Labor market and economic policy in Poland

Abstract

The paper deals with the hypothesis that the rate of unemployment of 20% in 2003 is the result of economic policy in Poland. In 1990-2003, whenever there was a possibility of trade off between inflation and unemployment the policy favored lower inflation to the detriment of the rate of unemployment. The author points out long-run (14 year-period) and short-run character of the tendency in economic policy. The only exception is the period of 1993-1998 when the changes of the rate of unemployment and inflation were parallel. Sacrificing unemployment in favor of lower inflation made Polish employment indicators much poorer in comparison with European countries including those in transition (except Slovakia). The following part of the paper the rate of unemployment in Poland, are analyzed according to such categories as territory, duration and type of unemployment. The approximate rate of natural unemployment is estimated. The rate of natural unemployment in Poland, being around 13.5%, has long way to reach the level observed in market economics. Economic growth of Polish economy of around 6.2% is the determinant of the normal level of natural unemployment by 2009.