The new East's new businesses: Heart of the labor market problem and/or part of the solution?

This paper is based on evidence from interviews in 1997 with 400 young (aged up to 30) self-employed people, and parallel studies of the support being offered to the self-employed by state services and non-governmental organisations (NGOS), in four East-Central European countries (Bulgaria, Hungary, Poland and Slovakia). The samples represent the New East's better-established young business people. The evidence presented in this paper explains why, in turn-ofthe- century conditions, the New East's new businesses are in danger of becoming locked into low-productivity, low wage niches. It is argued that the prospects of the new market economies in the twenty-first century depend largely on the ways in which their relationships with the European Union develop, and forms of assistance that will promote the development of the more capable SMEs into quality businesses are identified: e.g. encouraging inward investors to become mentors and customers of local enterprises; encouraging banks to become small business-user-friendly; conglomerating assistance to small enterprises within regional support centres.