Poland’s Crisis and Solidarity Today

Against the Current, No. 35, November/December 1991

Mark M. Hager

A WELL-PUBLICIZED electronic workers’ strike and factory occupation in Lodz (pronounced, roughly, “Woodj”) this past summer captured in microcosm much of the present confusion and frustration in post-Communist Poland. Deliberate policy and unplanned dislocations have fueled a deepening crisis that may portend searing struggles, productive stagnation and political impasse.

Steering his nation toward capitalism, President and former Solidarnosc leader Lech Walesa has remarked that Poland after Communism cannot afford to try another experiment, with some “third way” alternative to capitalism and state socialism. Current developments may indicate, however, that Poland cannot afford not to seek a third way.

Lodz is a major textile center, thriving until recently despite outdated equipment and plant some of it left over from the last century. Much of the city’s architectural landscape reflects its history of rapid textile industrialization. Films of nineteenth century industrial life are frequently shot there.

The original factories, still in use, dominate many blocks—huge expanses of brick, cheek by jowl with the palatial mansions of former owners. There is street upon street of barracks apartments built for worker families, alongside lovely Secession-style apartment buildings—in dingy repair but attractive nonetheless—built for those with more wealth.

In the past year Lodz textiles have fallen on hard times, due to constrictive state economic policy and the collapse of export trade primarily with the Soviet Union. Major layoffs have come down and reported unemployment has risen to fifteen percent. Hopes, such as they are, have been pinned on privatization. Five Lodz textile firms were privatized in the first wave of ownership transformation under Poland’s new privatization law. The textile stocks are now traded on the exchange in Warsaw, housed ironically in the former Communist Party headquarters.

Times are tough also at Fonica Electronic, a state-owned firm employing roughly 1760 workers in Lodz. In recent years Fonica has specialized in making high-fidelity CD and other audio equipment largely for Soviet and other export trade. Though not top of the line by world standards, Fonica products are of high quality, using Japanese components that were state-of-the-art until recently. In addition, Fonica has engaged in joint production ventures with U.S. and West German companies such as Phillips, Continental and Brandt, achieving brisk export trade to European Community (EC) markets.

In the past year, however, Fonica has fallen victim to some of the same political choices and economic dislocations that have smothered Lodz textiles. On June 13, Fonica’s Solidarity-led work force shut down production and occupied the factory in an illegal strike aimed at securing relief from economic tensions workers find intolerable.

Sitdown Strike

Some 1500 workers joined the occupation, with shifts alternating day and night. When I visited Fonica on July 3, the occupation was in its twenty-first day, with no end clearly in sight. The day following my visit, some ten to twelve workers announced a hunger strike. By their dramatic actions, the Fonica strikers hoped to sway the course of economic transformation and to register deep reservations about the privatization nostrum that now controls the fate of their textile brethren.

Several factors, each with general significance, have combined to produce Fonica’s sudden distress. First, Fonica’s markets—Western, domestic and Soviet —have collapsed with stunning swiftness. Zbigniew Raj, Fonica’s technical director, recounted that sales revenues had plummeted from 14 billion zlotys (Roughly $1.5 million) in January to 2 billion zlotys in June. The figures are dramatically reflective of Poland’s nationwide industrial depression.

General collapse of the Soviet trade is a crucial and devastating reality for Polish industry. The causes are manifold, including the Polish government’s new insistence on hard-currency payments, a demand Soviet buyers can rarely meet. The hard-currency policy repudiates the former trade system, based on zlotys and special rubles, which was denounced, perhaps demagogically, as one that countenanced Soviet “exploitation.”

In addition to the hard-currency problem, state trading institutions have broken down on the Polish side, while continuing to operate on the Soviet side. (This article was written prior to the August upheaval and subsequent events in the USSR—ed.) Hence old marketing channels no longer connect. For the moment, newly independent Polish traders lack the experience and savvy needed either to connect with the Soviet state trade channels or else bypass them to reach Soviet buyers directly. Competitors are beating them to market.

