Unions criticise draft budget for 2005

Download article in original language : PL0410103NPL.DOC

In September 2004, Poland's three main central trade union organisations issued a joint declaration criticising the government's draft national budget for 2005, arguing that is not in line with the legitimate expectations of society at large.

There is much to suggest that the Polish government faces an uphill struggle in winning acceptance of its state budget proposal for 2005. The most striking premise of the draft budget - officially presented on 28 September 2004 - is a significant reduction of the public deficit to PLN 35 billion (from PLN 45.3 billion in 2004) and a goal of keeping public debt below 60% of GDP. The government has officially distanced itself from various proposals for tax increases being made in public debate. However, within the cabinet, opinion on this issue appears divided, so changes of fiscal policy can not be ruled out. It is clear that the budget proposal strives towards fulfilment of the Maastricht criteria for EU Economic and Monetary Union; it is presumed that, if the budget is accepted as proposed and savings discipline can be upheld in the coming years, the Maastricht criteria will come within reach in 2007, paving the way for Poland’s membership of the 'euro-zone'. However, commentators point out that a parliamentary election is scheduled for 2005 and, accordingly, suggest that the temptation to create an 'electoral budget' that allows for more spending will be strong.

A foretaste of the debate to come has been provided in the reactions of the social partners prior to official publication of the budget proposals. The trade unions have displayed unusual solidarity in their criticism of the draft budget, to the point where the three union organisations with representative status for purposes of the Tripartite Commission for Social and Economic Affairs (Komisja Trójstronna do Spraw Społeczno-Gospodarczych) (PL0210106F) - the Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność), the All-Poland Alliance of Trade Unions (Ogólnopolskie Porozumienie Związków Zawodowych, OPZZ) (PL0208105F) and the Trade Union Forum (Forum Związków Zawodowych, FZZ) (PL0212109F) - published a joint declaration on 21 September in which they stated that 'the systemic solutions set out in the draft national budget mostly limit themselves to a quest for savings in the social sphere'.

The unions argue that, if the budget is enacted in its present state, real-terms spending on social purposes by the state will be decreased by 1.9%. The unions also state in their declaration that 'we do not find in the draft budget act any effort to explain the lack of real-terms pay increases for several hundred thousand employees of budget-funded entities'- the result, the signatories argue, will be a widening gap between remuneration in the public and the private sectors. The unions are adhering to their demand that pay in the area funded by the state budget for 2005 be increased by 5.5% (ie the inflation forecast for 2004, which is 3%, plus half of the GDP increase for the current year, or 2.5%) rather than adjusting them with reference to an index of consumer goods and services price increases (3%), as the government would have it (PL0410101F). The unions also object to a proposal to increase the minimum wage by 3%, arguing that the brunt of such a solution would be borne by Poland’s poorest. Finally, the unions appear to place little stock in government promises concerning simplification of the tax system and curtailment of the 'underground' economy (PL0406107T).

Following official presentation of the draft budget Act in parliament on 28 September, a lively debate will now ensue, and many alternatives to the government's proposals are expected.

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