Thursday, 23 August 2012

Austerity Policies in Poland

I have written a paper on Poland for a series published by the Friedrich Ebert Stiftung foundation on austerity policies in Europe.

You can find it here

Thursday, 9 August 2012

Some Notes on Poverty in Poland

As part of another larger project I have been writing something about poverty in Poland. Below I include some notes on this topic.

The graph below shows some clear trends in changing poverty levels in Poland. According to all the measurements of poverty, deployed by the Polish Statistics Agency, poverty grew sharply from 2000 until Poland entered the EU in 2004, it then steadily declined until the outbreak of the global economic crisis, before once again levelling out or slowly increasing.

In spite of these changes, the levels of relative and absolute poverty remain similar in 2011, to what they had been in 2001 (we shall consider statutory poverty below). Poverty most affects those families in which at least one member is unemployed. In those families with one unemployed member, 11.5% were below the statutory poverty line, which rose to 1/3 of families with 2 or more members without work. 

However, due to the low income levels of many workers in Poland, just over 9% of those engaged in physical work live below the statutory poverty line (slightly above the 9% who are below the absolute poverty line). 

Women are particularly affected by poverty, due to the high level of deactivation of female labour and the relatively low wages that women receive in comparison to men. The employment and activity rates are around 15% higher for men than women and men on average earn nearly 20% more than women, which rises to around 30-40% in sectors such as trade and finance

 Extreme poverty is most pronounced in the countryside, with the percentage of farmers living in extreme poverty equalling 13.1% in 2011 (up from 8.9% in 2010). Those who have no paid income and do not receive sick benefits or pensions suffer the highest level of absolute poverty (21.9%). The level of absolute poverty also rises markedly in families that have more children, with 24% of families with four children or more living in absolute poverty, compared to just 2.3% of those with one child. 

Children are at particular risk of poverty in Poland. In 2011, 10.5% of those under 18 years of age lived in households whose income was below the statutory poverty line and 9% below the absolute poverty line. This means that 31% of all those categorised as living in absolute poverty in Poland are under 18 years of age, whilst they make up around 20% of the whole population. 

Contrary to common perceptions, elderly people are relatively well protected from poverty. Just 4% of those aged above 65 live below the statutory poverty line and 3% below the absolute poverty line. Therefore, elderly people make up 7.5% of all those living in absolute poverty, whilst they account for 1/7 of the whole population.


The availability of benefits to those not working greatly affects the distribution of poverty. The threat of poverty for the unemployed in Poland is particularly acute. Only 16.7% of all the unemployed receive unemployment benefits, which is given to claimants for a set period of time (between 6 and 12 months) and is of an amount below the relative poverty line.

Pensions in Poland are presently relatively high in relation to other social benefits (averaging 1,755zł in 2010). However the move in Poland from a repatriation pension system to a capital one from the end of the 1990s will result in future pensions, particularly for lower earners, being up to a half lower than at present, thus potentially sharply increasing levels of poverty amongst the elderly.

 The largest concentrations of those living on benefits are in the rural areas where state farms had once operated. For example, of the 20 municipalities where more than 20% of the population are on benefits, 10 are in the Warminsko-Mazurskie province (in 2 of these over 30% of the population are on benefits)  After joining the EU, incomes in the agricultural sector began to increase, partly due to the availability of EU subsidies that already equal around 50% of farmers’ income. From the end of 2005 until May 2011, Poland received around 139bn zł in agricultural subsidies, of which 78.6bn zł came in the form of direct subsidies. As noted above, however, this has not prevented a rise in poverty amongst farmers since the outbreak of economic crisis, returning in 2011 to its highest level since 2005. 

