© Roland Berger Strategy Consultants

"Polish people are ambitious and hungry"

Looking ahead to the Best of European Business competition in Poland, the country's former Treasury Minister Jacek Socha reflects on the competitiveness of Polish companies.

Mister Socha, last year, Poland attracted per capita foreign direct investment of €128, whereas Estonia drew €550. Is the Polish economy not nearly as competitive as its Baltic neighbors?

Don’t overestimate that figure. In Poland, our human resources are strong, and we have a higher percentage of university graduates than most other European countries. And the Polish people are ambitious and hungry. We know that the new European Union membership is a tremendous opportunity for us.

The EU is worried about the Polish public deficit, though, and whether reducing social spending would cause internal problems.

That may be true, but it would also generate new jobs. Polish people see the opportunities for change, and this motivates them to accept the necessary cuts.

But for how long? The World Bank has estimated that on present trends it will take 41 years for Poland to catch up with the EU average in terms of wealth…

I would not bet on these figures. It could easily take much less time for Poland to catch up than the World Bank expects. What counts anyway is for our people to know that at some point, we will catch up.

In terms of management, Polish companies at present have a payment model that features low base wages and high levels of incentive pay for regular workers. Is that a model for the West?

Definitely yes. Performance-based pay is always a better approach, also for companies in the West. It makes employees more motivated. Europe as a whole has to rediscover the magic word in global business: competition.
Jacek Socha
Jacek Socha
However, average Polish wages today are much higher than wages in Romania or Bulgaria. Are you afraid Western companies will stop investing in Poland altogether and move to the Europe’s southeast?

Not at all. Romanian wages might be lower, but our productivity and efficiency are clearly higher, and furthermore, investments in Poland are safer. Of course over time we will certainly have more and stronger competitors. We simply have to become better at every aspect of doing business. I see it as a good thing that at some point, Polish entrepreneurs will also invest in Ukraine, for instance. Most transnational investments are good for both sides of the transaction.

But what about the companies? Can Western businesses learn something from Eastern Europe?

There is no strictly Polish way of doing business. We still have a lot to learn. We have to improve our corporate governance structures and increase people’s mobility. Our companies still do not always manage to offer products that consumers really want. We have to take the test and then pass the test.

Does that mean sending an entire economy
back to school?


No, that approach would underestimate our present state of development. In many companies, Polish top managers have taken over from the CEOs originally sent in by the international investors in recent years. A lot has changed here. We adapt very quickly.

You have said Polish people are hungry. Does the West lack that kind of hunger?

Without a doubt. Every country needs to have a clear target, an aspiration. We Poles are driven by the desire to catch up with Western Europe. We want to have bigger cars, visit faraway countries and buy art. But what is the West driven by? At least some European countries lack a clear model to strive for. That decreases their competitiveness.

Clear criticism of Old Europe. Which model of society should Eastern Europe follow—the Western European or the American one?

Definitely the European one. That way of life suits us. Polish people want a high level of security. The American model would be too individualistic for us.
But there is one difference: today, we are less affluent. Hence, we cannot offer all that much protection to the poorer people in our country. They know that they have their own life in their hands. This makes them more active and motivated. And I personally would like Poland to keep this high level of motivation for as long as possible.

In many Western European countries, there is a basic debate about capitalism and globalization. What about Poland?

We don’t have that kind of discussion. We still remember the reality of life under state socialism. Capitalism is seen as a driver of change—and the Polish people still want change. Globalization and capitalism are seen here as something natural.

Let’s take a brief look at the future of Europe. The European Union is in crisis right now. Can the new member states give it momentum?

I am sure that we can. Right now, the new members seem to have fallen under the radar in Old Europe. Maybe that has been a good thing in the past, because otherwise we might not have been accepted.

I think that in all the referenda, those who were against the expansion were also the ones that voted agains the Constitution as such. We have brought new momentum to the European Union that might frighten some people. There is definitely a lesson for Europe to learn in all of this.

And is there also a lesson for the new EU members?Should you have made yourself understood better by Old Europe?

We tried. But it is sometimes difficult to get the others to pay attention.
Until the September 2005 elections, Jacek Socha was Poland’s Treasury Minister. Before that, he spent ten years heading the country’s Securities and Exchange Commission. An economist by training, he studied at the University of Warsaw and the Capital Market Institute, which is attached to the United States SEC. He is a member of the Polish jury for the Roland Berger Strategy Consultant's “Best of European Business” contest.



The full interview with Mr. Socha, from which these excerpts are taken, will appear in the November issue of think:act.



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Oct 26, 2005

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