Tuesday, 31 January 2012

Eurozone Problems: Paul Krugman

It's well worth looking at the lastest blogpost by the economist Paul Krugman on the Social Europe website. He presents a number of clear charts that show, for example how the current economic difficulties in the Eurozone, and in particular the GIPS countries in Southern Europe, were not caused by a rise in public debt. Rather the rise in public debt has been a consequence of the crisis, the shift of resources from the public to the private sphere and the imbalances between the richer and poorer economies within the eurozone. Read more here

Thursday, 26 January 2012

Young Poles Outraged by ACTA

Yesterday the Polish government signed the ACTA in Tokyo. On the same day protests spread around Poland to a number of cities, with around 10,000 alone demonstrating in Kraków and thousands expressing their anger outside the Citizens' Platform offices in Poznań.

Below I reproduce an article by the Green Party activist Adam Ostolski on the recent mobilisations in Poland against ACTA

2011 was a year of discontent throughout the world, but apparently not in Poland. Poland's political class was spared the challenge of massive protests that blossomed in many places, from Egyptian and Tunisian revolutions, through the Indignados of Spain, to the US Occupy movement. There is much to be angry about, to be sure. Life in Poland is getting harder, the privatisation-by-stealth of health service and education is going on, schools and kindergartens are being closed down, which makes it especially difficult for young parents, there's no affordable housing, the prices of municipal services and staple foods are rising (both at least partly due to recent changes in tax rates). Poland is now the leading country in Europe in terms of non-permanent job contracts (having outrun Spain), and the vision of having a decent retirement in the future is becoming increasingly remote. Read more

Wednesday, 25 January 2012

Tusk Attacks his Base (and then some!)

Donald Tusk has managed to do something truly amazing. He has riled his own political base and brought them out onto the streets to demonstrate with his opponents. He has managed to cause such social anger over his decision to sign the Anti-Counterfeiting Trade Agreement (ACTA) that for the first time in a generation’s memory Poland is standing at the forefront of an international protest movement.

The protests started on-line, after the government announced that it would sign ACTA in Tokyo this Thursday. Government websites were blocked, closed down or replaced with counter-propaganda in an impressive show of technical skill and political ingenuity. One of the major complaints of the protestors has been that the government has failed to consult with society over its plans to sign ACTA. So the government talked amongst itself, then announced that it would open up a period of social consultation, but only after it had signed the agreement (sic).

At this point the scale of the dissatisfaction was unclear. Many commentators claimed that the blocking of government websites was counterproductive and that such ‘internet activists’ would not be able to translate this into numbers on the street. They were wrong.

As I walked up Świętokrzyska Street towards the offices of the European Parliament in Warsaw yesterday afternoon I was met by a wall of noise that I have rarely experienced at a demonstration in Poland. All too often whilst huge numbers of people have demonstrated in Europe against wars, austerity and their like, only a handful have turned up to similar mobilisations in Poland. But this time it is different. The social and political breadth of the 1000 or so demonstrating yesterday was impressive. Nationalists with anti-fascists; liberals alongside conservatives; Catholics amongst atheists; football fans standing with students. The atmosphere was angry, but good humoured and the chants witty and cutting. The symbols ranged from Polish flags to the masks of the occupy movements. The slogans sometimes called for ‘people before profit’ and at other times equated the coming censorship with the communist system. It was truly eclectic, the potential birth of a new social movement.

So why Poland? Why in a country where political passivity has become the norm have young people reacted so strongly. What the government has not realized is how directly ACTA could affect the lives of young people in Poland. The Internet nowadays is not simply an additional activity, it is a means of life, where people communicate, socialise, share information and, crucially, work.

Throughout the more than 20 years since Communism collapsed in Poland the number of graduates has soared. By the early 2000s Poland had the highest number of university graduates as a share of the under 30 population in Europe. Young people have done all that could be expected of them. They have educated themselves, learnt foreign languages, immersed themselves in the new information technologies, embraced the country’s entry into the EU and taken literally and seriously the notions of freedom and democracy. All this has now been thrown back in their faces.

Firstly, the economic system upon which all this has been built has not been able to provide the jobs and security that this generation needs. As well as there being 2 million unemployed in the country, 1/3 of all working Poles are on temporary, insecure contracts. This is the highest figure in Europe and as it does not take into account the large and growing section of society that is ‘self-employed’ then it is greatly underestimated. It is now becoming a rare thing to meet someone with a secure full-time contract.

This is a dangerous social mix. Young people are now more educated, aware and socially active in Poland than at any time in its history. And the government has previously recognised this, producing pages upon pages of documents, declaring its wish to harness society’s human capital, build so-called social capital and to create a governing administration built upon social consultation. Its actions around ACTA show all of this for what it is – empty words.