Social help is also available for individuals and families on very low incomes. Until October 2012, such benefits were accessible for a family (2 adults and 2 children) whose income did not cross 1,404zł and for a single person whose income was not above 477zł. These limits (which are the same as the statutory poverty line) are set by the government every 3 years, yet in 2009 the government did not raise it from the position established in 2006. This helps explain why the statutory poverty index declined so sharply from 2006, with GUS estimating that if it was  defined according to the real cost of goods and services then the level of statutory poverty would actually have stood at 11.4% in 2012 instead of 6.5%. This ensured that large numbers of people were pushed out of the benefits system,  with an estimated 1 million children losing their right to benefits over the past 8 years. In fact, for the first time in 2012, the percentage of those living in households below the statutory poverty line was  actually greater than those receiving benefits. From October 2012 the government raised the threshold to 1,824zł for families and to 542zł for single people. This was set according to prices existent in 2010, and therefore, as the rate of inflation is increasing, by 2015 some of those living below the absolute poverty line may not even be eligible to claim social benefits. 

Wednesday, 1 August 2012

Tadeusz Kowalik 1926 - 2012

The life of the renowned Polish economist, Tadeusz Kowalik, spanned 10 decades and three economic and political systems. 

Tadeusz was born in the village of Kajetanówka in the south-east Lubelskie region of Poland. He was brought up in conditions of poverty and exclusion, in a village that lacked basic facilities such as a post-office, a shop or a school. He was raised in a family that he describes as being open and tolerant and one which valued education and literature. In order to complete his basic education, Tadeusz had to travel to 3 different schools, perhaps explaining why he (along with his sisters) were the first from his village, until the 1960s, to complete a university education .

Tadeusz's childhood was cut short by the years of war and occupation. He recalls seeing the Jewish residents of his village being taken away by the Nazis, an image that was to remain with him. This resulted in the region being stripped of its artisans, and Tadeusz enrolled in an apprenticeship to become a hat maker, allowing him to avoid being sent to Germany as forced labour. 

Tadeusz's subsequent social advancement through education came about as a result of war and the building of Communism. By the end of the Second World War Poland had lost three-quarters of its pre-war intelligentsia. As part of the process of rebuilding the country out of the its war-time ruins, millions moved from the villages to  the cities. For the first time health care, education, housing and work were being made available to all. Tadeusz believed in the ideals of socialism and he entered the School of Social Science organised by the Central Committee of the Polish United Workers Party (PZPR). He studied for three years at the Law High School, before completing the fourth year of his Master studies at Warsaw University. Tadeusz was part of a rising intelligentsia, that included some of Poland's most respected and critical twentieth century intellectuals such as Leszek Kołakowski, Włodzimierz Brus, Kazimierz Łaski and Adam Schaff. 

As Tadeusz took the road from law to economics he increased his interest in 'non-communist' socialist economists under the guidance of Oskar Lange. Kowalik was being educated as an economist within one of the most creative group of left-wing economists in Europe, including Lange, Brus, Lipiński and Kalecki. They built upon the work of Rosa Luxemburg (particularly in her book The Accumulation of Capital) which showed how the developed western capitalist economies grew through incorporating non-capitalist areas to its east. These ideas had been expanded by writers such as Kalecki in the 1930s who used Marxist categories in order to develop many of the theories and concepts of Keynesian economics before Keynes himeslf. 

During the political thaw from 1956, Tadeusz participated as a member of the 'Crooked Circle Group', which brought together critical intellectuals in Warsaw. He lent his voice to those intellectuals that argued for a new system of economic management, more workers self-management (often looking to Yugoslavia for inspiration) and political reform. Under his editorship, the newspaper Życie Godspodarcze became a forum for those seeking to reform the system; and during the 1950s and 60s he helped to arrange for dozens of books by critical economists and socialists to be published in Poland. 

Although critical of 'really existing socialism', Tadeusz remained a member of the PZPR for twenty years. In 1968 he was expelled from the PZPR, as part of a general purge against opposition intellectuals in the party. From this time on, Tadeusz became part of the growing opposition movement. Firstly, he helped to organise seminars with Brus, with only non-party members invited. In 1975 he co-authored an open-letter to delegates of the VII congress of the PZPR, arguing for a reform of the system. He participated in the creation of the Workers' Defence League (KOR), an organisation that sought to create an alliance between the opposition intelligentsia and industrial working class; and from 1977 he gave lectures through its 'flying university'. 

Some of this would perhaps have been forgotten if it had not been for the tumultuous events in Gdańsk in 1980-81. He added his name to a group of intellectuals that supported the demands of the strikers in the Gdańsk shipyards and he became an expert for the inter-enterprise strike committee.

