PolReport
6 Dec 2006 / #1
In the aftermath of the fall of the socialist Poland, the privatization of the state-owned sector began in earnest. Everything was for sale and for a bargain prices - if you were in the right place that is. Fancy a pasta factory – as the wife of a former high placed state functionary did – and it is yours for the taking for merely a single zloty. Fancy a furniture factory, you got it. The sale of the century is on.
Unfortunately, not all were invited to bid. As usual, the people in charge - the turncoats - the former so-called communists turned capitalists in no time at all, and all of a sudden embraced the capitalist economy, shared in the birthday cake. One of the former solidaritarian spokesmen and egalitarian got himself a newspaper, another Solidarity leader got himself a supermarket with a suitable number of employees – the solidarity slogan replaced with a sign on the door: “Trading hours 9am-9pm”.
No wonder the average citizen looking at the new capitalist class the Phoenix bird rising from the ashes, asked himself, “Is this really the new, better social order we were promised and hoping for?”
The enterprises that none of the insiders was interested in were advertised for sale, often for a bottom price. Banks, insurance companies, shipyards, car factories, and newspapers were all for sale, and many went to overseas owner. Swedish bankers, Portuguese insurers, Korean car makers, German newspaper concerns, and French phone companies - all were keen to sink their teeth in a tasty and potentially lucrative piece of the Polish national wealth.
The Poles obliged. The privatization of the Polish industry and other enterprises happened for the sake of a democratic future, forgetting that many Western countries, for example Sweden, has a large and thriving public sector that makes a lot of money for the state. Some things are better if they are not private, the Swedes believe, but the Poles did not care.
It is fine with foreign capital coming into the country, but the problem is that they take back the profits. The investment is often short term or even one-off, but the profits are long term. Thus, year after year, the Polish people will contribute to the welfare of foreign companies and countries that are much better off. Foreigners now own old Polish brands that were once the pride of the country.
True, even in the West they allow the buying companies by foreign capital. Using Sweden again as an example, not only Swedish companies get bought, but Swedes, like veritable sharks, buy out companies all over the world. Little Sweden with only nine million inhabitants has an enormous number of multinational companies: ASEA, Ericsson, Alfa-Laval, Elektrolux, Nitro-Nobel - you name it. Thus, money flow in both directions. How many Polish multinational companies have you heard of?
The current high level of unemployment in Poland can be in part an unwelcome contribution to its labor market by the foreign owners of former polish companies. Not only new, but more effective processes were introduced at the workplaces and many old workforce intensive ones were disposed of by the new owners. In addition, a lot of production has been moved abroad or discontinued.
Many companies chose to import products from the mother company rather than to continue to produce them in Poland. One scary example is ladies napkins that were once widely produced in Poland, but nowadays the majority is imported from abroad. Whether they are better, is not a question here, rather whether the jobs stay at home or go.
According to the statistics, Poland was paid under 20 billion USD for a lion share of its industries sold between 1989 and 1999, which is a rather meager result, as some claim corresponding to no more than 10% of the real value. And having a foreign owner is not a guarantee of their welfare: on the contrary, there were serious problems, even bankruptcies. Even large company like TP S.A., Daewoo and PLL LOT had their fair share of problems in the past.
Many point out that companies were sold far below their real value: Person Car Factory in Bielsko Biala, Insurance company PZU, bank PKO Polska SA, Telecommunications Polska SA, Shipyard in Gdansk, Paper Mill in Kwidzyn, Shopping Centre in Warsaw, Steel mill in Warsaw, Daewoo FSO, etc. The list goes on and on. Many were sold for the symbolical one zloty.
So who is the winner? In the long run, only time will tell, but in the short term, certainly the buyers have managed to acquire lots of bargains. On the other hand, the socialist government was hopeless when it comes to running an effective economy. True, the companies were potentially worth a lot, but the fact remains that most of them were hardly making any profit. It is Poland’s real dilemma that the Poles, during almost half century of the socialist rule, forgot how to run a profitable business, and now it is up to foreigners to run former Polish businesses and make them flourish.
Unfortunately, not all were invited to bid. As usual, the people in charge - the turncoats - the former so-called communists turned capitalists in no time at all, and all of a sudden embraced the capitalist economy, shared in the birthday cake. One of the former solidaritarian spokesmen and egalitarian got himself a newspaper, another Solidarity leader got himself a supermarket with a suitable number of employees – the solidarity slogan replaced with a sign on the door: “Trading hours 9am-9pm”.
No wonder the average citizen looking at the new capitalist class the Phoenix bird rising from the ashes, asked himself, “Is this really the new, better social order we were promised and hoping for?”
The enterprises that none of the insiders was interested in were advertised for sale, often for a bottom price. Banks, insurance companies, shipyards, car factories, and newspapers were all for sale, and many went to overseas owner. Swedish bankers, Portuguese insurers, Korean car makers, German newspaper concerns, and French phone companies - all were keen to sink their teeth in a tasty and potentially lucrative piece of the Polish national wealth.
The Poles obliged. The privatization of the Polish industry and other enterprises happened for the sake of a democratic future, forgetting that many Western countries, for example Sweden, has a large and thriving public sector that makes a lot of money for the state. Some things are better if they are not private, the Swedes believe, but the Poles did not care.
It is fine with foreign capital coming into the country, but the problem is that they take back the profits. The investment is often short term or even one-off, but the profits are long term. Thus, year after year, the Polish people will contribute to the welfare of foreign companies and countries that are much better off. Foreigners now own old Polish brands that were once the pride of the country.
True, even in the West they allow the buying companies by foreign capital. Using Sweden again as an example, not only Swedish companies get bought, but Swedes, like veritable sharks, buy out companies all over the world. Little Sweden with only nine million inhabitants has an enormous number of multinational companies: ASEA, Ericsson, Alfa-Laval, Elektrolux, Nitro-Nobel - you name it. Thus, money flow in both directions. How many Polish multinational companies have you heard of?
The current high level of unemployment in Poland can be in part an unwelcome contribution to its labor market by the foreign owners of former polish companies. Not only new, but more effective processes were introduced at the workplaces and many old workforce intensive ones were disposed of by the new owners. In addition, a lot of production has been moved abroad or discontinued.
Many companies chose to import products from the mother company rather than to continue to produce them in Poland. One scary example is ladies napkins that were once widely produced in Poland, but nowadays the majority is imported from abroad. Whether they are better, is not a question here, rather whether the jobs stay at home or go.
According to the statistics, Poland was paid under 20 billion USD for a lion share of its industries sold between 1989 and 1999, which is a rather meager result, as some claim corresponding to no more than 10% of the real value. And having a foreign owner is not a guarantee of their welfare: on the contrary, there were serious problems, even bankruptcies. Even large company like TP S.A., Daewoo and PLL LOT had their fair share of problems in the past.
Many point out that companies were sold far below their real value: Person Car Factory in Bielsko Biala, Insurance company PZU, bank PKO Polska SA, Telecommunications Polska SA, Shipyard in Gdansk, Paper Mill in Kwidzyn, Shopping Centre in Warsaw, Steel mill in Warsaw, Daewoo FSO, etc. The list goes on and on. Many were sold for the symbolical one zloty.
So who is the winner? In the long run, only time will tell, but in the short term, certainly the buyers have managed to acquire lots of bargains. On the other hand, the socialist government was hopeless when it comes to running an effective economy. True, the companies were potentially worth a lot, but the fact remains that most of them were hardly making any profit. It is Poland’s real dilemma that the Poles, during almost half century of the socialist rule, forgot how to run a profitable business, and now it is up to foreigners to run former Polish businesses and make them flourish.