New rules of engagement

   Last week's proposals by Defense Minister Bronislaw Komorowski to reshape the armed forces by cutting the number of army recruits and shortening military service probably went down like a lead balloon in the Labor Ministry.

   The latest announcement about cuts in the armed forces comes on the heels of other threats by the ministry to close down 70 army garrisons – all part of a six-year plan to cut 40,000 soldiers from the state's payroll. But the new closures have been accompanied by howls of protests by local townspeople who say closing down garrisons effectively shuts down the towns that service them.

   Poland may need to move toward a more streamlined NATO-like professional army, but what to do with all those spare soldiers?

   The same can be said for steel workers who took to the streets in Katowice last week protesting the dire state of their industry amid worries of mass redundancies. Ditto for the car industry as tumbling turnover forces firms like Daewoo to slide off the auto makers' map of best sales.

   Unemployment reached 15.6% in January, the highest rate since February 1995, and institutions monitoring the numbers such as Citibank say it could rise to 18% by the end of the year.

   The latest jobless figures show the labor market becoming slack as the economy slows down. Domestic demand has weakened across the board from buying houses to shopping for consumer goods. Inflation is biting and high interest rates are taking their toll.

   Analysts, meanwhile, say that such figures are to be expected as companies consolidate and become more productive and profitable. For many, there's a certain inevitability about unemployment as the economy adjusts itself to the new Poland.

   But others worry the government is not doing enough to combat the problem. Many blame deep structural problems such as delayed privatizations, particularly the stalled reforms of state-owned monoliths. A slump in demand inevitably leads to a cut in production and a fall in output. The government is now under pressure to reform its labor laws and to help encourage more small and medium-sized enterprises, which many consider to be the backbone of the economy.

   But politicians paying lip service to long-term structural reforms will still be small change for the lines of unemployed workers. The government is saving $1.5 billion by cutting back on the army, but few people in local towns will greet the news with anything but derision. After all, the money saved will be spent on state-of-the-art weapons from the West.