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Poland's Reforms Bolstered by Vote

Growth of private sector buoys optimism

THIS week's national referendum on privatization was made invalid after less than the necessary 50 percent of Polish voters cast ballots. But for investors and former Communists, apathy can be good.

The low turnout, which means the government will not have to change its current course on economic reform, is in effect a vote of confidence in the ruling Democratic Left Alliance (SLD). The party, despite its Communist roots, has kept Poles steady on a capitalist course since it took control of parliament in 1993 and the presidency last year.

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The outcome also confirms Poland's economic success in making the transition from a state-run economy to one where the private sector now produces 60 percent of national output.

Trade and privatization of industry helped deliver four years of economic growth, reaching a real rate of 7 percent in 1995. This has transformed the nation of almost 39 million people into what some economists call ''Europe's Tiger'' and an example for other formerly Communist nations to follow.

''Poland has achieved significant progress on the macroeconomic front - indeed far better than most observers initially expected,'' says Paul Knotter, the World Bank representative in Poland. ''The high rate of economic growth, averaging around 6 percent, reflects in large part the private sector's increasing share of the economy.''

Meanwhile, Poland has benefitted from the government's move last year to make the zloty a hard currency. Inflation has fallen to an annual rate of about 21 percent. Foreign investment doubled last year to $2.5 billion.

The referendum, held Sunday, was a first test for new Prime Minister Wlodzimierz Cimoszewicz, a reform-minded former Communist, on whether his government could maintain a political go-ahead for economic reform. The referendum, called by outgoing president Lech Walesa, was aimed at replacing the SLD's plan to sell state investments through investment funds with a system of vouchers that could be exchanged directly for company shares.

''My government will consistently stay on the path of reforms,'' said Mr. Cimoszewicz. He pledged to speed restructuring of heavy industry and telecommunications, to reform social security, and to keep pressing for membership in the NATO and the European Union.

Not all Poles are sharing in the benefits of reform.

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Coal miners from the powerful Solidarity trade union in the southwestern region of Silesia are protesting the government's plan for restructuring the mining sector.

Many of Poland's more than 60 state-owned coal mines need to be closed to further economic growth and reform and cut the budget deficit, reformers say.

The Solidarity union, which under Mr. Walesa battled Communist rule in the 1980s, now is the chief opponent of free-market reforms that threaten jobs.

But for many, the private sector is providing jobs. More than 2 million private companies have sprung up since 1989, according to Poland's privatization office. Unable to draw capital from the tightly regulated stock market, many entrepreneurs have financed their initial growth by putting profits back into the business. Many of these businesses are even absorbing idle workers from state-owned industries, chipping away at unemployment, which has declined from 16.9 percent in July 1994 to just under 15 percent of the labor force in December 1995.

''The labor force's increasing productivity has permitted exports to continue to grow despite the zloty's strong real appreciation,'' Mr. Knotter says.

POLAND was the first country in the region to introduce ''shock therapy'' reforms to make its currency exchangeable and cut hyperinflation. But for almost the last two years, economic success has been guided by a new plan, the ''Strategy for Poland,'' an economic program adopted by the SLD that specifies tasks and goals that the government intends to carry out between 1994 and 1998.

This year, the government plans to privatize the oil and chemical sectors, the banking sector, and Poland's copper combine, the fifth largest in the world. The government hopes to finance its pension and social-security system with the proceeds from selling state assets.

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