Barbara Brylska
Reasons and Sources of
Unemployment in Poland During
System Transformations
Annales Universitatis Mariae Curie-Skłodowska. Sectio H, Oeconomia 28, 79-85
U N I V E R S I T A T I S M A R I A E C U R I E - S K Ł O D O W S K A L U B L I N — P O L O N I A
VOL. X X V III, 7 SECTIO H 1994 Z a k ł a d E k o n o m i k i P r z e m y s ł u
W y d z i a łu E k o n o m ic z n e g o U M C S
B a r b a r a B R Y L S K A
Reasons and Sources of Unem ploym ent in Poland During System Transformations
P rzyczyn y i źródła bezrobocia w P o lsce podczas zm ian sy stem o w y ch
The phenom enon of unem ploym ent takes place in all countries th a t in m anaging of m anp o w er are m o stly based on m a rk e t m echanism . The counteraction, th e ap pearance of high unem p lo ym en t level, p rev en tio n of stru c tu ra l unem ploym ent, equalization of job m ark ets in regional system s
as w ell as so ftenin g th e social resu lts of unem p loy m ent are essential d irections of sta te in terv entio nism in those countries. H ow ever, despite distinct p rogram s of n e u tralizatio n th e unem p loy m ent and gving large m eans for this purpose, th e u nem ploym ent level in m ost of W est Europe countries equals 7— 12%. T h at is: in A u stria — 7.3%, D enm ark — 11.3%, France — 11.2%, N etherlands — 5.2%, Spain — 21.7%, W est G erm any — 8%, Sw eden — 7.1%, G re a t B ritain — 10.5%, Italy — 9.5% 1.
In Poland, a fte r long tim e of deficit of m an po w er (despite hidden un em plo ym ent estim ated as 20— 30%), th e rap id decrease of factories’ req uests for lab o u r follow ed in th e 90’s. S ta rtin g from J a n u a ry 1990, we o bserve th e appearance and th en intensification of unem ploym ent phe nom enon. In S ep tem b er 1993, th e unem p loy m ent level in Poland exceeded
15% and th e am o u n t of unem ployed people approached 2,830 m illion. The dissim ilarity of unem p lo ym ent conditions in o u r country, however, should be em phasized. It accom panies th e tran sfo rm atio n process of m anaging system . It is the consequence of economic changes d u rin g dom ination of new lib eral and m o n e ta ris ts conceptions.
The new ru les of economic functioning, ten d in g to tra n sfo rm atio n of th is c e n trally m anaged econom y to m a rk e t econom y called Balcerowicz p rogram , w ere carried into effect a t th e beginning of 1990. S ta rte d as p a rt of this program , th e fiscal, m o n eta ry and salary policies whose purpose
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w as suppressing of inflation, displayed to be too restric tiv e and led to deep economy recession. The reaction of m ost firm s against th is program w as shifting th e resu lts of condition changes to purchasers. U nd ertak en w ith in tran sfo rm atio n process of economy, radical decreasing of subsidy fo r producers as w ell as price liberation caused th e increase of costs and prices, b u t not th e ten d en cy to im provem ent of m anaging efficiency.
On th e o th e r hand, th e new rules of financing led to significant redu ctio n of m oney influence, depreciation of people’s m oney resources and decreasing of real wages. It was th e reason of arising th e dem and b a rrie r in sh o rt tim e. A lm ost overnight, firm s th a t lacked m ark e t e x perience, and th a t possessed an old technology and sta ff to g eth e r w ith h a b its carried from cen trally m anaged econom y, w ere faced to h erm etic b a rrie r of dom estic dem and due to social and foreign im poverishm ent caused by th e loss of e astern m arkets. M eeting d em and b a rrie r caused, u n d e r condition of big production m onopolization and lack of com petition, n eg ativ e ad ap ta tio n processes in m any firm s. In stead of looking fo r possibility of production and sale increasing, production w as reduced b y m eans of accepting ’’w a itin g ” strategies, using group dism issal and reduced w o rk in g tim e. In 1990— 91, in d u strial production w as decreased by 36%, and th e low est level w as in consum ption industries. T he scale of activ ity in th e rest of economic sectors w as also reduced. These tendencies m ade econom ic su bjects to reduce em ploym ent.
