Poland Plans Broad Price Hike Package

The Polish government announced a broad package of price increases Saturday, ranging from 40% to 200%, the steepest price hikes here since the 1982 martial-law period.

The price increases will go into effect in three stages in the next three months, the first stage on Monday. The increases cover everything from basic foodstuffs to the cost of tractors. The government said the hikes are necessary to its economic reform plan.

Many essential items in a Polish consumer’s budget will go up sharply. Rents, electricity, gas and heating will rise by 100%. Gasoline will go up by 65%, diesel fuel by 100%.

The government also announced wage increases of 6,000 zlotys (about $19) per month for government workers. Workers in state enterprises will also be granted raises of about 6,000 zlotys, with higher increases pegged to productivity and profitability.

The wage increases, announced in conjunction with the price hikes, reflect the government’s concerns over the possibility of a public rebellion resulting from the sharp price increases.

Past Worker Revolts

Price increases led to worker revolts in Poland in 1956, 1970, 1976 and 1980. The 1980 price hikes eventually resulted in the formation of Solidarity, the now-outlawed independent trade union.

A national referendum in November rejected a government proposal for even sharper price increases, the key issue in an economic reform plan launched by the government of Gen. Wojciech Jaruzelski. Since the referendum, the government has been faced with the difficult task of revitalizing a moribund economy while at the same time taking care to placate a population that shows it has little tolerance for increased economic hardship.

Poland has a foreign debt of about $37 billion and has been negotiating with international lending agencies for debt relief and fresh infusions of cash. Most of the lenders have been urging price increases and a reduction of the heavy load of state subsidies, but the offsetting wage increases announced by the government will cut sharply into whatever gains it may make from the price hikes.

In recent weeks, as the public anticipated the price rises, Poles have depleted the stocks of most stores. On Saturday, some stores were limiting sales of sugar, butter, flour and other basic commodities.

Price of Sugar Up 50%

The price of sugar went up by 50%, flour and tea jumped 40%, and meat by 40%. Alcoholic beverages went up 46%.

There was no immediate reaction to the price increases from the Solidarity figures, although a national spokesman for the union last week described the situation in the country as being “more tense” than anytime since martial law. He said it was possible that there would be some reaction from factory workers when they realized that their pay raises would not compensate for the increase in prices.