Shaping labour market in Poland Patryk Toporowski The Polish Institute of International Affairs Warsaw,

Main indicators (2014) Total population thousand Active population thousand Employed thousand Unemployed thousand Unemployment rate9% (but acc. to national methodology, ca. 11%)

The gender gap is not narrowing: c.a. 13 p.p. difference remains

Source:

Applied solutions up to 2016 General efforts: Modernisation of education and training system (computer classes, soft skills etc.) Public works (for at least minimum wage) Grants for trainings, scholarships, internships Activisation benefits (up to 50% of unemployment benefit) Youth guarantees „Job for youth” programme, including a system of financial incentives to entrepreneurs to employ young people „My first business – Support at the Start” – System of loans (0.69% interest rate) worth at PLN for a loan for young graduates or last year students, financed by the Bank of National Development One year of credit vacations vouchers for job-seekers who change their place of residence telework grants

Unemployment benefits Benefit1 st three months Successive months (max 12, if unemployment rate in the region is sufficiently high, 6 otherwise) Basic (100%)185,94 EUR*145,9 EUR* Reduced (80%)148,65 EUR*116,72 EUR* Increased (120%)222,98 EUR*175,1 EUR* * According to mean NBP exchange rate 1EUR=4,473 PLN, Additional grants for internships, trainings etc. worth around 220 EUR*

Applied solutions up to 2016 Increase of employment of women (by development of system of childcare institutions, children have guaranteed place in the pre-school, subsidies for private childcare units) The „Toddler” programme (enabling students and academics to leave children close to universities) from 2014 Re-activation benefits (incl. telework grant) Facilitation of flexible working time Deregulation of professions: IV tranches, more than 200 professions deregulated Aid to businesses suffering from restricted imports from the other countries (mainly linked with agriculture) Repayment of pension and healthcare insurance Cofinance of training for workers

Applied solutions up to 2016 Activisation of the elderly people with „50+” and „solidarity across generations” programmes since 2008 – their aim to reach 50% of activity (important because of the prolonged retirement age) insurance relief for Employment and Guarantee Funds trainings smaller projects financed by specialised funds, i.e. Employment Fund since 2013, the programme was extended to 45+ actions intensely financed by UE funds

Most recent actions -Introduction of the minimum wage at 12 PLN (less than 3 EUR) for flexible contracts in 2016 (apart from 1850 PLN for regular jobs contracts) -Reduction of use unjustified non-regular job contracts, by burdening the flexible contracts with pension insurance. -Increase the maximum time when the maternity/paternity leave can be used (up to child is 6 years-old ) -Introduction of maximum limit of employment on fixed term contracts

2 main obstacles to decrease unemployment Remaining (or even increasing) high tax wedge on salaries. Remaining complicated regulations (incl. costs) on running own firms/self employment. There are reliefs for new businesses: reduced ZUS and healthcare contribution: around 100 EUR Afterwards: around 250 EUR

Tax wedge on labour in 2016 – regular job contract Mean gross salary919,07 EUR* Mean gross salary919,07 EUR*Total costs Healthcare Insurance 103,46 EUR* Accident Insurance71,36 EUR*453,37 EUR* Social Insurance (incl. Pension and old age contribution) 71,36 EUR*Social Insurance (incl. Pension and old age contribution) 149,41 EUR* (higher since 2012) Net salary/gross „gross” salary Sickness insurance22,51 EUR*Employment fund22,51 EUR*59,1% PIT66,4 EUR*Guarantee fund0,9 EUR* Mean net salary655,11 EUR* Gross „gross” salary 1 108,49 EUR*Net minimum salary/ gross „gross” minimum salary Employee's costs263,95 EUR* Employer's costs189,42 EUR*60,8% * According to mean NBP exchange rate 1EUR=4,473 PLN,

Tax wedge on labour – by form of contract * According to mean NBP exchange rate 1EUR=4,473 PLN, Regular job contractMandatory contract (since 2016)Specific-task contract Salary919,07 EUR*Salary919,07 EUR*Salary919,07 EUR* Employee's costs 263,95 EUR*Employee's costs 250,14 EUR* (depending on eligible costs) Employee's costs 132,35 EUR* Employer's costs 189,42 EUR*Employer's costs 165,98 EUR*Employer's costs - Net salary to gross „gross” salary 59,1%Net salary to gross „gross” salary 61,65%Net salary to gross „gross” salary 85,6%

Challenges -Long-term unemployment -High wedge -Low mobility (geographic and between branches) -Low access to professions (however it changed over time) -Dual labour market (the abusive use of flexible contracts) -the problem is that for some groups these contracts are beneficiary, while for the others not much. -Migration -Grey economy -„Quality” of jobs -Movement of jobs from agriculture to other branches

Thank you!