The co ntinuation of th e restric tiv e finan cial policy for state led to financial incapacity of m an y of them . D ifficulties w ere gone th ro u g h by firm s having m odern m achines, because th ey could n o t fig h t th e financial s tra in s in v irtu e of dividend as w ell as th o se havin g developm ent and in v estm en t p rogram , because th ey could not fig h t th e b a rr ie r of expensive credit. Possibilities w e re blocked for those firm s th a t w an ted to export. M is-shapen rate of dollar m ade th e ir effo rts unprofitable. Also th e w ay of w ages fu nd reduction in firm s (so-called ’’popiw ek”), w eakening th e m otivation tow ards w ork, reduced v ery m uch th e d em and fo r things on dom ain m arket, intensifyin g th e recession.
One should u n d erline th a t dem and red uctio n w as so high th a t it caused a decrease of pro d u ctio n even in firm s so fa r p ro fita b le and hav in g m a rk e t for th e ir articles o r servicing; it caused such resu lts as decrease of w o rk dem and.
Thus, despite th e reasons w hich had caused in fla tio n before 1990 stopped, th e politics whose consequence w as dem and red u ctio n w as still p re fe rre d . F irst, its resu lt w as still high inflatio n; second, in ten sify in g of recession. Finally, th e recession appeared in th e form of considerable b u d g et deficit th a t is alw ays inflation th re a t. I t seem s th a t in situ atio n w h en inflation has cost b u t no dem and ch aracter, one m u st change an
approach to p rio rity in economic politics. The fighting against inflation should be sw apped b y recession counteraction.
It is ch aracteristic th a t increasing of fre e production pow er accom panies th e increasing of unem ploym ent. M. K abaj estim ated the factor of m anp ow er in social in d u stry as 50%, w hich m eans th a t ev e ry oth er place in th e in d u stry is not used.2 In activ ity of m achines accom panies inactivity of people.
So-called hidden unem ploym ent was p resen t in central m anaged economy; it was often nam ed as unem p lo ym ent at a place of w ork. It was estim ated, as m entioned, appro x im ately 20—30%. It did not get a shape of ev id ent unem ploym ent, so it did not cause pathological phenom ena, ch aracteristic of such kind of u n em ploym ent. T ogether w ith s ta r t ing the m a rk e t m echanism , th ere app eared conditions for tran sfo rm in g it, at least in a p a rt, into ev iden t u nem ploym ent.
The thesis th a t hid den unem p lo ym ent is one of th e d e te rm in a n ts for creating u n em p loy m ent in Poland, especially at th e beginning of its increase, w as v e ry common. From com paring the decreasing tendencies of production, em ploym ent and efficiency, it ap pears th a t such thesis is not confirm ed because 36% pro du ctio n decreasing in 1990— 91 was accom panied by sm a lle r decrease of em ploym ent (about 14%). The. efficiency in in d u stry in th is ,tim e decreased b y 24%. One should th in k th en , th a t the process of em ploym ent ratio n alizatio n did not fu lly start.in Poland. Inversely, th e hidden u nem ploym ent level increases as some, econom ists th in k .3
The collapse of the Council for M utual Economic Aid (RWPG) and th en crash of tra d in g in fo rm er U.S.S.R. and fo rm er socialistic countries had sy re ly an effect on increasing of unem ploym ent. Politics and economic tra n sfo rm atio n s in these countries caused w eakening of tra d itio n al trad e connections. Economic d ifficulties of co u ntries hav in g belonged to fo r m er RW PG, decrease in th e ir dom estic dem and as w ell as conversion to bonded se ttle m en t of accounts caused appreciable decrease in Polish e x p o rt to fo rm er socialistic countries, m ostly to fo rm er U.S.S.R. It origi nated — as was m entioned before— dem and b a rrie r, m ostly due to th e lack of m eans in U.S.S.R. and high prod u ctio n costs in Poland. It caused
i ' r .1
crash of m any firm s producing for zone I of paym ents. The clear instance of th is is th e situ ation of Polish m ilita ry clothing, food and m achine in d u stry .
