Two years and nothing
The verdict is in. The committee Finance Minister Leszek Balcerowicz set up in 1998 to "debureaucratize" Polish companies and make life easier for private business has failed. In the two years since Balcerowicz charged the committee with seeking ways to diminish government bureaucracy, life has gotten harder for private enterprises and entrepreneurs thanks to a string of new labor and social laws. While the committee may not have been directly responsible for drafting the legislation, it certainly seems to have done nothing to dissuade it.
One of the charms to have come out of recent legislative sessions is the switch in Social Insurance Office (ZUS) payments. Creative employment contracts (umowa o dzielo) are now subject to a whopping 45% ZUS tax. In addition, pension reform has made companies responsible for even more layers of paperwork when accounting for ZUS taxes.
Changes to the labor code that would have helped employers, such as a 40-hour workweek and longer maternity leaves, have been abandoned in the face of opposition from union leaders. Now employers continue to be burdened with forms to fill out for everything from the number of an employee's sick days to the cost of his eyeglasses. Government "support" for private business has meant offering to shorten the workweek and maybe even the workday. The only country that would regard such a move as pro-business is France.
At the same time, interest rates have risen, making borrowing more expensive for companies. The zloty is stronger, thanks to those interest rates, making Polish products less competitive internationally. The good news, a cut in corporate taxes to 30% by 2000 and to 22% by 2004, won't be soon enough for many entrepreneurs. And let's not even get into the country's practice of accounting for and paying value-added taxes (VAT).
Small to medium-sized business is the engine of growth in many first world economies. The same holds true in Poland. Private enterprises accounted for roughly 75% of gross domestic product (GDP) and employed 70% of the working population in 1998.
If this engine were truly working, unemployment rates would likely be on the decrease. But that isn't happening, which lends the conclusion that Polish business is still reeling from government policies. Unemployment hit 13.6% in January, up from 12.2% in October 1999.
If Balcerowicz's committee truly wants to aid Polish business it should lead the charge and fire itself. It should then take the hatchet to the more than 126,000 who reportedly worked for the central government in 1998, almost triple the mere 46,000 in 1990. The government should also scrap plans to create new ministries or agencies.
In short, the best way for the government to help the private sector is to disband the committees, scrap some of the regulations and generally get off business's back.
