Poland Plans to Sell Off State-Owned Industries

Poland surged out in front of the pack of reform governments in Eastern Europe on Friday as the main chamber of its legislature passed a landmark bill to dismantle state ownership of industries and sell them off to private investors.

Finance Minister Leszek Balcerowicz said the privatization bill, which applies to 7,600 state enterprises, “is going to change the Polish economy more radically than anything done up to now.”

The government owns 80% of industry in Poland, including steel mills, coal mines and factories. None of the state enterprises would be off-limits to privatization, officials said.

The bill is the centerpiece of the Solidarity-led government’s plan to restructure the centrally planned socialist economy along Western free-market lines. Its passage marks a much-needed victory for government leaders, who recently have been accused by Solidarity union leader Lech Walesa of offering Poles little more than economic hardship.

Austerity measures in the first six months of the year have ended hyper-inflation, but at a higher than predicted social price.

The country is mired in a severe recession that has cut economic activity by 30%. Unemployment, which did not officially exist before this year, has soared. At the end of June, 570,000 people, or 4.2% of the work force, were jobless, and that figure is expected to double by year’s end.

The privatization bill was approved overwhelmingly 328 to 2 with 39 abstentions by the Sejm, or lower house, as former Communists and independent lawmakers voted with the Solidarity caucus. Approval by the Solidarity-dominated Senate is expected.

All Polish citizens will be given “privatization bonds” that can be redeemed for company stocks, allowing the estimated 65% of Polish families with no savings to become shareholders.

The bill had been bogged down in committee for more than three months as the government wrestled with workers’ demands that they be granted special rights to own shares in the companies that employ them.

There were also widespread fears among Poles that privatization could lead to an uncontrolled, bargain-priced selloff of Polish industry to foreigners.