Poland’s draconian inflation-busting program, International Monetary Fund-inspired but named the Balcerowicz Plan after the Finance Minister who promulgated it, has squeezed Fonica like thousands of other enterprises across Poland. Restrictive state monetary and credit policy has made it impossible for Fonica to secure loans, just at the moment when sales revenues have plunged. As a result Fonica paid no wages for the month of May, providing an immediate impetus for the occupation strike.

Across Poland, Solidarity has identified some 180 firms that have either missed wage payments or else furloughed workers for “holiday” without pay. Even prior to May, several aspects of the government’s anti-inflation and deficit-reduction programs had attacked the wallets of Fonica workers.

A new wage-increase tax called the popiwek requires employers to pay a stiff penalty tax for any pay hikes they grant. The effect is to hold wage increases below the level of price rises. Originally launched to control inflation and reduce state deficits, the hated popiwek has more recently become a tool in deliberate government policy to favor private enterprises over public. The wage-increase tax, though it applied last year to all workers, this year applies only to public enterprise workers.

New enterprise tax policy also favors private over public. High taxes on state-owned firms currently leave only between 2-10% of profits in enterprise hands, while private firms pay taxes at a much lower rate. Somehow this bias in incentives is seen as consistent with neoliberal faith in state noninterference with the economy. The government seems determined to press state firm managements and work forces into opting for privatization under new ownership transformation laws.

According to Miecyslaw Socha, economies professor at the University of Warsaw, privatization is favored in part to rid enterprises of the workers’ councils that Solidarity began to use as a vehicle for worker participation in management Under the new order, workers’ councils are to be treated as a mere obstacle to streamlined modem management.

The forced privatization policy is a leading cause of the worsening state budget crisis that makes high taxation a plausible policy. State sector industrial production has fallen some 40% in the past two years, exacerbating deficit difficulties seriously, since up to 80% of government revenues had previously been derived from state firms. At present the private sector, while generating 17% of total product, pays only 2% of total taxes. The private sector gets a boost while state firms are fitted with cement overshoes.

To complete the depression feedback loop, tight credit and income restraints have stifled domestic demand, hampering sales for companies like Fonica. Meanwhile, both the domestic and European Community markets have become domains of intensified competition from firms using non-Japanese Asian components produced more cheaply than Fonica’s Japan-made Fonica strike leaders would like to see the government assist the firm in switching to different components, but such a suggestion flies in the face of the government’s policy of active neglect.

Fonica’s competitive posture is further undercut by Poland’s drastically low trade barriers, reduced in accord with IMP specifications. Poland’s trade barriers are now reportedly the lowest in all Europe, a suicidal course at a time when EC barriers to Polish exports remain very much in place. The negative effects of all this can scarcely be called minor Real wages are off by a rate of one-third per year, consumption down by 28%, industrial production off by 30% and national income by 20%. “Communism is gone, but…”

Hand-lettered banners bedecked the factory facade as we pulled up to visit Fonica. One said roughly “communism is gone, but stupidities persist” Another made fun of Walesa, in a context I explain below. My guides, two graduate students, expressed apprehension about going inside. One had already told me he opposed the strike, and their misgivings about a hostile reception inside struck me as middle-class worker-phobia of a too-familiar stripe.

Our reception in fact was anything but negative. We were quickly ushered upstairs and apologetically given some glasses of “strike coffee” while we put our questions to members of the Solidarity strike committee. The committee members all sported patriotic red-and white-striped Solidarity armbands; the dark office in which we met was decorated almost exclusively with pictures of the Pope and topless girlie posters.

Our interviews were subject to repeated interruptions because we had chanced to arrive in the middle of a quite busy day. The all-Lodz Solidarity Committee was scheduled to meet the following day to consider whether the strike should be expanded to other firms in the city. No decision for immediate expanded action was taken.

Meanwhile Solidarity’s national chairman Marian Krzaklewski was due to visit Fonica a few hours after our own visit, for discussions with both the strike committee and the factory directorate. The inconclusiveness of Krzaklewski’s visit may have prompted the hunger strike, announced the following day.

