Gender & Post-Communist Economic Restructuring: How Women Pay the Price

Val Moghadam

ECONOMIC INTERNATIONALIZATION HAS drawn more and more women into production and public life. But various forms of economic restructuring are working to the disadvantage of women.

Economic restructuring is a global phenomenon that entails a shift from internally-oriented to externally-oriented growth and trade, from import-substitution industrialization to export-led manufacturing, and from large public sectors and nationalized industries to privatization of state-owned enterprises and a contraction of the public-sector wage bill. Its impact on women ranges from retrenchment and mass unemployment to job opportunities in “flexible” labor markets, including subcontracting and the revival of homework and of domestic and family labor systems.

Such forms of unstable employment are characterized by low wages and the absence of social security. Restructuring has major implications for women’s productive and reproductive activities and options.

In the developing countries, restructuring has come about mainly through “structural adjustment” policies supervised by the World Bank and International Monetary Fund (IMF). There, working women have lost jobs or seen their incomes fall. Women have had to assume more responsibilities for their households, and poor women have had to devise all manner of survival strategies.

In post-communist Central and Eastern Europe and the former Soviet Union, the difficulties of the transition to a market economy have been exacerbated by the recession in the major industrial capitalist (OECD) countries, and much of the burden of rapidly rising unemployment is shouldered by women. In China and Vietnam, similar economic reforms are in place. Although still within those states’ ostensibly-socialist framework, these reforms may be leading to a lowering of labor standards and entitlements previously enjoyed by women workers, such as maternity leave benefits.

There is consensus that stabilization and structural adjustment have had intensely adverse effects upon the livelihoods and standards of living of masses of people throughout the Third World. The now-classic UNICEF study Adjustment with a Human Face showed that the poverty-inducing aspect of adjustment results in downward social mobility for middle-class women and an even more serious decline in the standards of living for poor women and their children.

The feminization of poverty and its implications were acknowledged in the World Bank’s World Development Report 1990, which focused on poverty: “The plight of poor women is troubling in itself. It is even more troubling because the health and education of mothers greatly influence the well-being and future of their children.”

In many countries, the quality and extent of public services, including health care, deteriorated. High budget deficits led governments to reduce outlays on two main items: social security, subsidies, and other transfers on the one hand, and public investments (capital expenditure) on the other. In many countries, subsidies both to consumers (food, rent, etc.) and to public enterprises were cut as part of the stabilization policies. The share of social security also declined, particularly in Latin America and the Middle East.

The burdens borne by women, especially poor women, during the course of adjustment have had not much of a pay-off for the national economy; neither have they paved the way for a sustainable growth in the 1990s. Structural adjustment has exacerbated gender bias by overlooking, if not denying, women’s access to and consumption of the type of productive resources and services — such as extension, credit, and input subsidies — that are targeted to export production.

By limiting women’s productivity, adjustment policies sabotage their goals of stable long-term growth. Middle-class women in the professions, especially in teaching and health care, have also been affected by cutbacks in public expenditures, subsidies, and declining incomes.

To the Market: Implications for Women

A recent UNICEF report highlights the economic crisis and the deterioration of social indicators in Central and Eastern Europe (CEE):

“. . . the economic and social reforms introduced since 1989 are facing severe problems of implementation and involve economic, social and political costs far greater than anticipated. . . . initial hopes for rapid transformation and economic prosperity have quickly been tempered by a considerable and lasting decline in output, employment and incomes and by the worsening of many social indicators.

“The crisis is without doubt most pronounced in Eastern and South-Eastern Europe, where the spread of poverty, birth contraction, escalation of death rates, decline in school enrollments and an unstoppable crime wave have reached truly alarming proportions. . . . In [Russia], the number of yearly deaths in 1993 exceeded that of 1989 by 547,000 units, a figure which more than anything else illustrates the gravity of the current crisis — a crisis which, in relative terms, appears even more acute than that recorded in Latin America and Africa during the ‘lost decade’ of the 1980s.

“Despite recent signs of recovery in several areas, Poland also suffered a considerable surge in poverty and death rates and a deterioration in other demographic and welfare indicators and is still in the grips of rising unemployment. After plummeting in the first and second years of reforms, social conditions stopped deteriorating in the better-off nations of Central Europe (Hungary, Slovakia and Czech Republic) where past achievements in some areas were protected despite difficult economic conditions. Only the Czech Republic, however, may slowly be returning to normal conditions.”(1)

The report goes on to document the changes in social policies, such as those pertaining to the family, children and maternity leave. As a UNU/WIDER research project showed, these policies, quite generous before, are now either eliminated or greatly reduced.

In Russia’s case, maternity leave was actually greatly extended, from 112 days to 140 days. But this was done to discourage women from returning to the labor market and to re-establish women’s family attachment. In any event, at a time of high inflation or price shocks, paid maternity leave considerably loses its purchasing power.

Throughout the region, unemployment has reached unprecedented and unexpectedly high levels, while real wages have fallen. There has been a serious decline in household incomes and the quality of life. In Russia, fully 28% of wage-earners receive a wage that is below 50% of the average wage. Fifty million people, a third of the Russian population, are now living below the poverty line. More than half of the households headed by women have fallen into poverty. The situation is particularly bad for pensioners.

