EUROPEANSEMESTER2020
Country Report 2020 Poland
Marc Lemaître, DG REGIOReihard Felke, DG ECFINBarbara Kauffmann, DG EMPL
Warsaw, 6 March 2020
2020 European SemesterMarc Lemaitre, DG REGIO
Key new features in the 2020 country reports
• Integration of the Sustainable Development
Goals
• Enlarged scope of the analysis to capture
challenges and opportunities arising from
climate and energy transition
• Analysis of regions and sectors most
challenged by the transition towards climate
neutrality, including identification of priorities for
support by the Just Transition Fund (annex D
of the country report)
Implementation of CSRs in Poland since 2011
• Substantial progress: product markets, access to
professional services, public finance
• Some progress: labour market reforms, research
and innovation
• Limited progress: life-long learning, enforcing
contracts, removing obstacles to investment in
infrastructure
• No progress: reforming special pension regimes,
establishing an independent fiscal council, limiting
the use of reduced VAT rates, ensuring effective
consultations in the legislative process.
20%
32%
42%
3%3%
No Progress
Limited Progress
Some Progress
Substantial Progress
Full Implementation
Main findings of 2020 country report
• population aging represents long-term risk for public finance
• shortages of skilled labour hamper firms’ growth, while labour market
participation stays below EU averages
• private investment is significantly low
• innovations are still low, despite government efforts
• economy is energy-intensive and highly dependent on fossil fuels,
which entails sustainability challenges in the view of the transition to a
climate neutral economy.
The economy is successfully catching up, however key long-term challenge is ensuring a
gradual shift towards a knowledge-based model
Economic outlook, investment and
sectoral policiesReinhard Felke, DG ECFIN
Key challenges for the Polish economy
• Gradual shift towards a knowledge-based economy producing advanced
products and services
• Transition to a low-carbon economy
• Ensuring long-term fiscal sustainability
Strong economic performance….
• Success story: fast catching up over the
last years
• Growth to remain solid in the near future –
driven by domestic demand
• Best labour market situation since 30
years
• No short-term risks to fiscal sustainability
Real GDP per capita, 2008-2018
... offers opportunity for reforms
Structural factors weight on long-term growth:
• Population ageing => shrinking workforce
and long-term pressure on public finances
• Investment climate
• Innovation
• Fosil-fuel dependency
Demographic situation is not helpful…
Productivity grows but investment lags
• Productivity gains supported potential growth
in recent years
• Investment needed to further increase labour
productivity
• Investment remains visibly subdued,
particularly private investment
• Strong private investment is necessary but
barriers persist
Investment rates
Infrastructure requires sizeable investment
• Aging energy generation infrastructure
reliant on fossil fuels
• Road network develops fast but
environmental challenges arise
• Lagging modernization of railway projects
hinder rail transport services potential
Freight transport performance in
billion tonne-kilometers (tkm)
Regulatory environment affects private investment
• Overall the business environment is
favorable
• Legislative procedures lacking adequate
public consultation weigh on business
sentiment
• Rule of Law may negatively impact
investment climate
Graph on sentiment here
Innovative outputs still to materialise
• Poland has made progress, but innovation
performance remains modest
• Measures to improve scientific performance
being introduced, but science-business
cooperation is a weak spot
• Innovation dissemination is low and
innovative firms face certain barriers
Poland’s ranking in
European Innovation Scoreboard
2010 - 2018
Positive trend in public finances reversed
• Public debt at safe levels, while deficit –
constantly decreasing since 2011 – grew in
2019
• Limited room for further gains in tax
compliance
• Fiscals rules circumvented with recent new
spending
• Long-term sustainanability risks
Good economic times not used for
structural fiscal consolidation
Financial sector is solid
• Overall well capitalised, resilient, with decent
profitability
• Foreign-currency denominated mortgages
could require additional capital
• Increasing state’s presence underlines the
role of strong and independent supervision
Non-performing loans, % of total
European economic governance review
• Current governance framework dates
from 2011 – 2013
• Proven successful with challenges
• An inclusive debate with all stakeholders
has started
Current framework
Labour market, education,social and health policies
Barbara Kauffmann, DG EMPL
Labour market outcomes continue to improve
• Rising & high employment
with divergences
• Unemployment rate at
record low
• High wage growth
18
Employment, wages, unemployment rate
… but structural challenges
19
• Shortage of skilled labour
• Demographic context: rapidly
aging population
• Rapid increase in foreign workers
• Lack of comprehensive long-term
