6. Information technology and women's employment in manufacturing in Eastern Europe

This is the old United Nations University website. Visit the new site at http://unu.edu

The specific problems faced by Slovenia as a new sovereign state in the transition from a socialist self-management economy to a more market dominated one have affected many aspects of women's employment. These changes cannot be separated from the impact of information technology. It is hoped that this study will provide insights into the problems faced by an economy such as Slovenia, and that parallels might be drawn with the ongoing transition processes in the other central and eastern European countries.

Slovenia is a small central European country with 2 million inhabitants and an area of 20,256 square kilometres. It is the most developed part of ax-Yugoslavia, with the highest living standard, an intensive manufacturing sector and very active foreign trade. It has traditionally been open to the world and, in comparison with other central and east European countries, enjoyed an active flow of commodities, people, information and technology from and to the industrialized countries.

There have been rapid changes in the ownership structure of the Slovene economy in recent years. Of 13,309 operating enterprises at the end of 1991, some 75 per cent were private, 19 per cent were public and 5.6 per cent had mixed ownership. Despite these changes, the economy is to a large extent still dominated by public enterprises, which account for 78 per cent of total revenue and employ 88 per cent of the labour force. Many of these enterprises will be privatized or restructured by 1995. The November 1992 Privatization Law provides for the mandatory privatization of all public enterprises in manufacturing within a set period. The privatization process is expected to have major implications for the organizational structure of the Slovene economy.

There is a tradition of Slovene women working in paid employment, dating back to World War II. In 1952, women made up a third of the workforce. By 1990 the figure was as high as 46.5 per cent. There is however a clear gender pattern of employment: in the same year women provided 73.5 per cent of the workforce in what are classified in Slovenia as 'non-economic' activities (public administration, education, culture, health services, social services, etc.)¹ and 41.3 per cent of the workforce in 'economic' sectors.

The high participation of women in the active labour force can be explained by a number of factors. Relatively dynamic economic development after the war demanded the recruitment of additional workers. The income of a single provider was also not sufficient to support a family and secure a decent standard of living. With the rise in women's educational level, the number of women willing to be full-time housewives decreased even further. As long as there was work available, it was regarded as 'natural' to look for a job on leaving school, and to continue working after marriage and childbirth.

As in a number of other socialist countries, the employment of women was supported by labour legislation. Though some labour rights have been curtailed, there has been no change in the laws guaranteeing equal status for women in terms of renumeration, protection, promotion and various employment benefits. Legally, therefore, equal treatment is guaranteed, although this does not prevent companies from advertising for 'men only'. Some special protections for women have also been retained.² Talk of abolishing maternity protection has been limited, even among conservatives, by the fear of further lowering the birth rate, which has been declining in the last five years. The net reproduction rate in 1990 was 0.71 per cent. On the other hand, no extension of maternity leave or increase in benefits is realistic, given the severe economic crisis. In the current debate in Slovenia, women's right to continue working on the same terms as men has been asserted by intellectual and professional workers, but it is less popular among working-class women who, in some industries, are seriously affected by various job-related health hazards.

Unemployment figures are rising, due to the economic crisis, but it is no worse among women than among men,³ perhaps because they had been employed in larger numbers in 'non-economic' (service) sectors. Employment levels in these sectors have fallen less markedly, and have even begun to recover. One official of the Agency for Employment said that less bankruptcies have occurred in typically female industries, because women are more willing to accept lower pay rather than losing their work and are more flexible in looking for alternative jobs, even ones which do not fit their qualifications. Such observations are of course impressionistic.

However, there is no evidence thus far that women are being discriminated against in labour cuts.

The severe recession at the beginning of the 1990s was caused by the shock of the double transition - to an independent state and to a market-oriented economy. Most of the damage was caused by the collapse of trade with the states of ax-Yugoslavia, by the loss of transport and other infrastructure links with the south, by the aggression of the Yugoslav Army in Slovenia in the summer of 1991, by the wars in Croatia (Slovenia's second most important foreign trade partner) and Bosnia and Hercegovina (which brought some 70,000 refugees to Slovenia). These alone would have created economic difficulties. Moreover, the Slovene economy has been going through ownership restructuring, fighting an everlasting war with inflation, introducing a new currency and modernizing its industry.

Since 1989, GDP and industrial production have been falling, although there were more encouraging indications regarding industrial production in the second half of 1993, when particularly the manufacture of consumer goods showed positive growth. Less satisfactory results were to be observed in the area of unemployment,⁴ which is expected to continue to increase in 1994, as the result of privatization and the bankruptcies of a number of large companies.

High unemployment figures and general lack of financial resources have made restructuring extremely problematic. Signs of stress had become apparent by the late 1980s, when it was obvious that many of the large conglomerates would have to reorganize and modernize. With the gradual introduction of new technology and new managerial practices, a number of companies, particularly medium-size ones, successfully survived until the beginning of 1992. The break with other ex-Yugoslav republics has in many cases led to a halt in the restructuring process and transformed it, for the time being, into a holding action.

Under these circumstances, it is difficult to talk about any major trend as regards the introduction of information technology in Slovene manufacturing. The general lack of new investment has affected the rate of introduction of new technologies. However, the situation is somewhat different in those companies which have had either long-term cooperation deals or joint ventures, since they have had to follow the technological changes in their partner companies, and have often received financial assistance from the foreign partner to introduce new production technology.

Research in technology transfer has fallen with the slow-down in technological restructuring. Before 1988, a number of research projects were dealing with the introduction of information technology (IT) and its effects in various sectors. Since then, there has been practically no economic research in this field. One major research project, in 1988, studied the planned rate of introduction of computer assisted design (CAD) and computer assisted manufacturing (CAM) technologies in the metal processing industry. This showed that the process of technological change was very slow, and varied substantially from company to company. Even in the metal processing industry, which research had identified as likely to make many changes, as many as two thirds of the companies said that they had no plans to introduce CAD/CAM before mid-1990 (Duhovnik et al., 1988; Stanovnik and Kuntin, 1989).

Where the introduction of information technologies has already taken place, most of the new technology went into the design departments and very little into the actual production, with the exception of sonic experimental applications. It was also noticeable that suggestions for the introduction of new technology came predominantly from the engineering side. Management has simply listened to the technical cadre in implementing technical change, with little economic or organizational analysis. This has meant that there has been little organizational or personnel changes, so that the full benefits of the information technologies could not be exploited, which in turn has led to a degree of disenchantment among management. Any financial and economic benefits from the introduction of information technologies in this piecemeal fashion would not be noticeable for two to three years, and by then other economic factors such as the high inflation and interest rates and overvalued currency had often undercut them.

Most labour cuts observed in this study were not the result of the new technology, but were indicators of over-employment in administration in the past, or were caused by the loss of markets and the consequent fall in production levels, and organizational rationalization. The effects of new technology can be expected to be felt within the next few years, when such technology is introduced on a more significant scale.

Although the data from the 1988 project is relatively old,⁵ the low investment rate over the past few years means that the situation in Slovene industry has not changed dramatically. What has altered is managerial perception on the importance of new technology.

Despite the lack of statistical data, by conducting interviews in one company in each of the sectors in which many women work, it was possible to make an approximate assessment of what is happening to Slovene women. Eight sectors were identified in which 50 per cent, or nearly 50 per cent, of the workforce are women in 1990 (see Table 6. 1). No consideration was given to the technological intensity of these sectors. These eight sectors were then analysed as to their importance in the national economy (their share in industrial production, in imports and exports), the educational structure as compared to the average in industry and salary level.

Only two of these sectors (manufacturing of electrical machinery and apparatus, and the chemical industry) have experienced a fall in production which is above the average for industry as a whole.⁶ All the others show relatively good results, as reflected in Table 6.2.

Table 6.3 shows the educational structure of the workforce in each of the selected sectors. Unfortunately no breakdown of these statistics by gender is available, but it is striking that these sectors, in which the share of women is high, have a very poor educational structure. On average 49.7 per cent of all those employed in industry have basic education (8 years of elementary school or less), but of our selected sectors, only the chemicals sector has a lower percentage (48.9 per cent), and in the manufacturing of textile yarns and fabrics 64.1 per cent of the workers have only this basic education. These figures also reflect the relatively poor educational structure of Slovene industry, which will undoubtedly have serious repercussions for technological and organizational restructuring.

Sector	% of ind. prod.	% of exports	% of imports	% of women in workforce
Sector	% of ind. prod.	% of exports	% of imports	1990	1992
Manufacture of electrical machinery and apparatus	11.3	15.9	11.3	51.0	49.2
Chemicals	8.6	6.8	7.4	50.3	50.3
Textile yarns and cloth	2.9	2.5	2.8	64.0	62.7
Textile products	7.4	3.2	2.0	84.4	83.5
Leather and fur manufacture	1.3	1.9	1.0	47.0	43.7
Leather products	2.2	3.1	1.9	75.0	76.4
Food products	11.3	3.2	5.1	45.9	44.0
Tobacco	0.3	0	0	64.8	67.4
Total	45.3	36.6	31.5

