New labour market legislation adopted

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An Act regarding the promotion of employment and labour market institutions was passed by the Polish parliament in April 2004 and started to come into force on 1 May. The new legislation deals with the state’s duties with respect to fostering employment, assuaging the impact of unemployment and 'activating' unemployed people. An important role in the achieving these objectives is envisaged for the social partners. Adoption of the Act marks the latest step towards harmonisation of Polish legislation with EU law in this area.

Towards the end of April 2004, the lower chamber of parliament (the Sejm), having taken into account amendments proposed by the upper chamber (the Senate), enacted a legislative Act regarding promotion of employment and labour market institutions, and the President promptly signed it into law.

The legislation was adopted in something of a hurry, with the aim of adopting by 1 May 2004 - the date of Poland's accession to the EU - so as to qualify for European Social Fund resources out of its 2004 budget for employment activation (the amount at stake was in excess of PLN 1.5 billion). The new Act supplants a 1994 Act regarding employment and counteracting unemployment and a 2001 Act on facilitating the employment of school leavers. Furthermore, the provisions of the previous Act governing disbursement of pre-retirement benefits (PL0211108F) will be replaced by a separate statute dealing with these matters, which has already been approved by parliament and is now awaiting the signature of the President.

The legislative Act regarding promotion of employment and labour market institutions is one of the cornerstones of a legislative package (known as the 'Hausner plan') prepared by Jerzy Hausner, the Deputy Prime Minister charged with economic and labour affairs in the now-disbanded cabinet of Prime Minister Leszek Miller. The draft was ready well before the end of 2003 (PL0310104F), but controversy surrounding the Hausner plan as a whole meant that its enactment was delayed until the last moment. The new Act - as the parliament ultimately acknowledged, if somewhat grudgingly - is a prerequisite for smooth incorporation of Poland into the EU's EURES network of employment services.

The Act comes into force in stages. Certain provisions have been in force since 1 May 2004, while the Act as a whole became law on 1 June, with isolated provisions coming into force on 1 September 2004 and on 1 January 2005.

Overview of new regulations

The Act regarding promotion of employment and labour market institutions provides that the state’s labour market policies are based on a 'domestic plan of pro-employment activities' drawn up by the cabinet with due heed for pertinent provisions of the EU's European employment strategy.

The new Act introduces several concepts previously unknown in Polish law. The first of these is the definition of a catalogue of employment service entities, public as well as private:

  • the public employment services - ie the employment offices at county and regional (voivodship) level;
  • the 'volunteer labour corps'- an entity financed out of the state budget that works towards the objective of enabling young people to continue their education and to gain vocational skills;
  • employment agencies - a category which includes labour placement agencies, personnel consultancies and temporary staffing agencies;
  • training institutions - commercial entities that train unemployed people;
  • social dialogue institutions; and
  • local partnership institutions (see below).

The Act defines the basic types of labour market services, namely:

  • labour market intermediation/placement;
  • EURES services;
  • career counselling and information;
  • assistance with active job-seeking; and
  • organisation of training.

As compared with the old regulations governing labour market-related matters, the new Act places more emphasis on 'activation' than on welfare. It enshrines a dramatic overhaul of the employment services’ operating model. These institutions have previously acted as a dispenser of unemployment benefits, but now their task is to aid the jobless in actively looking for work. A series of measures incorporated in the Act is addressed specifically to those groups within the population who are most threatened by unemployment: the youngest (aged below 25) and the oldest (over 50) participants in the labour market; long-term unemployed people (those without work for two years or more); unskilled people; lone parents of children aged up to seven; and people with disabilities. For example, for people aged 50 or more, time spent receiving unemployment benefit will be credited towards the combined length of employment necessary to qualify for a retirement benefit. However, the Act concentrates more on activation measures. The public authorities may: subsidise - for a period of up to 12 months - commuting and accommodation costs insofar as they relate to taking up paid employment or an internship/apprenticeship; subsidise the purchase of equipment needed for work/business activity; and reimburse to employers that recruit unemployed people the social insurance contributions paid in relation to these workers.

The new Act provides a legal basis for the establishment by employers of self-financed training funds, expenditure from which can qualify for partial reimbursement from the public authorities. Also, where an employee is sent on training leave (another new concept introduced by the Act) of at least 22 days’ duration, an unemployed person assigned by the labour office can be recruited temporarily to fill the absent worker's job (on the basis of a 'contract for substitution'), and the cost of training and remunerating this unemployed person may be partly reimbursed from the Labour Fund (Fundusz Pracy) (PL0212106F).

The Act also provides for 'monitored redundancy programmes', which are mandatory for employers employing at least 100 people and contemplating collective redundancies. Under such a programme, the employer collaborates with the labour office to provide the redundant employees with support in the area of training, career counselling and employment intermediation, and to assist them with active job-hunting.

The Act includes many provisions devised to motivate unemployed people to look for jobs actively. One of these instruments is the possibility for an unemployed person who takes up a job paying less than the minimum monthly wage to continue drawing a portion of his or her unemployment benefit. As regards unemployment benefits themselves (PL0210107F), the maximum period over which they can be paid out has been reduced; while, nominally, such benefits can still be collected over a basic period of six months, this limit applies only to areas where the unemployment rate is not more than 125% of the national average (up from 100% previously). In practical terms, this means that some unemployed people who would be entitled to benefit for one year under the old rules will lose this entitlement. The trade unions protested against this provision, arguing that it will translate into a shortening of the unemployment benefit eligibility period in almost 150 counties.

An important change made by the new law is the elaboration of rules governing the registration of employment agencies (PL0308103N), and also the institution of a duty whereby people engaging in professional labour market intermediation and advice must obtain a licence issued by the minister charged with labour affairs.

Social partners' role in employment promotion

The role and the duties of the social partners in their capacity as a legislatively designated 'institution' of the labour market, and also the relevance of social dialogue for employment promotion, are defined in Chapter VIII of the new legislative Act regarding promotion of employment and labour market institutions. The underlying premise of the Act is that labour market policies are pursued by the government in cooperation with the social partners; the platforms for such cooperation are to be presented in the National Employment Council and in the regional employment councils, which have the status of review and advisory bodies. The trade unions and the employers' associations join the public employment services in the provision of EURES services. Cooperation between the public authorities and the social partners with respect to fostering employment can also assume the form of initiatives at the county and regional levels. Local authorities may also commission the social partners (as they may all other labour market institutions other than the labour offices) to perform tasks relating to employment promotion and to vocational activation of unemployed people. Duly empowered entities may also approach the authorities with initiatives of their own. Work may be commissioned by way of an open bidding procedure; in their execution of the projects, selected entities may receive public funding in the form of earmarked grants.

Commentary

In the course of the discussion of the draft legislative Act regarding promotion of employment and labour market institutions, as proposed by the government, members of parliament did not voice any material objections, and trade union complaints about the more stringent unemployment benefits regime were ignored. In the public debate, voices were discernible to the effect that the Act, while indubitably necessary to achieve harmonisation with European law and to secure access to EU funding, does not make for cohesive foundations for efficient labour market policy in Poland. Given the hurry in which the new law has been approved, at least a few rounds of amendments to the Act and to subsidiary legislation associated with it are a likely prospect for the near future. (Jan Czarzasty, Institute of Public Affairs [Instytut Spraw Publicznych, ISP], and Warsaw School of Economics [Szkoła Główna Handlowa, SGH])

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