The Lights Shine Brightly In Poland As A Former Basket Case Morphs Into A European Tiger

Poland Emerges as a Central European Powerhouse

By Alex Storozynski

There’s an old joke about how many Poles it took to screw in a light bulb. But after a Polish electrician named Lech Walesa pulled the plug on Communism and helped bring down the Soviet Union, that joke lost its luster. These days the light bulbs are made in Poland, and over the past two decades, the country’s economy has grown at a record pace compared to its neighbors.

This month marks the 20^th anniversary of Russia withdrawing the Soviet army from Poland. Since then, Poland went from Communist basket case, to what German magazine Der Spiegel dubbed last year as: “The Miracle Next Door: Poland Emerges as a Central European Powerhouse.”

Poland is the only European Union economy to avoid recession since the global financial crisis hit in 2008. Polish workers use to travel abroad to where the factories were. These days, factories move to where the Polish workers are. This summer, Fabrizio Pedroni closed his factory in Italy when his employees went on vacation, and packed up his electric component machinery and shipped it to Poland where workers rank higher on the World Economic Forum’s global pay and productivity table.

Last month, Arvato, which supplies financial and consulting services to Google and Microsoft , moved 140 jobs from Ireland to Poland. Dell Computer moved its factory from Ireland to Poland in 2009, while Esplex, a subsidiary of PC manufacturer Acerclosed logistics centers in France and England and moved those jobs to Poland. Cadbury Schweppes, the tea giant Twinnings, and Electrolux have all moved jobs to Poland. Last year Credit Suisse moved IT jobs to Poland.

Despite these moves, Poland’s unemployment rate remains over 10%, and earlier this month workers took to the streets to protest and demand more jobs and higher pay, blaming the government for not doing enough to spur the economy. But this protest has more in common with the Occupy Wall Street movement than the deadly riots in Greece, or even the 1980s, when Poland’s Solidarity trade union shut down the government all together.

These days, the frustration of Polish workers is expressed in a more orderly fashion. Poland has become a stable country, where the democratic government and economy are pulled back and forth by debate and market forces rather than through riots and revolution. That’s why Standard & Poor’s rating services last month affirmed Poland’s ratings as “Continued Economic Strength; Outlook Stable.”

Of course it’s not all wine and roses and the Polish government has made questionable moves such as the recent nationalization of half of the country’s pension funds. Steve Forbes criticized “Poland’s Piggish Pols” for this pension grab because it “hurts the impressive progress Poland has been making.”

Investors in the Warsaw Stock Exchange (WIG) agreed, and when the plan was announced on Sept. 5, the index fell by 6.2% in intraday trading. But it turned out to be a blip on the screen, and since then, the WIG has bounced back even higher, and is up 14.8% over the past year.

On Friday, President of the National Bank of Poland, Marek Belka will speak at an economic conference at the Kosciuszko Foundation on the Upper East Side to give an update on Poland’s economy. No doubt, he will say that Poland is still a work in progress, but moving in the right direction.

That Poland has gone from being the front line between NATO and the Warsaw Pact, to being an island of stability in the center of Europe is a phenomenon indeed.