It is perhaps little wonder that dissatisfaction with the economic reforms is so pronounced. According to recent surveys, only in Albania, the Czech Republic and Romania do a majority of the people claim to be better off now than before.

The growth in the number of people living in poverty, and the deterioration of real wages in a situation of ever-rising prices, surely extends to female-headed households. Although at present gender-disaggregated data are not available, we can assume that the well-being of women and children in households maintained by women alone has been adversely affected by recession and the loss of socialist-era subsidies.

We do know that working women have seen dramatic declines in their labor-force participation rates, and in their employment levels. In most countries, the previously high participation rates of women (80-90%) dropped by 5-10 points during this period.

The introduction of economic reform and a competitive labor market has converged with traditional gender bias and a perception of women as relatively “expensive labor” — due to the generous benefits that women workers previously enjoyed — to result in growing involuntary unemployment and higher rates of unemployment for women than for men.

Market Reforms in China and Vietnam

China’s rural and urban reforms have been widely hailed as a huge success, attested to by China’s very high economic growth rates, expansion of rural industries (which have grown to employ over 100 million rural workers), its important place in global trade and its enormous increase in exports (most remarkably in textiles, clothing, and radios), and its attraction of much foreign investment.

Yet the impact on poverty, on labor standards, on women workers, and on gender relations, has been mixed. Foreign-backed joint ventures tend to ignore existing labor codes: complaints of low wages, long hours, deplorable worker housing, the absence of unions, the use of child labor, and industrial accidents have increased in recent years.

In the rural areas, the reforms not only created a surplus labor force, but in more recent years they seem to have contributed to a growth in rural poverty. Some have argued that inequalities have actually increased with the reforms. A UNICEF situation analysis of women and children, prepared in Beijing in 1994, applauds China for its success in eliminating extreme poverty in the period 1978-1984, but notes that rural reforms and decollectivization have resulted in less access to health care and higher costs.

Although the official unemployment rate is under 3%, the unofficial international estimate is 5%, at a time when a social safety net is not in place. The response from labor has been increasingly militant, with many wildcat strikes and slowdowns, as well as protests and demonstrations involving hundreds of thousands of unem<->ployed and underemployed workers.

The prospects of the rural poor are worsened by the fact that basic education and health care are becoming less available than in the past. At the 38th session of the Commission on the Status of Women last March, a Chinese delegate conceded that 550 million rural women live in poverty, and that unless they are helped, the numbers could rise.

The shift from collective farming to household production entailed a loss of wage-earning by women, resulting in a return to the traditional sexual division of labor and certain undesirable and patriarchal customs and social practices (boy preference, bride-buying, female foeticide). According to the 1990 census, 75% of women work in agriculture compared to 67% of men. There is some evidence that the impressive growth in nonagricultural rural activities has been enjoyed mainly by men.

A 1990 study by the All-China Women’s Federation (ACWF) identifies three of the main problems facing women in the context of economic reform:

“(1) . . . Some units now discriminate against women, setting much higher standards for women than men when recruiting new employees. As a result, women fare worse than men in the competition for jobs. (2) Women account for the majority of those rejected by working groups within enterprises. Since the system of competition for jobs has been adopted . . . employees can arrange their workplaces themselves . . . Most of these [who are not accepted] are women. (3) . . . Most urban women now prefer to work in state-owned units, doing jobs with a lighter workload, secure welfare, and more flexible management policies.”(2)

In addition to beefing up legal provisions against discrimination, the Chinese government is trying to spread the burden of maternity and childcare benefits across enterprises by creating maternity insurance programs, which tax enterprises on the basis of the total work force regardless of sex. As a result of the gender-specific problems of economic reform, the ACWF and its various branches have initiated studies with a view towards influencing policy and the direction of change.

Vietnam’s strategy of economic reform — called doi moi, literally, renovation — was adopted in 1989. Doi moi measures include rural reforms; exchange rate, fiscal, and interest rate reforms; promotion of private sector growth; changes in foreign trade regulations; programs to minimize the “social costs” of economic reforms; a shift in emphasis from heavy to light industries; a partial deregulation of production activities by granting greater autonomy to individual enterprises; and a recognition of the need to promote an export-oriented manufacturing capacity, especially to Western and Southeast Asian markets.

In 1991, 80% of all exports worth nearly $2 billion were directed to Asian countries. Handicraft manufacturers that made lacquer products or embroidered clothes for Western markets, and the apparel/shoes manufacturers with subcontracting arrangements from Asian NIEs, were the two industries that substantially expanded their export markets. In these two industries, women workers predominate.

Some problems are anticipated with increasing marketization. As private-sector jobs offering higher wages expand in Ho Chi Minh City, school drop-out rates may be increasing among teenage girls. With the contraction of the state sector, the promotion of the private sector, and the rise of unemployment, the household has re-emerged as a major unit of production.

