Employment Guarantee and Social Security

In analogy to the Soviet Union, almost every Central and Eastern European country guaranteed employment, but also established the duty to work. From the economic view, the employment guarantee was of no importance. The hoarding of labor of state-owned enterprises, considered a consequence of the lack of information between central authority and enterprise from the neoclassical viewpoint and caused by the absence of a money-related budget constraint according to monetary Keynesianism, created an overall economic shortage of labor.1 Shortage on the labor market was particularly evident with regard to the qualification and the mobility of employees. The choice of occupation was de facto limited and was supposed to be controlled according to the educational planning derived from the labor balance. Wages differed from region to region in order to induce employees to move. This proved to be necessary particularly in the Soviet Union, where the development of the eastern regions required such action. Wage structure and wage rates were, on principle, determined by the state. The overall economic payroll and the total of bonuses were reconciled with the planning of cash in circulation which followed the planned supply of consumer goods. A planned equilibrium between the monetary and real sphere was thus achieved.