COMMISSION STAFF WORKING DOCUMENT Assessment of the 2012 national reform programme and convergence programme for POLAND Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on Poland’s 2012 national reform programme and delivering a Council Opinion on Poland’s updated 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  
SWD(2012) 323 final 

COMMISSION STAFF WORKING DOCUMENT 

Assessment of the 2012 national reform programme and convergence programme for 
POLAND 

Accompanying the document 

Recommendation for a  

COUNCIL RECOMMENDATION 

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

{COM(2012) 323 final} 

EN 

   EN 

 
 
 
 
  
 
 
 
CONTENTS 

EXECUTIVE SUMMARY................................................................................................. 3 

1. INTRODUCTION........................................................................................................... 4 

1. INTRODUCTION........................................................................................................... 4 

2. ECONOMIC DEVELOPMENTS AND CHALLENGES .............................................. 5 

2.1. Recent economic developments and outlook ....................................................... 5 

2.2. Challenges ............................................................................................................ 6 

3. ASSESSMENT OF THE POLICY AGENDA ............................................................... 7 

3.1 Fiscal policy and taxation...................................................................................... 7 

3.2. Financial sector .................................................................................................. 13 

3.3. Labour market, education and social policy ...................................................... 14 

3.4. Structural measures promoting growth and competitiveness............................. 17 

3.5. Modernisation of public administration ............................................................. 20 

4. OVERVIEW TABLE.................................................................................................... 22 

ANNEX ............................................................................................................................. 26 

2 

 
 
 
 
 
EXECUTIVE SUMMARY 

In  2012,  Poland's  economic  activity  is  expected  to  slow  down  as  compared  to  2011. 
Nevertheless, GDP growth is still projected to increase by 2.7%. Unemployment is foreseen 
to slightly rise to 9.8%.  

Poland's public finances are improving. Helped by solid economic growth in 2011, Poland has 
reduced  its  budget  deficit  in  line  with  the  Commission's  recommendations.  The  parliament 
adopted  a  major  reform  of  the  country's  pension  system,  which  would  gradually  rise  the 
statutory  retirement  age  to  67.  In  other  areas  however,  reform  efforts  have  been  limited, 
particularly as regards the labour market, education, energy, transport and regulation.  

In the medium to long term, Poland is faced with a number of challenges. The budget deficit 
has  to  be  further  reduced  to  reach  the  medium-term  objective.  Financial  markets  require 
continued attention. A very low labour force participation rate, in particular women, and the 
quality of vocational training and education are major concerns given an ageing population. 
There  are  also  signs  of  labour  market  segmentation  affecting  the  youth.  The  low  level  of 
public  and  private  R&D  spending,  weak  links  between  science  and  industry  and  the  poor 
innovation performance call for improvements. Poland's infrastructure, particularly its railway 
and  energy  system,  remains  underdeveloped.  The  efficiency  of  public  administration,  tax 
collection and law-making needs to be significantly improved. Unjustified restrictions in the 
field of professional services impede economic growth. . 

3 

 
 
 
 
1. INTRODUCTION 

In  May  2011  the  Commission  proposed  7  country  specific  recommendations  (CSRs)  for 
economic and structural reform policies for Poland.  In July 2011 the Council adopted these 
recommendations  which  concerned  public  finances,  the  pension  system,  education  and 
training, the labour market, energy, transport and deregulation. 

In  November  2011,  the  Commission  published  its  Annual  Growth  Survey  for  2012  (AGS 
2012)  in  which  set  out  proposals  for  building  the  necessary  common  understanding  about 
priorities for action at national and EU level in 2012. It focused on five priorities — growth-
friendly fiscal consolidation, restoring normal lending to the economy, promoting growth and 
competitiveness,  tackling  unemployment  and  the  social  consequences  of  the  crisis,  and 
modernising  public  administration.  It  encouraged  Member  States  to  implement  them  in  the 
2012 European Semester. 

Against  this  background,  in  April  2012  Poland  presented  updates  of  its  national  reform 
programme and convergence programme detailing progress made since July 2011 and plans 
going forward. 

This Staff Working Document assesses the state of implementation of the 2011 CSRs, as well 
as the AGS 2012 in Poland. It identifies current policy challenges and, in this light, examines 
the country’s latest policy plans. 

Overall,  Poland  implemented  the  Council  Recommendations  only  partially.  On  the  positive 
side,  economic  growth  was  robust  in  2011,  and  the  country  managed  to  reduce  its  fiscal 
deficit  as  required  under  the  Excessive  Deficit  Procedure  (and  repeated  in  the  CSRs). 
Notwithstanding  these  important  achievements,  reform  efforts  were  limited,  particularly  as 
regards  the  labour  market,  education,  energy,  transport  and  regulation.  Therefore,  in  these 
areas, the challenges identified in July 2011 and reiterated in the AGS 2012 remain valid. As 
regards  the  pension  system,  Poland  has  unveiled  a  major reform  proposal that aims  to raise 
the statutory retirement age to 67, by 2020 for men and by 2040 for women. 

Poland’s  most  pressing  challenges  are  in  public  finances,  the  labour  market,  infrastructure 
development,  and  the  business  and  innovation  environment.  The  budget  deficit  has  to  be 
further reduced to reach the medium-term objective and maintain the confidence of financial 
markets. A very low labour force participation rate is another major concern in the medium to 
long  term,  given  an  ageing  population.  Originating  in  the  poor  labour  market  performance, 
poverty  and  social  exclusion  is  another  challenge.  Youth  unemployment  has  increased  and 
there are signs of labour market segmentation affecting the youth. Moreover, the efficiency of 
improved.  Notwithstanding  sizeable 
public  administration  needs 
investments in the road network, the country’s infrastructure, particularly its railway system, 
remains  underdeveloped  and  is  thus  a  factor  that  severely  hinders  growth.  The  low  level  of 
R&D spending and poor performance regarding innovation is another important policy issue. 
Finally,  in  the  light  of  persistent  uncertainties  in  international  financial  markets,  Poland 
should  continue  to  pursue  prudent  and  pre-emptive  policies  in  financial  regulation  and 
supervision. 

to  be  significantly 

The  policy  plans  submitted  by  Poland  are  relevant.  They  focus  on  the  fiscal  consolidation, 
increasing  the  employment  rate  and  improving  business  environment.  However,  in  some 
areas, in particular as regards further reforms of the pension system, they lack the ambition to 
address the challenges in a comprehensive way. 

4 

 
 
 
2. ECONOMIC DEVELOPMENTS AND CHALLENGES 

2.1. Recent economic developments and outlook 

On  the  back  of  a  solid  export  performance,  economic  activity  expanded  strongly  in  Poland 
before the financial crisis. Continuous improvements in price- and non-price competitiveness 
helped exporters to gain market share and attracted considerable foreign direct investment in 
productive  sectors.  Thanks  to  resilient  domestic  demand  and  improved  absorption  of  EU 
funds,  the  country  was  able  to  weather  the  financial crisis  and its  aftermath, with  real GDP 
increasing by 1.7 % in 2009, and a robust 3.9 % in 2010. 

In 2011, the Polish economy picked up strongly. GDP is estimated to have grown by 4.3 %. In 
the  first  half  of  the  year,  strong  external  demand  fuelled  manufacturing  and  private 
investments.  In  addition,  EU  co-financed  infrastructure  projects  gave  investment  a  further 
push. Private consumption picked up on the back of a strong labour market. However, with 
growing  tensions  in  global  financial  markets  in  the  second  half  of  the  year,  consumer 
confidence  deteriorated  and  private  consumption  lost  steam.  A  sharp  fiscal  consolidation, 
resulting in weak public consumption, added to negative pressure on domestic demand. Thus, 
despite  continued  strong  external  trade,  helped  by  currency  depreciation,  the  labour  market 
outlook also started to weaken. 

Following a drop in 2010, inflation picked up again in 2011. Surging commodity prices and a 
depreciating  currency  pushed  up  consumer  price  inflation  from  2.7 %  in  2010  to  3.9 %  in 
2011.  Despite  sustained  rises  in  employment,  the  unemployment  rate  stabilised  at  around 
9.6 % in 2010-2011, keeping nominal wage growth in check. As a result, real wages remained 
broadly stable over the past two years. 

Looking  forward,  the  ongoing  recession  in  the  euro  area  is  likely  to  slow  down  economic 
activity in Poland significantly. Real GDP is projected to increase by 2.7 % in 2012 and 2.6 % 
in 2013. In 2012, still favourable, albeit somewhat weakened, labour market conditions, the 
continued  inflow  of  EU  funds,  increasing  investments  from  the  corporate  sector  and  a  still 
depreciated  currency  will  be  the  main  factors  supporting  growth.  In  2013,  private 
consumption is expected to inch up again as the global environment starts to improve. Lower 
domestic  demand  and  further  external  trade  gains  are  set  to  improve  the  current  account 
position  somewhat.  The  rate  of  inflation  is  forecast  to  decrease  gradually  in  2012-2013,  as 
food and fuel prices stabilise and the negative effect of currency depreciation peters out. 

In  the  absence  of  adverse  financial  and  external  developments,  GDP  growth  could  average 
3½% in 2014-2015. This should bring down the unemployment rate to around 8¼% by end-
2015.  Given  unfavourable  demographic  developments,  a  broad  range  of  structural  reforms 
will have to be undertaken to keep growth at this level in the medium term and to deal with 
underlying imbalances, particularly to reduce the relatively high current account deficit. 

The  national  reform  programme  and  the  convergence  programme  were  adopted  by  the 
Council of Ministers on 25 April 2012. The convergence programme outlines in an integrated 
manner  the  fiscal  consolidation  efforts,  the  key  structural  reforms  and  the  reforms  that 
underpin  macroeconomic  stabilisation.  The  national  reform  programme evaluates  progress 
towards meeting national Europe 2020 targets for employment, R&D, education, energy and 
climate  change  and  poverty  reduction.  These  targets  set  out  the  longer-term  development 
trajectory to modernise the Polish economy and put imminent reform priorities in a broader 
context. The national reform programme also describes the measures Poland plans to take to 
fulfil its obligations under the Euro Plus Pact. 

