One step forward, one step back
The voting through of the Labor Code liberalization is welcome news for all employers. The reform, piloted through the government and the Sejm by Labor Minister Jerzy Hausner, makes labor relations in Poland more flexible. Now that the first day of sick leave will not be paid, the number of employee sick days should come down dramatically. It will be easier to hire staff to fill in for those on long leaves of absence. Businesses employing fewer than 20 people will not have to go through the nonsense of consulting the local labor exchange when shedding 10% or more of their staff. If an employer wants to hire people for more than three consecutive fixed-term contracts, he will be able to do so.
The reform of the labor code is this government's first genuine move in favor of business. It has been forced into it by the alarming rise in the number of unemployed, but all credit to Hausner for skillfully limiting the opposition to the reforms from trade unions. More surprising is that so many on the Polish right opposed or questioned this reform. More on that later.
Let us now turn to Kołodko's entrance onto the political stage. His exposé was certainly stylish. At a time of recession and political troubles he oozed optimism and was bullish about the prospects for the Polish economy in the coming years. He lambasted the Democratic Left Alliance's (SLD) critics and made the government benches feel happy before the recess.
The problems begin when we start reading the small print of his plan. As things stand, the proposals are a step backward on the road to a healthy market economy. Kołodko is proposing legislation that would assist in writing off debts of many state companies as long as they maintain current levels of employment and begin to meet their national insurance and tax obligations. All this to help the companies restructure. But will they? Or will they just read this as a green light to get into debt once more hoping for another bailout down the road? The big question mark surrounding Kołodko's proposals is whether this kind of state aid is not counterproductive. It certainly seems unfair to all those who have kept their tax and national insurance payments up to date: for example, the private sector.
This package really seems to be a quick fix to get the government and the state sector through a difficult time and to keep unemployment down. There are no guarantees that the hoped-for restructuring will ever materialize.
Kołodko's approach was not surprising. Hausner's labor code reforms were refreshing. What was really worrying was how the opposition center-right split on these issues. You would have expected it to have grudgingly approved of Hausner's measures asking for more and to have attacked Kołodko for his plans to raid the public purse when the state agencies and funds that they promised to reform remain untouched.
Of the opposition parties, only the Civic Platform (PO) followed such an approach. They welcomed the labor code liberalization and asked for more in the future. They opposed Kołodko's plans arguing that it is a pre-local-election gimmick.
The other parties of the right, the Law and Justice (PiS) party and the League of Polish Families (LPR), actually argued that the labor code reforms go too far. They went further in this direction by welcoming Kołodko's plans. PiS even submitted its own legislative proposal on writing off the debts of companies "of strategic importance to the economy."
Their behavior showed that the opposition has not learned from the errors of the previous government. The Polish center-right is still not able to mix social conservatism with economic liberalism. A large segment of the Polish right is tied to supporting old-fashioned state intervention and trade union positions on refor-ming the labor market.
This is why it is very difficult to imagine how the center-right could govern the country. They are forming electoral coalitions to get them through the local elections. They may even do so for the parliamentary elections. But what happens next? How will they govern when they cannot agree on something as fundamental as economic policy? Until that question is answered the SLD, however troubled and weak, remains the only show in town.
Chris Mularczyk is a Warsaw-based consultant. He can be e-mailed at cmularczyk@wbj.pl.