Persons employed in household production typically work long hours, and child labor is also prevalent. Indeed, a draft UNICEF situation analysis of Vietnam (January 1994) states that child labor seems to be on the rise, and that the new situation is particularly hard on rural women.

Professor Nguyen Quang Vinh, a senior sociologist in Ho Chi Minh City, discussed with the author the positive and negative aspects of doi moi. On the positive side, there are new opportunities for employment and the development of new kinds of jobs and occupations with the expansion of the private sector in manufacturing and in services.

New service jobs that have expanded are in banking, tourism (hotels and restaurants), computer, insurance, new pharmaceuticals and in advertising (such as advertising of beer). Workers have received new training and have sought to upgrade their skills by learning a foreign language, use of the computer, and so on. Many state, private, and non-governmental organization (NGO) training centers have appeared to respond to the new labor market demands and requirements. The oil sector is expanding.

On the negative side, there is now more unemployment. With the restructuring of state-owned enterprises (SOEs), workers have lost jobs or have moved into the household economy or the private sector. Professor Nguyen referred to a “crisis in state-owned enterprises” and said that it is becoming increasingly difficult for SOEs to maintain high benefits.

Now that the SOEs have more autonomy, they must be more productive. In his view, the main problem is on the management side, not with labor costs. For this reason, although some SOEs have reduced their work force, others have not. Another problem has been caused by labor migration, mainly from cities in central Vietnam to HCM City. Documentation is no longer a simple matter as there are fewer controls. “This creates problems for city services, and urban housing problems.”

Rural migrants will be the most vulnerable in the labor market; as low-skilled workers they are likely to become very low-waged. For women rural migrants, there are job opportunities as domestics. But there has also been an expansion of prostitution, especially in HCM City, because of poverty, tourism, and demand on the part of newly-rich men. This has launched a public debate and two views on addressing the problems: (1) prostitutes need to be registered and provided with health care, especially if AIDS is to be avoided, and other opportunities provided to vulnerable women so that eventually prostitution will be phased out; and (2) legalization of prostitution is to be strongly opposed and prostitution itself must remain illegal.

The most pressing problem is unemployment, which is higher for women than for men, and most difficult for young women who are newcomers to the labor market. Also, economic restructuring has led to the introduction, for the first time, of user fees in health care and hospitalization. Moreover, the six-month maternity leave of women workers began to
be contested, with some government officials favoring four months, and the Vietnam Women’s Union insisting on six months for reasons of both child welfare and women workers’ rights.

Similarities and Differences in the Transition

Economic restructuring in many developing countries has had profound implications for women’s productive activities and their reproductive responsibilities. In some cases, they have simply lost jobs; in other cases they have lost entitlements to, for example, childcare and maternity leaves previously guaranteed through public expenditures; in yet other cases, the deterioration of conditions of work and pay have led to increases in the amount of time women have to devote to childcare and other domestic responsibilities.

Cutbacks in public expenditures recommended in structural adjustment programs, and the increasing trend towards flexible labor markets which are supposed to spur growth and increase international competitiveness, may have led to increases in the quantity of female labor, but they have also led to a deterioration of the quality of employment. This trend is being replicated in the former centrally-planned state economies that are now in transition to a market economy. The difference is that there is no discernible demand for cheap female labor in Russia and the CEE (Central and Eastern Europe) at the present time.

One major difference between Vietnam and China on the one hand, and Russia and the CEE region on the other, pertains to the ideological underpinnings of the market reforms. Women’s rights and women’s organizations still have a place in Chinese and Vietnamese society and official considerations that does not exist in post-communist CEE countries or in Yeltsin’s Russia. It is vitally important that official women’s organizations and NGOs in China and Vietnam continue to monitor the reforms for their gender and overall social effects, and continue to be involved in top-level discussions and the decision-making process regarding national economic policy as well as specific social policies.

Another difference is that Russia and CEE look to the West, still in recession, while China and Vietnam are part of the booming Asian regional economy. In Vietnam, because the industries that are being promoted for export — textiles, garments, food processing, handicrafts, and so on — are female-intensive in both the SOEs and the private and cooperative sectors, this suggests a continuation of demand for female labor.

On the other hand, discrimination against women workers may occur under a market economy as employers seek to avoid the cost of benefits such as maternity leave and childcare, as has been occurring in CEE, the Baltic states, Russia and China. Indeed, there are disconcerting similarities in the two sets of cases, derived from the inherent tendency of market reforms to accentuate existing vulnerabilities or create new ones.

New social problems include rising inequalities, unemployment and underemployment, and poverty unalleviated by social protection. Moreover, market reforms have a built-in gender bias which derives from both cultural constructions of gender and economic calculations. Culturally, women are regarded as secondary earners who should really be at home taking care of their husbands and children. From a market point of view they are seen as “expensive labor” to be shed during times of cost-cutting or restructuring. This explains the higher rates of women’s unemployment in both sets of cases.

Notes

1. UNICEF, Public Policy and Social Conditions: Central and Eastern Europe in Transition (Florence: International Child Development Centre, Nov. 1993), iii.
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2. Women in China, edited and published by New Star Publishers, Beijing, 1990, 11.
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ATC 57, July-August 1995