Polish Government policy for coal (1989‐2006)

Abstract

PurposeThe purpose of this paper is to discuss and assess the consecutive Governments' policy for coal (1989‐2006) in the context of the systemic transformation of the Polish economy.Design/methodology/approachThe paper presents a critical analysis of the rationale and effectiveness of government efforts to restructure the Polish coal mining industry in the light of economic theory, published literature, and a survey of three collieries. Some parallels, toutes proportions gardées, are drawn between the situation in the UK under Margaret Thatcher and that in Poland.FindingsThe paper argues that, despite throwing billions of zlotys at the industry in the form of direct subsidies and debt write‐offs, decision makers failed to make the collieries economically sound. The weaknesses of the consecutive governments – manifesting itself, amongst other things, in the unwillingness and/or inability to confront the miners' unions, to introduce market mechanisms into the sector, to ensure competent management and, crucially, to press on with nationwide economic liberalisation – are seen as the principal reasons behind the failure.Practical implicationsThe paper highlights the root causes of government ineffectiveness as well as aspires to provide policy recommendations with a view to rendering the Polish coal industry economically viable in a free‐market reality.Originality/valueIt presents the coal mining industry as a relic of socialism and highlights the inconsistencies and inadequacies of the consecutive restructuring programmes; concludes that restructuring efforts – to be truly effective – have to be co‐ordinated with nationwide economic liberalisation.