Mass union rallies push Polish government further into a corner

By bne IntelliNews September 12, 2013

bne -

Polish unions kicked off four days of planned protest on September 11 as tens of thousands marched in the capital to demand improved labour conditions and pensions protection. The events, due to peak on Saturday, September 14 with 100,000 expected on the streets of Warsaw, are only likely to increase the pressure on Prime Minister Donald Tusk.

Organised by the country's largest union OPZZ, alongside Solidarity and others, the demonstrations saw protestors gather in front of the main ministries. They then marched towards parliament through the murk of smoke bombs and to the sound of drums, whistles and sirens, reported newswires.

The crowd - which numbered 10,000-15,000 according to city authorities, and 18,000-23,000 according to organisers - called at the start of the four-day demonstration for the government to resign. On top of that, legislation to support higher wages and increased job security was demanded. Hit late - but hard - by the Eurozone crisis in early 2012, unemployment has spiked to above 13% in Poland. That, in turn, has wrecked the domestic demand that had previously done so much to protect the economy from the Eurozone crisis.

Poland's dwindling growth has seen the government scrambling to balance its precarious financial position, upsetting practically everyone along the way. Facing a majority sliced wafer thin by defections from within the conservative right of his liberal Civic Platform party and approval ratings that have slipped below those of the largely incompetent main opposition Law and Justice (PiS) party, the PM now looks increasingly hemmed in.

The protestors on the street also repeated calls for the reversal of a raise in the retirement age pushed through last year. Meanwhile, investors have spent the last week furiously critiquing the government's decision to nationalize a large chunk of the country's pension system.

Coming on top of significant loosening of the 2013 budget's original attempts towards improved fiscal management, and the recent suspension of constitutional debt limits, that saw Poland's financial markets - on which Tusk has spent much energy pushing towards a role as a regional hub - plummet. Now he faces mass protests on the streets for his "anti-labour" policies - events which will only play into the hands of the populist Jaroslaw Kaczynski at the head of of the opposition Law and Justice party.

Analysts worry that with the signs suggesting a genuine economic recovery is underway in both the Eurozone and Central Europe, the domestic pressures on Tusk will see Warsaw further relax fiscal discipline. "The risk in Poland," suggests RBS, "is that the ruling coalition decides to use the increased fiscal leg-room that has been obtained from the recent pension reforms to loosen fiscal policy and improve their polling, in case early elections ... materialize."

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