Any pay increases for members of the 60,000-strong staff of the Polish tax authorities are the prerogative of the government, which must earmark the appropriate funds in the national budget. Over the past few years, low earnings have been the main factor behind the growing discontent among tax authority employees. This dissatisfaction is compounded when they compare their own earnings with those in other sectors of the Polish economy. In 2006, average pay before tax in the private sector increased by 4.9% compared with the previous year, and in 2007 this proportion reached as high as 9.2%. Meanwhile, pay in the public sector increased by 1.5% in 2006 and remained static in 2007.
On 28 April 2008, employees of the Polish tax authorities commenced a three-day protest. Many of the participating employees took leave from work on short notice, although the work continued without major disruption. The staff are demanding improved working conditions and higher salaries. While it is clear that changes are needed in the public sector, an uncertain political climate makes it difficult to introduce reform. Meanwhile, many employees are leaving to join the private sector.
Background to dispute
Any pay increases for members of the 60,000-strong staff of the Polish tax authorities are the prerogative of the government, which must earmark the appropriate funds in the national budget. Over the past few years, low earnings have been the main factor behind the growing discontent among tax authority employees. This dissatisfaction is compounded when they compare their own earnings with those in other sectors of the Polish economy. In 2006, average pay before tax in the private sector increased by 4.9% compared with the previous year, and in 2007 this proportion reached as high as 9.2%. Meanwhile, pay in the public sector increased by 1.5% in 2006 and remained static in 2007.
Moreover, remuneration is not the only point of contention. Tensions between tax authority employees and the Ministry of Finance (Ministerstwo Finansów, MF) – the employer for all Polish civil servants in fiscal administration – began to emerge in February 2006. The Minister of Finance at the time, Zyta Gilowska, announced plans to freeze pay in the tax authorities, as well as to merge them with the customs service. Ultimately, due to the opposition of employees in the tax and customs services, these reform plans were scrapped.
Tax officials leave as pay gap widens
However, pay remained at the same level. In 2007, an exodus of specialists from tax authority units occurred, particularly in the larger cities, where up to 10% of the workforce left to seek employment elsewhere. Unsurprisingly, this trend was caused by low salary levels. A young lawyer taking a position in a tax office after completing their degree might earn PLN 1,800 (€530 as at 20 May 2008) a month, compared with PLN 3,000 (€880) in a law firm.
The upward tendency of remuneration in the private sector has continued since January 2008, meaning that the gap between earnings in the public and private sectors is widening further. In 2007, threats of imminent protests compelled the government to participate in negotiations with representatives of the tax authority employees from the Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy ‘Solidarność’, NSZZ Solidarność). The discussions resulted in agreement on an average pay increase of 9.3% in the next budget year.
Customs officers take protest action
The mass protests staged by members of the customs service in January and February 2008 are a reflection of the level of tension between tax authority employees and the Polish government. These protests took place after the snap elections held in the autumn of 2007 and the inauguration of a new government cabinet. The customs officials were demanding higher pay, retirement privileges comparable to those enjoyed by members of the police and armed forces, and legal safeguards in the performance of their official duties.
Participants in the protest took leave on demand and medical leave, leaving border crossings understaffed and causing a substantial backlog of trucks waiting in long queues for customs clearance. It is unclear to what extent this initiative might have inspired the tax officials; however, it certainly encouraged them to voice their own demands, even if they stopped short of drastic measures which would have brought the country’s tax administration to a standstill.
Demands of tax authority employees
On 8 February 2008, members of the National Section of Treasury Employees of NSZZ Solidarność wrote to the office of the Prime Minister, Donald Tusk, requesting a meeting to discuss the situation in the fiscal administration. The letter highlighted the need for:
a prompt and comprehensive reform of the fiscal services;
simplification and stabilisation of the tax laws;
a reduction in the tax burden;
reorganisation of supervision over the tax authorities;
an increase in average earnings in the tax service to PLN 5,000 (€1,470) gross a month over a two-year time span;
the definition of a clear career development path for tax authority employees.
The trade union representatives made clear that the pay increase of 9.3% guaranteed in the agreement signed between the government and NSZZ Solidarność in 2007 was insufficient. In March 2008, discussions on this issue took place between the trade union and MF, which is currently headed by Jan Vincent-Rostowski. The final government offer provided for a pay increase of PLN 245 (€72) a month in 2008. However, the Federation of Treasury Employee Trade Unions (Federacja Związków Zawodowych Pracowników Skarbowych, Federacja ZZPS), for its part, was demanding PLN 500 (€147) a month and threatened industrial action coinciding with the April 2008 deadline for submitting personal income tax returns for 2007.
Protest begins
On 10 March 2008, employees of the tax authorities – given the lack of progress in talks with the government – began a work-to-rule. Apart from reiterating their previous demands, they also asked that Minister Vincent-Rostowski should exempt their earnings for the previous year from income tax. Moreover, the workers announced that, if no agreement was reached, they would take leave on demand in late April, when the deadline for filing personal income tax returns had passed. No deal was forthcoming and, accordingly, the National Section of Treasury Employees of NSZZ Solidarność embarked on a three-day protest on 28 April. Many tax office workers took leave or went to give blood, but the work of the offices continued at this busy time of year without major disruption.
Commentary
The need to reform the state administration in Poland is undisputed. However, in light of the ever-changing political climate and the political opportunism of successive government cabinets, legitimate questions arise as to the existence of a firm resolve to overhaul the fiscal system. If the present situation continues, the ‘brain drain’ of trained fiscal officials will escalate into a major problem. Thus, it may be advisable to consider possibilities for adjusting the system that defines remuneration in the public sector, by encouraging regular and honest social dialogue in the sector.
Jacek Sroka, Institute of Public Affairs (ISP)
Eurofound recommends citing this publication in the following way.
Eurofound (2008), Employees of Polish tax authorities protest over low pay, article.