5 

 
 
Both  documents  share  the  same  economic  outlook.  For  2012,  the  outlook  is  broadly  in  line 
with the most recent Commission forecast. However, for 2013, the Polish authorities are more 
optimistic and forecast real GDP growth of 2.9 %. 

2.2. Challenges 

Despite  remarkable  growth  performance  during  and  after  the  financial  crisis,  Poland  could 
speed  up  its  reform  agenda  to  maintain  or  improve  its  growth  potential.  The  main  policy 
challenges  for  the  country  have  remained  broadly  unchanged,  though  the  progress  the 
government has made with its reform agenda requires some adjustments. 

In  particular,  continued  fiscal  consolidation  is  required  to  reach  the  medium-term  objective 
(MTO) for the deficit and to maintain the confidence of financial markets. Increasing the still 
low  share  of  growth-enhancing  expenditure  remains  a  prerequisite  for  sustaining  good 
macroeconomic  performance.  Moreover,  the  structural  weaknesses  of  the  fiscal  framework, 
identified  in  the  2011  Commission  Staff  Working  Document,  are  still  present:  poor 
monitoring  of  budget  implementation,  discrepancies  between  the  public  accounting  and 
reporting system and the European System of National and Regional Accounts (ESA95), and 
problems with coordination between various tiers of the general government in the annual and 
multi-annual budgetary planning. 

Regarding  labour  supply,  Poland  still  has  the  second  lowest  employment  rate  among  older 
workers in Europe, particularly of older women, and one of the lowest average exit ages from 
the labour market. This is of particular concern in the medium to long term, given an ageing 
population  and  growing  life  expectancy.  The  old  age  dependency  ratio  (population  aged  65 
and over as a percentage of the population aged 15-64) in Poland will double in the next 30 
years,  from  about  20 %  to  40 %.  Women’s  participation  in  the  labour  market  is  very  low, 
owing  partly  to  the  lack  of  affordable  childcare.  Thus,  the  main  challenge  is  to  prolong 
working  life  by  raising  the  statutory  and  effective  retirement  age  in  line  with  longer  life 
expectancy  and  to  improve  availability  of  childcare  for  infants  and  young  children.  A 
subsidised social security system for farmers keeps an unnecessarily large part of the labour 
force  in  agriculture,  and  thus  holds  back  productivity  growth  and  keeps  regional  labour 
mobility at a low level. 

A key challenge for Poland is to maintain its economic growth through raising and increasing 
effectiveness  of  growth-friendly  expenditure,  notably  in  education,  research  and  innovation 
investment. Current growth is to some extent based on the inflow of structural funds, a price-
competitive labour force and growing integration of Polish subcontractors and manufacturing 
centres into the global value chain. . In a medium-term perspective, however, a shift toward 
an innovation-driven economy is necessary. Measures adopted so far have not led to visible 
improvement  in  the  innovativeness  of  Polish  companies.  Low  public  R&D  spending,  weak 
linkages  between  science  and  industry,  and  severe  underinvestment  in  research  and 
innovation  in  the  private  sector  need  to  give  way  to  a  new  approach  with  well-designed 
incentives  and  effective  support  through  public  funding,  including  more  public-private 
cooperation. 

Poland also needs to promote growth and competitiveness by improving business conditions, 
modernising  public  administration  and  raising  the  quality  of  vocational  training  and 
education.  Limited  competition  among 
insufficient 
interconnections  with  other  Member  States  and  ageing  energy  generation  capacity  keep 
energy  prices  high.  Moreover,  Poland’s  underdeveloped  and  neglected 
transport 
infrastructure, in particular in the rail sector, continues to be a major growth bottleneck. 

incumbent  electricity  suppliers, 

6 

 
 
 
Businesses  would  greatly  benefit  from  improvements  in  tax  administration,  streamlining  of 
procedures  for  starting  up  and  closing  down  businesses,  as  well  as  from  better  contract 
enforcement and property registration. In the long run, an overhaul of the entire law-making 
system,  including  effective  impact  assessment,  stakeholder  consultation  and  monitoring 
would be required. 

Since 2011, challenges arise in the financial sector. Poland has built up a financial system that 
functions well and implemented a prudent and pre-emptive regulatory policy. This has helped 
the country to withstand the financial crisis and attracted foreign investments. This success, 
however, has also created a new risk. Continued inflows of foreign capital into sovereign debt 
markets  and  the  financial  system  have  increased  the  country’s  dependency  on  external 
financing. While in a normal environment, the level of capital inflows Poland registered in the 
past  few  years  would  not  be  perceived  as  harmful,  in  the  current  context  of  high  economic 
uncertainty  and  volatile  capital  markets,  it  requires  special  attention.  A  sudden  stop  or 
reversal  of  these  capital  inflows  would  lead  to  a  serious  limitation  in  credit  supply  and 
increases in financing costs for the government, as it did in many other EU countries during 
the  current  crisis.  To  mitigate  such  potential  negative  consequences,  vigilant  financial 
supervision as well as strengthened prudential regulation are appropriate tools. 

Another important challenge, also highlighted in the Annual Growth Survey 2012, is the fight 
against youth unemployment. Despite continued growth, the youth unemployment rate rose to 
25.8 % in 2011. Young people often lack the necessary skills to find a job, which points to the 
need  to  improve  the  education  system.  In  addition,  there  are  signs  of  labour  market 
segmentation,  since  the  transition  rate  from  temporary  to  permanent  contracts  is  low, 
particularly for the young. The partial abuse of self-employment and civil law contracts which 
are not governed by the Labour Law appear to be the main cause for the low transition rate. 
The in-work poverty rate for temporary workers is twice as high as for workers on permanent 
contracts owing to the wage penalty associated with temporary contracts, one of the highest in 
the EU.1 Moreover, and contrary to its commitment in the Euro Plus Pact, Poland decided to 
increase  non-wage  labour  costs  by  raising  the  disability  pension  contribution  paid  by 
employers  from  4.5 %  to  6.5 %.  This  measure  helped  fiscal  consolidation,  but  it  is  likely  to 
hinder  job  creation  and  the  government’s  efforts  to  reduce  the  high  share  of  the  shadow 
economy, with a particularly strong negative impact on young and low-skilled workers. 

3. ASSESSMENT OF THE POLICY AGENDA 

3.1 Fiscal policy and taxation 

Budgetary developments 

In its 2012 convergence programme, the Polish government confirmed its objective to correct 
the  excessive  general  government  deficit  in  2012  and  to  continue  fiscal  consolidation 
thereafter in order to reach the medium-term objective (hereinafter ‘MTO’), i.e. a structural 
deficit of 1 % of GDP, in 2015. The programme is precise on how to achieve the 2012 deficit 
target  and  specifies  an  MTO  deadline  for  the  first  time.  However,  it  lacks  sufficient 
information on fiscal measures and reforms needed to ensure progress towards the MTO. 

1 •  In Poland temporary workers represent 27 % of total employment (against EU average of 14 %). Temporary 
workers  are  on  average  paid  28 % less than other workers with similar qualifications and experience, and 
they face twice as high a risk of poverty compared to workers on permanent contracts (12 % against 6 %). 

7 

 
 
 
                                                 
Public finances have improved significantly since the 2011 European Semester. An ambitious 
consolidation  programme  and  robust  economic  growth  of  4.3 %  in  2011  allowed  the  Polish 
government to decrease its general government deficit by almost 3 pp from 7.9 % in 2010 to 
5.1 %  of  GDP  in  2011.  Despite  an  unexpected  fall  in  revenues,  mainly  from  social 
contributions and financial transfers, the deficit turned out 0.5 % lower than planned, thanks 
to  a  considerably  lower  expenditure,  mainly  on  public  investment,  social  transfers,  and 
government consumption. 

In 2012 a further reduction of the deficit is expected. The Commission services’ 2012 spring 
forecast expects the deficit to marginally exceed 3 % of GDP, while the national authorities 
project it to reach 2.9 % of GDP. The gap between the two forecasts is mainly due to different 
assumptions  on  public  investment  and  corresponding  inflows  of  EU  funds.  Whereas  the 
Polish authorities expect public investment to drop significantly following a sharp slowdown 
in  EU  financing  after  a  peak  in  2011,  the  Commission  projects  a  smoother  decline.  For  the 
same reason the composition of the consolidation process differs between the two projections. 
Both  revenue-to-GDP  and  expenditure-to-GDP  are  somewhat  higher  in  the  Commission 
forecast.  Compared  to  the  previous  programme,  the  2012  one  projects  both  revenue  and 
expenditure  lower by 1.1 pp of GDP, with lower tax revenues and public investment as the 
main drivers. 

In 2013, the 2012 spring forecast envisages a further reduction in the headline deficit to 2.5% 
of GDP, while the Polish government expects 2.2 % of GDP. The difference is due to a base 
effect  (as  the  starting  point  for  2013  is  slightly  different)  and  assumptions  on  financial 
transfers and corresponding public co-financing of investment projects. 

The  deficit  targets  of  the  2012  convergence  programme  differ  from  those  presented  in  the 
previous  update.  The  planned  consolidation  path  is  more  ambitious,  despite  a  considerably 
less optimistic macroeconomic scenario.2 As the revised macroeconomic scenario will result 
in lower tax revenues, the 2012 convergence programme assumes that consolidation for 2013 
onwards is driven by significant cuts in expenditure, almost exclusively on public investment.  

In 2012, the adjustment effort is concentrated on the revenue side, although total expenditure 
is  expected  to  decline  based  on  measures  introduced  in  previous  years  (see  table  below  for 
main measures in 2011 and 2012). The 2012 Budget also envisages revenues from dividends 
of state-owned enterprises, classified as a one-off measure.  

