Recommendation for a COUNCIL RECOMMENDATION on Poland’s 2012 national reform programme and delivering a Council Opinion on Poland’s convergence programme for 2012-2015
Date: 2012-05-30
Institutions: European Commission
Subjects: Poland, budgetary equilibrium, building permit, corporate finance, gas, in-service training, innovation, pre-school education, public expenditure, rail transport, remuneration of work, retirement conditions, transport infrastructure, work contract, youth unemployment

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
COM(2012) 323 final 

Recommendation for a 

COUNCIL RECOMMENDATION 

on Poland’s 2012 national reform programme  

and delivering a Council Opinion on Poland’s convergence programme for 2012-2015 

{SWD(2012) 323 final} 

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Recommendation for a 

COUNCIL RECOMMENDATION 

on Poland’s 2012 national reform programme  

and delivering a Council Opinion on Poland’s convergence programme for 2012-2015 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission2, 

Having regard to the resolutions of the European Parliament3, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

After consulting the Economic and Financial Committee, 

Whereas: 

(1) 

(2) 

On  26  March  2010,  the  European  Council  agreed  to  the  European  Commission’s 
proposal  to  launch  a  new  strategy  for  jobs  and  growth,  Europe  2020,  based  on 
enhanced coordination of economic policies, which will focus on the key areas where 
action 
to  boost  Europe’s  potential  for  sustainable  growth  and 
competitiveness. 

is  needed 

On 13 July 2010, the Council adopted a recommendation on the broad guidelines for 
the economic policies of the Member States and the Union (2010 to 2014) and, on 21 
October  2010,  adopted  a  decision  on  guidelines  for  the  employment  policies  of  the 
Member States4, which together form the ‘integrated guidelines’. Member States were 
invited  to  take  the  integrated  guidelines  into  account  in  their  national  economic  and 
employment policies. 

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4 

OJ L 209, 02.08.1997, p. 1 
COM(2012)323 final 
P7_TA(2012)0048 and P7_TA(2012)0047 
Council Decision 2012/238/EU of 26 April 2012 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

On 12 July 2011, the Council adopted a recommendation on Poland’s national reform 
programme  for  2011  and  delivered  its  opinion  on  Poland’s  updated  convergence 
programme for 2011-2014. 

On 23 November 2011, the Commission adopted the second Annual Growth Survey, 
marking  the  start  of  the  second  European  semester  of  ex-ante  and  integrated  policy 
coordination,  which  is  anchored  in  the  Europe  2020  strategy.  On  14  February  2012, 
the  Commission,  on  the  basis  of  Regulation  (EU)  1176/2011,  adopted  the  Alert 
Mechanism Report5, in which it did not identify Poland as one of the Member States 
for which an in-depth review would be carried out. 

On 2 March 2012, the European Council endorsed the priorities for ensuring financial 
stability,  fiscal  consolidation  and  action  to  foster  growth.  It  underscored  the  need  to 
pursue  differentiated,  growth-friendly  fiscal  consolidation,  to  restore  normal  lending 
conditions  to  the  economy,  to  promote  growth  and  competitiveness,  to  tackle 
unemployment  and  the  social  consequences  of  the  crisis,  and  to  modernise  public 
administration. 

On 2 March 2012, the European Council also invited the Member States participating 
in  the  Euro  Plus  Pact  to  present  their  commitments  in  time  for  inclusion  in  their 
stability or convergence programmes and their national reform programmes. 

On 25 April 2012, Poland submitted its convergence programme covering the period 
2012-2015  and,  on  27  April  2012,  its  2012  national  reform  programme.  In  order  to 
take  account  of  their  interlinkages,  the  two  programmes  have  been  assessed  at  the 
same time. 

Based  on  the  assessment  of  the  2012  convergence  programme  pursuant  to  Council 
Regulation  (EC)  No  1466/97,  the  Council  is  of  the  opinion  that  the  macroeconomic 
scenario underpinning the budgetary projections in the programme is plausible and is 
in  line  with  the  Commission's  2012  spring  forecast.  The  objective  of  the  budgetary 
strategy  outlined  in  the  programme  is  to  correct  the  excessive  deficit  by  2012  and 
reach medium-term budgetary objective (MTO) by 2015. The programme confirms the 
MTO  of  a  deficit  of  1%  of  GDP,  which  adequately  reflects  the  requirements  of  the 
Stability  and  Growth  Pact.  The  planned  correction  of  the  deficit  is  in  line  with  the 
deadline  set  by  the  Council  and  the  planned  fiscal  effort  complies  with  the 
recommendation  under  the  Excessive  Deficit  Procedure.  Based  on  the  (recalculated) 
structural deficit6, the planned annual progress towards the MTO is higher than 0.5% 
of GDP (in structural terms). The growth rate of government expenditure, taking into 
account discretionary revenue measures, is in line with the benchmark of the Stability 
and  Growth  Pact  over  entire  programme  period,  but  exceeds  the  expenditure 
benchmark  by  a  small  margin  in  2013,  according  to  the  Commission's  2012  spring 
forecast.  Sufficient  progress  towards  the  MTO  may  require  additional  efforts  as  it 
predominantly  relies  on  sizeable  cuts  in  public  investment  expenditure  and  is  not 
sufficiently  supported  by  detailed  measures  in  the  outer  years  of  the  programme. 
General  government  debt  is  projected  to  remain  below  60 %  of  GDP  in  Poland  over 

