TIME: Almanac 1995

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<text id=90TT1494> <title> June 11, 1990: Poland:Living With Shock Therapy </title> <history> TIME--The Weekly Newsmagazine--1990 June 11, 1990 Scott Turow:Making Crime Pay </history> <article> <source>Time Magazine</source> <hdr> WORLD, Page 31 POLAND Living with Shock Therapy </hdr> <body> Soviets, take note: the Poles discover that patience must not be in short supply if economic reforms are to succeed By John Borrell/Warsaw Just after noon each day, Henryka Ptasinska, 33, collects meals for herself and her six children from the soup kitchen at 10 Inwalidow Square in the leafy Warsaw suburb of Zoliborz. She is one of 250 regulars at the serving hatch in the white-tiled kitchen, opened to alleviate some of the pain produced by Poland's forced march from a centrally planned communist system to a free-market society. Her lunchtime routine shows that the success of that transformation still hangs in the balance. As Mikhail Gorbachev prepares to embark on his latest plan to save the Soviet economy, he has expressly ruled out the shock therapy administered by Polish leaders last January when they abolished subsidies and price controls. By far the boldest approach to economic reform anywhere in Eastern Europe, Poland's policies have created hard times for many of the country's 40 million citizens. Unemployment, virtually unknown under the Communists, has climbed to 400,000. Rising prices and tight curbs on wages have sliced the purchasing power of some families as much as 40%. For the first time people can remember, farmers and factories cannot sell everything they produce. Ironically, these somber facts may be indicative of success more than failure. Inflation, which reached 54% last October, sank to 6% in April. Absenteeism in industry has been halved during the past five months, as layoffs have increased. Food shortages seem a thing of the past. Shop shelves are full, and traders crowd pavements offering everything from bread to bananas. Even soup kitchens are as much a safety net as a final refuge for the down-and-out. Ptasinska, for example, has just borrowed nearly $1,000 from a privately financed special fund to set up a small business ironing sheets for hospitals and other institutions. She is counting on earning $300 in a good month, enough to make repayments and help support her family. But recent strikes by shipyard and railroad workers for higher pay and improved conditions suggest that patience may be wearing out. "People have been amazingly tolerant so far," says Professor Adam Bromke of the Polish Academy of Sciences. "But they are feeling the pinch, and there are many dangers ahead." One hazard is that less than half the 320,000 people who graduate from high school or university next month are likely to find jobs. This could be political dynamite. "We don't like to think of the consequences of 160,000 young people on the loose this autumn," admitted an official. Another problem is that the privatization of Poland's vast state-owned sector, much of it antiquated and unprofitable, is proving much more difficult than most economists imagined. When shares in a profitable import-export company were offered to the public recently, only 20% were purchased. A parliamentary committee is studying other ways of unloading state-owned companies, including a novel plan first discussed in Czechoslovakia that would create a capital market by giving shares to each citizen. The shares could later be traded on a stock exchange. "We have to remember that society has been pauperized," says Andrzej Bratkowski, a parliamentary Deputy. "There is just no money around to buy out the state." The roller coaster ride into the future could turn even more stomach churning if the split within Solidarity itself precipitates a political crisis. Trade-union leader Lech Walesa, who has made no secret of his presidential ambitions, has been pushing for elections even earlier than next year, which is when the government proposes they be held. But Prime Minister Tadeusz Mazowiecki opposes moving up the date, arguing that a campaign now would distract attention from economic reforms. Walesa, trailing both Mazowiecki and General Wojciech Jaruzelski in polls on who would best serve the country as President, stepped in last week and ended a rail strike in northwestern Poland. In doing so, he reasserted his claim to a pivotal political role and underscored the vulnerability not only of the Mazowiecki government but also of the country's hard-won economic reforms. For Mazowiecki, keeping Walesa's support may be almost as important as making sure that Poles do not run out of that most important of commodities: patience. GETTING LESS FOR THEIR MONEY [Average prices and percent increase.] <table> <tblhdr><cell><cell>Dec. '89<cell>May '90<cell>Increase <row><cell type=a>Wages (Monthly)<cell type=i>$65<cell type=a>$77 (April)<cell type=i>18% <row><cell>Refrigerator<cell>$122<cell>$211<cell>73% <row><cell>Gasoline (Per liter)<cell>$.13<cell>$.25<cell>92% <row><cell>Rent (Monthly, in Warsaw)<cell>$53<cell>$105<cell>98% <row><cell>Pork (One kilogram)<cell>$1.55<cell>$3.68<cell>137% <row><cell>Bread (One loaf)<cell>$.10<cell>$.24<cell>140% <row><cell>Men's Shoes<cell>$10.53<cell>$26.32<cell>150% </table> </body> </article> </text>