Labor in Poland
by Sean Pipkin
by Nicoline Blom
Poland's Post-War Labor Policies
After the Second World War Poland started using the Soviet-type economic system. Poland's economic system and its infrastructure had been essentially destroyed during the war. The polish Government was in desperate need of an economic turnaround. The Soviet system of Socialism is very different than the popular system of Capitalism. The Soviet type system central focus is the importance of the labor and making sure that it is fully employed. The socialist system lasted over forty years in Poland. This period was plagued by much slower growth than was anticipated and very poor working and living conditions.
The Soviet system of Socialism is based on the premise that the government controls all aspects of the labor market. The main objective of this system was that full employment would be reached. In a market economy there will always be some unemployment. The Socialist system tried through programs of heavy industrialization to eliminate unemployment. This system also made the decisions on where the labor would be allocated. " One can briefly define the objectives as an endeavor by the state authorities to achieve through proper provisions a rational management of manpower resources corresponding to the economic and social needs of the country and at the same time ensure full employment" (Adam,3). The socialist system tries to make sure that the employment sector will promote growth, income, and improve the standard of living. They felt that if the country is employed, and the country is growing the standard of living is soon to improve.
The Socialist system has changed strategies over the years trying to adjust for certain phases that were not going as planned. The most important strategy behind the system was the implementation of a program geared for heavy industrialization. " Socialist industrialization was to be achieved through state ownership of the industrial sector, through such means as nationalization of industries and economic enterprises "(Weiner,22). Poland in the past had been more of an agriculturally orientated economic system. This change would be more dramatic to Poland than some of the other East European countries switching to the socialist system. Poland's agriculture sector was also the collectivized under the socialist system. Every part of the country that made money or produced something was run by the government. This made it possible for the government to allocate the labor where they wanted it. Labor was not free to travel from job to job as in the market system of Capitalism. This systems problems in allocating labor efficiently would eventually help lead to it's failure. The socialist system would continue to hire employees as long as the sectors were growing. They did not follow the same rules that the capitalist system used regarding when to stop hiring employees. These strategies all come back to the central theme of heavy industrialization for the Socialist system.
Over the course of Socialism in Poland, Their employment policies have taken on various looks to try to solve some of their systems deficiencies. The early years of the system in the late forties-early fifties were mainly reconstruction years where the country was being geared for heavy industrialization. These reconstruction plans were implemented with the main goal of trying to improve the standard of living. This way the people would be more sympathetic to these dramatic changes if their standard of living was improving. Poland's employment policy in this period was essentially put the labor force where it will do the most. " The polish stressed optimum employment in the sense that labor would be directed to enterprises which, due to their conditions and technical equipment, showed the greatest productive possibilities "(Adam,95). The first phase did improve the employment situation on Poland dramatically. The problem was that labor was not always allocated to where it probably should have been. Otherwise the first phase of this system went as well as could be expected.
The period from 1956-1965 in Poland was plagued by periods of overemployment. Several changes in policy were made to try to adjust for this problem. One way was to increase the old-age pensions, this would allow employees to be more willing to retire. By doing this new job seekers were also given a chance for jobs in the underemployed sectors. Another change in policy was to set employment limits on hiring for the different industries. The employment ceilings were often met much sooner than expected. The Polish government had yet to have any type of unemployment benefits in their labor policy. This period of their policy was very rough for Poland and contributed to their lack of economic efficiency.
The period from 1966-1975 showed mixed results coming from the socialist system. There were improvements made in the standard of living. At the same time though there were also increasing labor shortages stemming from overemployment in other sectors of the economy. Poland was trying hard to speed up the growth of heavy industry during this period. This period was marked by Poland continuing what it had been doing in the previous period.
The period from 1976-1989 was the most dramatic for Socialist Poland. This period marked the coming out of the Solidarity movement. The economy during the early stages of this period took a serious downfall. The standard of living dropped dramatically. A majority of these problems stemmed from the poor investment decisions made by the government. Poland's debt to capitalist countries more than tripled in a five year period. " In 1975 Poland owed $7.6 billion to capitalist countries and in 1980, $27 billion" (Adam,170). The employment policy for the first time tried to increase the amount of labor that was to be allocated to the private sector, instead of taking jobs away. This was hopefully going to simmer some of the anger coming from the Polish labor force. The movement known as "Solidarity" made its first real appearance in 1980. " In 1980, when the government introduced huge price increases, Solidarity appeared on the political scene, and the fight for free trade unions and economic and political reforms entered a new, unprecedented stage in post-war Poland "(Adam,171). The Solidarity movement created the events that took place in the form of strikes at the Gdansk shipyards.
