What led to Pi's existence

Poland

Dominik Owczarek

To person

Dominik Owczarek is the director of the "Social Policy" program at the Institute for Public Affairs in Warsaw (Instytut Spraw Publicznych / ISP, Warsaw). His research areas are social and labor market policy. For this purpose appeared inter alia. "Social Inclusion in Poland: Catching Up at an Uneven Speed"(2017) together with Christian Keuschnigg, and"Poland - When fear wins: causes and consequences of Poland’s populist turn" [in:] "Nothing to Fear but Fear Itself? Mapping and responding to the crisis culture and politics of fear in the European Union"(2017) together with Jacek Kucharczyk, Aleksander Fuksiewicz and Małgorzata Druciarek.

The one from the PiSChanges in Polish social policy brought forward by the government not only receive support, but also meet with criticism, especially from employers and trade unions. Among other things, the plan to introduce a state-regulated wage is rated as highly authoritarian.

Part of the PiS-The government implemented socio-political reforms were also changes in the Polish pension system, for example the withdrawal of the increase in the retirement age. (& copy picture alliance / NurPhoto)

Summary

The government of law and justice (Prawo i Sprawiedliwość - PiS) has placed social policy at the center of its political program since winning the parliamentary elections in 2015, thereby gaining support from voters, also for a further legislative period after the elections in October 2019. The government owes this success to the failings in the area of ​​state social policy 1989 as well as the consistent implementation of a large part of their election promises. The promises kept include the "500+" family support program, the introduction of hourly wages for service contracts, the faster increase in the minimum wage than the average wage, the withdrawal of the increase in the retirement age, the introduction of the 13th pension payment and the reduction in pensions for employees of the repressive apparatus in the People's Republic of Poland. Some important announcements from the PiS were not implemented, so the housing program "Apartment +" and improvements in health care. The support that the PiS Due to their mostly fulfilled social promises, they are allowed to cover up their controversial reforms in the area of ​​the rule of law, which are difficult to understand for most citizens due to their complexity and not directly influencing everyday life.

Correction of neglected social policy

Despite its spectacular economic growth after the collapse of the communist system in 1989, Poland did not manage to build a stable and coherent socio-political system. It cannot be clearly assigned to one of the three prevailing models in Western Europe - conservative, liberal or social democratic (according to the classic definition by Gøsta Esping-Andersen). It is characterized above all by measures to ensure a social minimum for the socially disadvantaged and pensioners. However, the system contains many gaps and inequalities. Important defining factors were the reforms of the 1990s, which corresponded to the neoliberal paradigm prevailing at the time, which was advocated by international institutions in the East Central European countries (and also in Latin America). Its aim was above all to mitigate the negative consequences of the transformation process from a centrally controlled economy towards a market economy. After Poland joined the European Union in 2004, the social policy system was supplemented by the generous EU structural funds, which above all enabled expanded measures in labor market policy (professional training, job placement). Compared to the phase before 2004, however, the socio-political model has not been changed.

This significant neglect of the state social policy took advantage of the PiS in their campaign ahead of the 2015 general election. Central promises were the introduction of a generous child benefit for Polish standards as part of the family support program "Family 500+", the launch of a program for the construction of affordable rental apartments "Wohnung +", the withdrawal of the pension reform that raised the retirement age and the restriction of service contracts (which were widely used instead of the usual employment contracts). Most of the reforms announced were made during the reign of the PiS Introduced from 2015 to 2019, although the degree of implementation did not always match the announcements. Other social policy reforms have also been introduced, including: a minimum hourly wage was adopted for service contracts and a number of changes were introduced in the pension system. Factors that favored the increased spending in the area of ​​social policy were the economic recovery after a slowdown in growth between 2009 and 2013 and the higher revenues from VAT as a result of the closure of tax loopholes.

With the aim of repeating the election success, the PiS in the 2019 parliamentary election campaign again to put demands from the area of ​​social policy in the foreground. The most important three, the so-called Kaczyński hat trick, included firstly the gradual increase in the minimum wage from 2,600 zloty gross (around 610 euros) in 2020 to 4,000 zloty gross (around 940 euros) in 2024; and 14. Pension payment in the monthly payment system, thirdly, full EU subsidies for farmers, comparable to the value of the additional payments for farmers in Western Europe.

