Legislative amendments aim to boost employment

In mid June 2008, the Polish Ministry of Labour and Social Policy unveiled a draft set of amendments to the legislative Act on the promotion of employment and labour market institutions. The main objective of the proposed changes is to enhance measures designed to reintegrate unemployed persons into the labour market. Funding for training is an important provision, while stricter eligibility criteria will apply regarding unemployment benefit.

Socioeconomic context

Representatives of the Ministry of Labour and Social Policy (Ministerstwo Pracy i Polityki Społecznej, MPiPS) have explained that the introduction of amendments to the Act on the promotion of employment and labour market institutions is inevitable in view of the changes which have taken place in Poland since the adoption of the original Act in 2004 (PL0405105F). Although a substantial decline in the unemployment rate may be observed over the past few years – from 20.6% in January 2004 to 9.6% in June 2008 – the high proportion (42.8%) of long-term unemployed persons still constitutes a serious problem.

One of the challenges with which the labour market institutions have to cope is the fact that only a small share (15%) of unemployed persons are entitled to unemployment benefit; the remainder of unemployed people have to rely solely on the support of the social welfare system. Moreover, it is worth noting that the decrease in the unemployment rate, which is a consequence of both economic growth and labour migration, has generated a new problem – a shortage of qualified workers in the Polish labour market.

Content and objectives of legislative changes

Funding for training

The government’s draft set of amendments, published in mid June 2008, envisage that unemployed people who are still learning should receive scholarship funding, which will amount to 120% of the unemployment benefit, to be increased at the beginning of 2009. This means that an unemployed person who participates in some form of training would get a monthly sum of PLN 1,010.40 (€287 as at 6 November 2008). Furthermore, for training participants aged 45 years and over, the grant will amount to 140% of the unemployment benefit, or PLN 1,178.80 (€335).

Stricter conditions

According to the proposals put forward by MPiPS, the amount of the unemployment benefit will increase from PLN 551.80 (€157) to PLN 788 (€224). However, eligible unemployed persons will only be entitled to this amount for the first three months. Over the subsequent nine months, unemployed people will receive a reduced benefit of PLN 563 (€160). Similarly, stricter conditions will apply in relation to being recognised as unemployed. Rejecting a job offer or refusing to participate in training will lead to a withdrawal of the status of being unemployed for a period of four months in the case of a first-time refusal; if the refusal is repeated, this status will be withdrawn for six months, or for nine months if the person rejects a job or training offer a third time.

Unemployed persons will still be entitled to apply to the head of a county (starosta) for partial financing of their postgraduate studies. It is envisaged that this financial support will cover up to 100% of the total cost of studies; at present, the maximum threshold is up to 75%. However, the support cannot exceed 300% of the average remuneration, amounting to PLN 8,900 (€2,530). The above proposal is also valid for employees threatened by dismissal during the termination notice period, when the termination is due to reasons not attributable to the employees.

Promoting older workers and foreign workers

The legislative amendments will enable employers that decide to employ a person aged over 50 years to make considerable savings: they will be exempted from paying the contributions towards the Labour Fund and the Guaranteed Employment Benefit Fund for one year. A total exemption from paying contributions towards these funds will apply to all employed men aged over 60 years and all employed women aged over 55 years until their retirement, which is set at 65 years for men and 60 years for women.

Moreover, the amendments aim to simplify the regulations concerning the employment of foreigners. Basically, the requirement to have a job offer will be eliminated from the process of getting a work permit, which will shorten the whole procedure.

Commentary

The proposed amendments to the Act on the promotion of employment aim to resolve a major problem in the Polish labour market – the insufficient level of labour activity among the Polish population. However, whether the above proposals will meet expectations remains to be seen, not least because the act of 2004, which sought to encourage unemployed persons into the labour market, appeared to be highly unsatisfactory and outdated.

Regarding the social partners’ opinions on the amendments, the employers have expressed favourable views. According to employer groups, all regulations allowing for the employment of qualified workers are welcome. By contrast, trade union organisations seem to have been far less interested in the above amendments, issuing no official statement on the matter.

Piotr Sula, Institute of Public Affairs (ISP)

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