Pay increases and disputes in 2004 examined

Source: own composition,

Pay rises

Pay demands - and disputes over them - became more prominent in 2004 (PL0411104F), as a result of a number of factors linked to Poland’s integration with the European Union. Poland’s accession in May gave impetus to inflation impulse and prices grew by more than 3% in 2004, a higher than expected rate. The costs of living increased in a noticeable way, coupled by fast economic growth. This situation resulted in growing pressure from employees for pay rises, not only in the private sector, where employees sought a share in improved revenues achieved by enterprises, but also in the public sector. Pay demands were most insistent in those branches of industry where enterprises were starting to perform better after many 'lean years'. In coal-mining trade unions sought pay increases of 25%-35%, while pay demands resulting from a better economic situation were also voiced by trade unions in the steel industry.

In many cases, pay talks failed, leading directly to collective disputes. For example, this was the case at Poland’s largest oil company, PKN Orlen, where workers gained a PLN 99 gross monthly pay raise following a collective dispute. There were similar cases in the motor industry and food processing.

Non-payment of wages

In 2004, the number of disputes resulting from the perennial problem of delays in the payment of wages owed increased compared with previous years (PL0501107F). Meanwhile, the scale of infringements of workers' rights with respect to pay increased.

Based on its inspections, the National Labour Inspectorate (Państwowa Inspekcja Pracy, PIP) reported that the proportion of employers that failed to pay wages correctly decreased from 62% of the inspected enterprises in 2003 to 55.9% in the first half of 2004. However, the number of workers who did not obtain their wages on time increased and during the first half of 2004 amounted to 61% of the total 2003 figure. The amount of the unpaid wages in the first half of 2004 represented 71.5% of the total 2003 figure. This means that, although fewer employers infringed pay regulations, the number of victims rose, as did the amount of the overdue wages.

Labour inspectors notified prosecutors’ offices about 380 offences in the first half of 2004 (against 925 in 2003). More than 28% of these offences were connected with breaches of workers' rights relating to labour relations (in 2003, the figure was 41%), which mainly consisted in the non-payment of due wages. In 12% of cases (8% in 2003), the offences involved breaches of workers' right together with the obstruction or total prevention of labour inspections. In only one case were the proceedings discontinued on the grounds that the employer's conduct did not cause 'social harm'. This might suggest that prosecutors and courts have changed their perception of these offences and no longer treat them as unimportant.

Overall, in 2004 pay disputes focused mostly on the non-payment of due wages. These disputes have increased in scale and grown more forceful in character.

Forecasts for 2005

According to an agreement reached in negotiations between the central social partners in the Tripartite Commission for Social and Economic Affairs (Komisja Trójstronna do Spraw Społeczno-Gospodarczych) (PL0210106F), the average pay rise should amount to 4.5% in 2005. The Finance Minister has indicated that the increase could reach 5%. It is unlikely, however, that the number of workers' protests over issues connected with pay will decrease. There will be many groups of employees seeking wage rises, with Polish pay rates being among the lowest in the EU (PL0312105F).

Another equally large number of employees will be seeking payment of overdue wages. Their situation may improve when parliament passes draft legislation it is currently considering on the protection of workers’ claims in the event of their employer’s insolvency.

Commentary

Poland’s membership of the European Union has certainly increased workers' pay expectations, especially as the cost of living has risen. However, these increased expectations have not been met, and the real pay rise in 200 was negligible. Furthermore, employers often tend to defer payment of wages or fail to pay at all. After a wave of liberalisation of labour law, employees' rights may now need strengthening in this area. However, when it comes to wages it is hard to expect profound positive change. (Rafał Towalski, Institute of Public Affairs [Instytut Spraw Publicznych, ISP] and Warsaw School of Economics [Szkoła Główna Handlowa, SGH])