It should be remembered that the expansion of the social policy instruments that the PiS Bringing in social support, at the same time is a protective shield to support the constitutionally controversial reforms of the PiS to be carried out, which led to great tensions both domestically and abroad. The clear support for the PiS holds itself among other things. because their main competitor is the conservative-liberal citizens' platform (Platforma Obywatelska - PO) is against which the PiS Has built a powerful narrative: When our liberal predecessors return to power, they will take back the new social policies, particularly the Family 500+ program.

The flagship: family policy

after the PiS When the government took over in October 2015, it began to keep its most important election promise, the introduction of the "Family 500+" funding program (cf. Poland analyzes 186). It is based on the fact that each family is paid 500 zloty (approx. 120 euros) for their underage children from the second child and for the first child in the case of a low income, that is less than 800 zloty per head (approx. 190 euros) or less than 1,200 zlotys per person (around 280 euros) in the case of a disabled child. For example, a family with three children receives 1,000 zlotys per month and, if they meet the low income criterion, 1,500 zlotys.

Such a social policy instrument is not unknown in the countries of the European Union. For example, child benefit in Germany is designed in a similar way. The peculiarity of "500+" is rather the level of performance compared to the income of Poles and public expenditure. This is illustrated by the median income in 2016 - around 2,200 zlotys net (around 520 euros) - and the costs of the program - around 23 billion zlotys annually, which is slightly below the state income from corporation tax and half of the income from the Income tax amounts. The "500+" program was introduced in April 2016 and extended to the first child without restrictions in July 2019, three months before the parliamentary elections. The PiS has thus expanded the redemption of its election promise in the course of its reign.

In the first two years of the "500+" family support program, the level of extreme poverty fell significantly, especially among children under the age of 17, from nine percent to six percent between 2015 and 2016 and to five percent in 2017 Households affected by "extreme poverty" include those in which the per capita income is lower than the value of the basket of goods and services determined by the Institute for Labor and Social Affairs, which ensure the physical existence of household members. that during this period this form of poverty among children was almost halved. However, in 2018 there was an increase in extreme poverty in the general population from 4.3 percent to 5.4 percent and in the group of children from 5 percent to 6.5 percent. The reason for the reduction in the positive effect of the family support program is usually the price increase, which will continue in 2019. It is therefore to be expected that extreme poverty in the group of children will rise again to the level of the time before the introduction of "500+". The extension of the benefit payment to the first child will have no (positive) influence on the number of households with an income below the extreme poverty line, since these households were already covered by the support program from the start; From 2019, the additional benefit will only go to families with middle or higher incomes.

One consequence of the family support program is that women's employment has fallen by two to three percentage points, affecting around 200,000 women. Women whose families are entitled to child benefit are less likely to take up a job or forego their previous job (it is often associated with low wages, poor working conditions and difficulties getting to and from the place of work). The "500+" program has the greatest impact on women leaving work in cities with 20,000 to 100,000 inhabitants. It usually affects low-skilled women and those with children between the ages of seven and twelve.

In addition, the program did not result in a noticeable increase in the birth rate. That is, one of its most important goals was not achieved.

During the same period, the adjustment of the limits that entitle the holder to receive social benefits was insignificant. (Social benefits are given to the poorest households whose income is below a limit set by the Ministry of Social Affairs.) This intensified the disparity between the generous child benefit "500+" and the other social policy cash benefits. Since October 2018, the limit for receiving social assistance has been 701 zloty (around 165 euros) for single people and 529 zloty (around 125 euros) per person in families with at least two people. She was from the PiS as a result of the mandatory review every three years of 634 zloty (approx. 150 euros) or 514 zloty (approx. 120 euros) from 2015, determined by the previous government. The amount of social assistance paid is the difference between the fixed income limit and the actual income per person in the household concerned.

As a result, it was observed that the number of households that were entitled to social benefits decreased. Combined with inflation, this led to an increase in relative poverty from 13.4 percent in 2017 to 14.2 percent in 2018. (Households classified as "relatively poor" have less than 50 percent of the average expenditure per person the population.)

