Reform proposed of employment measures for people with disabilities

Towalski, Rafał

Ħarsa ġenerali

Artikolu

Reform proposed of employment measures for people with disabilities

Ippubblikat: 27 January 2004

The proportion of people with disabilities who are in employment in Poland is one of the lowest in the OECD. Experts attribute this to factors such as an inefficient structuring of the disability benefits system, the relatively low level of education among disabled people, and various special rules on their working time. A programme for restructuring public expenditure unveiled by the government in October 2003 sets out proposals for changes intended to improve the labour market activation of disabled people.

Download article in original language : PL0312103FPL.DOC

The proportion of people with disabilities who are in employment in Poland is one of the lowest in the OECD. Experts attribute this to factors such as an inefficient structuring of the disability benefits system, the relatively low level of education among disabled people, and various special rules on their working time. A programme for restructuring public expenditure unveiled by the government in October 2003 sets out proposals for changes intended to improve the labour market activation of disabled people.

According to data from the Ministry of the Economy, Labour and Social Policy ( Ministerstwo Gospodarki, Pracy i Polityki Społecznej, MGPiPS) data, there were 611,000 people with disabilities in employment in 2002 - see table 1 below. The proportion of all disabled people who are in employment is one of the lowest in the Organisation for Economic Cooperation and Development (OECD) countries, at 20.8% (compared with an OECD average of 43.7%). At the same time, however, people with disabilities make up a proportion of all those in employment which slightly exceeds the OECD average. The largest single group of disabled people in employment are employed workers.

**Table 1. People with disabilities in employment, 2002**
Status	.
Employers, self-employed:	238,000
- in rural areas	170,000
- in cities	69,000
Family members rendering assistance	86,000
Employed workers:	287,000
- in 'protected labour entities'	207,000
- in the open market	87,000
Total	611,000

Source: Ministry of the Economy, Labour and Social Policy.

The 'index of vocational activity' (measuring the proportion of a group employed or seeking employment) for disabled people in Poland was only 17.8% in 2002, as compared with 55% for the population at large.

According to the most recent official study on the economic activity of the population, the unemployment rate for people with disabilities in Poland stood at 18.5% in late 2000, compared with 18.4% for the general population. As part of this study, 157,000 disabled people without gainful employment were identified, a figure which significantly exceeded that of disabled people registered as unemployed with the state labour offices (46,000 in the second half of 2001). This difference may be accounted for by the fact that many people look for work without the intermediation of the public employment services, while those drawing disability benefits and not in employment may not register as unemployed, only as seeking work. It is the disability benefits system which is frequently cited as a major obstacle to the labour market activation of people with disabilities.

Reasons for low activity levels

The principal reason why many disabled people in Poland remain economically inactive is thought by experts to lie in the ready availability of disability benefits. Some of these people have qualified as 'disabled' in the legal sense (thus becoming eligible for disability benefits arising from their inability to work) and are said to regard this status as an alternative means of support, given the loss of their jobs. Many commentators point to this tendency as a factor reducing the employment indicators for people with disabilities

The particularly difficult situation faced by people with disabilities in the labour market also arises from their generally below-average level of education. Half of all disabled people have not proceeded beyond elementary school education, while approximately 19% have been educated to secondary level and only 4% hold university degrees. While university graduates are the smallest group in terms of education level among people with disabilities, it is they who take up work most often, with those with a lower-level of education faring much worse.

According to research, possession of a university diploma increases a disabled person’s chances of finding work by 2.7 times only; the same indicator for the population as a whole is 4.2. Even greater disproportions persist among those with general secondary education only and those with vocational training only.

An appreciable disincentive for employers to employ people with disabilities is thought to be the catalogue of statutory special working time rules applying to disabled people under Polish labour law. These include:

shorter working time (not more than 40 hours per week for those with a minor disability and not more than 35 hours for those with a moderate or severe disability);
a break for therapeutic exercise included in working time; and
additional recreational leave, plus paid leave for rehabilitation.

