Identifying Vertical Product Differentiation in Three Polish Manufacturing Industries: an Enterprise Survey

The paper attempts to identify indirectly vertical product differentiation in three industries of Polish manufacturing (manufacture of glass and glass products, manufacture of other general purpose machinery and manufacture of other special purpose machinery) by examining how focus on a given group of customers (segment) is related to company characteristics. Changes in companies' segment orientation between 2002 and 2005 are examined and the factors of these changes are discussed. The analysis is based on a survey of 77 companies. The data support the hypothesis that there exist segments in the consumer goods market, defined by the income level of customers. In the capital goods market, it is shown that domestic-owned customers are the low-end segment of the market, whereas foreign-owned customers constitute a higher segment. It seems that industries producing capital goods have shifted towards higher market segments between 2002 and 2005 and their principal motive was the pressure exerted by competitors, both domestic and foreign.product differentiation, quality, competitiveness, manufacturing.

Changes in the Competitive Position of the Czech Republic, Hungary and Poland in the EU Market

This paper aims at comparing the uneven process of changes in competitiveness among three accession countries' manufacturing industries, the Czech Republic, Hungary and Poland, during the period prior to their EU membership (1996-2003). It demonstrates that the three countries improved competitiveness in the majority of their manufacturing industries. However, these changes were differentiated across time, among industries, in terms of the quality of segments and between the three countries overall. A drop in the productivity gap between the manufacturing industries of the three accession and the incumbent EU countries played the major role in improvement in competitiveness. It determined the drop in relative unit labour costs. The paper shows that changes in competitive advantages of a given country's industry reflect changes in relative (as compared to foreign) productivity rather than differences in level and changes in productivity among industries of a given country. The dynamics and levels of productivity among the Czech and Polish larger winners were lower than the manufacturing average of both countries. However, since the improvement in productivity in these industries in both countries was larger than in their incumbent EU counterparts, the former pushed the latter out of the EU market. Poland's and the Czech Republic's export specialisation in less productive industries implies that their export expansion to the EU would result in lower than potential economic growth in both countries. The paper shows that Smith's law of absolute advantages tends to determine changes in market share.competitiveness, productivity, transition economies, manufacturing industry, EU integration

Differentiation of changes in competitiveness among Polish manufacturing industries

This paper aims to show the uneven process of changes in competitiveness across Polish manufacturing industries during the period prior to Poland's EU membership (1996-2003). Based on the Schumpeterian approach to competitiveness, that is the ability to compete, it looks at changes in competitiveness as effects of competition and its factors. Using two types of measure, four clusters of Polish manufacturing industries are selected: double winners, export-led industries, export-oriented industries and losers. The analysis shows that the use of EU market share as a measure of changes in competitiveness fails to reveal differentiation in levels and changes in relative productivity in those industries that increased their EU market share. It also shows that the larger the initial differences in labour productivity across industries, the stronger the process of differentiation of changes in competitiveness. Systemic transition and external liberalisation are conducive to improvement in the competitiveness of highly productive industries, but create a weak stimulus for improvement in the competitiveness of the most backward ones. Secondly, the higher the investment rate and its dynamics, the larger the increase in competitive pressure on the EU market. This conclusion is of great importance for Polish manufacturing, all of the more so given that the potential to reduce employment seems to have been largely exhausted and investment intensity has dropped considerably, especially since 1998.competitiveness, productivity, transition economies, manufacturing industry, EU integration

Collective Agreements, Wages and Restructuring in Transition

Using a large matched employer-employee dataset, the authors investigate the relationship between collective agreements, wages and restructuring in transition in three former centrally planned economies (Czech Republic, Hungary and Poland). They adopt a natural experiment approach and capture the restructuring process triggered by the launch of transition by means of cohort effects among firms founded before or at different stages of this process which enable them to control for the heterogeneity of firms in different cohorts. They find that the wage premium associated with different levels of collective agreements depends on restructuring and its timing in the transition. In early-middle transition firms, industry level agreements protect low skilled wages; whereas in late transition ones, firm level agreements increase medium and especially high skilled wages. Some cross country differences emerge in the structure of the wage premium as a result of country specific features of restructuring.Collective agreements, wages, transition economy, restructuring

Wage Differentials across Sectors in Europe: An East-West Comparison

This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries (namely Belgium, Italy, the Netherlands, Norway, Portugal and Spain compared with Latvia, Lithuania, the Czech Republic, Poland and Slovakia). To do so, we use a unique harmonised, linked employer-employee data set, the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. Among high-wage sectors, we find the energy (coke, petroleum, gas, electricity and nuclear power), chemical, financial and computer industries. In contrast, it is in the traditional sectors (wood and cork industry, textile, clothing and leather industry, hotels and restaurants, and retailing) that wages are lowest. Further results suggest that the dispersion of inter-industry wage differentials fluctuates considerably across countries. It is relatively small in Norway and Belgium, large in the Netherlands, Italy, Spain, Poland and the Czech Republic, and very large in Portugal, Latvia, Lithuania and Slovakia. Our findings support the hypothesis of a negative relationship between the dispersion of inter-industry wage differentials and a country's degree of corporatism.inter-industry wage differentials, collective bargaining, Europe, matched employer-employee data

