Poland: Social partner’s involvement in unemployment benefit regimes

  • Observatory: EurWORK
  • Topic:
  • Social protection,
  • Published on: 20 December 2012



About
Country:
Poland
Author:
Jan Czarzasty
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The last major reform of the unemployment benefits regime in Poland took place in 2004 on the eve of the EU-accession. The reform marked a shift towards more pro-active labour market policy of the state. The legislation in force foresees number of directions in which social partners may become involved in the labour market but it does not expand to the field of unemployment benefits. The national regime does not embrace ‘unemployment insurance’ component, while ‘unemployment assistance’ is not earnings-related.

1. The characteristics of the UB system in the country

1.1. Recent changes/transformations of the UB system in your country:

1.1.1. In the last 10 years, has the country’s UB regime been modified? Have new forms of interventions been introduced?

  • Regarding the UI:

No, UI does not exist in Poland

  • Regarding the UA:

Yes, the major change in the UB system in Poland took place in 2004.

However, as far as the UA are concerned, no major changes occurred, concerning the coverage eligibility, duration, financing (as defined for the purpose of the study) and the setting rules, which continues to ignore the earnings aspect in determining the quantity of the unemployment benefit, which until today remains a fixed, social-minimum related benefit set by law.

The Act underwent through multiple amendments since its inception, the most important of which, from the perspective of the study, took place in 2008, when the maximum duration of the unemployment benefit was shortened from 18 to 12 months (effective as of 1 January 2009).

  • Regarding the SA (if relevant):

In 2004 the Social Assistance Act was adopted. According to that piece of legislation, the Tripartite Commission for Social and Economic Affairs (Trójstronna Komisja do Spraw Społeczno-Gospodarczych, hereinafter: the Tripartite Commission) enjoys the right to be consulted and voice an opinion on the issue of the amount of family benefits and income thresholds: each year, by 15 May the government (the Council of Ministers) should submit to the Tripartite Commission their proposal regarding i.a. income thresholds used to determine eligibility to social assistance to families and, subsequently, the Tripartite Commission should produce the opinion by 15 June. The opinion, however, is not binding.

1.1.2. For each of these changes/innovations indicate:

  • date of introduction:

The current system was introduced in 2004.

  • who took the initiative (government, unions, employers’ associations, other organisations):

The initiative came from the government. In 2003-2004, the government prepared a comprehensive reform of public finances under the name “Programme for Rationalisation and Reduction of Public Expenditure” (Program uporządkowania i ograniczenia wydatków publicznych, hereinafter: the Programme), which included concepts for re-arranging the labour market policy. The Programme resulted in a legislative package consisting i.a. of the draft legislation dealing with unemployment assistance and labour market activation. The Act on Promoting Employment and Labour Market Institutions (hereinafter: the Act) was enacted in 2004 (PL0405105F). The Act replaced the former legislation dealing with the area of unemployment, namely the Act on Employment and Counter-acting Unemployment of 1994.

  • the content of the change / of the new programme:

The Act was an expression of the state’s will to introduce the principles of the Active Labour Market Policy, so that the major strategic goal of the public policy regarding labour market – increasing the employment rate – could be attained. Thus the new system is 'activation'-oriented, unlike the former, which focused on welfare distribution. Furthermore, the new regime encompasses a wide circle of actors to take part in the labour market policy, the role previously restricted to government.

The lawmaker’s motives were reflected in the content of the new law, which introduced the notion of ‘employment services’ (both public and private): Public Employment Services (Publiczne Służby Zatrudnienia, PSZ), that is labour offices at district and regional (voivodship) , the 'volunteer labour corps', employment agencies, commercial training institutions, local partnerships institutions, and last but not least social dialogue institutions, including SPs.

  • the aim pursued:

Implementation of a system based on the Active Labour Market Policy approach, providing a range of labour market instruments assisting job-seekers in active pursuit of employment opportunities such as training, vocational activation, organisational and financial assistance to young people entering the labour market (subsidized internships, grants and loans for business start-ups), de-centralisation and professionalisation of labour administration, furnishing the minister responsible for the area of labour market (Minister of Economy and Labour at the time, Minister of Labour and Social Policy nowadays) with prerogatives to formulate National Action Plans for employment (PL0310104F).

1.1.3. For each of these changes / innovations please indicate from the main SP who was in favour or supported and who was against or resisted to it, and why:

As one of the new law’s objectives was to empower SPs, introduction of the new regime was not contested. Furthermore, the new legislation was adopted in a hurry, in order to beat the date of Poland's accession to the EU on 1 May 2004. Therefore, no significant objections were raised at the time.

1.2. The main characteristics of the UB system as it is now

Focusing now on the current situation, please specify the characteristics of the existing programmes:

1.2.1. Unemployment Insurance.

Irrelevant.

