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Poland - Labor Conditions

Under Polish law, wage levels are determined through negotiations between employees and management with guidelines set by a tripartite commission including representatives of the Government, employees and employers. This commission sets annual limits for permissible increases in nominal wages for employees of State-owned enterprises. These limits were 6.8 percent in 2000, 9.2 percent in 2001, 5.6 percent in 2002, 3.0 percent in 2003, 3.2 percent in 2004, 4.5 percent in 2005, 3.5 percent in 2006, 3.4 percent in 2007 and 6.0 percent in 2008. The limit negotiated for 2009 is 8.0 percent.

The registered unemployment rate was 19.0 percent at the end of 2004. This high unemployment rate was mainly attributable to slower growth, demographic effects, ongoing restructuring of industry and an increase in the number of people registering as unemployed as a result of the increased benefits due to the health system reforms implemented at the beginning of 1999. Since January 2005 the unemployment rate (then 19.4 percent) has slowly fallen and was 17.3 percent in November 2005. In January 2006 the unemployment rate was 18.0 percent, but decreased to 14.8 percent in December 2006, 11.2 percent in December 2007 and at the end of October 2008 it was 8.8 percent. However, since January 2009, the unemployment rate has slowly increased to 11.0 percent as at April 30, 2009.

The unemployment rate is defined as the proportion of unemployed persons in Poland's civilian economically active population. Persons between the ages of 15 and 74 are regarded as economically active and a person is treated as unemployed if he or she is not working and is available for work and is actively seeking work or has been offered a job and is waiting to take it up.

The relaxation of immigration controls resulting from Poland's entry into the EU has offered Polish workers the opportunity to seek employment across the EU. As a result of this opportunity a significant number of Polish workers have left the Polish workforce. It is estimated that as many as 2.3 million workers have left since 2004. Despite this outflow of Polish workers, there is no definitive evidence of any negative repercussions on Poland's economy as a result of such outflow.

A major component of State expenditure is social security payments. Four social security and pension funds are administered by the State and are partially or wholly financed by contributions from employers and employees. The revenues of these funds are not shown as revenues in the State budget. Two of these funds do, however, receive significant transfers from the State budget and such transfers are shown as expenditures in the tables in "Public Finance". The Social Insurance Fund and the Pension and Disability Fund (for farmers) are the largest extra-budgetary funds and rely on State budget transfers to supplement their own off-budget revenues.

On January 1, 1999, the "pay as you go" pension system in Poland was replaced with a multi-pillar system. The first pillar is an improved version of the mandatory "pay as you go" system, under which a minimum pension becomes payable from the State budget to those receiving insufficient benefits under the second and third pillars; the second pillar involves private pension funds called open pension funds managed by private institutions; and the third pillar comprises voluntary capitalized funds, such as employee pension schemes and individual pension insurance policies. Since January 1, 1999, participation in the first two pillars has been mandatory for persons below the age of 30. Persons between the ages of 30 and 50 had to decide by the end of 1999 whether they would pay into a private pension scheme or remain in the "pay as you go" scheme. Persons over 50 remained in the "pay as you go" scheme. As at the end of December 2008, there were 14 second pillar pension funds with a membership of more than 13.7 million people accounting for PLN 138.8 billion of net pension fund assets. Treasury securities and stocks listed on the Warsaw Stock Exchange constituted the majority of total assets held by such funds (accounting for 73.5 and 21.5 percent of total assets held by pension funds respectively) as at December 31, 2008. The investment strategy of pension funds is regulated by law.

Pension reform is aimed at reducing State budgetary liabilities to the social security system and in turn providing more liquidity in domestic markets as a result of the significant flow of funds into privately managed pension funds. The pension funds are only allowed to invest five percent of their funds in foreign currencies or foreign assets. Due to a shortfall in the system upon its implementation, only part of the State-collected pension premiums have been transferred to open pension funds. In addition, as the reforms gained public approval, more people than previously expected decided to join the second pillar, which since 2000 has resulted in higher transfers from the State budget.

Currently, management of the health care system is coordinated by a national health fund, into which employers are required to make a mandatory payment of 9.0 percent of each individual employee's wages. The budget expenditure on health care amounted to PLN 5.1 billion in 2008.

The law provides that all workers, including civilian employees of the armed forces, police, and frontier guard, have the right to establish and join independent trade unions without previous authorization or excessive requirements. Foreign and migrant workers also have the right to unionize. While many workers exercised this right, in practice many small and medium-sized firms discriminated against those who attempted to organize labor. Newly established small and medium-sized firms were generally nonunion, while privatized, formerly state-owned enterprises frequently continued union activity.

Under the law, 10 persons are required to form a local union and 30 persons for a national union. Unions must be registered with the courts, and organizations are required to give employers quarterly updates on the total number of trade union members. A court decision refusing registration may be appealed. The law does not give trade unions the freedom to exercise their right to organize all workers. For example, workers on individual contracts cannot form or join a trade union.

The law allows unions to conduct their activities without interference; however, in practice the government failed to protect this right at small and medium-sized companies. The law provides for and protects enterprise-level collective bargaining over wages and working conditions. A tripartite commission composed of unions, employers, and government representatives was the main forum that determined minimum national wage and benefit increases in areas such as the social services sector.

Key public sector employers could not negotiate with labor without the extensive involvement of the ministries to which they were subordinate. The law provides for parties to take group disputes to formal mediation, then to the Board of Social Arbitration in either the district court or Supreme Court depending on the number of employers involved, and, as a last resort, to strike. By law employers are obligated to notify a district inspection office in the region about a group dispute in the workplace. During 2008 the State Inspection Office registered 5,433 disputes, compared with 2,869 disputes in 2007.

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Page last modified: 11-07-2011 03:04:20 ZULU