industrial policy and restructuring – polish case etuc summer school kraków, 8.07.2005 sławomir...
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INDUSTRIAL POLICY INDUSTRIAL POLICY AND RESTRUCTURING AND RESTRUCTURING
– Polish case– Polish case
ETUC Summer School ETUC Summer School
Kraków, 8.07.2005Kraków, 8.07.2005
Sławomir Adamczyk NSZZ Solidarność
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Starting point -1989 Starting point -1989 political freedom but also a political freedom but also a collapse of „old” economic collapse of „old” economic systemsystem
• Inflation – 389%Inflation – 389%
• GDP decline – 10,5%GDP decline – 10,5%
• Real wage decline – 24%Real wage decline – 24%
urgency for comprehensive urgency for comprehensive transformation of the transformation of the
systemsystem
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Transformation of economy Transformation of economy - main principles- main principles
• Establishing a legal frameworkEstablishing a legal framework
• StabilityStability
• LiberalisationLiberalisation
• Structural reformsStructural reforms
But…But…
Nothing about social dimention of the Nothing about social dimention of the processprocess
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Recovery of the economyRecovery of the economy
0
50
100
150
200
250
300
350
400
1990 1992 1994
Inflation (%)
-12
-10
-8
-6
-4
-2
0
2
4
6
1990 1992 1994
GDP growth (%)
-25
-20
-15
-10
-5
0
5
1990 1992 1994
Real wage (%)
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
PrivatisationPrivatisation
• main tool for building market economymain tool for building market economy
• the best „panacea” for competitive the best „panacea” for competitive challengeschallenges
• employment in private sector only 9% employment in private sector only 9% (1990), mainly in SME’s(1990), mainly in SME’s
• First time foreign employers presentFirst time foreign employers present
• no solution for „difficult sectors”no solution for „difficult sectors”
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Employment in private sector Employment in private sector (%)(%)
0
10
20
30
40
50
60
70
80
1989 1990 1995 2001
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Share of private sector in GDP Share of private sector in GDP (%)(%)
0
10
20
30
40
50
60
70
80
1990 1995 2001
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Industrial policy (1)Industrial policy (1)• Bad experiences with central-planned Bad experiences with central-planned
economyeconomy• Neoliberal approach (1990-93) – the best Neoliberal approach (1990-93) – the best
industrial policy is the lack of industrial industrial policy is the lack of industrial policypolicy
• Rising social costs of transformation – Rising social costs of transformation – necessity to take into account trade necessity to take into account trade unions’ demandsunions’ demands
• 1994 – first social agreement at national 1994 – first social agreement at national level on privatisation issueslevel on privatisation issues
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Industrial policy (2)Industrial policy (2)
• 1994 – Poland associated with EC1994 – Poland associated with EC• 1997 – opening of the accession 1997 – opening of the accession
negotiationsnegotiations• On this occasion Polish industrial policy On this occasion Polish industrial policy
is formulatedis formulated• Horizontal policy vs structural Horizontal policy vs structural
dimentiondimention• Sectoral policy as an instrument for Sectoral policy as an instrument for
restructuringrestructuring
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of „difficult” Restructuring of „difficult” sectorssectors
• Based on agreements between trade Based on agreements between trade unions, government and employersunions, government and employers
• Voluntary reduction of employmentVoluntary reduction of employment
• Different tools for social protection Different tools for social protection and activation on the labour market and activation on the labour market were usedwere used
• Preventing exclusion from labour Preventing exclusion from labour market as a main goalmarket as a main goal
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of employment Restructuring of employment – steel industry– steel industry
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20
40
60
80
100
120
140
160
Thousands
1990 1992 1995 2003
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of employment Restructuring of employment – mining industry– mining industry
0
50
100
150
200
250
300
350
400
Thousands
1990 1992 1995 2003
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of mining Restructuring of mining -comparison-comparison
• British mining industry British mining industry
16 years (1983-1999) 16 years (1983-1999)
- 235 000 workplaces reduced- 235 000 workplaces reduced
• Polish mining industry Polish mining industry
13 years (1990-2003)13 years (1990-2003)
- 260 000 workplaces reduced- 260 000 workplaces reduced
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Restructuring of employment Restructuring of employment - railways (PKP)- railways (PKP)
0
50
100
150
200
250
300
350
Thousands
1991 1995 2003
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Foreign Direct Investments Foreign Direct Investments in Poland in Poland (accumulated, bln USD)(accumulated, bln USD)
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10
