Lessons learned from the restructuring of Poland’s coal-mining industry (GSI)

This report by the Global Subsidies Initiative (GSI) looks at subsidies for underground mining of hard (bituminous) coal in Poland which intended to help the industry make the transition from a command-and-control to a market-based system, while becoming internationally competitive. Soon after the economic transition began in 1989, demand for coal declined but controls on coal prices remained in place. Over-employment combined with high production costs proved to be untenable for the coal mines. Early government efforts did not improve matters. Only a program endorsed by the Solidarity trade union, and backed by substantial public funds for closing mines and providing social benefits, was at least a partial success. Today, coal companies have nearly achieved long-term viability and the process of privatization has commenced.