Was it HR (or The Hoff) that brought the wall down?

I'm back in the office after spending some of last week at the CIPD Annual Conference and Exhibition (ACE) in Manchester followed by a weekend in Berlin which happened to coincide with the 25th anniversary of the fall of the Berlin Wall.

I was at ACE to co-present a session entitled 'Megatrends: what the changing economy means for HR'. I set out some of the short term and long term trends affecting the economy and my co-presenter Catherine Taylor, Group HR Director at Daimler Mercedes Benz, showed how insights from what can sometimes seem a mass of data and competing trends can be used to transform both HR and company performance. For example, the realisation that in an environment of low growth, the company would have to pursue increased market share rather than expect more sales from market buoyancy and look to forms of recognition that didn’t require a significant pay rise.

One of the long-term megatrends shaping work and working lives is technology and globalisation. Less constraints on trade and innovation contributed to the West’s widening economic advantage over the East. The collapse of communism gave globalisation a shot in the arm, bringing much of Eastern Europe into the European Union and the ex-Soviet Union into the world trade system as well as quite probably encouraging other countries into the global trade system (most prominently China).

So what of the work and working lives in the former Communist countries of Eastern Europe? How have these changed in the last quarter century?

There is a problem assessing change. Reliable data for the Communist era are scarce. Either data were not collected or there was the potential for manipulation of the results (or people would assume that any response to an "official" request for data might not be used entirely for statistical purposes!). It took time for the newly independent countries to become integrated into the European statistical system although, from 1989 onwards, they began to participate in international studies as we will see below. The statistics presented below are for the ten former Communist countries that joined the European Union in 2004 and 2007 (which have recently been joined by Croatia).

Taking GDP per head as a measure of living standards, the economies of all the ex-Communist countries have grown faster than their richer counterparts, so we are seeing the expected catch up process (see chart below). The Baltic countries have seen the fastest growth rates despite suffering very badly in the post-2008 recession and the two newer EU entrants, Bulgaria and Romania, are still some way behind earlier entrants. However, there is still a significant gap between the leading East Europeans (Slovenia) and the UK and Germany.

The immediate post-Communist years saw much restructuring and often chaotic political and economic conditions in some countries and, since then, some of the Eastern European economies have struggled to create jobs. Only the Czech Republic and Slovenia have consistently kept their total employment rate over 60%, roughly comparable to the average for the 15 pre-enlargement members. As the chart below shows, there is wide variation in unemployment rates and the recession led to more joblessness in some countries than others.

But what of work itself? Work and workers held a privileged place in the former Communist economies – they were (supposedly) the ruling class. Yet Marx was rather more equivocal on the subject arguing that paid work in a capitalist society exploited and alienated the worker (and it would be a matter for debate whether any of the post-War Communist regimes met Marxist visions of a Communist society).

We have data on job satisfaction from the European Values Survey for 1990, 1999 and 2008 (see chart below), which gives us a data point very soon after the collapse of Communism (or just before in the case of the Baltic countries and Slovenia). Interestingly, although job satisfaction is on average lower in the post-Communist countries than it is in Germany or the UK, there is variation and evidence of convergence here too. In 2008, mean job satisfaction scores in Poland, Slovakia and Slovenia were just ahead of the UK. Of course, differences in experiences, expectations and cultural norms may be important as well as differences in the employment mix (such as how many people are employed in small workplaces, where job satisfaction is always higher).

Finally, from the same survey, we have scores measuring how free employers think they are to take decisions at work. Again, some post-Communist countries started from a low base. Interestingly, on this measure, UK employees are more positive than German employees – as, indeed, are Slovenians and Slovakians by 2008.

But even if convergence is taking place, there are still areas where working conditions lag behind those in the West – most prominently, health and safety at work.

So back to the exam question, did HR make the wall come down? I suspect CIPD had few members behind the Iron Curtain. The power to decide who would work where - and to impose sanctions on people who ‘stepped out of line’ – was presumably reserved for Party loyalists and involved considerable liaison with the authorities. HR strategy may have been aligned with the business and political strategy but when the latter is ‘say you meet whatever targets are set in the 5 year plan – even if you don’t – and otherwise keep your mouth shut and don’t cause any trouble’, then I doubt even a plane full of Chartered Fellows could have kept the show on the road. So maybe it was The Hoff after all?

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  • Hi Mark, I spent the same weekend in Berlin - it was a great atmosphere - so I read your article with interest :)

    I really like the analysis and insight the data provides and the conclusion - great article.