Poland: Latest working life developments – Q1 2018

The conclusion of proposals to replace the labour codes, new rules on the employment of foreign citizens, and reactions to draft legislation on a new pension scheme are the main topics of this article. This country update reports on the latest developments in working life in Poland in the first quarter of 2018.

Controversy around new draft labour codes

On 14 March 2018, the Labour Law Codification Committee published new draft labour codes. The proposals call for the 1974 Labour Code to be replaced by two codes (covering individual and collective labour). Critics have lamented the tight 18-month timeframe for drafting the measures, and, while the committee met its deadline, controversy has surrounded the conclusion of the process. Most problematic for the government were several controlled leaks to the media on the codes’ provisions, which gave an incoherent picture and drew attention to disappointment among some committee members.

Contentious aspects of the proposals include new employer powers to control working time. There are also concerns about enhanced measures to protect employment relationships (the legal link between employees and employers) and about limitations on companies’ use of freelancers and subcontractors. The proposals introduce a number of innovations, however, such as the collective labour code, which includes measures to promote collective bargaining (scarcely a feature of Polish industrial relations).

The prospects for translating the codes into law now look bleak and the government has made it clear (unofficially) that a parliamentary debate on labour law reform will not happen soon.      

New rules make it easier to employ foreign citizens

On 1 January 2018, the government brought into force changes in the law to make it easier to hire foreign workers.

The reforms include a new ‘seasonal work permit’ to allow foreign citizens to work in Poland’s farming, agriculture and tourism sectors for up to nine months per year. The procedure for issuing the permit is simpler compared to other work permits (it is issued by local labour offices). Furthermore, nationals of six countries (Armenia, Belarus, Georgia, Moldavia, Russia and Ukraine) will enjoy preferential treatment when applying and will have considerable scope to transition into permanent employment.

The amendments to the law (the Act on Promoting Employment and Labour Market Institutions) address growing labour supply shortages, which continue to exist despite years of rising worker immigration.

New figures showed that inward labour migration to Poland reached new highs in 2017. According to the Ministry of Labour, there were 1.8 million ‘declarations of intent’ to offer jobs to foreign citizens through the government’s simplified entry procedure, which allows citizens of six countries (indicated above) to work in Poland for six months without work permits (1.7 million requests applied to Ukranians - UA). The volume of declarations was a sharp rise on 1.3 million requests in 2016 (1.2 million UA) and on only 780,000 in 2015 (760,000 UA).

There were also steep increases in the numbers of work permits issued to citizens of other countries, rising to 235,000 in 2017 from 121,000 in 2016 and only 61,000 in 2015.

Government’s pension proposals get mixed reactions

In March 2018, the government published early draft legislation for a new pensions scheme (the ‘employee capital plan’ - PPK). The proposed private, voluntary scheme would add a third pillar (voluntary, private funded accounts, including savings plans) to Poland’s pension system.

The proposed features of PPK are as follows:

  • All working citizens (aged 19-55) will enrol in PPK by default and will have three months to quit the scheme without penalty. After two years, employees who quit PPK will be re-enrolled unless they opt out again.
  • Employees will contribute 2% of their gross monthly salary (deducted from net wages). Employers will pay-in a further 1.5%.
  • The state will contribute a welcome sum of 250 PLN (€60) plus annual top-ups of 240 PLN (€56).
  • At 60 years of age, PPK members will be able to withdraw 25% of their savings. They will receive the remainder in monthly payments over 10 years.
  • PPK members will be able to quit the scheme anytime, although this will result in financial penalties (including losing the state-paid premiums).
  • PPK savers can pass on their savings to family members after death.

The expansion of PPK will be incremental, beginning with large private employers (250+ staff) in 2019.

While the prospect of low incomes in old age has boosted public interest in the plans, social partners have expressed serious doubts. The Solidarity trade union (NSZZ) has argued that PPK will not help the 'working poor’ and minimum wage recipients, who are likely to be excluded from the system.      

Commentary

It seems that no one is happy with the long awaited draft labour codes, which means the proposals are unlikely to progress in their current form. The issue of labour migration has attracted public attention, although the recent legislative changes are essentially an effort to comply with the European Union’s legal requirements. The pension debate continues and will not end any time soon, although the proposed system’s future looks bleak without the support of the social partners.

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