1.2.2. Unemployment Assistance. Are forms of UA present? If yes, please indicate their general characteristics with specific attention to:

  • Coverage:

The basic type of UA in Poland is “unemployment benefit” (zasiłek dla bezrobotnych). Other forms of UA include stipend (stypendium) for the unemployed on training, internship or vocational preparation.

In general, the “unemployment benefit” is available to any adult citizen who is registered as unemployed and prior to application for the UA was in employment either as employee or self-employed and had their social security (including the Labour Fund dues) and health insurance contributions duly delivered. It is important to note that being registered as unemployed gives the person right to health insurance (contributions paid by labour administration) which may be extended to other members of their direct family, provided they are not covered by health insurance in any other way. Furthermore, the unemployed are covered by social insurance, including all pensions-, disability-pensions- and accident-related contributions, which are paid by labour administration.

  • Eligibility:

In order to be considered eligible to the unemployment benefit, a person has to meet the following conditions:

  • having worked at least 365 days within 18 months preceding the official enlisting as the unemployed with the labour administration,
  • having collected at least the national minimum wage,
  • having had their social security (including the Labour Fund dues) and health insurance contributions duly paid.

Women returning to work following child-care leave, who subsequently lose employment are also eligible for UA, while still unemployed and registered with the labour administration.

In number of instances, a person may be found ineligible to the unemployment benefit, in particular if: the unemployed declines an offer of a job, training, internship, vocational preparation for adults, interventional work or public/community work; furthermore, the unemployment benefit may not be granted if the person refuses to undergo a medical/psychological examination aimed at determining their capabilities to work or participating in other forms of assistance defined by law (provided such person is asked for it) ; UA is not paid to the persons who already receive a training or internship stipend.

Furthermore, the rights to the unemployment benefit are narrowed for employees who leave their jobs voluntarily. Such persons become eligible for the benefit only after 90 days after handing a notice.​

Nevertheless, in the majority of case the Unemployment benefit is paid until the right expires, this is the case for the vast part of the unemployed (over 85%). c) Duration:

Unemployment benefit is available for a period of six to 12 months, depending on the level of unemployment in the district (powiat) where the unemployed resides. If the unemployment rate in the district did not exceed the level of 150% of the national average unemployment rate as of 30 June of the year preceeding the year in which the unemployment benefit is granted, then the duration is six months. However, if the unemployment rate in the district surpassed the level of 150% of the national average unemployment rate as of 30 June of the year preceding the year in which the unemployment benefit is granted, then the duration lasts a whole year. There are also two cases named by the Act, when the UA may be collected for 12 months (even though the basic conditions, that is the excessive unemployment rate in the district is not met): 1) if the unemployed is aged above 50 and has amassed a total of 20 years of employment and 2) if the unemployed supports children aged below 15 and his or her spouse is also unemployed and no longer eligible to the unemployment benefit.

The duration may be extended for women who gave birth while collecting the unemployment benefit (either for six or twelve months) or within a month after the statutory period is expired.

Regardless of what case of duration applies to the unemployed, the unemployment benefit may be terminated, if the person undertakes training, internship, vocational preparation for adults, or interventional work, which results in financial benefits other than unemployment benefit paid to the unemployed.

Social insurance contributions for the unemployed are paid as long as they are eligible to unemployment benefit (six/12 months).

Health insurance contributions for the unemployed are paid continuously, so that even the unemployed who are no longer eligible to unemployment benefit are covered by health-insurance.

  • Replacement rates:

Unemployment benefit is not earnings-related. It is subject to annual adjustment as of 1 June in reference consumer price index (CPI) in the previous year. The regular rate (100%) of the unemployment benefit currently amounts to PLN 761,40 (roughly EUR 180) a month in the first three months, and PLN 597,90 (about EUR 145) in the remaining part of the period. The lowered rate at 80% applies to the unemployed with the employment history of less then five years. The increased rate at 120% applies to the unemployed with the employment history of at least 20 years.

  • Financing:

UA are distributed by public labour administration (labour offices) using financial means from the Labour Fund (Fundusz Pracy). The Labour Fund relies mostly on mandatory contributions paid by employers for their employees. Since 1999, the rate amounts to 2.45% of the income gained by an employee from the given employment relation. In case of the self-employed, it is the declared income, based on which the contribution at 2.45% rate is calculated. Another important source of the Labour Fund revenues comes from the state subsidy (national budget). As set by the 2012 national budget plan, employers contributions are to provide for roughly 94% of the Labour Fund annual revenue, while government subsidy amounts to approximately 5%. In 2012 approximately 37% of total expenditure by the Labour Fund is to be spent for unemployment benefits.

  • SP involvement: Yes

Involvement of the SPs is limited and exercised mainly through ‘employment councils’ (rady zatrudnienia), which are defined as “consultative and advisory bodies” to the government at central and regional levels. For details on activities of employment councils see point 2.4.