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COM(2012) 68 final 
Cyclically  adjusted  balance  net  of  one-off  and  temporary  measures,  recalculated  by  the  Commission 
services  on  the  basis  of  the  information  provided  in  the  programme,  using  the  commonly  agreed 
methodology. 

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the programme period. The national authorities forecast it to decrease gradually from 
56.3%  of  GDP  in  2011  to  49.7%  of  GDP  in  2015,  whereas  the  Commission,  taking 
account  of  possible  risks  to  the  consolidation  plans,  expects  the  improvement  to  be 
slower. 

(9) 

The Polish government has not yet taken action to implement a permanent expenditure 
rule by 2013. Work on a permanent rule is still in preparation and no details have been 
disclosed  so  far.  There  has  also  been  no  progress  on  adjusting  the  classification  of 
national  accounts  to  the  European  system  of  accounts  (ESA95  standards)  and  on 
improving  coordination  among  different  levels  of  government  when  it  comes  to  the 
budgetary process. 

(10)  Youth  unemployment  is  above  the  EU  average  and  is  largely  the  result  of  skills 
mismatch  and  low  access  to  apprenticeships  and  work-based  learning.  Measures  are 
planned  to  facilitate  the  entry  of  young  people  into  the  labour  market.  The  partial 
abuse of self-employment and civil law contracts which are not governed by Labour 
Law appear to be a cause of labour market segmentation and in-work poverty, which is 
among  the  highest  in  the  EU.  Additionally,  the  scope  and  adequacy  of  in-work 
benefits support for low-wage earners should be reviewed 

(11)  Poland started implementing an ambitious higher education reform in the second half 
of 2011. This aims to strengthen university-business links and to address the skills and 
jobs mismatch. The reform aims to make courses more flexible and more responsive to 
changing labour market needs. It also promotes self-employment. Nevertheless, there 
is  still  a  need  to  improve  the  relevance  and  quality  of  teaching  provision,  with  a 
particular focus on tertiary private institutions. 

(12)  The participation of women in the labour market needs to be raised by improving the 
childcare  system.  Poland  currently  has  the  lowest  enrolment  rate  in  pre-school 
education in Europe. This is due to the lack of places, lack of adequate infrastructure, 
and of qualified staff. The Government’s declaration that it would generate additional 
funds to set up pre-school childcare institutions (3-5 years of age) is not reflected in 
the 2012 Budget Law, which decreased education subsidies. This has resulted in some 
municipalities closing down schools and kindergartens. 

(13)  To  address  the  low  participation  of  older  workers  in  the  labour  market,  Poland  has 
adopted a general pension reform. The statutory retirement age will be raised gradually 
from 2013 onwards to reach 67 for men in 2020 and for women in 2040. Poland has 
continued its efforts to limit favourable retirement conditions for uniformed services. 
In 2011, Poland introduced some changes to the farmers’ social security fund (KRUS). 
However,  the  reform  is  temporary  and  not  sufficient  from  the  labour  market 
perspective. Miners still benefit from a special pension scheme. 

(14)  Recent  reforms  to  improve  the  research  environment  aim  to  concentrate  tailored 
funding  on  the  institutions  that  perform  best.  The  National  Research  Programme, 
adopted  in  August  2011,  is  an  important  step  in  this  direction.  However,  it  remains 
unclear  how  priorities  in  the  programme  are  linked  and  taken  forward  in  innovation 
and industrial policy.  

(15)  Unjustified  restrictions  on  providing  professional  services  are  a  major  obstacle  to 
further growth, in particular in construction, transport and health. The government has 

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announced a plan to scale down regulation in professional services by 50 %, regarding 
both educational requirements and licensing. Despite recent efforts, the administrative 
burden  on  business  remains  high,  and  public  administration  continues  to  lack 
efficiency.  The  main  areas  of  concern  include  high  compliance  costs,  complex  and 
unstable tax legislation, weak contract enforcement, lengthy and burdensome licensing 
and  permit  procedures,  and  property  registration  and  zoning  legislation.  Judicial 
proceedings and other legal actions are lengthy and there are a relatively high number 
of cases pending. 