From  2013  onwards,  adjustment  shifts  exclusively  to  the  expenditure  side.  Over  the  period 
2013-2015,  both  expenditure-to-GDP  ratio  and  revenue-to-GDP  ratio  are  planned  to  fall 
gradually in every year. In case of revenues, the authorities are planning a sharp decline from 
42.6 %  in  2012  to  38.6 %  in  2015.  In  the  absence  of  significant  new  measures,3  the  fall  in 
revenues  will  result  from  the  expiry  or  gradual  reversal  of  some  consolidation  measures 
implemented in 2011 (see Box 1 below for details). 

2  In  particular,  in  2012  an  unchanged  target  of  2.9 %  of  GDP  is  foreseen  with  1.5  pps.  lower  growth  (2.5 % 
against 4.0 %). In 2013, a 0.3 pp lower deficit shall be reached despite 0.8 pp slower growth (2.9 % versus 
3.7 %). Finally, in 2014 a 0.1 p. faster reduction in the deficit (to 2.0 % of GDP) will be accompanied by 0.7 
pp slower growth. 

3 Some reforms with a positive, though minor, budgetary effect are planned but not enacted yet. They include an 
increase in PIT revenues on the author’s rights revenues, abolishment of PIT exemptions on internet use and 
multiple children upbringing, as well as the introduction of CO2 emission payments and the sale of rights to 
use additional radio frequencies. 

8 

 
 
                                                 
A  decrease  in  expenditure  as  a  share  of  GDP  (from  39.6 % in 2012 to 37.6 % in 2015)  will 
more than offset the fall in the revenues. The envisaged consolidation is expected to be driven 
by a sharp decline in public gross fixed capital formation and a further decline in the pension 
expenditure due to the abolishment of the early pension system in 2009. Moreover, Poland’s 
temporary  expenditure  rule  will  limit  increases  in  existing  discretionary  and  new 
expenditures. It is also expected that the wage fund for public sector employees (with some 
specific  exceptions)  remains  frozen,  but  as  long  as  the  measure  is  not  legally  enacted,  its 
budgetary effects cannot be guaranteed. 

Overall,  the  steps  discussed  above  have  put  Poland  on  track  to  fulfil  the  Council 
recommendations  on  fiscal  consolidation.  The  headline  deficit  is  forecast  to  marginally 
exceed 3.0% of GDP in 2012, but since Poland’s debt-to-GDP ratio is consistently below the 
60 %  of  GDP  reference  value,  Council  Regulation  (EU)  No 1177/2011  allows  to  take  into 
account the cost of a systemic pension reform for assessing whether effective action has been 
taken. This cost is estimated at around 0.6 % of GDP in 2012, which is higher than the gap 
between the expected deficit and the reference value. 

Poland’s  average  annual  fiscal  effort  is  expected  to  meet  the  Council’s  recommendation 
thanks  to  the  consolidation  package  implemented  in  2011  and  2012.  According  to  the  2012 
spring  forecast,  the  structural  balance  is  forecast  to  decline  significantly,  reaching  5.0%  of 
GDP  in  2011  and  2.8%  of  GDP  in  2012,  0.3  pp  higher  than  the  (recalculated)  structural 
balance4 forecast by the Polish authorities. The average annual fiscal effort over the reference 
period amounts therefore to 1.5% of GDP, above the recommended 1¼%.    

4  Cyclically  adjusted  balance  net  of  one-off  and  temporary  measures,  recalculated  by  the  Commission  on  the 

basis of the information provided in the programme, using the commonly agreed methodology. 

9 

 
 
 
                                                 
Box 1. Main budgetary measures 

  Revenue 

Expenditure

2011 

  Amendment of the pension reform (0.6 % of GDP) 

Expenditure rule (including nominal freeze in wage 

Increase in VAT rates by 1 pp (0.4 % of GDP) 

Nominal freeze of PIT thresholds (0.1 % of GDP) 

Abolition of VAT reimbursement for company cars 

and fuel (0.1 % of GDP) 

Changes in excise duty regulations (0.1 % of GDP) 

fund, except for teachers) (0.5 % of GDP) 

Replacement  of  early  retirement  by  ‘bridge’ 

pensions (0.3 % of GDP) 

Cuts  in  spending  on  active  labour  market  policies 

(0.3 % of GDP) 

2012 

  Amendment of the pension reform (0.5 % of GDP) 

Expenditure rule (including nominal freeze in wage 

Changes in excise duty regulations (0.2 % of GDP) 

Increase in disability contribution (0.4 % of GDP) 

Tax on copper and silver extraction (0.1 % of GDP) 

Increase in dividends from state-owned companies 
due  to  exceptionally  high  profits  (0.1 %  of 
GDP) 

fund) (0.1 % of GDP) 

Replacement  of  early  retirement  by  ‘bridge’ 

pensions (0.3 % of GDP) 

Decrease  in  complementary  payments  to  farmers 

(0.1 % of GDP) 

2013 

  Amendment of the pension reform (-0.1 % of GDP) 

Reversal of the freeze in the wage fund (-0.1 %) 

Abolition  of  specific  VAT  exemptions  (-0.1 %  of 

GDP) 

Reversal  of  revenues  from  dividends  to  the  long-

term trend (-0.1 % of GDP) 

2014 

  Amendment of the pension reform (-0.1 % of GDP) 

End  of  temporary  increase  VAT  rates  by  1  pp.  (-

0.4 % of GDP) 

Note:  The  budgetary  impact  in  the  table  is  the  impact  reported  in  the  programme,  i.e.  by  the  national 
authorities.  A  positive  sign  means  that  revenue/expenditure  increases/decreases  as  a  consequence  of  the 
measure.  The  degree  of  detail  reflects  the  type  of  information  made  available  in  the  stability  or  convergence 
programme and, where available, in a multiannual budget. 

The  Council  also  recommended  that  Poland  should  make  adequate  progress  towards  the 
MTO, i.e. a structural general government deficit of 1 % of GDP. The Polish government is 
committed to reach the MTO in 2015, targeting a (recalculated) structural deficit of 0.7 % of 
GDP for that year. Thus, a further annual structural improvement of 0.6 % of GDP is planned 
after  the  expected  correction  of  the  excessive  deficit  in  2012.  This  is  more  than  the 
benchmark rate of 0.5 % of GDP both on average and in every year of the reference period.       

The analysis of the expenditure benchmark provides slightly different conclusions. According 
to the information provided in the programme, the growth rate of government expenditure, net 
of discretionary revenue measures, over 2013 (1.19 %) will not exceed a rate which is lower 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
than the reference medium-term rate of potential GDP growth (2.58%) and which ensures an 
annual structural adjustment towards the MTO by 0.5 % of GDP. However, according to the 
Commission  services’  forecast,  the  benchmark  will  be  exceeded  with  the  growth  rate  of 
expenditure amounting to 2.81% in 2013. According to the programme, expenditure growth is 
expected to remain in line with the benchmark later too, in 2014 and 2015. 

Based on the information contained in the programme on enacted structural measures, timely 
progress towards the MTO may require additional efforts for several reasons. 

First, no additional consolidation measures for the years 2013-2015 have been enacted so far. 
Thus,  the  reduction  towards  the  MTO  largely  relies  on  a  sizeable  cut  in  public  investment 
expenditure  (from  5.8 %  of  GDP  in  2011  to  2.8 %  of  GDP  in  2015).  However,  given  the 
continued  inflow  of  committed  EU  structural  funds  going  forward  and  the  government’s 
obligation  to  co-fund  them,  it  seems  unlikely  that  such  a  decrease  can  be  achieved.  On  the 
other hand, a sharp drop in public investment is likely to have an adverse impact on Poland’s 
growth  potential  and  as  such  is  in  conflict  with  the  recommendation  to  ‘minimise  cuts  in 
growth-enhancing  expenditure  in  the  future’  (see  first  priority  of  AGS  2012  and  2011 
recommendation on fiscal policy).      

Second, the structural measures adopted or announced so far, in particular the reforms aiming 
at improving the long-term sustainability of and unifying the pension system, while relevant 
and corresponding to the specific recommendations in the AGS 2012 are not likely to bring 
budgetary sizeable effects in the short-to-medium term. 

Third,  the  projected  consolidation  path  is  subject  to  a  number  of  risks.  Poland’s  growth 
prospects,  and  thus  its  tax  revenues,  may  be  negatively  affected  by  the  deteriorating  global 
outlook. In addition, volatile financial markets and depreciation of the zloty may result in a 
rise in the government’s interest costs. On the upside, the rate of GDP growth may be higher 
than assumed, leading to a more rapid increase in revenues. 

After a rise from 45.0 % of GDP in 2007 to 56.4 % of GDP in 2011, general government debt 
is projected to remain below 60 % of GDP in Poland and to keep falling over the programme 
period, both according to the 2012 convergence programme and the Commission 2012 spring 
forecast. However, the speed of reduction differs between the Commission's and the national 
authorities’  projections.  While  the  programme  projects  the  debt  to  decline  from  56.4 %  of 
GDP  in  2011  to  53.7 %  in  2012  and  52.5 %  in  2013,  the  Commission  forecasts  a  slower 
reduction to 55.0% in 2012 and to 53.7% in 2013. The difference in 2012 is due to different 
assumptions  on  stock-flow  adjustments,  mainly  exchange  rate  movements,  while  in  2013  a 
somewhat  lower  budget  deficit  projected  by  the  national  authorities  is  important.  Since  the 
debt-to-GDP ratio is below the reference rate, the debt reduction benchmark is not applicable. 

