet Union and Albania; by contrast, in Poland and Hungary things were not as dramatic. Yet, despite these nuances, the fact remains that what it came down to was the restriction and criminalization of economic freedom (Balcerowicz, 2003).

Given that great emphasis was laid on collectivism, uniformity and conformity, independent thinking was discouraged or frowned upon. Every member of a communist society, be it a primary-school pupil, a priest or a factory worker, was supposed to not only toe the Party’s line but also accept the superiority of collectivism over individualism (Tischner, 1992; Zientara, 2009a). To that end, indoctrination sessions were held at schools, in the workplace and even at holiday resorts. Needless to say, any grass-roots activity not endorsed by the Party was out of the question. Of course, quasi-independent parties and non-governmental organizations did function, but they were just Party-controlled façades, whose raison d’être was to make a semblance of political pluralism and to show that basic human rights were respected in the Soviet bloc, thereby proving Western anti-communists wrong.

Another, and often overlooked, ramification of the imposition of communism on Eastern European states was the degradation of social capital. Although definitions of social capital vary slightly (Coleman, 1988; Putnam, 1995; Field, 2003; Meadowcroft & Pennington, 2007), there is broad consensus that the concept refers to associational activity that—through interactions—fosters reciprocity and trust, which, in turn, facilitates “cooperation between strangers” (Field, 2003, p. 32). Trust can be defined as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer, Davis, & Schoorman, 1995, p. 712).

Thus, to simplify, it is trust that underpins social capital. And ubiquitous, Hobbesian mistrust was a defining principle of the communist regime. Indeed, fellow Communist Party officials did not trust each other, as they rightly feared Stalinist-style internal purges. Apparatchiks mistrusted ordinary people, whom they suspected of plotting a counter-revolution. Finally, there was really little trust amongst citizens themselves, who often spied on their colleagues and denounced them to the secret police (especially in such countries as East Germany and Romania, where Stazi and Securitate had hundreds of thousands of informers). All this had a pernicious effect on the quality of social capital, which—as we will see in more detail later on— poisoned in equal measure post-communist politics and industrial relations.

Poland under Communism

Even though a totalitarian state with such characteristics was the norm across Eastern Europe, Poland stood out among other communist countries (with the exception of Yugoslavia) in certain respects. First, it is essential to realize that in Poland private ownership of the means of production— and hence individual enterprise (albeit of rudimentary character)—were not completely eliminated (Tittenbrun, 1992; Balcerowicz et al ., 1997). In fact, many countryside dwellers resisted—literally against all odds—government plans to collectivize their land and create state-owned farms (known by their Polish acronym as PGR), which were modelled on Soviet kolkhozes. The point to remember is that, having seized power, the communists carried through a sweeping agrarian reform, whereby land—which in Polish rural areas had always been heavy with traditional symbolism and totemic significance—was parcelled out. As a result, peasants obtained small plots of land and became owners, tout court. And later when the authorities changed tack and began to set up collective farms, many of the smallholders doggedly clung to their property. This, in turn, allowed them to offer their produce to consumers in the informal marketplaces, which could be regarded as an ersatz of capitalist commercial activity.

Second and related to the above, despite the authorities’ orchestrated attempts to throttle small-scale entrepreneurship in urban areas, as well as their reluctance to accept private ownership of land in the countryside, private enterprise survived. In practice, this meant that certain services (shoe-repairing, say) and goods (food or clothes) were provided by independent “entrepreneurs” rather than by state-owned entities. Besides, in the 1980s communist decision-makers made it possible to set up (private-sector) joint ventures with foreign capital of “Polish origin” (that is, with the financial resources of Polish émigrés or foreigners of Polish descent). At the same time, restrictive rules regulating passport-application procedures were slightly relaxed, which led to the intensification of cross-border travel (mainly, within the confines of Eastern Europe). This translated into an increase in the volume of individual imports as Poles going to such countries as Hungary or Czechoslovakia brought back products unavailable in Poland and then resold them at a profit. All that helped to mitigate, at least partially, a constant shortage of basic goods (which itself was the result of the progressing economic malaise that brought the country to the brink of a precipice in the late 1980s).