The events that took place at the Gdansk shipyards were the most significant juncture for the labor policies that were implemented under the Socialist system in Poland. This strike was not one trying to take away any power, it was merely trying to help improve the conditions of labor in Poland. Not all of the demands were met, but the ones met were very crucial. The first demand that was met was the establishment of free trade unions. This essentially gave rights to employees who before the agreements did not have much say in the unions. " Their purpose is to provide working people with appropriate means for exercising control, expressing their opinions and defending their own interests"(A.Kemp-Welch,188). These new unions gave the people more say in where the labor was being allocated, determination of wages and etc. The Gdansk agreement also gave the people the right to strike freely and safely. Point three was demanding that the people of Poland were entitled to freedom of expression as stated in the Constitution. The fourth point was the release of political prisoners. This also included the rehiring of participants in the previous strikes that took place in the seventies. Point five was primarily regarding economic reform to take place in Poland. The people wanted all the information to be known regarding their economic situation. This would allow them to contribute to the plan that would try solve their economies problems. The next major point in the agreement was to eliminate all the unfair hiring that took place. People now had to be given jobs based on their qualifications. This eliminated people getting a position because of what party they belonged to. The last major point and the most important for the people was the improvements in welfare. Changes were made in health care system to ensure the well-being of a worker. Employees would not be allowed to work on Saturdays. Mothers were given more maternity leave. The housing situation was also improved. These are just a few of the items that were implemented into policy to provide better welfare for the workers. This agreement was a great victory for the workers of Poland.
The events that took place at Gdansk were the first steps that this country took toward democratization. No longer did the people allow themselves to suffer through such hardships. People had to realize that after so much time this command economy was not working. Changes had to be made towards a market economy. Many of these ideas behind this agreement are still carried out today in post-Socialism Poland.
The Polish Labor Market under a Command Economy
The labor market functions in a unique manner when set under the forces of a command economy. Before the fall of communism in 1989 the Polish labor market was under the control of the central planning authorities. The government of Poland controlled all aspects of the labor market. This included labor distribution, the assurance of close to zero unemployment, wage allocation, and the function of trade unions.
There have been many dynamic factors that have determined the allocation of labor in Poland from 1950 through 1989. Soon after World War II the population rate in Poland soared and this had to be taken into account when allocating the labor. "During the postwar period in Poland over 19 million children were born, as a result of which there was a population increase of almost 10 million." (Schulz, pp.3) This caused a large increase in the people eligible for employment. "The growth of employment in the national economy was due not only to the potential for assimilating available labor and to the dynamic numerical growth of the population but also to increased employment". (Schulz, pp.3)
Therefore, the task of the planning authorities in postwar Poland was to ensure employment for the swelled population. Plans were implemented to bring the people of the country to the areas in which they were needed for employment. "Thus the task of assimilating labor reserves in cities and overcoming agrarian overpopulation in the country was given priority in employment policy." (Schulz, pp.4) This policy was noted as being very effective, "which permitted accelerated growth of the national income by providing jobs for people." (Schulz, pp.4) From 1950-55 employment increased by 2.5 million workers because of the country's policy of transferring the population to the cities and increasing industrialization. "This was the start of large-scale transfer of labor from agriculture to other areas of the national economy, particularly construction and industry". (Schulz, pp.4) This transfer was gravely needed because of the severe capital shortage, so labor was utilized in abundance. "Labor was substituted for scarce means of production (machines and equipment), and the growth of employment permitted growth of national production." (Schulz, pp.4)
This type of planning was implemented for many years. During the sixties employment was still on the rise but it was also coupled with an increase in investment "which helped increase industrial technical equipment and, at the same time, created conditions conducive to increased labor efficiency". (Schulz, pp.5) Since capital equipment was so scarce in the fifties, in the sixties with a small increase in capital, labor productivity increased immensely. However, by the seventies we see an altogether different situation.