Tadeusz was to remain a member of the Solidarity trade union until 1992, participating as an adviser and member of its programmatic councils. Whilst he lectured abroad during the 1980s (in the USA, Canada and Britain) he remained a strong advocate of reforming the system in Poland through a left democratic programme that would maintain the support of the population. He was a strong supporter of the idea of the round-table talks that led to the negotiated transformation of the Communist system, although he did not participate in these due to programmatic differences that emerged during the preparatory discussions. 

Perhaps the most lasting and important contribution made by Tadeusz was following the transition from Communism and the creation of capitalism in Poland. From the beginning he opposed the so-called 'Balcerowciz Plan' that introduced the package of shock-therapy reforms that sought a rapid jump to a capitalist system. 

The criticisms of the shock-therapy reforms, made by Tadeusz, followed  two major themes: 

The first of thees concerned the social costs of the reforms, which Tadeusz instinctively and vehemently opposed. The shock-therapy reforms plunged large swathes of the population into poverty, created wide social inequalities and led to the formation of huge structural unemployment and a deactivation of labour, which has been a characteristic of Polish capitalism ever since. These were not just viewed by Tadeusz as a moral or social failing, but also as being economically irrational. 

Secondly, Tadeusz stood against the tide of propaganda that claimed that the neo-liberal path of shock-therapy reform was the only available route out of the previous system. In his last book (published in English this month under the title From Solidarity to Sellouthe goes into great detail to show how neo-liberal economics was a minority trend within the Solidarity movement and at how the support given to it by the Solidarity leadership was a betrayal of its ideals and history. He also took up this fight  intellectually, opposing the neo-classical economists, who came to dominate the economic departments in Poland's universities. They were attempting to present their form of economics as a positivist science, from which human agency was removed. 

Therefore, Tadeusz sought to promote pluralism within economics and the public debate over economic policy. Ironically he was primarily opposing liberals, many of whom he had previously cooperated with, who were formulating a new dogmatic ideology.  He opposed those who put forward the thesis that globalisation meant there were no alternatives to the neo-liberal project, instead arguing that there was a variety of capitalisms in the world and that Poland should follow the social democratic path taken by countries such as Sweden. 

Tadeusz held the belief in the 1980s that Poland had the best prospects out of all the Eastern Bloc countries to build a social democratic alternative (due to the existence of the Solidarity movement and a strong reform wing within the PZPR). At the beginning of the transition he participated with people such as Ryszard Bugaj in creating the Labour Union, an attempt to create a social democratic party out of the Solidarity movement. Despite these good intentions, there proved to be no space for such a social democratic party in Poland and no basis for building a social democratic alternative in a country being submerged into the global capitalist system. 

As someone brought up in the 1930s and educated in the school of Kaleckian economics, the global economic crisis from 2008 came as no surprise. A free-market capitalist system, that had  freed itself from the shackles of the state and acquiescenced the trade union movement, would soon reveal its irrationalities and tendencies towards crisis. From its onset, Tadeusz had opposed the move towards a single currency in Europe, particularly one built upon the tight monetarist regulations of the Growth and Stability Pact. He believed that the crisis showed how only an economy that was built upon a strong national state could resist the forces of the international markets. He therefore argued that a break up of the eurozone would be the best outcome to the present crisis as this would allow governments to take more control of their economies and protect their populations. In a discussion with him I argued that the left should seek to unify Europe around a common programme of investment and welfare. He responded with a sceptical and wry smile. 

The last time I saw Tadeusz was in March at the International Women's Day demonstration in Warsaw. He had already been ill for some time, although he was hopeful that he would soon make a full recovery. He talked enthusiastically about the march and how it was pleasing to see so many young people attending. Unlike many of his generation he understood how issues such as womens' rights are an integral part of the left movement and should be supported. He was someone who managed to reach across political boundaries and perhaps like no other figure on the left in Poland was welcomed and invited by groups and parties from different traditions. 

Tadeusz Kowalik will be missed. However, the body of work he has left, the example he has set and the tradition from which he has come is one that should inspire the present generation.