Eastern Europe has become the talk of the political town. While it was hoped in the West that the region would become a new power house in Europe after the Great Reunification in the early 1990s, from which the West would then also benefit, disappointment now prevails. The region is characterized by the emigration of many workers, the dominance of Western companies and enormous political instability, even the open turning away from Europe. What has happened?
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The answer to this question is simple: wages are rising much faster than in the West. But they are also rising faster than the internal conditions in these countries, i.e., the national inflation rate and the national productivity trend combined.
Wages (compensation per hour worked) in Bulgaria, for example, have risen by an average of 7.7 percent per year over the past ten years, measured in euros. This is in stark contrast to the corresponding figure for Germany (+3 percent) and even more so for the EMU as a whole (+ 2.2 percent). The Baltic states are in a similar range to Bulgaria: in Estonia, the average growth rate over the past ten years was 6.9 percent, in Latvia 7.6 percent and in Lithuania 7.4 percent. Romania achieved an annual growth rate of 5.9 percent. The Czech Republic still manages 3.9 percent. Only Hungary and Croatia lag clearly behind their western competitors, with 1.7 and 1.0 percent respectively. Slovenia, at 3.1 percent, is roughly on a par with Germany, while Poland is slightly higher at 3.6 percent.
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Why are the politicians failing?
With the role of Western companies and the importance of outward migration, traditional indicators of a country’s success or failure are now of limited use. Eastern Europe’s national governments lack the experts to make international comparisons and draw conclusions. The EU Commission, which clearly has the task of advising and accompanying these countries, fails completely because, in its neoliberal credo, it refuses to acknowledge that the transition to a market economy was not a success story for Eastern Europe. If one reads the reports of the EU Commission on the economic situation in these countries (to be found here), the usual criteria are simply consulted, and consequently the countries are consistently attested a good economic performance.
What enormous and dangerous structural changes are taking place behind the façade of national accounts is not taken note of. One day, Western companies will leave because wage equalization is largely complete and they can produce more cheaply elsewhere, and these countries will be left completely bare and will depopulate even more.
However, unlike the European statisticians and analysts, the population has a very good sense that something is wrong. You can see the extensive dependence on foreign companies, you can feel the gaps in the population torn by emigration, you can feel the impotence of the increasingly fragile democratic institutions and the inability of their own government to bring about fundamental change. The result is general frustration, a turn toward nationalism and increasing questioning of democracy.