According to calculations produced by the Ministry of the Economy, Labour and Social Policy, the additional expenses entailed for employers on account of the above regulations are as follows:

23% of the gross remuneration of a person with a moderate or severe disability; and
3% of the gross remuneration of a person with a minor disability.

At the same time, these working time 'privileges' appear to be bringing little benefit to the disabled people concerned. Economic activity of the population studies indicate that, in spite of the statutory provisions concerning maximum working time for disabled people (see above):

64% of disabled people with a moderate disability and 60% of those with a severe disability actually work more than 40 hours per week (the figures apply to those employed on a full-time basis); and
13% of disabled people with a moderate disability and 13% of those with a severe disability work more than 50 hours per week.

It has also been claimed that the statutory 'privileges' extended to people with disabilities impair their chances of successfully competing for jobs with non-disabled people or with disabled people with less serious disabilities. Accordingly, great importance attaches to the solutions employed to increase employment among people with disabilities.

Supporting the employment of disabled people

The institutions seeking to increase the involvement of people with disabilities in economic life are:

the government ombudsman for disabled people;
the National Consultative Council for Disabled People;
the State Fund for Rehabilitation of Disabled People (Państwowy Fundusz Rehabilitacji Osób Niepełnosprawnych, PFRON);
local government bodies at regional (voivodship) and county levels; and
non-governmental organisations (NGOs).

PFRON is a state-operated earmarked fund which supports activity geared to the social and professional rehabilitation of disabled people. At least 65% of the Fund’s revenues are channelled into employment and vocational rehabilitation. Most of PFRON’s revenues (90%) originate from obligatory contributions paid by employers with at least 25 employees, unless at least 6% of their employees are disabled.

The official division of responsibilities among these various institutions is set out in table 2 below.

**Table 2. Institutional division of responsibilities with respect to the employment and vocational activation of people with disabilities**
Institution	Government ombudsman for disabled people	National Consultation Council for Disabled People	PFRON	Regional and county governments	NGOs
Duties	Formulation of general premises of employment policy and of vocational and social rehabilitation. Preparation and review of draft legislation concerning employment policy and of vocational and social rehabilitation. Cooperation with NGOs.	Review of plans on employment policy and of vocational and social rehabilitation. Review of reports on operation of PFRON.	Support for social and professional rehabilitation of disabled people, including employment and vocational rehabilitation. Funding to preserve jobs at risk of being cut. Establishment and operation of vocational counselling services.	Preparation of regional programmes for improving quality of life in social and vocational spheres. Cooperation with NGOs and foundations. Counties draw up vocational rehabilitation and employment programmes concordant with regional development strategies. Counties liaise with state administration and local government bodies. Counties attend to employment intermediation services, vocational counselling and training, and cooperate with labour inspectors.	Establishment of associations, unions, chambers and employer and employee organisations at national level (as commissioned by PFRON and by counties). Establishment of vocational activation entities (financed by PFRON).

Breakdown of expenditure

The defining characteristic of the approach to employment support adopted in Poland is that most resources are channelled to the employers of people with disabilities, rather than to the disabled people themselves or to institutions which assist them, for instance, in finding jobs. Of PFRON’s combined expenditures for vocational rehabilitation in 2002, which amounted to PLN 859 million, some 96.2% was devoted to subsidising employers of disabled people.

The value of support extended to employers of disabled people per disabled employee is quite varied, depending on the status of the employer in question. The employer category which gains the most by way of public funds for vocational rehabilitation is the 'protected labour entities'- see table 3 below.

**Table 3. Subsidies to employers for employment of people with disabilities, 2002 (estimates)**
.	Public aid (per year)	Average subsidy per disabled employee (per month)	No of employees with significant disability
Protected labour entities	PLN 2,780 million	PLN 12,111	7,000
Employers with up to 24 employees	PLN 227 million	PLN 367	2,000
Disabled people pursuing business or agricultural activity	PLN 27 million	PLN 9	17,000

Source: PFRON.

Table 3 clearly illustrates the major inequalities observed in the division of funds, which many commentators tend to view as being irrational.