L iberality of foreign tra d e and free access to curren cy exchange accom panied conditions of un em ploym ent connected w ith Polish economy
, 2 M. K , a b a j: Program elem en ts of u n em p lo y m en t cou n teraction . Social P o litics no 1, 1992.
3 Ib id em .
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transfo rm atio n. The sale of Polish p rodu cers’ articles decreased due to rela tiv e ly high prices and low q u ality of Polish products; it seem s th a t th e increase of dem and for im ported articles w as psychological. T h a t is, a fte r m any years of d ifficu lt approach to foreign things, th e re appeared p ossibility of free bu yin g them . Also th e fact th a t S ta te m ilita ry policy was inconsistent and it led to crash of Polish p ro d uctio n as w ell as fin ally to unem ploym ent increase is not insignificant for increasing dem and for im port.
Obviously, it m u st be u n d erlin ed th a t p a rt of reasons causing unem p lo y m ent in Poland has its roots in th e past. The m ark e t econom y has ju st show ed them . T here is d evelopm ent negligence: high d ecap itali zation of prod u ctio n m eans, u n p rep a rin g of firm s to effective m anage m en t u n d er conditions of m ark e t economy, com petition and ri9k, u n d e r developm ent of large economic regions, and h id d en a g ra ria n un em p loy m en t, u n fitte d level and teaching s tru c tu re to w ork m a rk e t needs.
The facto r th a t intensifies unem plo ym en t is underdev elo pm en t of large regions of th e country, and a t th e sam e tim e, hidd en ag rarian unem ploy m ent. A fter all, it refers to eastern and ce n tral provinces of Poland th a t h ave low level of in d u stry and service. These regions are characterized by high em ploym ent in ag ricu ltu re and fo re stry as w ell as by high p e r cen tage of tw o-profession people. G rum bled farm s w ith surplus of m an p o w er th a t w as em ployed in n e a r factories before econom y tra n sfo rm a tion, and a t th e beginning of it, was laid off, a re the m ajority. It m eans th a t due to tran sfo rm atio n processes, th e in let of unem ployed people to th e villages appeared, w hich increased hidd en unem plo ym ent scale.
It should be u nderlined th a t u n d e r Polish conditions, th e ru ra l w ork m a rk e t is of m ore im portance th an elsew here in Europe. A lm ost 40% of people live in th e coun try; to g eth e r w ith sm all tow ns, alm ost 10 th o usand people, th a t is about 45% people of Poland; alm ost 28% people w orking in n atio n al econom y are engaged in ag ric u ltu re . In the cou ntry and sm all tow ns th e re are no, so far, possibilities of o th er a lte rn a tiv e em ploym ent. It form s in local Poland the m ore d ifficu lt situ atio n th a n in big in d u strial agglom erations.
M oreover, th e un em ploym ent in the country, especially in n o rth e rn and e astern provinces, increases due to group dism issions from S ta te F arm s (PGRs).
The am ount of state farm s th a t have no c re d it possibilities increases sy stem atically . In 1991, 368 farm s out of 2,100 lost th e ir credit possibility. F a st w orsening of financial situ atio n of PGRs, lack of perspectives for f u rth e r developm ent create th e necessity of m aking th e essential p ro p erty tran sfo rm atio n s of th ese individuals.
In conditions of dem and b a rrie r and difficulties in ag ricu lture products sale, th e p ro fita b ility decrease, ag ricu ltu ral production is little a ttrac tiv e for capital investm en t. At th e sam e tim e, according to progressive social im poverishm ent, few people have enough capital to buy th e grounds belonging to PGR. T here is not also th e clear S ta te a g ra ria n policy. Such situ ation does n o t encourage to organize com panies b oth by PG R staff and o th e r physical and legal persons.
Thus, th e process of tran sfo rm in g them is slow, w hich w orsens m uch m ore th e ir economic situatio n and leads to dam age of prop erty , cultivation stopping of p a rt of th e grounds. The decrease in produ ctio n and em ploy m en t is th e result.
