Europe Going South and East

indexWarsaw   The Organizers’ Forum delegation began our meetings at the Warsaw School of Economics with Dr. Jan Czarzasty who is a specialist in labor markets and provided us with a helpful context for understanding the major issues of Poland’s political economy. It was an education!

He noted early in his presentation to us, while responding to questions, that there had been a sea change in expectations and understanding of the whole European proposition. Coming into the European Union, there had been a notion that the eastern countries of Europe, like Poland, as well as the southern countries like Greece, Italy, and Spain would essentially move north and west in adopting classic European standards around social security, general welfare, workers’ rights, and other citizen-centered policies, but after more than a dozen years, it now seemed that Europe was moving towards the lower standards of the southern and eastern countries.

Poland has seen an out-migration of two million workers as economic itinerants booming out in construction and service industries with more than 800,000 workers in the United Kingdom, almost 200000 in Ireland, and 100000 in Norway and Sweden for example. Many continue to bounce back and forth, and remittances have become a substantial part of the economy, even after the global recession.

Meanwhile, the economy of Poland has improved, but everything is relative. Unemployment for example is a record low – 10% — which sounds awful, but is great when you consider it was 20%.

The social safety net continues to be frayed. Contributions to the state system are not matched by the government, except for the political astute and powerful farmers who have a separate pension system which is 95% paid for by the state. There was a second system, based loosely on the Chilean private IRA-type investment scheme, but the state recently unilaterally transferred all of that fund to the state system. Polish citizens who had put money in the privatization scheme refer to that move simply as “robbery.” Meanwhile the eligibility for retirement has been gender neutralized, but that meant raising everyone’s retirement age to 67 years.

The housing market, especially in Warsaw, is very tight. Part of the problem we learned from the professor came from the adoption of the British-system biased towards home ownership rather than doing more to protect and privilege renters. This has led to young people packing four and five in 500 square feet of space or so in order to afford the rents. Additionally, the more family friendly policies of other countries, especially around parental leave and child care have also driven many young families west as well. Jan described his students at the School of Economics as mainly middle-class and well-educated, but the combination of rental and labor markets leads to about half of every class migrating somewhere else in Europe for employment and opportunity.

Even while reporting all of this less than rosy picture, nothing about Warsaw fits with the image in our memory bank. The visual impression in Warsaw is still European and more modern than not. I can vividly recall when we attached an ACORN colleague to a trip for organizers sponsored by some foundation to Poland not long after the Solidarnosc movement in the 1980s. The descriptions were dire, calling up images of smokestacks, pollution, heavy industry, and almost a grim pre-industrial vision. Now, the names on the taller buildings include MetLife, Kia, and others. Auto manufacturers have flocked to the relatively lower wages here to locate their plants. People tell us, all evidence to the contrary, that things are better, there are more things to buy, and people are happier with the economy.

Poland is advancing on Europe and Europe is coming down to Polish standards in a great leveling of sorts where it is hard to predict either the bottom or the top these days.

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