Many experts have criticized the fact that the "500+" family support program does not fit harmoniously into the overall system of social benefits and family policy. The "500+" benefit doubles another - less generous - instrument, childcare allowance, which is paid to low-income families so that they can cover the expenses related to raising children. Furthermore, single parents (especially mothers) with a child who exceed the limit of low income are ignored. In addition, the support with "500+" is excessively high in relation to the level of other benefits. In addition, the data on the poverty level in 2018 revealed another disadvantage of this instrument: There is no guaranteed adjustment mechanism.

The one from the PiS So implemented social policy did not cope with the problem of extreme poverty, nor did it stop the rise in relative poverty. The buzzword of the "lost decade" emerged in the public debate, starting with the outbreak of the global crisis in 2008, which slowed the decline in the proportion of the poor in the country, which ranged from 4.3 to 7 from 2008 to 2018 , 4 percent moved.

Stable employment and higher wages

The PiS-Government is seeing visible successes in wage increases as well as in limiting the scope of fixed-term employment and it plans to continue in this direction in the legislative period that is now beginning.

Laying the ground for reform of the PiS the ruling coalition of the Civic Platform and the Polish Peasant Party (Polskie Stronnictwo Ludowe - PSL) under Prime Minister Ewa Kopacz at the end of her reign. In 2015 she introduced changes to the Labor Code with the aim of limiting the flood of fixed-term contracts. One of the changes limited the number of ongoing fixed-term contracts to a maximum of three and their total term to 33 months. Together with the three-month probationary period, the employee cannot be hired for more than three years on the basis of fixed-term contracts. These new regulations came into force in January 2016, i.e. already under the PiS-Government, although the effects on the proportion of fixed-term contracts only became fully apparent at the end of 2018. The number of temporary jobs fell successively from 28 percent in 2015 to 24.3 percent in 2018. The PO-PSL-Coalition had decided on another reform in 2015, which also came into force at the beginning of 2016, namely the service contracts up to the level of the minimum wage were subject to social security contributions; in 2016 this amounted to 1,750 zloty gross (around 410 euros). As a result, the contracts became less attractive due to their higher costs for employers.

The PiS-Government raised the monthly minimum wage from 1,750 zloty gross (around 410 euros) to 2,000 zloty gross (around 475 euros) in 2017 for employees whose contracts are regulated by the Labor Code. The minimum wage rose nominally by more than eight percent, which was the largest growth in recent years. For those employees who only recently started their first job, the increase was even 35 percent, as the new regulations adjusted the minimum wage regardless of the year of employment - previously the minimum wage in the first year of employment was 80 percent of the minimum wage. The increase in the minimum wage was higher than originally proposed by the social partners. In the following years, the amount also increased significantly, albeit at a somewhat slower pace: to 2,100 zloty gross (around 495 euros) in 2018 and 2,250 zloty gross (around 530 euros) in 2019. In 2018, the minimum wage rose somewhat more slowly than that Average wage, while in the other years the minimum wage rose faster than the average wage. In the first phase of government PiS the minimum wage was 44.9 to 46.8 percent of the average wage. Currently, around ten percent of employees receive the minimum wage (or proportionally a lower wage if, for example, they are only employed part-time or only for a certain number of days per month, etc.).

In addition to the significant increase in the minimum wage, the PiS-Government in 2017 new regulations that for the first time introduced a minimum hourly wage for service contracts. Before the reform, there was no lower hourly wage and there were even amounts of four zlotys gross (around 90 cents). The hourly wage was set in relation to the monthly minimum wage, so that both values ​​must grow proportionally. The increase mechanism is the guarantee of a minimum standard of remuneration. In 2017 the minimum hourly wage was 13 zloty gross (around 3.10 euros) and in 2019 it was already 14.70 zloty gross (around 3.50 euros). The significant increase in monthly wages and the introduction of the minimum hourly wage can contribute to a substantial reduction in poverty among the working population, especially among those who work in extremely precarious conditions.

Before the parliamentary elections, the promised PiS a gradual increase in the minimum wage from 2,600 zloty gross (approx. 610 euros) in 2020 to 4,000 zloty gross (approx. 940 euros) in 2024. The implementation of this plan began with the definition for 2020 and the provision of the corresponding budget for 2020. This represents the largest increase since 1989, namely by 15.6 percent.If the promise were kept, the minimum wage would rise by an average of nine percent annually in the coming years, which would be an unprecedented dynamic in the history of the Third Republic.

