Social partners suggest amendments to anti-crisis legislation

Only half a year since the adoption of anti-crisis legislation in Poland, the social partners are highlighting the need to amend the Act on alleviation of economic crisis effects on employees and employers, citing the allegedly low effectiveness of its support measures. By the end of January 2010, just over 100 employers had reportedly requested public subsidies to maintain the employment of fewer than 10,000 workers.

In July 2009, the Polish parliament adopted an anti-crisis legislative package consisting of two bills: the amended Personal Income Tax Act, allowing for tax exemptions on allowances paid by trade unions and on vouchers convertible to goods or services, and the Act on alleviation of economic crisis effects on employees and employers (PL0909019I). The anti-crisis laws are set to expire at the end of 2011. The anti-crisis act contains a number of support measures, the most significant of which comprises subsidising the remuneration costs of employees working part time or remaining idle due to a temporary halt of operations at companies in ‘temporary financial difficulties’, defined as a ‘decrease in sales by at least 25% experienced over three consecutive months after 1 July 2008’.

Trade unions seek pay increases

In early 2010, the national statistics confirmed that the Polish economy had never slipped into recession, with real gross domestic product (GDP) growing by 1.7% in 2009. These results have prompted trade unions to abandon their moderate position on wages in 2009, in favour of pressing for pay increases (PL1002019I).

In addition, at national level, the trade unions are bringing pressure to bear on the government, demanding a ‘roadmap’ for the future increase in the national minimum wage towards 50% of the gross average pay level. At the moment, the gross minimum monthly wage amounts to PLN 1,317 (€332, as at 2 March 2010) and is equivalent to 42% of the average pay in Poland.

Anti-crisis legislation under review

Results of the support measures provided for in the anti-crisis act were published recently and are not impressive: by late January 2010, only 111 employers had requested public subsidies to maintain the employment of 9,577 workers. Not surprisingly, these findings have been followed by a wave of voices pointing to the need for adjusting the legislation to allow for easier access to financial aid.

Lowering eligibility threshold

According to the All-Poland Alliance of Trade Unions (Ogólnopolskie Porozumienie Związków Zawodowych, OPZZ), the threshold defining the decrease in sales should be lowered from the current 25% to 15%. Furthermore, OPZZ suggests extending the reference period over which the loss in sales occurred back to 1 January 2008.

In its official position (in Polish, 71Kb PDF), the Confederation of Polish Employers (Konfederacja Pracodawców Polskich, KPP) argues that the threshold should be reduced to 20%. KPP also recommends repealing the regulation of the act under which employers benefiting from subsidised employment are not permitted to carry out redundancies over the period of six months after receiving the aid. Another significant change advocated by KPP refers to simplifying the regulations requiring employers to present a restructuring programme, which has to include a feasibility study, in order to apply for public aid. In both cases, the confederation claims that the current regulations might discourage potential beneficiaries from applying for support.

Reducing administrative burden

The Vice-President of the Business Centre Club (BCC), Zbigniew Żurek, agrees with this view, telling the daily newspaper Dziennik Gazeta Prawna that ‘the variety of documents, copies and all sorts of information the companies are required to submit simply scares them away from applying for subsidies’. The employers also emphasise the need for widening access to enterprise training funds from the Labour Fund (Fundusz Pracy) so that all employers interested in such public support can receive it.

Reinstating restrictions on fixed-term contracts

In addition, trade unions call for revoking the controversial clause of the act that effectively suspends Clause 25.1 of the Labour Code, which stipulates that only two consecutive fixed-term employment contracts are allowed.

Next steps

The process of amending the act now enters the phase of consultation, so it will be the subject of the next round of talks in the Tripartite Commission for Social and Economic Affairs (Komisja Trójstronna ds. Społeczno-Gospodarczych). If the social partners and the government succeed in reaching a consensus on specific modifications of the law, the parliamentary proceedings on altering the act will then follow.

Commentary

Assessing the effects of the anti-crisis legislation so far leads to the conclusion that the support measures have not worked as expected by the legislature. Considering the arguments put forward by the social partners, it seems that the primary reason for the limited effectiveness of the anti-crisis policy lies in the excessively complicated regulations. The social partners’ proposals aim to simplify the regulations and expand the scope of eligibility. However, while the government appears attentive to the voice of the social partners, this will not necessarily translate into acceptance of all their proposals.

Jan Czarzasty, Institute of Public Affairs (ISP)

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