(16)  Growth and competition in the energy sector is held back by lagging implementation 
of  EU  legislation,  in  particular  regarding  the  Second  and  Third  Energy  Package  and 
the EU Renewable Energy Directive and pending infringement procedures. While the 
motorway and expressway network is being extensively developed with support from 
EU funds, the need for investment in the rail network is even more pressing, given the 
very poor state of the infrastructure. Poland is not fully using Cohesion Fund resources 
available  for  this  purpose.  There  are  still  obstacles  to  efficient  functioning  of  the 
railway market.  

(17)  Poland  has  made  a  number  of  commitments  under  the  Euro  Plus  Pact.  The 
commitments, and the implementation of the commitments presented in 2011, relate to 
fostering employment, improving competitiveness, enhancing sustainability of public 
finances  and  reinforcing  financial  stability.  The  Commission  has  assessed  the 
implementation  of  the  Euro  Plus  Pact  commitments.  The  results  of  this  assessment 
have been taken into account in the recommendations. 

(18) 

In  the  context  of  the  European  Semester,  the  Commission  has  carried  out  a 
comprehensive analysis of Poland’s economic policy. It has assessed the convergence 
programme  and  national  reform  programme.  It  has  taken  into  account  not  only  their 
relevance for sustainable fiscal and socio-economic policy, but also their compliance 
with  EU  rules  and  guidance,  given  the  need  to  reinforce  the  overall  economic 
governance  of  the  European  Union  by  providing  EU-level  input  into  future  national 
decisions.  Its  recommendations  under  the  European  Semester  are  reflected  in 
recommendations (1) to (6) below. 

(19) 

In  the  light  of  this  assessment,  the  Council  has  examined  the  2012  convergence 
programme, and its opinion7 is reflected in particular in recommendation (1) below, 

HEREBY RECOMMENDS that Poland should take action within the period 2012-2013 to: 

1. 

Ensure planned progress towards the correction of the excessive deficit. To this end, 
fully implement the budget for the year 2012 and achieve the structural adjustment 
effort  specified  in  the  Council  recommendations  under  the  Excessive  Deficit 
Procedure.  Thereafter,  specify  the  measures  necessary  to  ensure  implementation  of 
the  budgetary  strategy  for  the  year  2013  and  beyond  as  envisaged,  ensuring  an 
adequate  structural  adjustment  effort  to  make  sufficient  progress  towards  the 
medium-term  objective,  including  meeting  the  expenditure  benchmark.  Minimise 
cuts in growth-enhancing expenditure in the future and improve tax compliance.  

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Under Article 9(2) of Council Regulation (EC) No 1466/97. 

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2. 

3. 

4. 

5. 

6. 

Speed up the reform of the fiscal framework by enacting legislation with a view to 
introducing  a  permanent  expenditure  rule  by  2013.  This  rule  should  be  consistent 
with the European system of accounts. Take measures to strengthen the mechanisms 
of  coordination  among  the  different  levels  of  government  in  the  medium-term  and 
annual budgetary processes. 

To  reduce  youth  unemployment,  increase  the  availability  of  apprenticeships  and 
work-based  learning,  improve  the  quality  of  vocational  training  and  adopt  the 
proposed lifelong learning strategy. Better match education outcomes with the needs 
of the labour market and improve the quality of teaching. To combat labour market 
segmentation  and  in-work  poverty,  limit  excessive  use  of  civil  law  contracts  and 
extend the probationary period for permanent contracts. 

Reinforce  efforts  to  increase  the  labour  market  participation  of  women  and  raise 
enrolment  rates  of  children  in  both  early  childcare  and  pre-school  education,  by 
ensuring  stable  funding  and  investment  in  public  infrastructure,  provision  of 
qualified staff and affordable access. Tackle entrenched practices of early retirement 
to increase exit ages from the labour market. Phase out the special pension scheme 
for miners with a view to fully integrating them into the general scheme. Take more 
ambitious, permanent steps to reform the social security fund for farmers (KRUS) to 
better reflect individual incomes. 

Take additional measures to ensure an innovation-friendly business environment, by 
ensuring better links between research, innovation and industry, and by establishing 
common  priority  areas  and  instruments  supporting  the  whole  innovation  cycle; 
improve access to finance for research and innovation activities through guarantees 
and bridge financing.  

Step  up  efforts  to  improve  incentives  for  investment  in  energy  generation  capacity 
and  efficiency,  speed  up 
the  development  of  cross-border  electricity  grid 
interconnections  and  strengthen  competition  in  the  gas  sector  by  phasing  out 
regulated  prices  and  by  creating  a  gas  trading  platform.  Strengthen  the  role  and 
resources  of  the  railway  market  regulator  and  ensure  effective  and  swift 
implementation  of  railway  investment  projects.  Reduce  restrictions  on  professional 
services  and  simplify  contract  enforcement  and  requirements  for  construction 
permits. 

Done at Brussels, 

For the Council 
The President 

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