Analysis of the ownership structure of Poland’s public debt reveals a potential risk factor. At 
the  start  of  2012,  about  30 %  of  domestic  debt  (issued  in  PLN)  was  owned  by  foreign 
investors. In addition, foreign investors held a large majority (around 95 %) of internationally 
issued  sovereign  debt.  Poland’s  total  dependence  on  foreign  investors  was  thus  as  high  as 
50 %. A smooth roll-over of maturing debt therefore requires continued willingness of foreign 
investors  to  keep  the  share  of  Polish  assets  in  their  portfolios  constant.  Moreover,  the 
accomplishment  of  projected  reduction  of  debt  partially  relies  on  the  completion  of 
privatisation operations. However, their success depends crucially on future prospects of the 
Polish economy.    

11 

 
 
Long term sustainability 

Poland’s  long-term  change  in  age-related  expenditure  is  below  the  EU  average.  The  initial 
budgetary position compounds the long-term costs. Assuming no policy change, debt would 
fall to 50 % of GDP by 2020. The full implementation of the programme would put debt on an 
even steeper downward path by 2020. 

Fiscal framework 

The Polish fiscal framework is composed of three main elements: (i) fiscal rules, applicable to 
general and local levels of government separately, (ii) medium-term programming (based on 
the  Multiannual  Financial  Plan  of  the  State  and  Multiannual  Financial  Projections  for  local 
governments), and (iii) performance budget system (still in the implementation phase). At the 
level  of  general  government,  a  debt  rule,  set  out  in  the  Constitution  and  the  Public  Finance 
Law,  puts  a  limit  on  the  general  government  debt-to-GDP  ratio,  while  a  temporary 
expenditure rule limits the annual nominal growth of all newly-enacted expenditure items and 
existing discretionary items to the inflation rate (CPI) plus 1 %.5 At the local level, a complex 
set of deficit, expenditure and debt rules are not compatible with the rules applying to central 
government. 

The Polish government has not yet taken action to implement a permanent expenditure rule by 
2013, as in the recommendation on the fiscal framework. According to the programme, work 
on a permanent rule is at an advanced stage, but the final version has not yet been announced. 
There has also been no progress on adjusting the national classification of public accounts to 
ESA95 standards, and on improving coordination among different levels of government when 
it  comes  to  the  budgetary  process.  A  new  deficit  rule  for  local  governments,  which  is 
expected to enter into force in 2013, is also at the final stage of preparations. It is also not yet 
known  whether  compatibility  between  the  local  and  the  central  expenditure  rules  and  the 
mechanisms to implement and monitor the process will be ensured. 

Tax system 

The tax burden on labour in Poland is among the lowest in the EU and the implicit tax rate on 
labour has been steadily decreasing. The tax burden has decreased with the introduction of the 
new personal income tax system in 2009, which removed the highest income tax rate of 40 %. 
However, non-wage charges constitute a substantial part of the cost of labour in Poland, and 
the disability contribution rate paid by employers has been increased as of 2012 from 4.5 to 
6.5 %, partially reversing earlier reductions.6 

Tax compliance appears to show scope for improvement, with the shadow economy estimated 
as  accounting  for  as  much  as  25.0 %  of  GDP,  well  above  the  EU  average  of  15.2 %. 
Moreover, Poland tops the ranks of most burdensome administrations in the EU in terms of 
time  needed  to  comply  with  tax  requirements  and  the  high  administrative  cost  of  revenue 
collection.  Progress  on  this  front  would  enable  Poland  to  comply  with  the  AGS  2012 
recommendations, as improved efficiency in tax collection and lower tax evasion would make 
Poland’s fiscal consolidation more growth-friendly. 

5  This  rule  is  expected  to  be  replaced  by  a  permanent  expenditure  rule  for  the  central  government  once  the 

Council adopts a decision abrogating the EDP for Poland. 

6 The disability contribution is one of four components of Poland’s social security fund, which together finance 

a broad range of social security benefits. 

12 

 
 
                                                 
The  VAT  revenue  ratio  (measuring  actual  VAT  revenues  as  a  percentage  of  theoretical 
revenue if the standard rate were applied to all final consumption) is below the EU average, at 
48.7 %,  compared  with  54.2 %  in  the  EU  in  2010.  Poland  has  potential  for  increasing  VAT 
efficiency  by  extending  the  scope  of  the  standard  rate.  The  standard  rate  is  23 %,  whereas 
reduced rates, applied to a relatively wide range of goods and services, are 5 % and 8 %.  

Increased  tax  rates  on  energy  products  other  than  renewable  energy  could  be  one  of  many 
cost-efficient  instruments to facilitate Poland’s transition toward achieving the Europe 2020 
targets for reduction of CO2 emissions and total energy consumption. Excise duties on energy 
products  other  than  transport  fuels  are  among  the  lowest  in  the  EU,  but  in  line  with  EU 
requirements. While Poland obtains a relatively high share of revenues from energy taxation 
(2.1 %  of  GDP,  compared  with  1.8 %  of  GDP  in  the  EU),  the  implicit  tax  rate  on  energy 
consumption is only around half the EU average, as the energy intensity of production is very 
high. 

Overall,  the  composition  of  tax  revenue  is  rather  favourable,  as  a  high  share  is  raised  from 
indirect taxes, which are considered less distortionary. Poland has one of the highest levels of 
revenue  from  consumption  taxes  other  than  VAT,  such  as  excise  duties  on  alcohol  and 
tobacco, recurrent property taxes or energy taxes. 

3.2. Financial sector 

Financial sector stability 

Financial  institutions  in  Poland  have  adopted  a  rather  conservative,  domestically  oriented 
business  model,  which,  in  combination  with  prudent  financial  regulation,  has  allowed  the 
banking sector to weather the financial crisis well and to benefit from a subsequent rebound. 
In  2011,  total  banking  profits  reached  pre-crisis  levels  and  the  quality  of  the  loan  portfolio 
stabilised.  The  share  of  non-performing  loans  fell  to  4.7%  in  2011,  from  4.9%  in  2010 
(compared to the EU average of 7 % in 2010),7 mainly as a result of improved profitability in 
the  corporate  sector.  The  capital  adequacy  ratio  (Tier  1)  for  the  banking  sector  as  a  whole 
decreased  slightly  to  11.8 %,  but  remains  well  above  the  level  required  under  the  Basel  III 
agreement. No Polish financial institution was in need of recapitalisation within the temporary 
bank  recapitalisation  exercise  launched  by  the  European  Council  of  October  2011  and 
coordinated by the European Banking Authority. 

The Polish government has addressed credit and liquidity risks in the banking sector. These 
risks  stem  from  the  fact  that  36 %  of  the  outstanding  loan  portfolio  comprises  foreign 
currency  loans  (mainly  housing  loans  in  Swiss  francs).  The  Polish  financial  supervisory 
authority  has  revised  prudential  recommendations  to  limit  the  extent  to  which  foreign 
currency mortgages are used. Moreover, closing down a subsidised housing-loan programme, 
‘Family  on  its  own’,  may  result  in  falling  demand  for  housing  and  mortgage  loans.  These 
regulatory and legal changes are relevant and effective, as banks have limited the supply of 
foreign  currency  housing  loans  (77 %  of  all  new  housing  loans  in  2011  were  granted  in  the 
domestic  currency).  Overall,  these  measures  have  addressed  this  challenge  in  an  effective 
manner. 

Despite  a  recent  increase,  the  average  funding  gap  (difference  between  loans  granted  to 
domestic sectors and deposits collected) in the banking sector remains at a relatively low level 

7 IMF Financial Soundness Indicators at: http://fsi.imf.org/. 

13 

 
 
 
                                                 
(17 %).  However,  this  number  conceals  significant  differences  among  Polish  banks.  In 
particular,  subsidiaries  of  foreign  financial  institutions  have  a  higher  funding  gap  and  often 
depend  on  the  ability  and  willingness  of  their  parent  entities  to  continue  funding.  Recent 
changes in the taxation of retail deposits, intended to close a legal loophole in capital gains 
tax, might lower the availability of domestic deposits, ultimately increasing the funding gap. 
However, the financial supervisor, in cooperation with the central bank, wants to revive the 
market for securitised instruments. Once implemented, this should provide long-term funding 
for banks. Moreover, the supervisory authority monitors liquidity flows in the banking sector 
on  a  daily  basis  and  has  recommended  retaining  2011  profits,  depending  on  the  capital 
situation of individual banks. These steps are intended to strengthen the liquidity and capital 
positions  of  banks  and  to  facilitate  access  to  long-term  funding.  Consequently,  Poland  is 
effectively supporting lending activity in line with AGS priorities. 

Overall,  the  country  should  continue  with  its  prudent  and  pre-emptive  regulatory  policy, 
though more ambitious efforts to increase domestic deposits, ultimately lowering the loan-to-
deposit ratio, might be useful. Moreover, the financial supervisor could identify early warning 
indicators  and  immediate  measures  to  allow  a  quick  reaction  in  case  of  intensified  capital 
outflows. 

Financing of the real economy 

Banks  continued  to  provide  lending  to  the  corporate  sector,  SMEs  in  particular,  fuelling 
investment activity and growth. However, there are still bottlenecks for specific segments of 
the market, namely those where innovative SMEs and start-up companies seek financing. In 
particular, the venture capital market is still in its infancy and the availability of risk capital is 
limited. Moreover, relatively high collateral requirements limit the scope for SMEs to receive 
credit. Poland is trying to tackle these issues with the National Capital Fund. Since the fund 
only  became  operational  in  2010,  it  is  too  early  to  assess  its  impact  on  the  development  of 
start-ups and seed capital funds. 