From 1970 up to the fall of communism in 1989 there was a trend of labor shortages rather than abundance. Employment was still increasing but not to the extent that industries wished to hire. "It was particularly difficult to find workers-even for key industries-in Silesia, Warsaw, and Wybrzez, and also in all other major urban agglomerations." (Schulz, pp.7) This caused problems for the industries but also forced them to run more efficiently. Labor productivity increased greatly at this time but the problems may have outweighed the benefits. Two adverse affects on the economy were:
The shortage of labor is mainly attributed to labor hoarding by the industries. This is the practice of the firms employing too many workers and keeping them on staff even if they are underproductive. Labor hoarding has occurred for many reasons. This is one way the government assures that there is no unemployment. The planners give incentives to the industries to employ an inefficiently high amount of labor. The government allocates wage funds and this entices the firms to hire many workers as well as receive bonuses. Also, the firm has reasons for labor hoarding. Firms receive raw materials sporadically and do not know beforehand when they will arrive. This forces the firms to keep all their employees for when they are needed. Workers are either underutilized or overutilized.
Another reason for no unemployment in command economies is because people are forced to work. The communist system's belief is that of the working class, that these people are the heart of the system. Hence, you are forced to be part of this system. If you do not comply you may be sent to the army or to prison.
According to the communist ideal wages should be equal throughout the economy, yet this is far from true. There is a large difference between the highest strata and the lowest, however the difference has decreased over the years. But, one thing is true to the communist beliefs, blue-collar workers' wages are higher than white-collar wages.
Yet, the communists believe this is justified because:
Although blue-collar wages are higher, white-collar workers benefit from other types of perks. Because of their status white-collar workers have better connections and receive extras. They normally have better housing, cars, etc. because of subsidies or semilegal transactions. So it may be considered that the two groups are more equal in the end.
This equality does not hold true in considering the minimum wage though. The minimum wage has been substantially lower than the average wage over time. "Although the minimum wage has frequently been increased, the gap between it and the average wage has not changed over time. In 1970 the minimum wage was 40% of the average wage". (Flakierski, pp.77)
Trade unions in Poland are an important aspect of the labor market. These unions do not function in the same manner in which unions in America do, yet they play a key role in the workers' lives. "Granting that the CRZZ (the Polish counterpart of our AFL-CIO) is an instrument of state planning and recognizing that strikes are anathema to Communist thinking, it would be a mistake for the industrial relations scholars to ignore the functions, structure, and philosophy of a labor movement which enrolls about 95 percent of the working people in Poland, or about 10.5 million members in a population of 33 million." (Ludlow, pp.315)
The labor unions are in a hierarchical structure with the Central Committee of Polish Trade Unions at the top. This committee is made up of 180 branch representatives. Next is the Presidium made up of about 20 members, including vice-presidents, secretaries, chief of the trade union press, general inspector of labor, some branch union presidents, and workers. Third is the Secretariat, consisting of the president, 3 vice-presidents, and 5 secretaries. "In Poland where twenty-three branch unions each represent a specific industry and where only one union may enroll workers in a given plant in accordance with the ministry that supervises that plant." (Ludlow, pp.316) Labor unions are financed out of 1 percent of members' wages. These funds are broken-down and distributed to different areas, such as administration, recreational houses, and cultural events.
These unions are not free to act as the ones in the US are but they do have a great amount of influence in Poland. "Polish law does provide for a kind of 'preferential hiring' under which a union may insist that plant management receive union permission before taking on a new employee." (Ludlow, pp.317) However, CRZZ does not have the power of collective bargaining. The unions are not the ones that determine the wages, that is left in the power of the central government. But, they do have great influence in the "once-a-year opportunity to argue for improvements". (Ludlow, pp.319)
Most members join the trade union for the social events that it sponsors. Movies are shown, cultural events are held, as well as vacations. Recreational vacation spots are normally built by the union and members are able to enjoy this benefit. Union members even after retirement still participate in the social events held by the union.
All aspects of the labor market function differently under a command economy as opposed to a market economy. These aspects are controlled by the centrally planned government not by free market forces. This is the manner in which Poland's labor market functioned until the fall of communism in 1989.