The second option is correct.
The communist system had the state as owner of the means of production, that is, the whole economy revolved around state power and workers worked for state-owned enterprises.
With the collapse of the system, the state production model collapsed and people became unemployed. As there was no private initiative, people were mostly unemployed. In addition, the state was responsible for providing all services, including medical care, which was complemented by the ruin of the system, leaving thousands of people without basic care.
