Integration patterns: uneducated people and their workplaces in Norway, Italy, and Hungary

What is missing for the uneducated population of the former socialist countries to find work at the level established in Europe (or even Latin America)? This is probably the most important unanswered question of domestic and Eastern European labor market research. The lagging behind of the post-socialist countries in this area is so extensive and so region-specific that it is not helped by referring to either global trends (‘skill-biased technological change’) or sharply different institutional characteristics between the countries of the region (minimum wage, benefit systems, employment policy). Neither the data on the size of the uneducated population and – hence its average expected abilities – nor the data on relative wages or relative cognitive skill levels predict a common, regional labor market failure. According to the 2008 data from the European Labour Force Surveys (EU-LFS), the observed East-West difference in the employment rate of the unskilled was 24.5 percentage points, much larger than the intra-regional standard deviations (8.9 percentage points in the former socialist countries and 9.5 in the western EU countries). A country-level regression with an Eastern Europe dummy as the only explanatory variable explains 61% of the total variance in employment rates. A similar univariate employment logit model estimated on individual data correctly classifies 72.7% of men and 54.4% of women, and 59.4% of all observations. The absolute and relative employment rates of the uneducated population are only higher in Romania and Slovenia than in Belgium, which lags far behind the western EU countries. All other former socialist countries perform worse than any western EU member state. The employment rate of the unskilled compared to the skilled does not reach 45% in Bulgaria, Estonia, Latvia and Hungary, 40% in the Czech Republic and Poland, and 35% in Lithuania and Slovakia.