Wages and unemployment in Poland: recent developments and policy issues

Fabrizio Coricelli () and Ana Revenga

No 821, Policy Research Working Paper Series from The World Bank

Abstract: The authors review recent developments in wages, employment, and unemployment in Poland and discuss some of the main risks Poland faces in sustaining its stabilization effort. They find that: unemployment has increased dramatically with stabilization, but this increase cannot be said to reflect widespread economic adjustment and restructuring throughout the Polish economy; and wages showed a significant degree of downward flexibility - in real terms - at the beginning of the year, when firms faced a severe supply shock coupled with very tight credit. The wage policy still in force in Poland at the end of 1991 maintains a few undesirable features. The monthly indexation and the possibility of carrying forward the unused margins are among the policy's main drawbacks; another is the link between wages and profitability. The current wage policy could be replaced by a generalized agreement on the wage path, with synchronized six-month contracts. The wage path should be related to expected inflation and economywide productivity. This scheme would also have the advantage of being based on a consensual agreement instead of being perceived as being imposed as a punitive tax.

Keywords: Youth and Governance; Banks&Banking Reform; Economic Theory&Research; Health Monitoring&Evaluation; Environmental Economics&Policies (search for similar items in EconPapers)
Date: 1992-01-31
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