strategy* Break in series concerning declarations**For 2019 data on seasonal work permits and declarations to entrust job to immigrants available only for the first half of the year
Data source: Ministry of Family, Labour and Social Policy
Labour market participation, segmentation and social partner involvement
• Low participation of certain groups:
• women
• older workers
• people with disabilities
• less-skilled people
• Labour market segmentation
• Involvement of social partners20
Enrolment in formal childcare,
children below the age of 3
Education and skills: strengths and challenges• Low rate of early leavers from education &
training, and
high tertiary educational attainment rate
• Increased risk of educational inequalities
following the school system reorganisation
• Teachers' low salaries (2017: for upper
secondary teachers, 80% of other tertiary
educated workers)
• Low participation in adult learning21
Adult participation in learning
* Provisional data, % of population aged 25 to 64
Education and skills: basic skills• Long-term improvement in basic skills in all three PISA domains (PISA 2018)
• ET2020 benchmark on underachievement (15%) has been met: R: 14.7% M:
14.7%; S: 13.8%
• Impact of the socio-economic background: gap 17.7 (EU: 25.5%)
22
0
10
20
30
40
50
60
70
80
IE PL EE FI PT DE DK SI FR BE UK HU CZ EU SE LU NL AT LT HR LV IT SK EL RO MT BG CY
All students Students in the bottom quarter of ESCS Students in the top quarter of ESCS
Underachievers in reading (%) by socio-economic status
The social situation improves, but challenges remain
• Poverty and income inequalities continue
to decrease
• Overall positive impact of social transfers
on poverty reduction
• Challenges:
• Targeting of social transfers
• Social services remain
underdeveloped
23
Key poverty indicators,
general population
2020 Health challenges in Poland• Access to healthcare - high
unmet needs for medical
examinations
• Shortage of medical
practitioners and staff
• Insufficient provision of
outpatient care and long-
term care
• Scope for a more efficient
use of resources in the
hospital sector
The social scoreboard shows promising results• Best performers:
• Early leavers from education and training
• Gross disposable houshold income per
capita growth
• Space for improvement:
• Gender employment gap
• Enrolment in childcare aged less than 3
years
• Individuals’ digital skills
2020 (14 Jan)Launch of engagement and wide consultation – with national, regional, local authorities, social partners and stakeholders
2020 (30 Nov)Ideas and pledges through a dedicated website
2021Action Plan to seek endorsement at the highest political level – PT Presidency
A Strong Social Europe for Just Transitions
Consultation webpage: https://ec.europa.eu/social/yoursay-socialeurope
Selection of new Commission initiatives
• Fair minimum wage
• Updated Skills Agenda for Europe
• Reinforced Youth Guarantee
• Platform Work Summit
• Green Paper on Ageing
• European Unemployment Reinsurance Scheme
• Child Guarantee
Digitalisation
People
Global context/
Geopolitics
Green transition
Demographic pressures
European Pillar of Social Rights
20 principles in 3 main areas:
• Equal opportunities and access to the labour
market
• Fair working conditions
• Social protection and inclusion
Climate and energy transition
Marc Lemaître, DG REGIO
• Poland in the group of EU Member States
with the highest GHG emissions per
capita.
• The total emissions have increased in
recent years, contrary to general downward
trend in the EU.
• Energy supply and use are jointly
responsible – high share of solid fuels in
residential energy consumption .
0
5
10
15
20
25
30
LU EE IE CZ NL CY DE PL BE FI
tonnes per person
2007 2017
Difficult starting point for transition to low carbon economy
Source: Eurostat
Graph 3.5.1: Greenhouse gas emissions per capita in
ten EU countries with the highest emissions in 2017
• A clear decarbonisation strategy is missing
• Ongoing investments in coal-fired power plants despite doubts about economic
viability
• Wind energy sector negatively affected by past regulatory measures
• Modernisation of the energy sector will be linked to substantial costs in
the next decades
• Costs of the transition could be lower with a well-functioning energy
market
Energy sector
The coal sector plays an important socio-economic role in some Polish regions (over 112 thousand people remain employed in coal mining and coal-based energy sector.
While the transition from coal has progressed substantially over the last years, it will keep directly affecting coal regions communities in the coming years.
Transition from coal - implications Graph 3.5.2: Indigenous production of hard coal
Source: Eurostat
0
20
40
60
80
100
120
140
160
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
millions of tonnes
PL CZ DE UK ES
• Key challenge: Curbing greenhouse gas emmisions through
decarbonising of power generation and reducing energy intensity.
• Transition to carbon neutrality will not happen without:
A broad political consensus around a coherent set of decisive policy
measures
Tackling the social implications of the low-carbon transition
Support from local, national and EU budgets.
Transition from coal - way forward