Monopolizing of local and regional w ork m arkets by relatively big state factories em ploying considerable percentage of w orkers had an effect on w ork m a rk e t destabilization. In Poland th e re are app ro xim ately 500 factories hav ing over 20% em ployed people w ho live w here th ey w ork 4.
Regions especially being in d an ger of unem ploym ent, in w hich one facto ry p rac tic a lly m onopolizes th e w o rk m a rk e t and its crash th re a ts w ith un em p lo ym ent to dom estic people, are especially so u th e rn and e astern provinces. Am ong 15 tow ns having over 25 thousand citizens, in w hich one facto ry concentrates 35% of all w orkers, 9 are placed in th a t p a rt of the country. The decrease in em ploym ent in social sector is only p a rtia lly com pensated by em ploym ent in p riv a te sector because th e process of this secto r form ing in Poland is ra th e r slow. Sm all firm s often face specified developm ent b arriers, am ong them : insufficient dem and b a rrie r, too high fiscalism, expensive credit b a rrier, v ariab ility of action conditions as w ell as high r e n t s 5.
In th e n e a r fu tu re th e unem p loy m ent is going to be stro n g e r as being a resu lt of re stru c tu ra liz a tio n of co u n try regions, whose developm ent was based on m ining and heavy in d u stry ; it refers m ainly to K atow ice and W ałbrzych voivodeships These are th e regions of ecological dam age and low re n ta l of developed branches of in d u stry . In such regions, w ith t r a ditional, old-fashioned in d u stry , processes of p ro d uct and b ran ch re s tru c tu ra liz a tio n leading to liquidation of w ork places w ill be growing.
From these considerations, it resu lts th a t the m ain gen erato r of un em plo y m ent in Poland is social econom y and big in d u stry factories (traditional in d u stry , req u irin g liquid atio n or restru ctu ralizatio n ).
4 F. A d a m c z y k , J. P. M o s e w i z , J. G i e o r g i e a : W ork M arket in P oland, F ou n d ation ’’P ro m o tio n ”, W arsaw 1992.
5 B. B r y l s k a , K. Z n a m i r o w s k i : D ev elo p m en t B arriers of S m all P riv a te Firm s, in: B arriers of E conom ics D ev elo p m en t, U nder C onditions of S y stem T ra n sfo r m ation, C o lle c tiv e Issue, red. G. Sobczyk, L u b lin 1992, s. 137— 139.
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The im p o rtan t facto r of unem ploym ent increase appeared to be, especially am ong youth, eductional system u n fitte d to m ark e t econom y needs. This u n fittin g causes increase in u n em ploym ent am ong g rad u ates of m any types of schools. D uring th e c e n tra l m anaged economy, em ploy m ent system soaked in even the larg e r am ounts of secondary school graduates. It does not im ply th a t em ploym ent was alw ays consistent to level and s tru c tu re of education. M oreover, th e w orkers qualifications w ere not in use either. If qualification s tru c tu re is not fitte d to econom y needs, it leads to increase in unem ploym ent, and on th e o th e r hand, it is a b a rrie r to economic developm ent. T hat is w hy educational system should be so elastic to predicate directions of changes on w ork m a rk e t and fit to them .
Among conditions of u nem ploym ent th e re a re also: th e state of em ploym ent agencies, system of inform ation and functioning of in stitu tio n s called for reduction of u nem ploym ent scale and its results. In 1990 th e n etw o rk of em ploym ent agencies w as extended on th e base of fo rm er em ploym ent dep artm en ts. T here w ere created 49 provincial and 346 regional em ploym ent agencies. In practice, the role of these in stitu tio n s is m ainly to reg ister unem p lo ym en t and p a y u n em p loy m ent b enefits. How ever, the a c tiv ity of such agencies should be m ore concen trated on the help in direct o ffering th e w ork to the unem ployed, advising d u rin g th e choice of qualify in g to th e new job, organizing th e courses for unem ployed, giving th e loan for s ta rtin g ow n activity. The question is to p refer such form s of activ ity th a t w ould m ake possible w ork activ ity again to th e biggest am ount of people looking for a job. The em ploym en t agencies should, to a g re a te r e x ten t, play the role of co-organiser of em plo y m ent. However, th e developm ent, m odernization, com puterization, high qualified people are necessary to p lay th a t role efficiently. B ut even w hen th ey are fu lly m odern, th ey do not replace econom y m echanism leading to increase in em ploym ent and decrease in unem ploym ent. In m ajo rity of W estern Europe countries, th ese agencies are efficient and m o dem b u t th e ir effect on w o rk m a rk e t situatio n is n o t conclusive. Regional program s of creatin g th e w ork places secure job n ot m ore th a n to 50% of all am o un t of unem ployed.