ACTA threatens the one area of social life that young people have been able to claim as its own. It threatens to further commodify and extend the influence of monopolies over cultural life. It potentially criminalises people’s everyday activities and brings new suspicion and fear into their lives. ACTA is a bill that is unclear, ambiguous and full of uncertainties that can be interpreted in different ways. For this reason alone it should be opposed.

This reality has resonated amongst young Poles. It has been common during the protests of the past few days to equate the decision of the government to the political repressions of the previous system during the 1980s. The present elite in Poland never wastes an opportunity to wrap itself in the flag of the previous opposition movement and reminisce of the days when they had to fight for freedom. The young generation is now the guardian of such freedoms and its turning against this elite that it deems wants to take them away.

And this goes further still. A central pillar of the economic and political transition in Poland has been its incorporation into the EU. This has been seen as a guarantor of economic development, social progress and democratic freedoms. This is now not so clear. The economic turmoil in Europe is fragmenting the EU and the response at the centre to by-pass democratic institutions in order to impose austerity programmes is enhancing social resentment towards the Union. And now this. ACTA was debated and agreed within the EU, which is imposing a pressure upon Poland to sign up to it. The claim that Brussels even protects civil freedoms is now being questioned by many, hence the decision to demonstrate outside of the European Parliament building yesterday.

The furore around ACTA may dissipate and the government could eventually have its way. But the events of recent days show that the gap between the government, the political class and the population is growing. The governing Citizens’ Platform (PO) initially emerged as a supposed social movement that opposed the corruption of the elite. Tusk rode to power in 2007 through harnessing the fear in society that the Law and Justice Party (PiS) were pushing Poland down the road of authoritarianism. Yet now, increasing numbers of people, not least from those who had once supported him, see Tusk to be standing in the place where Kaczyński once did

Thursday, 19 January 2012

Fiscal Pact Divides Europe

The decision of 26 EU states to agree to a new fiscal pact (read: coordinated austerity) at the last EU summit was met with self-congratulation and new claims of optimism.

However, within less than a month all of this has dissipated as it becomes clear that a strategy of dealing with the crisis purely through public spending cuts is entirely insufficient. In turn countries outside the eurozone, amongst them Poland and the Czech Republic, have begun to question the wisdom of participating in such a fiscal pact.

The decision of the Standard & Poors Rating agency to downgrade the credit ratings of nine eurozone countries (including France) is a sure sign of how the markets are far from convinced that the EU’s current economic strategy will deal with present crisis. This is not just implied but, as the economist Paul Krugman points out, clearly set out in a statement by Standard & Poors:

We also believe that the agreement [the latest euro rescue plan] is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the EMU’s core and the so-called “periphery”. As such, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers’ rising concerns about job security and disposable incomes, eroding national tax revenues

And it is not just the markets that are unconvinced. Although Britain was the only EU member state to not formally sign up to the pact, it is now unclear which of the other non-eurozone EU member states will participate in it. The Czech government, which expressed its uncertainty over the pact from the beginning, has now provisionally committed itself to holding a referendum on whether to sign up to the agreement. Furthermore, Poland, a country that both pushed for and then praised the signing of the new fiscal pact, has also expressed reservations about participating in it.

Countries such as Poland are caught between the contradictory positions of France and Germany. On the one hand, it has consistently opposed the approach of Sarkozy to create a ‘two-speed’ Europe, where an agreement would be exclusively for the eurozone member states. Correctly recognizing that this would lead to its own isolation, the Polish government has pushed Germany to unite all 27 EU states around a common programme of action. Following the EU summit, Poland could claim that it had successfully secured a place at the centre of economic policy making in Europe and announce that it would willingly sign up to the new fiscal pact.

Yet it soon became clear that things were not so straightforward. The Finance Minister Jacek Rostowski argued that the pact did not concern Poland as it was not yet a member of the eurozone. He pointed out that Poland already has its own internal limitations of public debt and also that it has signed an agreement with the European Commission to bring down its budget deficit. The Polish government is therefore unwilling to enter into yet another binding agreement, especially one where it could be fined for not meeting its obligations. As Rostowski noted ‘ we are not masochists and we will not take on extra, unnecessary obligations’

Some within the government have taken this approach a step further and have begun to question the wisdom of prioritising alliances with Germany and other eurozone states. The Vice-PM,and leader of the junior coalition party the Polish Peasants’ Party, has argued that it would be better to seek closer alliances with non-eurozone member states such as the UK, Sweden and the Czech Republic. His argument for this is basic: ‘It was not us that caused the mess, therefore we should not be first to clear it up’. Also on a recent visit to Rome PM Donald Tusk said that Europe "cannot allow itself to be led by Berlin and Paris alone", arguing that countries such as Italy and Poland should have a greater say on the issue of fiscal union inside the EU.