20
30
40
50
60
70
80
90
1989 1993 1997 2001 2004
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Foreign companies in Polish Foreign companies in Polish economyeconomy
• 2001 – 11,5% GDP in private sector2001 – 11,5% GDP in private sector
• Share of employment in private sector:Share of employment in private sector:
1995 – 2,8%1995 – 2,8%
2001 – 5,7%2001 – 5,7%
• Main sectors: metal, banking, chemical Main sectors: metal, banking, chemical industry, food processing industryindustry, food processing industry
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Foreign investors – case of Foreign investors – case of Philips:Philips:
• Global electronic competitorGlobal electronic competitor
• 167 000 empl. in 150 factories around the 167 000 empl. in 150 factories around the worldworld
• Poland - 6 700 employers in 6 factoriesPoland - 6 700 employers in 6 factories
• European Centre of Lighting and European European Centre of Lighting and European Accounting Centre (in the process of Accounting Centre (in the process of development)development)
• Average annual export volume = annual Average annual export volume = annual export volume of entire coal mining export volume of entire coal mining industry = 1 billion USDindustry = 1 billion USD
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Multinationals and industrial Multinationals and industrial policypolicy• Some sectors dominated by MNCsSome sectors dominated by MNCs
• Introducing new technologies and Introducing new technologies and innovative approach are advantageous for innovative approach are advantageous for sectoral competitivity, but…sectoral competitivity, but…
• Reluctance to participate in sectoral Reluctance to participate in sectoral dialoguedialogue
• Lobbing used in order to put pressure on Lobbing used in order to put pressure on the governmentthe government
• Public interest often not compatible with Public interest often not compatible with the global strategy of MNCsthe global strategy of MNCs
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Relocation – what does it mean Relocation – what does it mean in Poland?in Poland?
• Moving production within Europe - Moving production within Europe - opportunity for increasing opportunity for increasing competitiveness of the entire regioncompetitiveness of the entire region (but (but social standards should be protected)social standards should be protected)
• Main threat – delocalisation outside Main threat – delocalisation outside Europe (e.g. textile industry in Poland)Europe (e.g. textile industry in Poland)
• Positive attitude - moving investments Positive attitude - moving investments from outside Europe (e.g. Goodyear, 3M)from outside Europe (e.g. Goodyear, 3M)
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
German FDI (accumulated) in German FDI (accumulated) in 2002 2002 structure of outflowing (%)structure of outflowing (%)
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10
20
30
40
50
60
Poland CEE EU-15 USA
Source: Gdańsk Institute for Market Economics, Deutsche Source: Gdańsk Institute for Market Economics, Deutsche BundesbankBundesbank
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Geographical directions of Geographical directions of German investments in 2005 German investments in 2005 (%)(%)
Others
Asia (excl. China)
South America
Russia, Ukr., South-East
Eur.
EU-15
China
EU-10
0 10 20 30 40 50Source: Gdańsk Institute for Market Economics, Source: Gdańsk Institute for Market Economics, survey of German Chamber of Trade and Industry survey of German Chamber of Trade and Industry (DIHK)(DIHK)
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
Attraction of investments Attraction of investments from outside Europe from outside Europe - - case 3M (Minnesota, Mining& case 3M (Minnesota, Mining& Manufacturing)Manufacturing)
• American based „conglomerate” MNCAmerican based „conglomerate” MNC
• 75 000 employees, 44 plants75 000 employees, 44 plants
• Medical tapes division is to be moved to Medical tapes division is to be moved to Poland from France… but also from Japan Poland from France… but also from Japan and USAand USA
• As a result Europe will became worldwide As a result Europe will became worldwide leader in this brandleader in this brand
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
ConclusionsConclusions• Transformation in Poland: macro-economic Transformation in Poland: macro-economic
stability achieved but privatisation too chaoticstability achieved but privatisation too chaotic
• Industrial policy not introduced in the Industrial policy not introduced in the beginning, enforced by trade unions and EU beginning, enforced by trade unions and EU integrationintegration
• Useful tool for sectoral restructuringUseful tool for sectoral restructuring
• But after privatisation a lot of sectors are But after privatisation a lot of sectors are controlled by MNC’s, no possibility to carry on controlled by MNC’s, no possibility to carry on effective industrial policyeffective industrial policy
• There is a need for European sectoral There is a need for European sectoral approach approach
INDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASEINDUSTRIAL POLICY AND RESTRUCTURING - POLISH CASE
And final remarkAnd final remark
There is no effective There is no effective industrial policy without industrial policy without
involvement of trade involvement of trade unionsunions