Table 6.2 Production in selected industrial sectors, 1989 to first 9 months of 1992 (1991 = 100)

(a) average wage in the sector, as a percentage of average wages in all industry

It is interesting to note that neither the rate of industrial production nor the educational structure seem to affect the wage level in individual sectors (cf. Tables 6.2 and 6.3). It is nevertheless noticeable that the three sectors in which wage levels are lowest (manufacturing of textiles and fabrics, textile products, and leather products) have the highest percentage of women workers. This is despite the fact that output in the leather products sector has been good. This would confirm the opinion of the official from the Agency for Employment, who argued that women are prepared to accept lower wages just to keep their jobs.

One company was selected in each of the eight selected sectors. No special attention was paid to the size of the factory, yet most were medium or large factories and would be well known in their branch. They were 'social' companies, meaning that the capital was still predominantly public. They could therefore be considered typical of the sector, and employment levels in these companies had not been affected by privatization. In each company, an interview was carried out with the general manager or the personnel manager. The following questions were asked:

In spite of the relatively general character of the questions, there was some reluctance to be interviewed or to provide exact figures. This was probably because of the social disapproval of firing workers. The perception is that you do not lay people off if you are doing well. Also, usually the only people with the authority to answer the survey questions were general managers who, because of severe work pressure, found it difficult to allocate time for an interview.

During the interviews, many of the representatives of the companies requested that the name of the company should not be mentioned. The results have therefore been combined, and names and exact figures have been eliminated.

In all the interviewed companies, various reasons had contributed to redundancies. The direct effect of technology was a minor factor and was seldom an isolated one. The standard procedure seems to be that department leaders examine the working process, decide how many workers are required for its smooth operation and gradually eliminate the redundant workers. The major factor determining the size of the workforce is the size of the market. The personnel departments have figures on the number of people who have left the company (early retirement, lay-offs), but no data on why certain jobs were no longer necessary. So no exact figures on the quantitative impact of the information technologies can be obtained, though impressions can be gathered from the discussions with the managers. These indicated that very few of the selected companies had a long-term plan of technological modernization and reorganization prepared in sufficient detail to include the personnel changes which would be required.

This was not because of any lack of willingness on the part of the management, but rather because of the general economic environment which, over the last few years, has been changing rapidly and requiring so much day-to-day improvization that long term planning could be carried out only in very broad terms, if at all. On the other hand, the gradual nature of technological modernization (caused also by scarce financial resources) had its positive side. Technology was introduced step-by-step in various departments within the factory, allowing for the gradual restructuring of employment. Workers would be moved from one part to the other and attempts were made to find other positions within the factory. The introduction of new technology was thus never seen as a major factor causing job redundancy: it was the loss of Slovenia's markets in the other republics of ax-Yugoslavia which dealt the most severe blow. This required an overnight adjustment of production and employment levees, and the adaptation was made even more difficult and complex by the general economic recession being experienced by Slovene economy.

In most of the companies some information technology had been introduced, mostly starting in 1989 or 1990. In electronics, and the pharmaceutical side of the chemicals industry, the introduction of new technology was seen as an on-going process. Companies typically started gradually with the introduction of new technology in administration and accounting, moved on to planning and production preparation, and continued into production itself. In no case can we talk about major technological change, let alone of flexible automation or CAM. What we found is a piecemeal approach, depending primarily on the availability of financial resources.

However there were two exceptional cases. In one the formation of a joint venture with a foreign partner required the existing plant to undertake a programme of overall reorganization and technical modernization. This led also to job redundancies in practically all parts of the company.

In the other example technological modernization in manufacturing was initiated in the development department, mainly because of the demand of foreign partners for higher quality products. From development and design stages, new technology moved on to the production floor. Today this firm has more than sixty fully-automated machines coordinated by a central programming station. Gradually, information technology is also being introduced to other sectors such as production support (various production calculations and optimizations, production documentation), purchasing and sales, storage facilities, accounting and financial services, and business planning. Productivity in the preparatory phases of production, which had previously been time-consuming and quite rigid, had risen markedly. Information technology allowed for much greater flexibility and the economical and rapid production of even small batches of particular designs.

All of the companies had introduced some information technology in accounting and general administration. It is not possible to draw firm conclusions on the basis of such a small sample, but it does seem that companies which had introduced new technology more systematically, and had applied it to the production stages, had also been better able to face the shock of losing the ex-Yugoslav market: the quality level of their production was sufficient to enable them to gradually increase exports to developed countries. In one case, while the physical volume of production had declined, on the quality side they had successfully progressed and consequently, had kept their export orders. They were convinced that, without new technology, there would have been no export development and the number of jobs which could have been kept would have been even lower.