3.3. Labour market, education and social policy 

One of the strengths of the Polish economy is its endowment with labour and the regulatory 
set  up  of  the  labour  market.  The  labour  force  is  relatively  skilled,  labour  taxes  are 
comparatively  low  and  labour  laws  provide  for  a  sufficient  degree  of  flexibility.  However, 
Poland faces a number of challenges that need to be addressed properly to allow the country 
to  exploit 
to  counteract  negative  demographic 
developments. 

its  untapped  growth  potential  and 

A main concern is the overall low participation rate. Only 64.8 % of the population between 
the ages of 20 and 64 is active on the labour market, and the rates are even lower for youth, 
women and elderly people. Youth unemployment is above the EU average and is mainly the 
result of skills mismatch and low access to apprenticeships. Women, particularly those with 
children,  find  it  difficult  to  combine  family  and  job  because  of  the  lack  of  availability  of 
childcare.  Elderly  workers  exit  the  labour  market  early  because  the  current  tax  and  pension 
systems provide only limited incentives to stay in the labour market. Finally, employers are 
discouraged  from  employing  elderly  workers  who  —  after  reaching  a  certain  age  —  enjoy 
special protection and cannot be easily dismissed. 

The  government  has  acknowledged  these  challenges,  which  were  identified  in  last  year’s 
recommendations  and  were  also  highlighted  in  the  AGS  2012.  The  national  reform 
programme  set  an  ambitious  employment  target  for  2020,  at  71 %,  and  the  main  aim  of  the 

14 

 
 
 
National Action Plan for Employment 2012-20148 is to facilitate access to the labour market 
and to ensure a high level of participation, combating poverty and increasing mobility. 

An  action  cutting  across  all  groups  is  the  implementation  of  the  flexicurity  principle.  Its 
objective is to simultaneously enhance flexibility and security in the labour market. The basic 
idea  is  to  combine  flexible  and  reliable  contractual  arrangements,  comprehensive  lifelong 
learning strategies, and effective active labour market policies. In this context, the efficiency 
of  Public  Employment  Services  will  be  improved.  These  measures  are  a  step  in  the  right 
direction,  but  their  budgetary  impact  must  be  carefully  assessed.  Moreover,  they  must  be 
implemented in parallel with an overhaul of the social benefit system that will ensure the right 
incentives  to  stay  in  employment,  while  protecting  the  most  vulnerable  and  reducing  the 
shadow economy. 

A  number  of  measures  are  planned  to  facilitate  the  entry  of  young  people  into  the  labour 
market.  The  most  important  are  a  reform  of  the  benefit  system  and  a  reform  aimed  at 
facilitating the access to regulated professions. In addition, improving the efficiency of the tax 
system,  including  incentives  to  take  up  legal  employment,  will  help  to  combat  undeclared 
work. In the context of promoting lifelong learning, specific attention will be given to training 
in  the  workplace  and  strengthening  cooperation  with  employers,  e.g.  by  promoting 
apprenticeships.  The  Ministry  of  Labour  has  also  designed  a  new  pilot  programme,  ‘30 
minus’, addressed to those under 30. 

Improving the childcare system is an important tool for raising the participation of women in 
the labour market. The number of places in child-care institutions for children up to the age of 
three  will  increase  by  4 560  in  2012  compared  to  2010,  thanks  to  the  continued 
implementation of the Toddler Programme, with significant support from the European Social 
Fund. However, the number of places could be more ambitious, given the low starting point. 
This measure alone is unlikely to lift the participation rate of women significantly. Poland has 
the  lowest  enrolment  rate  in  pre-school  education  in  Europe  (70.9 %  in  2009).9  This  is  due 
mainly  to  the  lack  of  places,  the  lack  of  adequate  infrastructure  and  of  qualified  staff. 
Moreover, the government’s declaration that  it would generate additional funds for creating 
pre-school  institutions  (3-5  years  of  age)  is  not  reflected  in  the  2012  Budget  Law,  which 
decreased  funding  for  education.  These  inconsistent  measures  not  only  cast  doubts  on  the 
government’s  willingness  to  create  more  places,  it  also  resulted  in  some  municipalities 
closing down schools and kindergartens, thus undermining the credibility of the reform. 

To  address  the  low  participation  of  elderly  workers  in  the  labour  market,  Poland  has 
announced  a  pension  reform.  The  statutory  retirement age (currently 65 for men and  60 for 
women) will be gradually raised from 2013 onwards, to 67 for men in 2020 and for women in 
2040. Changes in the pension system will be accompanied by reforms in the health sector to 
improve  the  health  of  the  workforce.  Moreover,  for  the  pension  reform  to  be  successful,  it 
would have to be underpinned with a major programme of active ageing measures. For now, 
an  important  policy  aspect  is  to  break  the  entrenched  practices  of  early  retirement,  in 
particular the alignment of special schemes with the general pension scheme. 

Poland has also continued its efforts to limit favourable retirement conditions for uniformed 
services. A draft law adopted by the government envisages the possibility of retirement after 
fulfilling two conditions: 25 years of service and 55 years of age (currently only 15 years of 

8 An operational document to the National Reform Programme, draft of 4 April 2012. 

9 The EU average was 92.5 % in 2009. 

15 

 
 
                                                 
service).  However,  the  new  conditions  would  apply  only  to  new  officers  (those  currently 
employed  would  be  able  to  join  the  new  system  on  a  voluntary  basis)  which  significantly 
limits  the  impact  of  the  reform  on  the  labour  market  and  the  public  finances.  Poland  also 
intends to modify a special retirement scheme for miners. The new scheme would apply only 
to miners who work underground, thus restricting the number of beneficiaries. 

Poland has one of the highest numbers of farmers in the EU. They form a very diverse group. 
Some  own  very  modern  farms  that  produce  high-quality  products.  However,  most  produce 
only for local markets and benefit from special social and pension systems. These subsidised 
systems need to be reformed. In 2011, Poland introduced some changes to the farmers’ social 
security  fund  (KRUS).  The  state  will  continue  to  pay  health  contributions  for  the  smallest 
farms (up to 6 ha), whereas owners of larger farms will have to pay for themselves. However, 
it  is  only  a  temporary  solution  for  2012  and  then  may  be  extended  for  2013.  A  permanent 
reform still needs to be designed and implemented. 

At  11.4%  in-work  poverty  in  Poland  is  fifth  highest  in  the  EU  and  its  statutory  minimum 
wage  is  among  the  lowest.  Coupled  with  very  low  net  transfers  to  low-income  earners  and 
strong eligibility rules, the impact on reducing poverty among the working population is very 
limited.  Those  on  temporary  contracts  or  civil  law  contracts  are  particularly  exposed,  since 
this group represents as much as 26.8% of total employment and holding a temporary contract 
involves a wage penalty of 27.8% relative to permanent contracts. These elements tend to trap 
people in poorly paid jobs and hamper upward mobility. 

An  important  challenge  for  Poland  is  pre-school  education,  a  pre-requisite  for  good 
educational  attainment  and  the  development  of  social  skills.  In  particular,  it  is  a  chance  for 
children from disadvantaged backgrounds to catch up with social and learning skills so that 
they  have  an  equal  start  with  others  at  school.  Poland  needs  a  substantial  increase  in  the 
number of pre-school places to cater for this challenge. 

A horizontal measure in this field is in lifelong learning, in which Poland is well below the 
EU average, with an adult participation rate of 5.3 % (vs. 9.1 % for the EU). Access to tailored 
and  individualised  support  programmes,  including  dedicated  training  and  apprenticeship 
programmes leading to a first vocational experience, is low. There should be more support for 
encouraging  apprenticeships  (e.g.  by  reimbursing  employers’  training  costs)  and  more 
cooperation  between  vocational  schools  and  employers.  The  new  programme  ‘Business  for 
education’  is  a  useful  tool  in  this  regard.  The reform of Vocational Education  and Training 
(VET), set to be implemented as of 2012/2013, aims to introduce more cooperation between 
VET  schools  and  employers  and  more  flexible  learning  pathways.  Moreover,  the  reform  is 
intended to increase the number of apprenticeships and to develop the skills of both the older 
and  the  unskilled  workforce,  using  dedicated  vocational  training.  While  these  reforms  are 
relevant  and  respond  to  the  challenges  identified  in  the  country  recommendations,  they  are 
not  ambitious  enough.  Allocating  more  funds  to  raise  the  number  of  apprenticeships  and  to 
encourage  employers  to  accept  trainees  could  remedy  the  situation.  Further  efforts  are 
required  to  make  VET  more  attractive,  and  to  reduce  the  skills  mismatch  by  improving  the 
quality of teaching. 

Poland started implementing an ambitious higher education reform in the second half of 2011 
that aims to strengthen university-business links and to address the skills and job mismatch. 
The reform aims to make courses on offer more flexible, responding better to changing labour 
market needs. Academic Enterprise Incubators are a good example of an initiative that offers 
students and graduates a chance to develop entrepreneurial skills on preferential terms. It also 
promotes self-employment. Another instrument in this area is the introduction of a financing 

16 

 
 
mechanism  for  higher  education  institutions  based  on  their  qualitative  performance. 
Nevertheless,  there  is  still  a  need  to  strengthen  the  relevance  and  quality  of  teaching 
provision, with a particular focus on tertiary private institutions.    

Given all measures taken, in terms of ambition and adequacy, Poland addressed the country-
specific  recommendations  related  to  the  labour  market  and  education  only  partially.  In 
particular,  much  remains  to  be  done  regarding  changes  to  the  farmers’  social  security  fund. 
Reforms  in  higher  education  and  VET  are  heading  in  the  right  direction,  but  the  quality  of 
tertiary  education  in  Poland  still  needs  to  be  improved  significantly,  particularly  as  regards 
private higher education institutions, and there are shortcomings in the provision and quality 
of career guidance. 

3.4. Structural measures promoting growth and competitiveness 

Poland has been able to secure continued growth even during the financial crisis and remains 
a ‘growth engine’ in the European Union. To enhance its growth potential, it is important that 
the  country  continues  along  this  path  and  tackles  the  challenges  that  were  identified  in  the 
European Semester 2011 and the AGS 2012. The country has to continue its modernisation, 
focusing on improving the business environment and infrastructure, strengthening innovation, 
and reducing energy dependency. 

