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Is the Labour Market Adjustment in Poland Surprising?
Author(s) -
Rutkowski Michal
Publication year - 1991
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/j.1467-9914.1991.tb00047.x
Subject(s) - economics , earnings , wage , flexibility (engineering) , labour economics , economic shortage , labour market flexibility , real wages , unemployment , macroeconomics , government (linguistics) , linguistics , philosophy , accounting , management
. On the basis of the brief review of developments in employment and wages in Poland during the stabilization program in 1990, this paper tries to provide critical comments on the two often expressed opinions: that the fall in employment was surprisingly small compared to the fall in output, and that the tax‐based incomes policy played a major role in forcing a huge drop in real earnings. It is argued that the actual proportions of the fall in output and employment were in line with specific features of the “overheated” shortage economy, which existed prior to the stabilization program. Since wages were not a “nominal anchor” for most of 1990, other reasons for the astonishing downward flexibility of real wages are analyzed. It is suggested that during the labour market adjustment, the rational strategy of employees was to accept a large, real wage cut in exchange for keeping their employment. Contrary to widespread opinion, it might also be argued that incomes policy, in a short and medium run, will play a much more important role in containing wage pressure than it has until now.