Behind all of these discussions lies the fact that the attempt to unite the EU around a common programme of austerity and budget cuts is not bringing its member states closer together but rather driving them further apart. The problem is that no viable alternative is coming either at a European or national level. For example, the country that has been most opposed to the fiscal pact, the UK, is pursuing its own independent policy of austerity that is pushing the country into an economic downturn deeper than that experienced in any of the other advanced economies in the world.

The fiscal pact is rapidly falling apart even before it has got off the ground, causing divisions between the EU states to intensify.

Tuesday, 17 January 2012

Trade Unions to Coordinate Protests

During the first decade following the collapse of ‘communism’ in Poland, politics was divided primarily along historical lines. Therefore the major political parties and coalitions were built out of organisations that were either connected to the previous governing party or opposition movement. Although historical issues continue to play an important role in Polish politics, they have ceased to be the defining issue of political allegiance.

One area however where the historical division has remained dominant is the trade union movement. The two major trade union federations are the Solidarność trade union (the successor of the independent trade union set up in the 1980s) and the All-Poland Alliance of Trade Unions (OPZZ) (that was created by the authorities in the 1980s as an alternative to Solidarność).

Solidarność and the OPZZ have remained rivals and have rarely coordinated their activities. This has ensured that the trade unions have been divided at a national level. This has hindered their ability to defend their members’ interests, particularly in a situation where trade union membership has been in a steady decline.

However, yesterday Solidarność, the OPZZ and the the third national trade union confederation Forum held a joint news conference for the first time. They have also announced that they will be coordinating a series of joint actions and protests.
Immediately they have revealed that they are suspending their participation in the Trilateral Commission that includes representatives from the government, employers and trade unions. They have done this in protest against the failure of the government to consult with them on a number of issues. The leader of the Solidarity trade union, Piotr Duda, stated that the trade unions would discuss now with the government only through force and that this step was the first in a number of actions to oppose the government.

The leader of the OPZZ, Jan Guz noted how there are more than 2 million unemployed in Poland, another more than 2 million who have been forced to emigrate, a further 2 million who receive extremely low wages and another milion who are employed on so-called junk contracts.

The trade union leaders concluded that it was only through joint actions that the government’s policies could be opposed. They have raised the possibility of carrying out protests before the Euro2012 football championships and also announced that they will collect signitures for a resolution to force a referendum on the government’s plans to raise the retirement age.

Sunday, 15 January 2012

Plans to Close Hundreds of Schools Met by Protests

It has been estimated that up to 800 schools will be closed in Poland this year, after 300 were shut down in 2011.

The official reason given for the liquidation of schools throughout Poland is the upcoming demographic downturn that will result in a decline in the number of available pupils for these schools. Of course behind this fact lies a debate about whether schools should be provided as a service, even in areas where there are less pupils, or whether they should be run along the lines of profitable businesses.

The most immediate cause of the schools’ closures is the cut in education spending, with the central government decreasing its education spending by 1.4bn złoty this year. Although up to now schools have been closing mainly in rural areas, they are now starting to be shut down in large cities as well.

The closing down of schools has been met by a new wave of protests throughout the country. An occupation of a technical school in Bytom has received the most media attention, with students and parents protesting against the local government’s decision to close down the school. Similar protests have taken place in places such as Wałbrzych.

The protestors have set up a facebook page which has some information about their activities in English.

Tuesday, 10 January 2012

Private Pension Funds Record Loss, Whilst Profits Rise

Poland’s private pension funds recorded an over-all loss in 2011, that averaged 4.8%. This means that future pensioners, whom are required to pay into these funds, have seen around 5bn złoty wiped off their future pensions. This is the second year in their 12 year history that these private funds have registered a loss, falling by 14% in 2008.

Despite the fact that the future pensions of Polish citizens has reduced throughout the year, the general Polish Pension Association (PTE), that administers the funds, saw its profits grow. In the first quarter of 2011 alone, the PTE enjoyed a profit of 438m złoty. Also the salaries of those working for the PTE grew from 80m złoty in the third quarter of 2011, up from 72m zł in the corresponding period of 2010.

As the publicist Piotr Szumlewicz has noted: ‘Estimates show that in 20-30 years time pensioners in Poland (particularly women) will receive miserly pensions. The pension reform, begun in 1999, has led to lower pensions, rising public debt, a rejection of the principle of inter-generational solidarity, whilst also bringing huge profits to the companies running these funds. In such a situation the government should abolish the compulsory private pension funds as quickly as possible and return to the previous pension system that was more stable, secure and just.’