Lower coverage but stronger unions? Institutional changes and union wage premia in Central Europe

In this paper we use the national samples from the European Structure of Earnings Survey (ESES) to analyze the evolution of the wage premium of firm- and industry-level agreements in the Czech Republic, Hungary, and Poland (the CE3) around the time of their accession to the EU. We find that despite a generalized reduction in union coverage in these countries, the union wage premium after accession to the EU became bigger and statistically more significant for Poland and Hungary, particularly for industry-level agreements. We interpret these findings in terms of the institutional reforms that occurred in the CE3 between 2002 and 2006. These reforms, which were prompted by the EU Commission's requirements for EU accession, increased the social partners' ability to bargain and enforce wage agreements, and made industry-level unions more effective in guaranteeing the protections provided by labor standards. Results are less conclusive for t

Zatrudnienie w Polsce 2006: Produktywnosc dla pracy

This book constitutes a follow-up and extension of Employment in Poland 2005. In this issue we analyse the influence of demand-side factors on Polish labour market and especially so from the macroeconomic and regional perspectives. We begin with macroeconomic look at the labour markets in eight – out of ten – states which joined the EU in 2004. We focus on identifying aggregate disturbances which had a crucial influence on the economic fluctuations within the CEE region in the period 1994-2005, and we assess to what extent these disturbances are responsible for different dynamics of unemployment and employment trends in the examined countries and to what extent different fiscal and monetary approaches adopted at that time contributed to remedy these disturbances. The key finding resulting is that the relatively most significant decrease in employment and increase in unemployment levels in Europe, which came about in Poland after the year 2000, are due to the idiosyncratic decrease in return on capital and total factor productivity [TFP] dynamics. We also find that, although the policy-mix adopted in the above period was not the direct cause for the slowdown, its role in accommodating the shock was probably moderately negative. Then we study regional differences in the labour market in Poland in the period 2000-2005. We analyse aggregate data and identify microeconomic factors affecting trends in job creation and destruction. We group the NUTS4 regions in Poland in six homogenous clusters and find that in the period 2000-2005 no significant changes in the labour market indicators occurred either between clusters or between voivodeships (NUTS2 regions). This is so because the direction and depth of fluctuations on the regional scale were generally shaped by aggregate shocks which affected the economy as a whole. Moreover, the above period saw a greater differentiation in terms of productivity and thus, in most parts of Poland, increasing employment and unemployment rates are due to the development of labour-intensive manufacturing. We argue that only the largest urban conglomerations in Poland have adopted the development model which supports high economic growth in medium and long term. In third part of the study we focus on spatial mobility of Polish workers. In case of both internal and international migrations we demonstrate that economic factors determine significantly decisions about changing place of residence and that the key incentive to migrate is higher wages in the destination location and a relatively worse situation in the labour market in the region of origin. We also estimate the scale of international migration from Poland, which indicate that the number of people who stayed abroad for more than two months in the year 2005 was higher by approximately 165,000-379,000 people than before EU accession, due to one-time increase in migration flows. Moreover, we point out that international migration is mostly seasonal and that emigrants retain strong ties with their homeland. As for internal migration, we argue that its aggregate intensity is relatively modest and we emphasise that although in general the population moves from smaller to larger conglomerates, the limited scale of these movements makes the progress in urbanisation being slow and agglomerations less numerous than in other EU member states. In the long run, this may constitute an obstacle for real convergence to the most developed EU countries. Finally we scrutinize work in the non-observed economy (NOE) in Poland. According to various methodologies we asses the NOE output at 15-30 per cent of the GDP, and we find that the main reasons behind the existence of the grey economy in Poland are overly burdensome fiscal policy and excessively restrictive economic regulations. We close the report with demonstrating links between areas we studied and implications for labour market and economic policy in Poland.Poland; unemployment; employment; transition countries; labour market shocks; unemployment persistance; regional disparities; labour migration; informal employment

