Banking sector supervision is satisfactory. But the pressures to which it is subject could become severe, especially if the prospect of EU accession engenders moral hazard in capital flows into Poland. In addition, the dramatic evolution of the pension industry spawned by the recent pension reforms underscores the need to ensure that any vulnerabilities in the non-bank financial sector are also quickly identified and addressed. To this end, a Financial Sector Stability Assessment, conducted by the IMF and the World Bank, is strongly recommended for 2000. Medium term labor market and trade policies 20.
Job creation is paramount.
Industrial restructuring has begun in earnest in the coal and steel industries, and similarly fundamental reform is required in the agricultural sector if Poland is to achieve its growth potential. But these initiatives will cost jobs in the restructuring sectors, in a context where official and hidden unemployment is already high. This places a premium on stimulating job creation in higher productivity activities elsewhere in the economy. To this end, reform of the minimum wage is essential. It is currently excessive.