Belka revival plan to be unveiled this week
Potential opposition to deep changes in the labor code from trade unions would not delay efforts to arrest growing unemployment
The government this week is set to consider an economic recovery package that will loosen labor codes as the country seeks to stave off rising unemployment and offer hope to an influx of young workers on the market, Finance Minister Belka said last week.
The labor proposals are part of a three-pillar economic growth package the government is set to approve Tuesday. The Democratic Left Alliance (SLD) measures, which also aim to mend public finance and promote enterpreneurship, come as unemployment hit a post-communist high of 17.4% in December and gross domestic product is projected to contract in the first quarter of the year. Even with healthy economic growth, the government would be unable to absorb all the new job market entrants, Belka said. Poles born after 1981's martial law declaration - just now entering the job market - represent the biggest demographic population bulge in the post-World War II period.
The government will look to reduce tax burdens on companies, give tax breaks to the lowest wage earners and vary minimum wage to allow the poorest regions to become more cost competitive, Belka said during a meeting organized by the Business Journal.
Belka, who is also Deputy Prime Minister, cautioned that his ideas are on the table for discussion but have not definitely been OK'd by fellow ministers.
"On the general level of such statements it looks very attractive," said Krzysztof Rybiński, chief economist with Bank Zachodni WBK. "But we have to wait to see details. And it would mean something only if there is political backing behind it. So it's too early to assess." At a press conference last week, Prime Minister Leszek Miller said the package would include several pro-growth elements including a long-awaited relaxing of rigid labor laws but cautioned that the recovery package needs lower interest rates to bring effects, Reuters reported.
Miller added that potential opposition to deep changes in the labor code from trade unions, which hold a powerful position in Poland, would not delay efforts to arrest growing unemployment."We would like everything to be agreed to (earlier), but even if it is not, we cannot allow this to block initiatives to improve the situation on the labor market," Miller said.
Belka said that specific proposals would include higher tax deductions for the lowest wage earners, effectively setting up a 0% tax bracket. A doubling or tripling of the standard deduction, now zł. 2,600 per year, for people earning the minimum wage would allow a relative increase in wages. That deduction would be eliminated for everyone else, though, causing other workers to pay slightly more in taxes, Belka said.
Other measures would lessen the social security, or ZUS, tax burden on some firms, possibly through a one-year waiver of the tax for new hires. Belka warned that the firms would have to keep the new hires on the payroll past the one-year tax-free period.
- Compiled from staff and wire reports