By virtue of the 2004 Act, national-level representative social partners organisations (participating in the Tripartite Commission) are assigned seats in the employment councils at each level. As of 2012, total number of national-level social partners is seven, among which there are three trade union organisations: Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy ‘Solidarność’NSZZ Solidarność), All-Poland Alliance of Trade Unions (Ogólnopolskie Porozumienie Związków ZawodowychOPZZ) and Trade Unions Forum (Forum Związków ZawodowychFZZ) and four employers’ organisations: Employers of Poland (Pracodawcy RP); Polish Confederation of Private Employers ‘Lewiatan’ (Polska Konfederacja Pracodawców Prywatnych LewiatanPKPP Lewiatan); Polish Crafts Association (Związek Rzemiosła PolskiegoZRP); Business Centre Club (BCC).

1.2.3. Social Assistance. Are SA programmes with a direct relationship with the UB system and/or SP involvement present? If yes, please highlight the factors underlying such a relationship.

SA programmes do not have direct relationships with the UB system. SA is regulated by a separate pieces of legislation, especially the Social Assistance Act, and the issue of eligibility to the SA is not linked the UB system. For example, eligibility to the SA benefits is not related to the labour market status of the beneficiary/applicant, as the major criteria defined by the Social Assistance Act are income-related (social minimum), that is both employed and unemployed may qualify for SA, provided they meet the basic condition.

2. SP involvement in the UB regime

2.1. The development phase

2.1.1. In your country, did SP participate in the development phase of UB programmes over the last decade?

Social partners were consulted during the legislation process during which the 2004 Act was prepared. They were also consulted each time while the amendments to the Act were being discussed. The Tripartite Commission was also involved, discussing the Programme, which was reflected in: Communication_021203, Communication 140104.

2.1.2. If yes, please provide detailed information on the SP involvement in the development phase of UB regimes with respect to the following dimensions, distinguishing between UI and UA and reporting any important changes during the decade.

  • Who did take the initiative of involving SP in the design process? Did they ask themselves?

As stipulated by the Constitution, it is mandatory to engage all relevant social actors in the legislative proceedings within the parliament. As a result, SPs were duly approached and voiced their opinions in course of preparing the regulations dealing with UB. In particular, the representatives of SPs participated in the work over the Act in 2003-2004 period. The involvement may be exemplified by their participation in the proceedings of parliamentary committees.

  • Which are the forms of such kind of SP involvement? Are/were they informed, consulted by the relevant institutions? Does/did some kind of negotiation or concertation between the SP and the institutions take place?

There are two basic forms in which SPs may become involved: first, consultations phase in the legislation process, second, through participation in tripartite social dialogue institutions, in particular, the Tripartite Commission. In each instance, SPs are in right to voice their opinions, yet their impact on the shape and content of the final outcome, that is legislation, is limited.

  • In which way is/was their involvement in the policy design process legitimated/accepted? Through their participation in formalised and stable organisms (like tripartite or bipartite bodies)? Through their participation in lightly formalised ad-hoc commissions, or in occasional interaction? In other ways?

The role of SP should be described as reactive, because ex post review of specific cases of SP involvement reveals that in each case the process was instigated by the government. In particular, the Act had been prepared as government draft.

  • How frequent is/was such involvement? Regular and predictable, or episodic, ad-hoc?

Ex post analysis of SP involvement reveals that the involvement should be described as predictable (as their rights as recognised by law were observed), yet at the same time episodic with governmental initiatives aiming at changing the legal environment being a trigger for their engagement.

  • At what levels does/did such involvement occur? (e.g. national, regional, local, cross-sectoral, sectoral, company, other level(s))

The involvement concentrates at the central and regional level.

  • Which are/were the effects of such involvement (with regard to both a more efficient/effective functioning of the programmes, and the strengthening and legitimation of the SP themselves)?

The effects are debatable. While setting the current system in place through enactment of the Act, SPs de facto authorised the concept devised and implemented in a top-down manner by the government. The recent case of the government’s refusal to recognise the decision taken by the Tripartite Commission in 2010 regarding increase in income thresholds for the purpose of entitlement to social assistance indicates unsatisfactory effectiveness of SPs involvement in shaping the UB system.

2.2. The implementation phase

2.2.1. Distinguishing between UI and UA programmes, please describe the SP' role in accomplishing specific functions related to UB schemes (such as selecting the officials in charge of UB’ services, collecting contributions, etc).

Non Applicable

2.2.2. Furthermore, please analyze such SP involvement in terms of:

Non applicable

2.3. The management phase

SP are involved in the management phase as long as they are totally or partially responsible for the organisational asset behind the provision of UB.