Structural funds 

Poland is the largest beneficiary of cohesion policy in 2007-2013, with a total allocation of 
nearly EUR 68 bn. Financial progress is more than satisfactory, with nearly 40 % of payments 
from the  Commission  made.  Currently Poland is focusing on avoiding backlogs in the final 
years  of  the  funding  period  and  spending  the  remaining  60 %  of  the  allocation  on  time  to 
avoid  any  de-commitments.  Overall,  progress  is  good,  but  some  sectors,  in  particular 
information society and broadband and railways, require further attention. 

Transport and infrastructure 

Poland’s  underdeveloped  transport  infrastructure  continues  to  be  a  major  bottleneck  to 
growth.  This  particularly  applies  to  rail  infrastructure,  where  substantial  investment  in  a 
deteriorating, ageing rail network is a priority. Out of about 20 000 km of lines operated, only 
36 %  is  in  good  technical  condition.  In  November  2011,  the  government  adopted  a 
multiannual  plan  for  investment  in  railway  infrastructure  by  2013  (as  required  by  the 
recommendation  on  infrastructure).  This  plan,  with  an  overall  budget  of  PLN  20.4  billion 
(including  EU,  EIB  and  national  funds),  will  focus  on  modernising  the  existing  railway 
network and will enable 2 300 km of lines to be upgraded. However, the plan lacks ambition 
in terms of scope, is not sufficiently consistent with other programmes, and its funding may 
be problematic. 

Despite the fact that the need for investment in the rail network is huge, Poland is not fully 
using the Cohesion Fund resources available for this purpose. On the contrary, in June 2011, 
it asked the Commission to accept a shift of EUR 1.2 billion from rail to road projects. This 
request  delayed  the  implementation  of  its  rail  transport  master  plan  (as  required  by  the 
recommendation  on  infrastructure).  Progress  with  the  implementation  and  use  of  EU  funds 
available  for  modernisation  of  the  existing  railway  network,  in  particular  TEN-T  corridors, 
are possible steps for improvements. 

Car  ownership  and  road  use  are  constantly  growing,  and  the  motorway  and  expressway 
network is being extensively developed with support from EU funds. There are currently 530 

17 

 
 
 
km of motorways and 740 km of expressways under construction. However, over the 2007-
2013  funding  period,  the  investment  ratio  between  road  and  rail  is  3:1,  strongly  favouring 
road projects. Therefore, the quick adoption and implementation of a new integrated transport 
strategy should provide a better balance in investment priorities in various transport modes, 
investments.  The  country  specific 
together  with  better  prioritisation  of  specific 
recommendations  relating  to  the  transport  sector  remain  partially  valid  and  should  be 
followed up this year. 

As regards development of the information society, Poland is below the EU average. Take-up 
of  broadband  connections  by  households  is  slightly  slower  than  the  EU  average  (58 %  vs. 
61 %). In particular, there is a lack of coverage in rural areas. Poland has recently mobilised 
public  funding  to  increase  its  rural  broadband  coverage.  However,  more  is  needed  to  bring 
about widespread connectivity. 

R&D and innovation 

Another  major  weakness  of  the  Polish  economy  continues  to  be  a  low  level  of  R&D  and 
innovation  investments  and  a  lack  of  innovativeness  in  businesses.  Despite  recent  growth, 
Poland’s R&D expenditure remains relatively low (0.74 % of GDP in 2010) and is among the 
lowest  in  the  EU.  The  pervasive  underinvestment  of  the  private  sector  is  particularly 
worrying.  The  low  levels  of  investments  are  also  reflected  in  a  poor  scientific  and 
technological performance.10 

Poland  recognises  these  shortcomings.  Recent  reforms  of  the  science  and  higher  education 
systems  initiated  a  major  restructuring  and  shift  towards  a  more  efficient  and  competitive 
system,  including  support  mechanisms  to  induce  science-industry  cooperation.  However, 
there are still structural problems with the functioning of an innovation-friendly environment, 
which at present fails to drive private-public collaboration, and does not stimulate the growth 
of  innovative  companies.  So  far,  structural  fund  support  for  R&D  and  innovation  has  been 
skewed towards absorption of new technologies, and has been less successful in undertaking 
indigenous research and innovation projects, especially at regional level. As a result, ongoing 
reforms  need  to  be  accompanied  by  more  effective  support  measures,  in  particular  for 
innovative young companies and SMEs. 

The National Research Programme adopted in August 2011 is an important step in tackling 
the  existing  fragmentation  of  R&D  efforts.  However,  it  remains  unclear  how  priorities  are 
linked and taken forward in innovation, and more broadly, in industrial policy. Poland needs 
to ensure better coordination between science and innovation policy and further concentrate 
funding  on  key  strategic  areas,  including  developing  private-public  partnerships  in  these 
areas. Another critical challenge is not sufficient internationalisation of Polish science. 

Environment and energy 

As regards the environment, waste management, water and air pollution are among the main 
challenges.  Too  much  municipal  waste  is  still  landfilled  —  73 %,  while  the  EU  average  is 
below  40 %,  and  recycling  accounts  for  only  18 %.  Valuable  resources  in  waste  are  being 
buried in landfills, with negative economic and environmental impacts. More could be done 
to use cohesion funds to support the development of the infrastructure needed, complemented 
by  a  landfill  tax  and  other  economic  instruments  such  as  ‘Pay  As  You  Throw’  schemes 

10  In  the  2011  Innovation  Union  Scoreboard,  the  country  dropped  to  rank  lowest  among  moderate  innovators 

(23rd place). 

18 

 
 
                                                 
creating additional incentives. Moreover, atmospheric emissions levels in Poland are among 
the highest in the EU, and the urban population’s exposure to particulate matter and ozone is 
still  above  EU  targets.  Energy  production,  household  combustion  and  transport  largely 
account  for  emissions.  Health  benefits  lost  from  not  achieving  the  2020  targets  of  the  Air 
Strategy are estimated at between EUR 6 bn and EUR19 bn. 

With respect to energy, coal remains the dominant fuel source for power generation. Poland 
still  has  to  make  a  considerable  effort  to  reach  its  15 %  Europe  2020  renewables  target. 
Furthermore,  congestion  on  the  Polish  domestic  electricity  grid  could  be  reduced  by  more 
capacity  to  interconnect  to  neighbouring  markets,  as  these  shortcomings  slow  down  market 
integration.  Regarding  natural  gas,  the  key  problem  is  lack  of  diversification,  with  almost 
90 % of gas imported from Russia. However, the situation is improving, thanks to a set of new 
investments (co-financed by the EU), such as an LNG import terminal, new interconnections 
with the Czech Republic and Germany, and new storage facilities. Furthermore the creation of 
a  gas  trading  platform  and  phasing  out  regulated  prices  would  stimulate  competition  in  the 
gas sector. Adoption of a national programme of development of the nuclear power in 2011 
was another step towards enhancing country’s energy security. Implementation of EU energy 
legislation,  particularly  regarding  the  Second  and  Third  Energy  Package  and  the  EU 
Renewable Energy Directive, is lagging behind, and a number of infringement procedures are 
pending. 

Poland is not obliged to reduce greenhouse gas (GHG) emissions and has to limit the increase 
in  GHG  emissions  to  14 %  (compared  to  2005)  by  2020  as  part  of  the  energy  and  climate 
headline target. As of 2010, emissions had increased by 12 % (compared to 2005). According 
to the latest Polish projections, emissions are expected to decrease by 4.5 % by 2020, leading 
to overachievement by 18.5 percentage points. 

Compared  to  the  EU  average,  Poland  has  a  higher  and  increasing  share  of  private  cars  in 
passenger  transport,  and  a  lower  share  of  railways,  buses  and  trams.  This  overall  trend  is 
ongoing,  and  is  negative  from  the  point  of  view  of  greenhouse  gas  and  other  atmospheric 
emissions  and  energy  efficiency.  There  is  generally  underinvestment  in  urban  transport, 
which  needs  modernisation.  The  proportion  of  road  freight  has  risen  in  recent  years.  To 
reduce  energy  demand  and  emissions  levels,  intermodal  transport  should  be  promoted  in 
Poland. Its share in total freight is currently under 5 %). 

In  2011,  Poland  adopted  the  Energy  Efficiency  Act  that  introduced  a  new  white  certificate 
scheme intended to deliver at least half the overall energy savings the Polish authorities have 
set  as  targets.  As  part  of  this  scheme,  energy  companies  are  obliged  to  obtain  either  a  set 
amount  of  energy  savings  among  end-use  consumers  or  energy  generation  (e.g.  district 
heating) or to pay a fee that could be used by the public administration to support new energy 
efficiency investments. More than two thirds of energy savings are expected from investments 
in the residential sector and through refurbishment of public buildings. 

Professional services 

Unjustified restrictions in the field of professional services hamper economic growth. Poland 
has notified 368 regulated professions to the Commission (32 % in construction and industry, 
21 % in the transport sector and 20 % in the health sector). Recently, Poland announced a plan 
to  scale  regulation  in  professional  services  down  by  half,  regarding  both  educational 
requirements  and  licensing.  The  government  launched  a  public  consultation  on  a  first  draft 
law liberalising access to around 50 professions in March 2012. It intends to adopt subsequent 
draft  laws  covering  around  200  professions  in  total  in  the  second  half  of  2012.  The 
government  estimates  that  such  deregulation  may  increase  employment  in  the  professions 

19 

 
 
concerned by 15-20 %. It would result in 50 000 to 100 000 new jobs. Moreover, the reform 
will increase competition, cut red tape and reduce prices of selected services. 

Single market legislation 

Although  Poland  transposed  the  Services  Directive,  the  effect  of  the  horizontal  law  on  a 
number  of  sectoral  acts  remains  uncertain,  especially  with  respect  to  the  cross–border 
provision  of  services  such  as  education  and  tourism  (e.g.  establishment,  registration 
requirement and obligation to possess a special identity document). The poor transposition of 
the  single  market  legislation  negatively  affects  business  environment,  in  particular  for 
companies from other Member States.  