The strikers were also buzzing over a series of encounters between Fonica and President Walesa concerning the strike. A few days previously Walesa had disparaged the strike, remarking flippantly that. Fonica was engaged in producing antiquated gramophones (“patefony”). In resentment of Walesa’s comment, strikers and the factory directorate had joined hands to deliver a high-quality Fonica CD player to Belvedere, Walesa’s presidential residence.

By this time the entire altercation was gaining coverage in the national media, so Fonica was quick to learn when a Belvedere spokesman teasingly complained that President Lech had no CD album with which to test the CD player’s quality. During my visit Leszek Sinski, chair of Fonica’s strike committee, showed me the CD album the workers were planning to send off to Belvedere that day: The committee had selected Surfln’ USA by the Beach Boys, perhaps as an absurdist comment on the whole proceedings. Good choice.

Public relations shenanigans did not belie a grim concern and determination among the strikers. They gave me a copy of their 13- point flyer of strike demands. A small number of points referred to enterprise issues, like payment of back wages and bonuses. What was striking about the flyer, however, was how many points referred to the course of national policy and therefore to factors over which the factory directorate has no immediate influence.

Though strike spokesmen assured me the strike would continue until all or most of the demands had been met, it is conceivable that resolution of enterprise-specific issues could induce a resumption of work. Some observers foresaw the government finding funds to tide Fonica over the embarrassing impasse.

The problem, of course, is that Fonica’s predicament is not isolated but generic. In January an occupation strike shut down the Lenin Shipyard in Gdansk, Solidarity’s spiritual birthplace-On May 22, Poland witnessed its first nationwide day of protest against economic policy under the post-Communist government The protest included occupation strikes at hundreds of enterprises across the country.

In June the Solidarity National Committee announced it would no longer serve as an ‘umbrella’ protecting the Walesa government against economic criticism. Meanwhile, a small but well credentialed faction of Solidarity officials and advisors, calling itself Labor Solidarity, has issued a draft program for economic reform, designed as an alternative to the reckless Balcerowicz Plan. Signers of the program include Senate member Karol Modzelewski, economist Tadeusz Kowalik and Warsaw-area Chairman Maciej Jankowski.

Under Communism, Poland’s working class perfected the device of coordinated occupation strikes, to place pressure on the government for policy changes. In 1980, worker actions on the Baltic coast secured the short-lived legalization of Solidarity as an independent trade union, providing a rare episode of significant advance through the much-romanced stratagem of general strike.

Then, throughout the 1980s, Solidarity organized toward ousting the party-state from its monopoly of power. Now, Solidarity as a union movement confronts not the clear adversary of a party-state apparatus, but an ambiguous and elusive compendium of issues and problems attendant upon incipient capitalism. It recognizes the challenge of attempting to shape the first capitalist forms likely to emerge from the epochal transition moment.

It may be, however, that Solidarity cannot help shape a humane and prosperous capitalism without simultaneously articulating a vision that moves beyond it—toward a democratic economy of secure and active workers and diversified enterprise.

The 13-point Fonica strike program contains no blueprint for economic reform. Rather, it lists a set of anxieties and principles workers think a reform program should attend to, but which the Balcerowicz program lacks. Among the main points stressed at Fonica are that there should be no permanent reductions in worker real incomes (which the flyer claims have fallen by half in one year) and that the main costs of reform should not be borne by the poorest.

The flyer urges cheaper energy prices, restoration of Soviet trade channels, transformation rather than bankruptcy of enterprises and an end to mass layoffs and unemployment, justice in privatization of state firms, and a higher level of government care and concern for the fortunes of public enterprises.

At present, labor’s resistance to Poland’s current economic program falls short of both articulate alternatives and coordinated tactics. It should not be thought, however, that labor stands so disoriented that terrible outcomes from Programs like the Balcerowicz Plan become inevitable. In the ongoing transformation, strikes like the Fonica workers’ may prove both quixotic and salvific.

The Fonica strikers breathe alternate moods of defiant desperation and tenacious hope. They know their strike may hasten the day when their livelihoods slip beneath a juggernaut of change. At the same time, they imagine their efforts may provide a rallying point.

© 2020 Against the Current

No. 35, November/December 1991