2.3.1. In this case, distinguishing between UI and UA programmes, please describe SP’ role in terms of:

Non applicable

2.3.2. Distinguishing between UI and UA programmes, please describe the role of SP in case they are engaged in the financial management of the UB funds.

NA

2.3.3. Distinguishing between UI and UA programmes, please answer to the following questions:

NA

2.4. The monitoring phase

2.4.1. SP involvement in monitoring/evaluating the UB performance

Are the SP involved in the monitoring and evaluation of the UB system?

Yes

Provided that only UA are taken into account, there are formal basis for SPs to take part in the monitoring activities regarding use of the financial resources from the Labour Fund. SPs, however, do not have any prerogatives which would allow them to exercise impact on distribution of unemployment benefits.

  • Which aspects of UI/UA functioning are put under evaluation (e.g. procedures, results, other)?

The voice of SPs in the issues regarding UA functioning may point to: annual reports for the Labour Fund operations, rationality of the management of Labour Fund expenditures, rules of distribution of the Labour Fund’s means for the purpose of programmes on promoting employment.

  • Who is in charge of such monitoring/evaluation (a commission, an external body, etc.)?

Based on the Ordinance of the Minister of Economy and Labour on Employment Councils of 2004, the ‘employment councils’ (rady zatrudnienia), which are defined as “consultative and advisory bodies” by the Act are institutions involved in the monitoring . The councils operate at three levels:

  • Central – Central Employment Council (Naczelna Rada Zatrudnienia), which issues opinions on annual reports for the Labour Fund operations, and on rationality of the management of Labour Fund expenditures;
  • Voivodship (województwo, basic administrative territorial unit) – Regional Employment Council (Wojewódzka Rada Zatrudnienia), which issues opinions on rationality of the management of Labour Fund expenditures and rules of distribution of the Labour Fund’s means for the purpose of programmes on promoting employment at the level of a given voivodship;
  • District (powiat, lower-level administrative territorial unit) – District Employment Council (Powiatowa Rada Zatrudnienia), which issues opinions on rationality of the management of Labour Fund expenditures and rules of distribution of the Labour Fund’s means for the purpose of programmes on promoting employment at the level of a given district.
  • How and when the monitoring process take place (in which phase of the process, with which frequency,…)?

On annual basis in case of annual reports evaluation; as councils meet (usually on quarterly basis) in case of other issues.

  • Which is the output (a report, other) of such process and which the possible outcome (formal recommendations, rewards, sanctions, other)?

“Opinions”, which, however, are not binding.

  • How extensive and relevant is the SP’ role in the assessment process?

National-level representative social partners organisations (participating in the Tripartite Commission) are assigned seats in the employment councils at each level. All the positions are taken collectively by the specific bodies, so the final outcome depends not only on SPs positions but also on the government’s.

2.4.2. monitoring the SP involvement in the UB system

Is the SP role within the UB system subject to evaluation and monitoring?

No.

3. Final observations

3.1. Public debates and policy discussion:

There are voices present among trade unions (especially, in the ‘revitalisation discourse’) which indicate interest in UI arrangements, perceived as an effective way to attract members and develop stronger bonds between them and the unions.

Employers organisations have advocated the idea of decreasing the mandatory dues for the Labour Fund, and ultimately replacing the current arrangement with a new one, which would solely rely on national budget as the source of UB financing.

SP have also displayed interest in having their impact enhanced in management of the Labour Fund, which is exemplified by a common appeal to the government issued by all three nation-wide representative trade union centres in mid-2011. The idea of testing the ‘Ghent system’-related solutions has also surfaced in the public debate, although it has not been transformed into action.

The basic concept underlying the current system of UB distribution has not been contested.

3.2. Research:

The topic has not been thoroughly examined in the national academic research. The issue of UI in the context of the ‘Ghent system’ is occasionally mentioned in the literature as a benchmark for Polish trade unions (eg. J. Gardawski (ed.), Polacy pracujący a kryzys fordyzmu, Scholar, Warszawa 2009).

No official publications reporting the research dealing directly with the issue made by social partners can be identified.

4. Commentary

4.1. Assessments and comments:

There are legal basis on which SPs may get involved in the UB system, yet the extent of the involvement is limited and does not allow for a direct participation in the area of UB distribution, even though the dues contributed to the system by employers constitute a vast majority of the Labour Fund’s revenues. To summarise, the impact of SPs on UB system is exercised in an indirect way and is very moderate.

4.2. Perceived strengths and weaknesses:

Involvement of SP in the UB system in Poland is very restrained, and, as explained above, has its boundaries restricted to the development phase, and, to minor extent, to the monitoring phase. Obviously, more involvement on the part of social partners would strengthen their position in the tripartite social dialogue and industrial relations in general.

Jan Czarzasty, The Institute of Public Affairs and Warsaw School of Economics

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