Stefan Domonkos

Averting the funding-gap crisis: East European pension reforms since 2008

This article analyses pension reforms in Central and East European countries in the aftermath of the 2008 financial crisis. The crisis revealed unresolved problems in the implementation of previous reforms, namely the financing of the transition costs. In their attempts to solve the funding-gap issue, the reforms needed to address legacies of past choices as well as the exceptional circumstances of the crisis. The interaction of fiscal constraints and political conditions shaped the variety of these reform outcomes.

The Politics of Flexibility: Employment Practices in Automotive Multinationals in Central and Eastern Europe

In this article we investigate the flexibility strategies of foreign automobile producers in three Central and Eastern Europe countries, where employment flexibility has become a major issue and an area of conflict with unions. We focus on nine subsidiaries in the Czech Republic, Slovakia and Hungary, and argue that flexibility strategies were shaped by parent company practices, the flexibility needs of individual affiliates and the relative strength of labour in negotiating the implementation of these practices. Given the relatively weak industrial relations institutions in the region, the relative strength of labour is conditioned primarily by market factors and parent company contexts. The findings thus highlight the importance of political resources and agency of actors in shaping employment policies.

Linking Labour Regimes and Technological Innovation in Central and Eastern Europe: The Case of Automotive and Software Industries

This report studies the link between labour regimes and technological innovation in Central and Eastern Europe, analysing in some detail two key sectors that have gained in importance in the economies of the region: the automotive and software industries. Defining success as a move up-market in terms of production and/or gaining a dominant and stable share in the world markets, both sectors have been successful regionally and, in certain aspects, also globally. Yet, the character and levels of innovation and RD b) openness to foreign labour as a source of knowledge in some cases and in others of numerical flexibility; and c) the existence and importance of clustering as a source of knowledge-sharing and knowledge-generation. Employment and labour-market flexibility and its links to legal and institutional frameworks are cross-cutting issues that come back in the three overarching themes. Flexibility takes different forms in the two sectors. While it might not be directly related to the innovation process as such, it has contributed to the increased competitiveness of the two sectors and supported a shift up-market in sophistication. Our general finding is that for both types of innovation – ‘imported’, which prevailed in automotive sector and ‘indigenous’ that was shown to exist fairly widely in the software industry – the availability of human capital, its structure and skill-sets have been important in order for the higher-end activities to be localised or nurtured in Central and Eastern Europe. However, the differences in the generation and implementation of innovation and in the nature of the production processes are reflected in significant differences in labour regimes.

Economic Transition, Partisan Politics and EU Austerity: A Case Study of Slovakia's Labour Market Policies

This working paper provides an overview of labour market policies in the Slovak Republic, from the beginning of the post-socialist transition to the recent period, characterised by growing pressure for fiscal stringency from the European Union (EU). It investigates the differences between the prevalent trends in labour market policies before and after 2010 and it finds little difference between them.While EU-led austerity may have played a role, it rather prolonged and reinforced the existing tendency towards increasingly strict punitive measures, underfinanced active labour market policies and cuts affecting the capacity of public institutions to provide material and non-material help to jobseekers.

Who Wants a Progressive Income Tax? Determinants of Tax Policy Preferences in Post-socialist Eastern Europe

Using multi-level modeling, this study investigates the determinants of public opinion on personal income taxation (PIT) in Central and Eastern European countries. The analysis finds that socio-economic and demographic variables, such as household income, occupational social class, and age, are important in determining PIT preferences. However, beliefs about fairness and perceptions of corruption also play a significant role. Support for progressive taxation decreases with the acceptance of income differences as a reward for talent and effort. Also, distrust of the legal system and a conviction that tax authorities treat certain people more favorably than others increase support for progressive taxation, although this latter effect is constrained to the less affluent. These results indicate that progressive PIT might be understood by the public as a corrective measure vis-à-vis inequalities arising due to corruption. The study finds little evidence for the importance of country-level variables, such as income inequality or the institutional features of income tax systems. Nevertheless, there is a moderately strong association between overall economic development and average support for progressive taxation. The public in less developed post-socialist countries are more in favor of non-redistributive forms of taxation, such as the flat tax and lump-sum taxation. This tendency may reflect their increased willingness to accept neoliberal reforms under circumstances of growing pressure to improve the international competitiveness of the domestic economy.

Labour Relations and Modes of Employment

An important component of the NEUJOBS project is its interaction with the policy community. The project is pursuing several avenues to ensure its results are properly “translated” and communicated to such audiences. One of them are policy briefs. This Policy Brief contains policy implications on labour relations and modes of employment (Work Package 6), a collaborative EU-funded research project. NEUJOBS Working Documents are intended to give an indication of work being conducted within the NEUJOBS research project and to stimulate reactions from other experts in the field. The views expressed in this paper are those of the author and do not necessarily represent any institution with which he is affiliated. See the back page for more information about the NEUJOBS project.