3.5. Modernisation of public administration 

Improvements  in  public  administration,  policy  design  and  delivery  are  crucial  for  a  better 
business environment and to raise the quality of government and public institutions in Poland. 
Two  major  legislative  packages  were  adopted  in  2011  in  this  regard.  The  revision  of  the 
freedom  of  entrepreneurship  act  limited  administrative  constraints  on  business  activity.  It 
decreased the burden of controls and allowed electronic registration of economic activity by 
creating the Central Electronic Register and Information on Economic Activity. This should 
bring  a  one-stop  shop  closer,  and  reduce  the  time  needed  to  start  a  business.  The  second 
legislative  package,  consisting  of  two  deregulation  acts,  aimed  to  reduce  information 
obligations  and  administrative  procedures  for  citizens  and  businesses.  The  new  provisions 
replaced administrative certificates with self-declarations in many areas. 

Despite  recent  efforts,  the  administrative  burden  on  business  remains  high  and  public 
administration  continues  to  lack  efficiency.  The  main  areas  of  concern  include  high 
administrative  compliance  costs,  unstable  tax  legislation,  weak  enforcement  of  contracts, 
lengthy  and  burdensome  licensing  and  permit  procedures,  property  registration  and  zoning 
legislation. 

Judicial  proceedings  and  other  legal  actions  are  relatively  high  in  number  and  long  in 
duration. The introduction in 2010 of simplified electronic procedures targeting mainly small 
and mass claims, run successfully by an e-court in Lublin (responsible for the entire country), 
slightly  reduced  the  backlog  of  pending  court  cases.  In  2011  legislative  amendments 
introducing a general simplification of judicial proceedings for economic cases were adopted, 
but  further  changes  are  necessary  to  improve  the  situation.  Since  2007,  the  average  time  to 
complete proceedings in civil and commercial matters has continued to increase. The situation 
in  the  courts  of  Warsaw,  where  the  headquarters  of  most  major  businesses  are  located,  is 
worse than in any other part of the country. Insolvency proceedings are longer than the EU 
average and show very low recovery rates.11 Furthermore, the length of the legal procedures 
necessary to enforce contracts in Poland (court proceedings and enforcement of the judgment) 
gives rise for concern. 

E-government services for citizens are not very well developed in Poland. The availability of 
public services is somewhat below the European average (at 73 %) and the take-up is low (at 
28 %).  In  addition,  efforts  to  improve  the  situation  have  been  lacking  efficient  coordination 
and  integration  into  a  well-functioning  system.  Online  service  provision  for  businesses  is 

11 World Bank, Doing Business, Economy Profile, Poland, 2012. 

20 

 
 
 
                                                 
close  to  the  EU  average  (at  88 %)  while  use  by  businesses  has  greatly  surpassed  the  EU 
average level (at 89 %). 

Efforts  to  reduce  the  administrative  burden  are  ad  hoc  and  lack  clear  orientation.  Impact 
assessments and consultations with stakeholders are poorly conducted and have little impact 
on the final provisions of legislative acts. Actions are not coordinated at government level and 
the  implementation  of  existing  guidelines  is  not  monitored.  Without  stronger  political 
commitment, it seems unlikely that the situation will change to any significant extent in the 
near  future.  A  new  strategy,  ‘Efficient  State  2011-2020’,  due  to  be  adopted  soon,  should 
address these challenges in a systemic way. 

Regarding  state  aid,  sectoral  aid  spending  is  much  higher  than  the  EU  median.  Poland  also 
lacks  a  coordinating  body  that  would  be  empowered  to  vet  domestic  state  aid  and  a  central 
state  aid  registry,  the  existence  of  which  would  enable  better  monitoring  of  public 
expenditure. 

21 

 
 
4. OVERVIEW TABLE 

2011 commitments 

Summary assessment 

Country-specific recommendations (CSRs) 

CSR 1: Implement the measures announced in the draft 
2012  Budget  Law  and  take  additional  measures  of  a 
permanent  nature  if  needed  to  reduce  the  general 
government deficit to below 3 % of GDP in 2012, in line 
with  the  Council  recommendations  under  the  EDP. 
While  ensuring  adequate  progress  towards  the  medium-
term  objective,  minimise  cuts  in  growth-enhancing 
expenditure in the future. 

CSR  2:  Enact  legislation  with  a  view  to  introducing  a 
permanent expenditure rule by 2013. This rule should be 
based  on  sufficiently  broad  budgetary  aggregates  and 
should  be  consistent  with  the  European  system  of 
accounts.  Moreover,  take  measures  to  strengthen  the 
mechanisms  of  coordination  among  the  different  levels 
of government in the medium-term and annual budgetary 
processes. 

CSR 3: Raise as planned the statutory retirement age for 
uniformed  services,  continue  steps  to  increase  the 
effective  retirement  age,  such  as  linking  it  to  life 
expectancy. Establish a timetable to further improve the 
rules  for  farmers’  contributions  to  the  social  security 
fund (KRUS) to better reflect individual incomes. 

Poland  has  partially  implemented  the  CSR.  Based 
on  the  Commission  2012  spring  forecast,  Poland 
has  managed  to  reduce  its  general  government 
deficit  close  to  the  recommended  3 %  threshold  in 
2012  (taking  into  account  the  cost  of  a  systemic 
pension  reform  the  Council  recommendation  is 
considered  to  be  met),  while  further  consolidation 
effort  is  required  to  ensure  adequate  progress 
towards  the  MTO.  In  this  regard,  plans  provided 
lack ambition and are not clear enough.  

Poland has not implemented the CSR. All measures 
covered  by  this  recommendation,  the  expenditure 
rule,  the  consistency  with  ESA  95  as  well  as  the 
deficit  rule  for  local  governments  have  not  yet 
advanced  beyond  the  negotiation  stage  and  details 
are often missing.  

Poland  has  partially  implemented  the  CSR.  While 
efforts  have  been  undertaken  to  limit  favourable 
retirement conditions for uniformed services and an 
increase  in  the  general  retirement  age for men and 
women  is  planned,  these  measures  should  have 
been  more  ambitious,  as  the  expected  impact,  in 
particular  regarding  uniformed  services,  is  very 
modest  and  will  occur  only  in  the  long-run.  The 
time span over which the retirement age for women 
is to be raised is overly long (until 2040).  

enhance 

apprenticeships 

CSR  4:  Implement  the  proposed  lifelong  learning 
strategy, 
and  dedicated 
vocational  training  and  education  programmes  for  older 
workers  and  low-skilled  workers.  Strengthen  links 
between  science  and  industry  by  implementing  the  ‘We 
build  on  Knowledge’  programme 
(‘Budujemy  na 
Wiedzy’).  Implement 
the  higher  education  reform 
programme  ‘Partnership  for  Knowledge’  (‘Partnerstwo 
dla  Wiedzy’)  so as to better align educational provision 
with labour market needs. 

Poland has partially implemented the CSR. Poland 
has  introduced  several  reforms  in  the  areas  of 
education, training and lifelong learning, which are 
all relevant to tackle the challenges identified in the 
CSR.  There  needs  to  be  more  effort  to  reduce  the 
skills  mismatch,  and  more  cooperation  between 
companies  and  higher  education 
institutions. 
Support mechanisms have been launched to induce 
science-industry  cooperation.  However,  they  need 
to  be  scaled  up,  and  more  widespread  efforts  are 
needed  to  address  persistent  structural  problems 
innovation-friendly 
with 
environment which at present fails to drive private-
public  collaboration  and 
incentives  for 
companies to innovate.   

functioning  of 

lacks 

the 

CSR  5:  Increase  female  labour  market  participation  by 
taking  measures  to  ensure  stable  funding  for  pre-school 
child-care  arrangements,  to  increase  enrolment  rates  of 
children under three years. 

Poland has partially implemented the CSR. Raising 
the  number  of  places  in  child  care  institutions  by 
4 500  seems  insufficient  to  increase  the  female 
labour  participation  rate  significantly.  Moreover, 
funds  for  pre-school  child-care  institutions  are 
reduced in the 2012 budget.  

22 

 
 
CSR  6:  Take  measures  to  improve  incentives  for 
investment in energy generation capacity with a view to 
encouraging  low-carbon  emitting  technologies,  and  to 
grid 
further 
cross-border 
interconnections;  develop  a  multiannual  plan 
for 
investment  in  railway  infrastructure  and  implement  the 
rail transport master plan. 

electricity 

develop 

Poland  has  partially  implemented  the  CSR.  Some 
progress  has  been  made 
the 
diversification  of  energy  supply,  but  progress  is 
limited 
and 
rail 
implementation of the transport master plan. 

transportation, 

in  relation 

i.e. 

in 

to 

CSR 7: Take steps to simplify legal procedures involved 
in  enforcing  contracts;  revise  construction  and  zoning 
legislation,  with  a  view 
to  streamlining  appeal 
procedures and speeding up administrative procedures. 

Poland has partially implemented the CSR. Despite 
recent  efforts,  the  administrative  burden  remains 
high  and  administrative  efficiency  could  be 
improved.  Only  minor 
reforms  have  been 
introduced,  which  are  not  expected  to  have  an 
impact sufficient to address the challenges. 

Euro Plus Pact (national commitments and progress) 

to 

further 

improve  public 

temporary  expenditure 

Commitments 
finance 
sustainability  include  enforcement  of  the  existing  debt 
(CPI  +  1 %), 
rule, 
introduction of new regulations limiting deficit ratios of 
local  governments  and  introduction  of  a  permanent 
expenditure rule.  

rule 

on 

based 

although 

The  public  finance  commitments  have  been  only 
partially implemented: 
The  existing  debt  rule  is  fully  operational  and 
enforceable, 
national 
classification  of  national  accounts,  different  from 
internationally  comparable  ESA95.  The  temporary 
expenditure  rule  has  been  included  in  the  2011 
budget and is to remain in force in 2012. The new 
deficit  rule  for  local  governments  has  not  been 
implemented  as  the  Ministry  of  Finance  and  the 
local  government  entities  could  not  agree  on  its 
final shape. The permanent expenditure rule is still 
under preparation.  

