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displacing at least $40 million in U.S. exports annually. Polish officials dispute the magnitude of this figure.

The Government recognizes the need for a full review of statutes on intellectual property, but faces significant opposition and misunderstanding within the legislature and the Polish population regarding adequate intellectual property protection. Currently, new draft laws on copyrights, patents and integrated circuits have been prepared. Several rounds of U.S.-Polish consultations on these laws and Poland's commitments to protect U.S. intellectual property under the Business and Economic Treaty were held during the fall of 1991, with the Polish authorities actively engaged in trying to overcome legislative opposition to bringing Poland's laws up to international standards. Poland has stated its intention to fully accede to the Paris Act of the Berne convention, including a statement to that effect in a side letter to the pending bilateral Business and Economic Treaty; such accession is eagerly awaited by Poland's IPR trading partners. The Treaty and side letter call for the Polish government to put in place implementing legislation, including laws covering intellectual property.

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Trade union legislation passed in 1991 establishes that all workers, including the police and frontier guards, have the right to establish and join trade unions of their own choosing. As few as 10 persons may form a trade union, and a founding committee of 3 persons must register the union at the appropriate provincial court.

Unions are independent of the government. They have the right to join labor federations and confederations, as well as to affiliate with international labor organizations. The Government and legislature are presently engaged in the process of revamping the Labor Code. New laws on employment and on trade unions and collective bargaining were passed in January and May.

The new Trade Union Act, which took effect in August is less restrictive regarding the right to strike than the 1982 version but still prescribes a lengthy procedure before a strike may be launched. The law has not yet faced a real test involving a major labor dispute. Short-term warning actions and strikes involving occupation of the workplace were common occurrences in the second half of 1991, and were usually settled by mutual compromise between the strikers and the Government, which is still the dominant employer.


The Right to Organize and Bargain Collectively

The May 1991 law on trade unions and collective bargaining provides for legal sanctions for antiunion discrimination. A notable weakness in the law, given Poland's ongoing transition from socialist centrally-planned to market economy, is the lack of specific provisions to


ensure that the union has continued rights of representation when a state firm undergoes privatization, bankruptcy or sale.

Wages are set in negotiations at the enterprise level between unions, management, and workers councils. Polish law does not require that wage agreements be registered with the government. Current government policy aims to liberalize investment procedures for both domestic and foreign firms rather than seeking to promote special incentives programs. Special duty-free zones exist in or have been contemplated for some 15 locations throughout Poland but have not thus far attracted much attention. There are no special labor regulations pertaining to these zones.


Prohibition of Forced or Compulsory Labor

Forced labor

Compulsory labor does not exist in Poland. is prohibited by law.


Minimum Age for Employment of Children

The Labor Code forbids the employment of persons under the age of 15. The employment of persons aged 15 to 18 is permitted only if that person has completed basic schooling and if the proposed employment constitutes vocational training. The age floor is raised to 18 if a particular job might pose a health danger. The Government is alert to reports of violations to child labor laws, but its inability to monitor the growing private sector leaves officials less certain that the problem does not exist.

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The national minimum wage is negotiated every three months by the Ministry of Labor and Social Policy and trade unions. The maximum legal workweek is 48 hours, but in practice most Poles work a 40 hour week.

The Labor Code defines minimum conditions for the protection of workers' health and safety; a new draft of that Code was scheduled for parliamentary approval in late 1991. Enforcement is a growing problem because an ever increasing portion of Polish economic activity outside the purview of the State Labor Inspectorate, which is only prepared to monitor State firms. In addition, there is a lack of clarity concerning which government or legislative body has the responsibility for enforcing the law. The State Labor Inspectorate, which is directly responsible to the Parliament, is charged with monitoring the implementation of collective agreements and health and safety laws. But the Ministry of Labor and Social Policy is responsible for setting standards and enforcing the law. As it is, norms for chemicals, dust and noise are routinely exceeded.


Rights in Sectors with u.s. Investment

Fifty-three U.S. firms have opened representation offices in Poland, and over 100 joint ventures with U.S. investors have been registered in the past three years. This investment is heavily concentrated in the services area. Before 1986, foreigners were only permitted to operate small


scale "Polonia" enterprises. Approximately 80 such ventures are owned by U.S. citizens of Polish ethnic origin. Labor conditions in enterprises with U.S. investment are generally characterized by higher wages, additional pay incentives, and high safety standards. Worker productivity is higher in these enterprises. Workers in these enterprises are guaranteed the same rights, under the law, as those in Polish owned enterprises.

Worker participation in ownership of privatized enterprises, a right under the new privatization law, has rights is the same in the electronics sector as in other sectors.

Extent of U.S. Investment in Goods Producing Sectors

No sector by sector data is available on investments in Poland.


Key Economic Indicators

(Millions of u.s. Dollars, Unless otherwise stated)

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Net basic balance of payments
Total nonmonetary net balance



1,859 3,471

Sources: National Institute of Statistics, Bank of Portugal, Government of Portugal, OECD, Portuguese Association of Banks and estimates by the Embassy.

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Despite virtual full employment and one of the European Community (EC)'s highest growth rates in recent years (an estimated 4.3 percent average from 1986 through 1991), the Portuguese economy is still characterized by structural imbalances and low general development. Labor productivity is considerably lower than that of other EC countries, particularly in the agricultural sector, and wide gaps separate upper socio-economic groups from those at the bottom. Contrasts are marked also between the more developed and industrialized coastal regions and the rural hinterland, as well as between modern and traditional economic sectors. The most important manufacturing sector is textiles and apparel, responsible for about one third of total manufacturing employment and about 30 percent of total Portuguese exports. The external trade of this increasingly open economy is conducted mostly (about 74 percent) with other EC member countries.

Medium term economic policy has the objective of approaching EC average development levels. Its principal goals are modernization of the Portuguese economy and preparation for the European economic and monetary union (and particularly for the European Single Market of 1993), by increasing productivity and external competitiveness, and by upgrading quality standards.

The main macroeconomic problem is a high inflation rate (which at 12 percent is triple the average of members of the European Monetary System Exchange Rate Mechanism (ERM). Other problems include: a chronic trade deficit (compensated by substantial foreign capital inflows and emigrant remittances) and a significant fiscal deficit.

To cool the economy, overheated by demand and foreign capital inflows, the Government has relied on a restrictive monetary policy, while fiscal policy has tended to accommodate inflation. The fiscal deficit is mainly due to public debt interest repayments, a large bureaucracy, increased civil service salaries, and infrastructure investments (mostly as counterpart of EC financing). To date, monetary control measures and commercial lending interest rates ten points above the inflation rate have proved ineffective in bringing inflation down to targeted figures.

The combined effects of slower growth internationally and the appreciation of the escudo, have led to a stagnation of Portuguese exports in 1991. As a result, textiles and other export oriented industries are experiencing increased unemployment and in some cases actual bankruptcies.

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