INDUSTRIAL POLICY
AND RESTRUCTURING
– Polish case
ETUC Summer School
Kraków, 8.07.2005
Sławomir Adamczyk NSZZ Solidarność
Starting point -1989
political freedom but also a collapse
of „old” economic system
• Inflation – 389%
• GDP decline – 10,5%
• Real wage decline – 24%
urgency for comprehensive
transformation of the system
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Transformation of economy
- main principles
• Establishing a legal framework
• Stability
• Liberalisation
• Structural reforms
But…
Nothing about social dimention of the process
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Recovery of the economy
Inflation (% )
Real wage (% )
GDP growth (% )
400
6
350
4
5
0
2
300
-5
0
250
-2
-10
200
-4
150
-15
-6
100
-8
-20
50
-10
0
-25
-12
1990
1992
1994
1990
1992
1994
1990
1992
1994
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Privatisation
• main tool for building market economy
• the best „panacea” for competitive
challenges
• employment in private sector only 9%
(1990), mainly in SME’s
• First time foreign employers present
• no solution for „difficult sectors”
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Employment in private sector (%)
80
70
60
50
40
30
20
10
0
1989
1990
1995
2001
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Share of private sector in GDP (%)
80
70
60
50
40
30
20
10
0
1990
1995
2001
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Industrial policy (1)
• Bad experiences with central-planned
economy
• Neoliberal approach (1990-93) – the best
industrial policy is the lack of industrial
policy
• Rising social costs of transformation –
necessity to take into account trade
unions’ demands
• 1994 – first social agreement at national
level on privatisation issues
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Industrial policy (2)
• 1994 – Poland associated with EC
• 1997 – opening of the accession
negotiations
• On this occasion Polish industrial policy is
formulated
• Horizontal policy vs structural dimention
• Sectoral policy as an instrument for
restructuring
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of „difficult” sectors
• Based on agreements between trade
unions, government and employers
• Voluntary reduction of employment
• Different tools for social protection and
activation on the labour market were used
• Preventing exclusion from labour market
as a main goal
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of employment
– steel industry
Thousands
160
140
120
100
80
60
40
20
0
1990
1992
1995
2003
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of employment
– mining industry
Thousands
400
350
300
250
200
150
100
50
0
1990
1992
1995
2003
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of mining
-comparison
• British mining industry
16 years (1983-1999)
- 235 000 workplaces reduced
• Polish mining industry
13 years (1990-2003)
- 260 000 workplaces reduced
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of employment
- railways (PKP)
Thousands
350
300
250
200
150
100
50
0
1991
1995
2003
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Foreign Direct Investments
in Poland (accumulated, bln USD)
90
80
70
60
50
40
30
20
10
0
1989
1993
1997
2001
2004
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Foreign companies in Polish
economy
• 2001 – 11,5% GDP in private sector
• Share of employment in private sector:
1995 – 2,8%
2001 – 5,7%
• Main sectors: metal, banking, chemical
industry, food processing industry
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Foreign investors – case of Philips:
•
•
•
•
Global electronic competitor
167 000 empl. in 150 factories around the world
Poland - 6 700 employers in 6 factories
European Centre of Lighting and European
Accounting Centre (in the process of
development)
• Average annual export volume = annual export
volume of entire coal mining industry = 1 billion
USD
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Multinationals and industrial policy
• Some sectors dominated by MNCs
• Introducing new technologies and innovative
approach are advantageous for sectoral
competitivity, but…
• Reluctance to participate in sectoral dialogue
• Lobbing used in order to put pressure on the
government
• Public interest often not compatible with the
global strategy of MNCs
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Relocation – what does it mean in
Poland?
• Moving production within Europe -
opportunity for increasing competitiveness
of the entire region (but social standards
should be protected)
• Main threat – delocalisation outside
Europe (e.g. textile industry in Poland)
• Positive attitude - moving investments
from outside Europe (e.g. Goodyear, 3M)
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
German FDI (accumulated) in 2002
structure of outflowing (%)
60
50
40
30
20
10
0
Poland
CEE
EU-15
USA
Source: Gdańsk Institute for Market Economics, Deutsche Bundesbank
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Geographical directions of German
investments in 2005 (%)
EU-10
China
South
America
Asia (excl.
China)
EU-15
Russia, Ukr.,
South-East
Eur.
Others
0
10
20
Source: Gdańsk Institute for Market Economics,
survey of German Chamber of Trade and Industry (DIHK)
30
40
50
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Attraction of investments from
outside Europe
- case 3M (Minnesota, Mining& Manufacturing)
• American based „conglomerate” MNC
• 75 000 employees, 44 plants
• Medical tapes division is to be moved to Poland
from France… but also from Japan and USA
• As a result Europe will became worldwide
leader in this brand
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Conclusions
• Transformation in Poland: macro-economic
stability achieved but privatisation too chaotic
• Industrial policy not introduced in the beginning,
enforced by trade unions and EU integration
• Useful tool for sectoral restructuring
• But after privatisation a lot of sectors are
controlled by MNC’s, no possibility to carry on
effective industrial policy
• There is a need for European sectoral approach
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
And final remark
There is no effective industrial
policy without involvement of
trade unions
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE