Editor's note: The time is now
There are, though, caveats that should be introduced when considering this downward trend that Deputy Economy Minister Jacek Męcina estimates could even touch 17.5 percent by Christmas. These provisos chiefly concern the employment-policy backdrops of the current and future administrations, and their influence on the macroeconomic picture.
While many analysts chose to focus their concerns on the current-account nose-dive recorded in May, which reversed April's zł.2,665 million surplus to a deficit of zł.2,982 million, there are indications that this balance may well have its foundations in a rise in demand for imports, fueled by an increase in homegrown consumption. If this is the case and we are witnessing a return to substantial economic growth - imports and exports still grew by 10 percent and 12 percent year-on-year, respectively - then fears over becoming stuck in an economic rut seem less well founded.
However, a considered analysis of the employment situation seems to indicate stronger grounds for concern.
The 18.1 percent jobless rate, while the lowest for more than three years, is still the worst level of the EU25 states and way above the EU average of 8.8 percent. The World Bank estimates that as much as 10 percent of those out of work are not actively seeking jobs. The small gap between the minimum wage and social benefits that is proving a major disincentive. Would you work an entire month for an extra zł.200?
In a pre-election giveaway, parliament has passed a bill to raise the minimum wage by five percent. The legislation has already divided Law and Justice (PiS) and Civic Platform (PO), which are likely to make up the new government. While PiS is sloganeering about raising "from poverty those who work hard for their families," PO is predicting that increased labor costs may force firms to shed workers and reverse the current jobless trend. Unemployment among graduates stands at an unacceptable 36 percent. With such jaw-dropping statistics, the social acceptance of economic and system reforms to tackle this is now higher than at any time since the system change in 1989.
The ineffectual Demo- cratic Left Alliance (SLD) has shied from controversy, and a major overhaul of benefits and employment regulations will lie in the hands of September's election victors - but only if the political alliance can agree to help those in need.
John Todd
Deputy editor
While many analysts chose to focus their concerns on the current-account nose-dive recorded in May, which reversed April's zł.2,665 million surplus to a deficit of zł.2,982 million, there are indications that this balance may well have its foundations in a rise in demand for imports, fueled by an increase in homegrown consumption. If this is the case and we are witnessing a return to substantial economic growth - imports and exports still grew by 10 percent and 12 percent year-on-year, respectively - then fears over becoming stuck in an economic rut seem less well founded.
However, a considered analysis of the employment situation seems to indicate stronger grounds for concern.
The 18.1 percent jobless rate, while the lowest for more than three years, is still the worst level of the EU25 states and way above the EU average of 8.8 percent. The World Bank estimates that as much as 10 percent of those out of work are not actively seeking jobs. The small gap between the minimum wage and social benefits that is proving a major disincentive. Would you work an entire month for an extra zł.200?
In a pre-election giveaway, parliament has passed a bill to raise the minimum wage by five percent. The legislation has already divided Law and Justice (PiS) and Civic Platform (PO), which are likely to make up the new government. While PiS is sloganeering about raising "from poverty those who work hard for their families," PO is predicting that increased labor costs may force firms to shed workers and reverse the current jobless trend. Unemployment among graduates stands at an unacceptable 36 percent. With such jaw-dropping statistics, the social acceptance of economic and system reforms to tackle this is now higher than at any time since the system change in 1989.
The ineffectual Demo- cratic Left Alliance (SLD) has shied from controversy, and a major overhaul of benefits and employment regulations will lie in the hands of September's election victors - but only if the political alliance can agree to help those in need.
John Todd
Deputy editor