Yet, even more importantly, these capitalist-like developments, however underdeveloped and simplistic, contributed to the erosion of Poland’s command-and-control regime and rendered Poles much better prepared to face the challenges of a free-market reality than, say, Russians or Romanians (Balcerowicz et al., 1997). This was also achieved by other peculiar occurrences. For one thing, ubiquitous shortages of basic goods stimulated creativity. In other words, to get hold of unavailable products, Polish people had to draw on ingenuity and innovativeness. Making dresses from dyed diapers—improbable as it might now sound—is a good case in point (Zien-tara, 2009a).

Poles’ remarkable creativity played a role in overthrowing the system. We have to remember that in this context, as Tim Brown notes, “[C]reative people like to challenge constraints and authority” (as cited in Vaitheeswaran, 2007, p. 24). And, indeed, Polish shipyard workers challenged the status quo by founding the first independent trade union (Solidarity), which thereafter mounted an effective opposition to the regime. And here this practical dimension of Polish creativity was of great help: after all, conspiring against any regime requires unfailing equipment (cars to move around, printing presses to turn out leaflets, etc.). This was especially evident in the mid-1980s, when Solidarity was outlawed. At that time, a homemade radio emitter (constructed by an ingenuous engineer and a card-carrying Solidarity member), together with homemade printing presses, allowed the opposition to get around media censorship and, by implication, to break the government’s monopoly on information provision. Thanks to the dissemination of independent-minded, propaganda-free news, Poland’s anti-communist activists not only managed to drum up societal support for the cause, but also managed to revive flagging spirits.

Besides, the Catholic Church in Poland was never subject to brutal persecution—in stark contrast to its counterpart in Czechoslovakia or the Orthodox Church in the Soviet Union (which encompassed, among other things, ruthless harassment of the clergy and massive expropriation). It is true that the Polish communist authorities did harass the Church in 1945– 1989, but the fact remains that, on balance, the scale of the persecution was much smaller than elsewhere in the Soviet bloc. This proved prescient, as the Church had remained a bastion of anti-communist opposition throughout the dictatorship (the election of a Pole to the papacy in 1978 reinforced its anti-regime stance and, at the same time, buttressed its privileged standing in society) and finally helped to broker the Round Table Agreement, which spelled the end of communism in Poland (and later in other Eastern European countries).

Thus, to reiterate, when the system eventually collapsed in 1989 and the systemic transformation got going, the Polish people were, toutes proportions gardées, a bit better prepared to function in a capitalist system than other Eastern European nations. Consequently, the early 1990s saw a small-business boom as millions of Poles—keen to take advantage of the opportunities offered by a new era—set up their own micro firms. A seemingly insatiable consumer demand, resulting from years of forced privation, proved to be a boon for these businesses. Ironically, this resurgence of private enterprise would not have been possible if it had not been for a bill, which—passed in 1988 by the last communist government—considerably expanded the scope of economic freedom (Zientara, 2009a). In the event, the law cut red tape and simplified taxation, thereby instituting a favourable business environment and, crucially, unfettering the nation’s entrepreneurial potential. As a result, the pace of economic growth quickened and, with the transformation gathering momentum, Poland came to be known as a “tiger of Eastern Europe” (Balcerowicz et al., 1997).

Abstracting from the actual presence of certain peculiarities that set Poland apart from other communist countries as well as the consequences of the systemic transformation (of which more in the final sections of this chapter), it is fair to say that across Eastern Europe communism had a devastating effect both on the economy and the societal psyche (Hayek, 1944). In other words, by restricting economic freedom, persecuting individualism and weakening the sense of responsibility for one’s own lot, it not only led to poverty and retardation³, but also distorted the work ethic and instituted the culture of over-dependence on the state (or, more generally, on somebody else). Nowhere else was all this more evident than in the workplace which—as if in microcosm—reflected the insidiousness and senselessness of the system. In the next part, we thus investigate the impact of communism on employee attitudes and workplace realities.

1.2 Workplace Realities and Personnel Management before 1989

The Functioning of So...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures and Tables
• Preface
• Introduction
• 1 Communist-Era Workplace Realities and the Systemic Transformation
• 2 Industrial Relations and Trade Unionism
• 3 Human Resource Management in Polish Organizations
• 4 Corporate Social Responsibility and Work-Life Balance in Poland
• 5 Employment and Management of Older Employees
• Conclusions
• Bibliography
• Index