Sum m ing up these considerations, it m u st be u n d erlined th a t u n em ploym ent in Poland is n eith e r, in th e b ro ad er scale, re su lt of ratio nalizing changes, production m odernizing, effectiveness actions n o r s tru c tu ra l transfo rm atio n s. It is m ain ly th e re s u lt of econom y recession. It m eets all areas of activ ity , no t only th ese ineffective ones. Thus, df th e recession drags on, th e re is a n x ie ty th a t considerable p a rt of unem ploym ent can form itself into p e rm a n en t shape.
A t present, it is th o u g h t th a t to stop inflation, too strong th era p y was applied and th e bounds of necessary wages and p ay m en t reduction was not k ep t w ithin. T h at w as too high cost th a t affected th e lost production, decrease in real wages and increasing unem ploym ent. As w ell as th e loss of tra d itio n al m ark e ts due to dam age of RW PG, econom y dem onopoliza tion, giving it to th e ex te rn al com petition caused th a t thousands of people lost th e ir jobs, in so fa r in itially fast increase w as m ainly connected w ith th e possibility of legal g etting the unem p loy m en t benefit, su re ly in the second h alf of 1990, th e high increase dynam ics of unem ploym ent was tho consequence of crisis phenom ena in th e economy.
S T R E S Z C Z E N I E
W prow adzone z p oczątkiem 1990 roku n o w e reg u ły fu n k cjo n o w a n ia gospodarki, zm ierzające do tran sform acji gospodarki cen tra ln ie k iero w a n ej w gospodarkę ry n k o w ą, zm ien iły w isto tn y sposób sy tu a c ję na rynku pracy w P o lsce. P o czą w szy od sty c z nia 1990 roku m am y do czy n ien ia z p o ja w ien iem się i n arastan iem w k olejn ych la- tach zja w isk a bezrobocia. W e w rześn iu 1993 roku stopa bezrobocia przekroczyła 15%, zaś liczba bezrob otn ych sięg n ęła 2830 tys. osób.
C zęść przyczyn tw o rzą cy ch bezrobocie w P o lsc e m a sw o je k orzen ie w p rzesz łości. G ospodarka ryn k ow a jed y n ie je obnaża. Są to zaniedbania rozw ojow e, m.in. w y so k a d ek ap italizacja środ k ów produkcji, n iep rzy g o to w a n ie p rzed sięb iorstw do e fe k ty w n eg o gosp od arow an ia w w aru n k ach gosp od ark i ryn k ow ej, k on k u ren cji i ryzyka. C zyn n ik am i p ogłęb iającym i bezrobocie są także: n iedorozw ój c a ły ch region ów g o sp o darczych przy jed n oczesn ym u k rytym bezrobociu agrarnym , n ied o sto so w a n ie pozio m ów i stru k tu ry k szta łcen ia do potrzeb rynku pracy. W głó w n ej jednak m ierze b ez robocie jest rezu ltatem recesji gospodarczej, która dotyka w szy stk ie sfery d z ia ła l ności, n ie ty lk o n ie e fe k ty w n e . U trata tra d y cy jn y ch ryn k ów zbytu w ram ach rozw ią zanej rów n ież R W PB, d em on op olizacja gospodarki, w y sta w ie n ie jej na kon k u ren cję z zew n ątrz p o w o d o w a ły w zrost bezrobocia.