In all of the companies, employment had shrunk since 1990. Depending on how much they were affected by the loss of the ex-Yugoslav market, the cuts in the labour force varied from 20 per cent to as much as 50 per cent. Since the interviews were conducted in typically 'female' enterprises, the majority of those made redundant were women. But there was no evidence to indicate that workers' gender had been significant. Where data was available it confirmed that the gender structure of the workforce had not changed.

Yet it was argued that the introduction of information technology had led to redundancies at various levels of production and in support activities. Better organization of the production process had meant a reduction in routine jobs, and the introduction of computers in accounting and administration led to major cutbacks on employment in these phases, affecting women in particular. Accounting and administration had been areas of massive over-employment. The relatively low cost of labour, combined with red tape, resulted in large administration departments by western standards, filled with women employees.

The major mechanism for dealing with redundancies, in practically all the companies, was early retirement. Retirement legislation permits companies to retire workers who do not yet meet the age or work experience requirements, by 'buying' the missing work years for them. Some workers who had been found a new position decided to quit the job, and yet others were given redundancy compensation. Natural attrition accounted for some workers leaving, and almost no new workers had been recruited in the past years.

In the introductory phase of new technologies, all companies provided additional training for workers with sufficient interest and background education to acquire new skills. Training was usually organized internally, in special courses run either by the supplier of the equipment or by the technical personnel of the company itself (this depended primarily on the size of the company). In one case, a foreign partner provided some training on their own premises. For workers with a very low educational level (or even illiteracy), there was no solution but redundancy. In general, the higher the initial educational level of the employees, the easier was the retraining process and less the need to declare the worker redundant.

Some of the companies have been recruiting on a small scale. This recruitment has largely been confined to workers with a very high educational level. This is gradually changing the skills structure, but it is not necessarily lowering the proportion of women employees, since many of the newcomers are women with college or university degrees. The employment policies of all companies looking for new workers recognize the need for a better-educated labour force: high school seems to be a minimum requirement. One reason is that rapid changes in the organization and technology of production require the ability to adjust quickly and to be able to understand the ongoing changes. People with higher basic education are expected to grasp new skills and knowledge faster and to be more easily trained. Familiarity with information technologies, especially computer literacy, is an advantage but not a prerequisite, since most personnel managers feel that this knowledge can easily be obtained on the job and with internal training (except of course for the job profiles dealing specifically with the programming or maintenance of computer equipment).

There is extensive legal protection and social assistance for workers who are threatened with redundancy. There are also schemes to promote employment, including:

Many of these programs do not have sufficient finance, and so are not able to achieve much at present. In 1993, all programmes were stopped in the middle of October for lack of funding.

The Agency for Employment is trying to introduce programmes for the unemployed to help them learn new or additional skills. These programmes include:

Unemployed people who wish to start their own business can receive a dump sum in lieu of unemployment compensation.

Sector	1989	1990	1991	Jan-Sept 1992	relative wage
All industry	127.5	114.2	100	86.9	100.0
Manufacture of electrical machinery end apparatus	134.0	114.9	100	80.1	98.1
Chemicals	120.2	112.0	100	70.2	117.6
Textile yams and fabrics	159.7	131.2	100	93.0	78.9
Textile products	124.7	111.7	100	93.1	88.5
Leather and fur manufacture	127.5	111.0	100	113.6	118.0
Leather products	160.4	133.0	100	116.3	84.2
Food products	104.0	104.6	100	90.4	109.7
Tobacco	133.7	108.0	100	121.2	134.2

Sector	No schooling	4-7 yrs elementary	Elementary	High School	2 year college	University
Manufacture of electrical machinery and apparatus	0.9	19.9	29.8	40.9	4.1	4.5
Chemicals	1.0	17.9	30.0	41.1	3.9	6.1
Textile yarns and cloth	1.6	31.2	31.3	32.2	2.3	1.4
Textile products	0.7	20.8	35.4	40.9	1.4	0.7
Leather and fur manufacture	1.7	30.5	26.8	35.1	3.1	2.9
Leather products	0.7	22.5	34.5	40.5	1.2	0.6
Food products	1.9	22.9	27.1	42.3	2.7	3.1
Tobacco	1.5	20.2	37.1	34.4	2.8	4.0
Total industrial workforce	1.4	22.3	26.0	44.6	3.0	2.7
Total national workforce	1.3	16.7	20.0	50.5	5.9	5.5