The ruling PiS also justifies the significant increase with the need to change the economic model, from a model based on low labor costs to a model based on innovation, based on high quality products and services. An important element of the political narrative is also the desire to reduce the extent of labor migration from Poland - in 2018, 1.5 million Poles were temporarily abroad, mainly in Great Britain and Germany - as well as emigrants returning to Poland to move (which would not be without influence on the western labor market).

The election promise of PiS is particularly criticized by entrepreneurs and employers in small and medium-sized enterprises for the failure to harmonize the rise in minimum wages with the rise in average wages and labor productivity. They warn that such a rapid increase could result in layoffs and bankruptcy declarations in companies with low profit margins and in companies with high labor costs. Experts suspect that the innovations can also contribute to the growth of a gray area.

The social partners (employer organizations and trade unions) as well as left-wing milieus criticize the authoritarian nature of the changes. The wages are supposed to be arranged by the government, without consultation in democratic processes with the social partners and other actors, whereby the structures of the social dialogue are ignored and the autonomy of the social partners is restricted in favor of the state that regulates the economy.

After the years of economic crisis when the unemployment rate was over ten percent, unemployment has recently disappeared from the list of top public affairs. According to Eurostat, the unemployment rate fell to 3.9 percent in 2018 and fell again to its historically lowest level in 2019. The problem of unemployment is currently only significant in some regions and groups of society, such as people with disabilities and young people, which refers to other structural barriers. Similar to the majority of the EU member states, the shortage of skilled workers is the greater challenge and an obstacle to social and economic development.

Earlier retirement, higher pensions

One of the most important buzzwords in the 2015 presidential election campaign and subsequently in the parliamentary election campaign was the withdrawal of the reform of the retirement age, which the PO-PSL-Government had introduced. The reform envisaged the gradual increase in the retirement age to 67 for men and women from 2013 onwards. That means an increase of two years until 2020 for men and seven years until 2040 for women. The reform also allowed for earlier retirement on the condition of a proportional reduction in pension payments. The pension reforms in Germany and other Western European countries were an important point of reference for the government's arguments.

The reform of the retirement age was supported by the PiS Not only criticized for their legality, but above all for their too rapid introduction and the insufficiently conducted social consultations, in particular the rejection of the citizens' motion for a referendum on this matter. The arguments of the PiS from the union Solidarność. Andrzej Duda, the presidential candidate of PiS, derived his main message from the call to reverse the reform that he would be a president of the dialogue who would listen to the voices of society. After winning the presidential and parliamentary elections in 2015, the reform of the retirement age was approved in 2017 at the request of President Duda and with the approval of PiS-dominated parliament withdrawn. Currently, the entry age of 65 for men and 60 for women, as it was before 2013. However, this was a somewhat reluctantly realized election promise given the knowledge about the increasing problems of the Social Insurance Fund as a result of the rapidly aging society. The change was supported by a campaign by ministerial officials and politicians of the PiS accompanied, which should encourage people to stay longer at work.

The PiS also proposed a change in the pension system in order to increase the pension savings of Poles. After the most important pension reform in 1999, the contribution system consisted of three pillars: the first, compulsory state pillar in the form of the social security fund, the second, compulsory commercial pillar in the form of the open pension funds and the third, optional pillar in the form of individual instruments Savings offered by commercial financial institutions (such as individual retirement savings accounts). Due to the poor construction of the open pension funds, which led to a rapid increase in public debt, the second pillar was added in 2014 under the PO-PSL-Government largely dissolved. In order to increase the pension savings of the citizens, founded the PiS in 2019 the employee capital plans, which are reminiscent of the open pension funds in that financial market institutions are active here as commercial providers. The difference, however, is the voluntariness. Although every employee is automatically enrolled in the employee capital plans and receives 250 zloty from the state as an incentive at the beginning and a further 240 zloty for each year in this program, the saver can also withdraw from the program at any time and receive it the sum saved up to then. Participation is based on the payment of contributions, namely two percent of income on the employee side and 1.5 percent on the employer side. The amount of the contributions can be increased voluntarily by up to two percent on the employee side and by up to 2.5 percent on the employer side. Ultimately, the total value of the monthly contributions to the employee lump-sum plans can be up to eight percent of the monthly income. Participation in this program means a lower net salary for the employee. The reform will be introduced gradually: in July 2019, the largest employers, with more than 250 employees, joined the program. Small businesses and the public sector are expected to join from January 2021.