The highly complex subsidies system in force until December 2003 has brought about a state of affairs whereby funds are divided unequally even within the confines of the 'protected labour' sector. In many instances, the exact value of the subsidy has not turned on what might be considered logical criteria, such as the number of disabled people employed or the severity of their disabilities. This situation is set to change as of January 2004, which will see the introduction of direct subsidies to the pay-checks of employees (see below).

Protected labour sector

According to the relevant regulations, the status of 'protected labour entity' is extended to employers carrying on business activity for at least 12 months, employing at least 25 workers (as quantified in terms of standard full-time positions), and meeting the following conditions as regards the employment of people with disabilities:

at least 40% of employees must be disabled, including at least 10% with a significant or moderate disability; and
at least 30% of employees must be blind, emotionally disturbed, or mentally disadvantaged people with a significant or moderate disability.

An employing entity designated as a protected labour entity is exempted from taxes, VAT and public financial encumbrances other than taxes. Protected labour entities disburse the funds accruing to then as a result of these exemptions as follows:

10% is contributed to PFRON; and
90% is paid into an in-house social benefits fund.

Protected labour entities are also eligible for PFRON subsidies to cover the increased costs entailed in employing disabled people and for refunds of training expenses. They also benefit from assistance from local governments.

The fact that no ceilings are imposed on the value of subsidies to protected labour entities means that Poland has the largest protected labour sector in the world. As of late September 2003, there were 2,988 such entities operating across the country, employing 208,000 people with disabilities (according to the protected labour entity database). The majority of these engage in manufacturing activity of some description.

Pending changes

In October 2003, the government unveiled a restructuring programme for the country’s public finances (PL0312107F). One of the issues addressed is that of the employment of people with disabilities. The underlying ideas are that: disabled people should be encouraged towards greater labour market activity; subsidies should be reduced; existing funds should be put to more effective use; and more financing from the European Social Fund should be sought. On this basis, a number of concrete initiatives are to be taken, including:

the elimination of barriers impeding the employment of people with disabilities, notably by doing away with the special working time rules. It is hoped that, in this way, the cost of employing disabled employees will be reduced and disabled employees and job candidates will have greater possibilities for competing with their non-disabled counterparts;
the reorganisation of expenditure to assist employers to employ disabled people. The first steps in this area have already been taken, with the amendment in December 2002 of the legislative Act regarding the vocational and social rehabilitation and employment of disabled people; and
liquidation of PFRON. It is proposed that its responsibilities pass to the state budget. The authors of the programme have gone to considerable lengths to emphasise that this will not entail any reduction in the funds earmarked for disabled needs.

The government is also proposing significant changes to the disability benefits system. The function of disability benefit would change, and many entitlements in this respect now in force would be subjected to verification (recent census data suggest that there is a high proportion of disability benefit claims in which abuses are involved). Furthermore, it is proposed that state assistance for the employment of people with disabilities will shifted from employers to the disabled people themselves.

Commentary

Viewed in absolute terms, the scale of employment of disabled people in Poland is very modest; nonetheless, this area merits special protection on the part of the state.

The changes proposed by the government in late 2003 have been opposed by people with disabilities, and this is particularly true of the proposed closing of PFRON. Opponents of this step maintain that it will lead to a dispersal of the funds earmarked for disabled people's employment. Representatives of people with disabilities have also been voicing their opposition to new principles governing operation of protected labour entities.

The government, however, has been quite unequivocal as regards its determination to implement what it views as necessary changes. It is difficult to predict whether the government programme will indeed bring the results hoped for. Also, it is impossible not to agree with the sentiment expressed by the disabled people themselves that they are the last group at whose expense economising manoeuvres should be made. (Rafał Towalski, Warsaw School of Economics [Szkoła Główna Handlowa, SGH] and Institute of Public Affairs [Instytut Spraw Publicznych, ISP])

Il-Eurofound jirrakkomanda li din il-pubblikazzjoni tiġi kkwotata kif ġej.

Eurofound (2004), Reform proposed of employment measures for people with disabilities, article.