Former Eastern Bloc countries that privatised their state assets in the early 1990s, caused large scale unemployment and subsequently many male deaths, a recent study has said.
The consequences hold stark lessons for China, India and other countries mulling reforms of their state sector, according to the study published by The Lancet.
AdvertisementBetween 1991 and 1994, male deaths in Russia, Kazakhstan, Latvia, Lithuania and Estonia, where intense, fast-track privatisation took place, rose 42 percent, coinciding with a 305-percent increase in unemployment, its authors say.
At the other end of the scale, Albania, Croatia, the Czech Republic, Poland and Slovenia where either privatisation was more cautious or the social safety net was stronger saw a fall of 10 percent in male mortality and only a two percent rise in unemployment.
The probe focussed on the death rate between 1989 and 2002 among men of working age in post-Communist economies in eastern Europe and the former Soviet Union.
To avoid distortion, the investigators filtered out trade and price liberalisation, income change and historical levels of health.
They found that swift, massive privatisation of assets was generally correlated with a lightning rise in unemployment and a sharp increase in mortality among men aged 15-59.
High alcohol consumption among jobless men could explain much of the increase in deaths, they believe.
In addition, in the old Communist system, many employers provided extensive health and social care for their workers, and these services were lost upon unemployment or were cut back or scrapped upon privatisation.
Economies that took a more gradual approach to selling state assets suffered far fewer casualties among their adult male population.
But there were also important exceptions.
Some countries where massive privatisation took place were able to withstand the shock well, thanks to support networks provided by churches, unions and other groups.
In countries where 45 percent or more of the population were members of at least one such social organisation, mass privatisation did not increase mortality, the researchers found.
"Great caution should be taken when macroeconomic policies seek radically to overhaul the economy without considering potential effects on the population's health," says the study.
"As variants of rapid reform policies are being debated in China, India, Egypt, and several other developing and middle-income countries -- including Iraq -- which are just beginning to privatise their large state-owned sectors, the lessons from the transitions from Communism should be kept in mind."
The study defined rapid, massive privatisation as the disposal of at least 25 percent of large state-owned enterprises to the private sector within a two-year period.
The authors are David Stuckler of Oxford University and Lawrence King at the University of Cambridge, both sociologists; and Martin McKee of the London School of Hygiene and Tropical Medicine, an expert on health in the former Eastern Bloc.
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