Savings were even considered “involuntary” as people had to regularly line up in queues at shops for consumer goods in short supply. After the reform in the 1990s, the “iron bowl” (lifelong secure job and welfare) system was smashed and the enterprises stopped providing pension and housing for free. However, effective social security system had not been in place either.
These significantly increased the incentive for precautionary savings. Nevertheless, the real cost of labor takes time to be reflected in the cost of the enterprises. As a result, the extraordinary profit from cost distortion did not find its way to liability accounts of pension, healthcare and housing for employees, where it should, lead to significant surge of corporate savings.