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