Shipbuilding Collapse Transforms Polish Economy

When E.U. aid rulings spurred bankruptcies and fire sales, industry labor unions lost big. The E.U. has ordered Poland's shipyards over the last few months to pay back hundreds of millions of dollars in what it deems illegal state aid. Since none of the shipyards were able to do so , bankruptcy and fire sales have cut down an industry that has long been of central importance both to Poland's economy and its sense of national pride. The unions that fought to save the shipyards have come away angry at both the E.U. and Poland's liberal government, which can claim only a Pyrrhic victory at best.
Government ,Poland's ruling Civic Platform has been ideologically committed to moving beyond heavy manufacturing and has consistently advocated more flexible labor markets. It has been suspicious of shipworkers, regarding them as too sympathetic to the rival Law and Justice party. However, jobs nationally have been hemorrhaging at extraordinary rates since January, from steel mills and car plants, and 50,000 jobs in the arms sector are in imminent danger from cuts in defense spending.
As the national unemployment rate rose to 11.2% in March, unions sat down with employers' associations to negotiate an "anti-crisis pact" in which they made historic concessions on job flexibility--in return, they thought, for a commitment to save jobs and increase minimum wages. Yet the government bill to implement its provisions expanded job flexibility while dropping many of the features labor advocates wanted. On April 29, a major labor demonstration in Warsaw ended in violence perpetrated by both sides. The unions have called for additional protests, but few concessions are likely. Industry,Shipbuilding will survive, but its heyday has passed. Employment will decline dramatically, from 11,000 in the Gdansk, Szczecin and Gdynia yards in May to about half that by next year. Working conditions are likely to become more onerous. Workers in Gdansk--the birthplace of the Solidarity movement that triggered the collapse of communism in 1989--reported the imposition of new work norms after the yard was sold to Ukraine's Industrial Union of Donbas in 2007. This has resulted in workers meeting only about two-thirds of their production targets, causing significant wage losses. This scenario will likely be replicated in Gdynia and Szczecin.
Labor,The big losers are workers and unions. The unions have already lost clout, particularly in Gdansk, where Solidarity shipworkers were noted for their militancy. Past leaders have used the plant's legendary status to extract state resources and resist painful restructuring. The current leadership has used union strike funds to pay workers to attend demonstrations and boasted of such tough tactics as setting tires alight and hurling small explosive charges. Yet for all their efforts, the industry has been brought down spectacularly. Efforts to save face by stressing the continuation of some shipbuilding cannot disguise this.
The E.U, Toughness on Polish subsidies combined with support for Western European industry has hurt the E.U. The notion of European solidarity has suffered a blow across the continent. Outlook ,The decline of Polish shipbuilding makes global economic sense, in that most of the work can be done cheaper elsewhere without sacrificing quality. However, Poland has little high-value-added manufacturing, so the decay of this industry could be more detrimental both economically and politically than similar developments in Western Europe. The opposition will reap political capital, although not yet enough to win power. As similar labor and structural losses add up, a political turn to the right, as elsewhere in Europe, is possible.