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small and fairly specialized, although in recent years Poland has built an increasing number of department stores, self-service food stores, supermarkets that sell both food and nonfood items, and mail-order houses. Certain retail outlets, such as gasoline stations, are too few to serve adequately the needs of the population; therefore, the government has occasionally encouraged private establishments as a means of reducing such adequacies and increasing the number of jobs for the growing labor force. As of the end of 1972 there were no visible results.

Retail sales increased by about 7.2% a year during 1961-70 (a little more than 6% per capita), about the same rate as that achieved during 1956-60. Under Gierek, retail sales rose 7.8% in 1971 and 12.5% in 1972. Food and beverages comprised 43% of retail sales in the socialized trade network in 1971, and nonfood consumer goods accounted for 42%. Nonconsumer goods, such as building materials, agricultural tools and machinery, fertilizers, seeds, and oil products, accounted for 15%. In the rural trade network, non consumer goods accounted for 32% of all retail purchases. Sales of nonfood items have grown somewhat faster than sales of foodstuffs.

Retail prices of consumer goods and services rose about 14% between 1960 and 1970. Gomulka's decision to increase prices sharply just before Christmas precipitated the 1970 riots. Not only were prices of food and fuel to rise sharply, but also prices of building materials, cotton, and textiles. Gierek rescinded the food price increases and froze prices for 2 years. This freeze was extended through 1973 and again through 1974. As a result, retail prices of consumer goods sold exclusively through the socialized network dropped 0.8% in 1971, while retail prices of consumer goods sold throughout the entire network rose only 0.5%. Prices of foodstuffs declined 0.1%, and prices of nonfood items dropped 2.6%. At the same time, retail prices of nonconsumer goods rose 4.9%, largely because of the substantial increases in prices of certain construction materials.

Under Gierek, the 1971-75 goals for raising the standard of living were revised slightly upward. Personal consumption is now slated to increase at an average annual rate of 7%, compared with a rate of 5% achieved during 1966-70. Gierek has, however, told the workers that substantial improvements probably cannot be achieved even by 1980.

Gierek's appeal for patience and understanding was helped by favorable economic trends in his first two years. Personal consumption rose strongly in 1971-72, stimulated by substantial imports of meat — made possible by a Soviet loan of $100 million in hard currency; larger than annual imports of grain — much of it from the West; and a substantial increase in imports of manufactured consumer goods.

In spite of the fairly rapid growth of incomes and retail purchases in Poland, there is still unsatisfied demand for high-quality goods of all types, including foodstuffs. Although sales of foods has risen less rapidly than sales of nonfood items, there have been rapid increases in the consumption of meat, animal fats, eggs, tea, chocolate, and alcoholic beverages. The consumption of grain products and potatoes has declined. There is still unsatisfied demand for better cuts of meat, milk products (including cheese), fresh fruits and vegetables, and imported specialty foods. The basic demand for clothing has been satisfied, as well as the demand for most consumer durables such as vacuum cleaners, stoves, refrigerators, washing machines, bicycles, and motor scooters. There is considerable unsatisfied demand for attractive, high-style clothing and for automobiles. The new, relatively inexpensive Fiat 126 — to be manufactured under a cooperative arrangement with Fiat of Italy — will help fulfill some of the demand for automobiles, but ownership of an automobile by the average citizen is still a far-distant goal. The government has capitalized to some extent on the demand for high-quality consumer goods by importing Western goods and reselling them in special stores to Poles who have received cash gifts of convertible currency from friends and relatives abroad. The inability to satisfy local demand has also resulted in a considerably black market for Western goals in Poland.

More serious than the unsatisfied demand for goods is the housing shortage. The rate of housing construction is still so low that even those with sufficient money must generally wait a long time to get an apartment — 5 years or more in the larger cities. In order to ease the inflationary potential of this situation, the government has encouraged people to save for down payments on cooperative apartments. Families with a per capita income of 1,500 zlotys or more are ineligible for inexpensive socialized housing and must purchase cooperative apartments in order to get into a new building.

There is also a large unsatisfied demand services in Poland, particularly construction and repair services. It is common for carpenters, bricklayers, plumbers, and shoe repairmen employed in socialized enterprises to do private works on the side, usually using tools and materials taken from the enterprises.

C. Economic policy and management (U/OU)

1. Policy

Poland's major economic goals throughout the postwar period have been rapid economic growth and the development of modern industry. After the consolidation of Communist control over most of the

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200070030-5