(Page 9 of 25) - Historical Legacies and Policy Choice: Labor and Public Sector Reform authored by Paczynska, Agnieszka.

candidates in parliamentary elections and, after the 1993 contest, became part of the SLD-PSL
(Alliance of Democratic Left – Polish Peasant Party) governing coalition. However, unlike
Solidarity, it chose not to play a prominent role in the government, remaining very much the
junior partner within the political alliance. Solidarity, on the other hand, was much more directly
involved in Polish political life. At times it offered political backing to governing coalitions,
sometimes it formed its own political organizations and became directly involved in governing.
Alongside trade unions, each state-owned enterprise had a workers’ council which had direct
control over the day-to-day management of these firms. Although the two types of workers’
organizations were independent of each other they frequently cooperated.

Economic restructuring program went into effect in June 1990. While the main priority of

the new government was to stabilize the macroeconomic environment, the government also
assumed that stabilization measures would have an immediate impact on state firm behavior and
eliminate the most inefficient among them. When this did not happen, reform of the public
sector became the top priority of the Mazowiecki government which submitted a proposed plan
to the parliament in spring 1990. The program envisioned two main privatization strategies:
capital privatization and privatization by liquidation. Capital privatization would entail first
turning state firms into joint-stock companies, restructuring, valuating and then selling them
through auction and public offers. Privatization through liquidation entailed selling of all or part
of the company assets or leasing them with the leasee agreeing to eventually purchase the
company. In the government proposal workers were eligible to purchase up to 20 percent of
shares in their companies on preferential basis, they and company managers had few avenues
open to them to initiate privatization procedures. Rather, the responsibility for initiating
privatization procedures rested with the state and founding bodies of enterprises. Similarly, the
parliament was to play a limited role during the process of public sector sell-off, with the overall
oversight of the program resting with state agencies.

Labor organizations reacted negatively the government proposal.

Union representatives

made this opposition clear during testimonies before various parliamentary committees and
ensured that supportive deputies presented an alternative privatization proposal for debate.

This

counter-proposal anticipated a greater variety of privatization methods, put bigger emphasis on
the employee buy-out schemes, accepted the possibility of collective ownership and more
broadly argued for greater social control of the whole process.

One of the main points of

contention between the government and labor became the issue of actual ownership of public
sector firms. The government argued that these companies were state property and hence the
state, as the legal owner, had the right to privatize these companies as it saw fit. Labor
organizations, on the other hand, argued that the within existing legal framework the state’s
ownership of the public sector was far from clear and undisputable and that in fact workers’
councils could make an equally strong claim to having property rights within these enterprises.

The final version of the privatization program represented a major victory for worker self-

management activists. Initiative for commencing privatization procedures would not be the sole
prerogative of state agencies, as the government wanted. Rather, enterprise-level institutions,