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NR50R0JACKMAN,R0LAYARDIH0LEHMANN,DOJ0K0BIELECKIGOIM0BONIEGO,
MEMORANDUMONTHEROLEOFPUBLICWORKSINPOLAND,1900101991
19.01.1991
To:TheRightHonourableJanKrzysztofBielecki,
PrimeMinisterofthePolishRepublic
and
TheRightHonourableMichałBoni,
MinisterforEmploymentandSocialPolicy
From:RichardJackman,RichardLayardandHartmutLehmann,
CentreforEconomicPerformance,LondonSchoolofEconomics
MEMORANDUMONTHEROLEOFPUBLICWORKSINPOLAND
1.Duringrestructuringtherewillbeforsomepeopleandinsomesectorsofthe
economyachronicshortageofjobs.Someformofsafetynetisneededforsuchpeople.
Butitneednottaketheformofanunconditionalentitlementtobenefit.Ratheritcanbe
madeconditionalonpeopledoingsomethinguseful.Intheshorttermthemostpractical
wayofdoinganythingonthescaleneededisthroughpublicworks.
2.InWesterneconomiesotheractivelabourmarketpoliciesbesidespublicworks
havebeenusedtocombatunemployment:wagesubsidies,training,retrainingorfur-
thertrainingschemes,theenterpriseallowanceschemeandjobcreationschemes.
Westronglyadviseagainstusingtheseactivelabourmarketpoliciesonanysubstan-
tialscaleinthenearfutureforthefollowingreasons:
a)Wagesubsidyprogrammes(includingtheonewhichexistsinPoland)contra-
dicttheintentionofthegovernmenttoimposeahardbudgetconstraintonfirms(they
specificallycontradictthe4Popiwek’legislationinplace).
b)Anykindoftrainingschemeshouldnotbeundertakenonalargescalebe-
cause:
α)firmsshoulddomostofthetraining;
β)theeconomyisatthebeginningoftherestructuringprocessanditsneedsare
notyetknown.
Asmallprogrammetotrainsomeoftheschoolleavers(e.g.indataprocessing)
couldbeundertaken.
c)Theenterpriseallowanceschemewhichprovidesunemployedpeoplewith
fundstosetupasmallbusinessissensibleasasmallprogramme(assuchitisalready
inoperation).However,alargeunemploymentproblemcannotbesolvedbycreating
hundredsofthousandsofsmallentrepreneurs.
d)Supportforjobcreationinfirmsbythestateisnotadvisablesincemostex-
istingfirmsareencouragedtoshedlabouraspartoftherestructuringprocessand