Employment in Poland 2007: Security on flexible labour market

This Report is a third in the series Employment in Poland. It consists of four Parts, devoted to empirical analysis of the impact of macroeconomic shocks on EU New Member States labour markets‘ in 1996-2006; utilization of flexible forms of employment on Polish labor market, determinants of wages and wage inequalities in Poland; effectiveness of ALMP in Poland, respectively. In Part I, we present how the cyclical upturn propagated on Polish labour market in 2003-2007 and how the performance of that market evolved relatively to other EU countries. Then we apply a panel SVECM to study propagation of macroeconomic shocks in eight CEE countries which joined the EU in 2004. We show that demand side shocks (foreign demand and labour demand shocks) were of foremost importance to unemployment and employment fluctuations in the region. At the same time, we argue that the wage shocks, thought of as wage rigidities, were important internal disturbances affecting the developments on the labour markets in the region. Part II is devoted to atypical forms of labour employment. We show that in all CEE countries the incidence of nonstandard employment arrangements is much lower than in Western Europe. Although Poland stands out in the whole EU with its dynamic spread of temporary employment and integration of temporary work agencies in the functioning of the labour market, in general the potential of atypical employment in Poland and other CEE is largely unfulfilled when it comes to work- life balance or supporting the economic activity of people who find it difficult to work full-time due to age or health reasons. In case of Poland, we study in more detailed way the legal, infrastructural and tax-related factors affecting the utilisation of nonstandard forms of employment. In Part III, we study wage developments in Poland from macro- and micro-perspective alike. We argue that wage growth in Poland exhibited a significant inertia during the transition period. We find that the concurrent rise of wage inequalities in Poland was due to the fact that rapid technological progress favoured some professional and social groups more than others. The increasing return on formal education and rising premiums on work in managerial positions as well as increasingly diverse individual and market characteristics of Polish workers seem to play the key role. The public sector stands out with higher wage compression than private sector. We show also that, in international comparison, the gender wage gap in Poland is relatively small. Notwithstanding the above, even if differences in individual and employer characteristics as well as working time are taken into consideration, women still earn about ten percent less than men. Part IV focuses active labour market policies (ALMP). We assess the ALMP spending and structure in Poland and we use the survey, conducted for the purposes of this Report, to study to effectiveness of ALMP. To our knowledge, it is the first attempt at producing a rigorous and comprehensive evaluation of ALMP effectiveness in Poland in the recent years. Applying Propensity Score Matching, we find that intervention and public works turn out to be completely inefficient when it comes to enhancing employment chances of the unemployed. At the same time, even for those programs that are characterised by positive net efficiency, such as internships and traineeships, the deadweight loss is also high, i.e. support is extended to groups whose situation is relatively good, whereas more difficult cases are neglected. Thus, the placement of ALMP participants in Poland is sub-optimal, which partly reflects very poor job broking and counseling done by PES. We complete the report with policy implications

Employment in Poland 2007: Security on flexible labour market

This Report is a third in the series Employment in Poland. It consists of four Parts, devoted to empirical analysis of the impact of macroeconomic shocks on EU New Member States labour markets‘ in 1996-2006; utilization of flexible forms of employment on Polish labor market, determinants of wages and wage inequalities in Poland; effectiveness of ALMP in Poland, respectively. In Part I, we present how the cyclical upturn propagated on Polish labour market in 2003-2007 and how the performance of that market evolved relatively to other EU countries. Then we apply a panel SVECM to study propagation of macroeconomic shocks in eight CEE countries which joined the EU in 2004. We show that demand side shocks (foreign demand and labour demand shocks) were of foremost importance to unemployment and employment fluctuations in the region. At the same time, we argue that the wage shocks, thought of as wage rigidities, were important internal disturbances affecting the developments on the labour markets in the region. Part II is devoted to atypical forms of labour employment. We show that in all CEE countries the incidence of nonstandard employment arrangements is much lower than in Western Europe. Although Poland stands out in the whole EU with its dynamic spread of temporary employment and integration of temporary work agencies in the functioning of the labour market, in general the potential of atypical employment in Poland and other CEE is largely unfulfilled when it comes to work- life balance or supporting the economic activity of people who find it difficult to work full-time due to age or health reasons. In case of Poland, we study in more detailed way the legal, infrastructural and tax-related factors affecting the utilisation of nonstandard forms of employment. In Part III, we study wage developments in Poland from macro- and micro-perspective alike. We argue that wage growth in Poland exhibited a significant inertia during the transition period. We find that the concurrent rise of wage inequalities in Poland was due to the fact that rapid technological progress favoured some professional and social groups more than others. The increasing return on formal education and rising premiums on work in managerial positions as well as increasingly diverse individual and market characteristics of Polish workers seem to play the key role. The public sector stands out with higher wage compression than private sector. We show also that, in international comparison, the gender wage gap in Poland is relatively small. Notwithstanding the above, even if differences in individual and employer characteristics as well as working time are taken into consideration, women still earn about ten percent less than men. Part IV focuses active labour market policies (ALMP). We assess the ALMP spending and structure in Poland and we use the survey, conducted for the purposes of this Report, to study to effectiveness of ALMP. To our knowledge, it is the first attempt at producing a rigorous and comprehensive evaluation of ALMP effectiveness in Poland in the recent years. Applying Propensity Score Matching, we find that intervention and public works turn out to be completely inefficient when it comes to enhancing employment chances of the unemployed. At the same time, even for those programs that are characterised by positive net efficiency, such as internships and traineeships, the deadweight loss is also high, i.e. support is extended to groups whose situation is relatively good, whereas more difficult cases are neglected. Thus, the placement of ALMP participants in Poland is sub-optimal, which partly reflects very poor job broking and counseling done by PES. We complete the report with policy implications.Poland; unemployment; employment; transition countries; labour market shocks; SVECM; wage rigidities; flexible forms of employment, wage inequalities, wage determinants, active labour market policy, ALMP effectiveness