In the group of pensioners, the level of extreme poverty rises (from 3.9 percent in 2016 to 4.6 percent in 2018) and the number of those who receive a pension below the minimum pension increases. Women who have contributed more than 20 years of contributions and men who have made more than 25 years of contributions have the right to the minimum pension. People who have paid into the pension fund for a shorter period of time, especially women, are excluded from the minimum pension. The amount of your pension is derived from the value of the accumulated contributions.

In response, the struck PiS for each pensioner a one-off 13th payment of the monthly pension in April 2019, i.e. one month before the elections to the European Parliament. For the state budget, this meant a one-off expenditure of 10.8 billion zlotys (around 2.5 billion euros). In this move, the ruling party was also guided by a desire to get votes from the oldest constituency (from which it generally received the greatest support) and to increase their turnout. In the election campaign for the Sejm the promised PiSto include the 13th pension as a permanent payment in the pension system and also to pay out a 14th pension to the majority of pensioners from 2021 (only the ten percent who receive the highest pension should be excluded). The newly elected parliament in October 2019 should deal with the legislative changes.

Another major reform with symbolic meaning was the introduction of the "Anti-Stasi Act" in 2016 (ustawa dezubekizacyjna). It reduced the pensions of the intelligence officers of the People's Republic of Poland and was a form of revenge on the employees of the repressive apparatus. The pension is calculated according to the principle of zero percent of the assessment base for each year of service in the totalitarian state. In addition, the pension cannot exceed the average pension paid by Rentenanstalt (around 1,800 zlotys, around 425 euros in 2019), regardless of how many years the person has worked after 1990. Many of those affected have appealed to the court (almost 19,000 cases). The law is criticized not only as an unlawful restriction of acquired rights, but also for the fact that the group of those affected is too large and includes those who in reality did not carry out any operational activities for the People's Republic.

Promises not kept

Finally, let's briefly make some key promises of the PiS from the parliamentary election campaign in 2015 and the following years that were not implemented.

The announcement that one million affordable rental apartments would be built by 2030 as part of the "Apartment +" program fell on fertile ground in a country with one of the lowest living space per inhabitant. After four years of reign of the PiS Almost 900 apartments have been released for use, i.e. less than a per thousand of the plan. That has, inter alia. To do with the fact that the possibilities of obtaining building plots from the state treasury and local government units were misjudged. It was also not possible to keep the announcement of low rents.

Under the influence of mass protests by various health care groups in autumn 2017, the PiS the agreement to raise public health spending to six percent of gross domestic product (GDP), raise salaries and create more specialist training positions. Despite the nominal increase in public spending on health care from 2018 onwards, its share of GDP fell compared to before the protests. With expenditure of 4.4 percent of GDP in 2015, Poland was well below the EU average of 7.2 percent. As a result of the poor functioning of public health services, patients are forced to turn to private institutions - and spend around two percent of GDP on private treatment. According to the Organization for Economic Cooperation and Development (engl. OECD) (2015) in Poland there are 2.3 doctors for every 1,000 people, while the average in the countries of OECD 3.3 and 3.4 in the EU countries. In the field of health care, the PiS Their promises to introduce free medication for pregnant women and free school lunches for the children and to clear the queues for specialist doctors have not been kept. So it was not possible to stop the collapse in the health system.

Translation from Polish: Silke Plate
The Poland analyzes are published jointly by the Research Center for Eastern Europe at the University of Bremen, the German Society for Eastern European Studies, the German Poland Institute, the Leibniz Institute for Agricultural Development in Transition Economies, the Leibniz Institute for East and Southeast European Research and the Center for Eastern European and International Studies (ZOiS) gGmbH. The bpb publishes them as a licensed edition.