Commitments  to  foster  employment  focus  on  labour 
market  participation  (provision  of  better  care  facilities 
for children under three, preservation of lower disability 
pension  contributions)  and  education  (getting  business 
involved in education).  

Commitments to foster competitiveness presented by the 
government  focus  on  education  and  the  science  sector 
(i.e. implementation of the reform of the science system; 
support  to  young  scientists;  transfer  of  knowledge  into 
the  economy  and  implementation  of  the  reform  of  the 
higher  education  system),  infrastructure  development 
(i.e.  creation  of  modern  road,  rail,  energy  and  digital 
networks)  and  the  business  environment  (i.e. reductions 
in  red  tape,  easier  access  to  bank  loans,  a  pay  freeze  in 

the  government’s  declaration 

Labour  market  commitments  have  been  only 
partially implemented: 
Non-wage  labour  costs  were  increased  by  raising 
the  disability  pension  contribution  paid  by 
employers  from  4.5 %  to  6.5 %,  contrary  to  one  of 
the  commitments.  The  number  of  places  in  child-
care institutions for children up to the age of three 
will  increase  by  4 500  in  2012  compared  to  2010, 
but 
to  generate 
additional  funds  for  creating  pre-school  child-care 
institutions (3-5 years of age) is not reflected in the 
2012  Budget  Law,  which  decreased  education 
subsidies.  This  reduction  not  only  casts  doubts  on 
the government’s willingness to create more places, 
it  also  resulted  in  closing  down  schools  and 
kindergartens by some municipalities, undermining 
credibility  of  the  reform.  Progress  in  involvement 
of  business  in  education  process  is  even  more 
limited.  

The  competitiveness  commitments  have  only  been 
partially implemented: 
Two new bills on education and science have been 
enacted  and  are  being  implemented.  Infrastructure 
is  being  upgraded,  but  progress  in  the  field  of 
business environment is very slow.  

23 

 
 
 
the public sector).  

Measures  to  reinforce  financial  stability  aim  for  more 
efficient regulation and supervision of the banking sector 
(i.e.  new  regulations  for  bank  resolution  funds  and 
support for the activities of the ESRB)  

The commitments have been partially implemented: 
A  new  banking  resolution  scheme  is  still  being 
prepared.  Poland  is  actively  involved  in  the  works 
of the ESRB 

Europe 2020 (national targets and progress) 

Employment rate target (in %): 

71 % 

R&D target (in %): 

1.7 % 

Greenhouse gas (GHG) emissions target: 

+  14 %  (compared  to  2005;  ETS  emissions  are  not 
covered by this national target) 

Renewable energy target: 

15.48 %  target  for  renewable  energy  sources  in  overall 
final energy consumption; 

10 % — share of renewable energy in the transport sector 
by 2020 

Energy  efficiency–  reduction  in  primary  of  energy 
consumption by 2020 in Mtoe: 

13.60 Mtoe 

Early school leaving target (in %): 

4.5 % 

Tertiary education target (in %): 

45 % 

Employment  rate  reached  64.9 %  in  2009  and 
64.6 %  in  2010.  Despite  recent  reforms  of  early 
retirement  regimes,  no  progress  has  been  made 
towards achievement of the target.  

Gross  domestic  expenditure  on  R&D  (in  %  of 
GDP) reached 0.68 % in 2009 and 0.74 % in 2010. 
Marginal  progress  has  been  made 
towards 
achievement of the target. 

Change in non-ETS GHG emissions between 2005 
and  2010:  +12 %  (this  data  corresponds  to  the 
current ETS scope) 

The share of renewable energy in gross final energy 
consumption  (in  %)  reached  8.9 %  in  2009.  The 
share  of  renewable  energy  in  the  transport  sector 
reached  3.6 %  in  2009.  Limited  progress  has  been 
made towards the achievement of the target. On 22 
December  2011, 
the  Ministry  of  Economy 
presented a draft Renewable Energy Sources Law. 

The  NRP  re-confirms  the  Polish  national  energy 
efficiency  target  for  2020  to  stabilise  primary 
energy consumption at the level of 96 Mtoe despite 
projected economic growth during that period. The 
NRP estimates that achieving this target will mean 
primary  energy  savings  of  13.6 %  in  2020  as 
compared to a business-as-usual scenario. 
Energy  efficiency  objectives  are  set  according  to 
national  circumstances  and  national  formulations. 
As  the  methodology  to  express  the  2020  energy 
consumption impact of these objectives in the same 
format was agreed only recently, the Commission is 
not yet able to present this overview. 

The  share  of  early  leavers  from  education  and 
training  (Percentage  of  the  population  aged  18-24 
with at most lower secondary education and not in 
further education or training) reached 5.3 % in 2009 
and  5.4 %  in  2010.  No  progress  has  been  made 
towards  achievement  of  the  national  target,  which 
is well below the Europe 2020 headline target. 

Tertiary  educational  attainment  reached  35.3 %  in 
2010.  There  has  been  some  progress  towards 
achievement  of  the  national  target,  which  is  above 
the Europe 2020 headline target. 

24 

 
 
Target on the reduction of population at risk of poverty 
or social exclusion in number of persons: 

1 500  000 

People  at-risk-of-poverty  or  social  exclusion  in 
1 000  persons  attainment  reached  10 454  in  2009 
and  10 409  in  2010.  No  progress  has  been  made 
towards achievement of the target. 

25 

 
 
ANNEX 

Core indicators
GDP growth rate
Output gap 1
HICP (annual % change)
Domestic demand (annual % change) 2
Unemployment rate (% of labour force) 3
Gross fixed capital formation (% of GDP)
Gross national saving (% of GDP)
General government (%  of GDP)
Net lending (+) or net borrowing (-)
Gross debt
Net financial assets 
Total revenue 
Total expenditure
  of which: Interest
Corporations (%  of GDP)
Net lending (+) or net borrowing (-)

Table I. Macro-economic indicators 

1995-
1999

2000-
2004

2005-
2008

2009

2010

2011

2012

2013

6.0
-0.4
11.3
7.5
12.0
21.7
20.3

-4.1
42.8
0.1
42.3
46.4
4.4

3.2
-0.3
4.3
2.4
18.6
19.9
17.4

-5.0
41.8
-21.1
38.3
43.3
3.0

5.4
1.3
2.6
6.0
12.1
20.4
18.6

-3.3
46.7
-19.7
39.9
43.2
2.5

1.6
-0.7
4.0
-1.1
8.2
21.2
17.3

-7.4
50.9
-22.2
37.2
44.5
2.6

3.9
-0.8
2.7
4.6
9.6
19.9
17.2

-7.8
54.8
-29.5
37.5
45.4
2.7

4.3
-0.2
3.9
3.7
9.7
20.2
17.4

-5.1
56.3
n.a
38.5
43.6
2.7

2.7
-0.9
3.7
1.9
9.8
20.4
17.7

-3.0
55.0
n.a
40.1
43.1
2.7

2.6
-1.5
2.9
2.2
9.6
20.1
17.2

-2.5
53.7
n.a
39.8
42.4
2.7

-4.5

-1.8

0.0

3.6

4.6

4.7

3.9

2.3

n.a
n.a
11.2
23.9

n.a
n.a
11.1
23.8

-79.9
-4.4
10.3
23.2

-85.2
-2.4
10.5
23.5

-85.2
-7.2
13.0
22.0

-74.7
10.3
14.7
14.7

-74.1
9.0
12.4
18.0

-2.1
n.a
32.5
2.0
19.5
2.3

1.9
46.8
32.9
3.3
20.0
6.0

3.4
47.6
34.2
5.4
20.6
8.1

6.3
37.1
35.1
5.6
20.4
10.5

1.1
49.2
33.0
3.2
19.6
5.7

-0.4
58.2
32.4
3.5
19.2
4.4

Net financial assets, non-financial corporations
Net financial assets, financial corporations
Gross capital formation
Gross operating surplus
Households and NPISH (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Gross wages and salaries
Net property income
Current transfers received
Gross saving
Rest of the world (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Net exports of goods and services
Net primary income from the rest of the world
Net capital transactions 
Tradable sector
Non-tradable sector
  of which: Building and construction sector
Real effective exchange rate (index, 2000=100)
Terms of trade in goods and services (index, 2000=100)
Market performance of exports (index, 2000=100)
Notes:
1 The output gap constitutes the gap between actual and potential gross domestic product at 2000 market prices.
2 The indicator for domestic demand includes stocks.
3  Unemployed persons are all persons who were not employed, had actively sought work and were ready to begin working immediately or within two 
weeks. The labour force is the total number of people employed and unemployed. The unemployment rate covers the age group 15-74.

-3.1
39.1
-3.7
-1.0
0.1
51.3
37.4
6.0
98.7
100.1
107.4

-2.3
27.5
-2.8
-0.8
0.1
53.5
34.9
6.6
93.8
106.9
92.8

-2.8
54.6
-2.3
-2.5
0.7
51.0
36.8
6.2
100.4
103.7
127.5

-1.9
64.2
0.1
-3.5
1.2
51.5
37.4
7.2
90.5
106.7
144.1

-2.2
n.a
-0.5
-4.2
1.7
n.a
n.a
n.a
94.2
103.4
150.2

-2.5
n.a
-1.1
-4.4
1.8
51.8
36.0
7.1
96.7
104.0
148.0

-2.1
66.0
-1.2
-3.4
1.7
51.0
37.1
7.3
98.9
105.2
145.2

-3.1
n.a
32.2
1.6
20.0
1.2

n.a
n.a
11.6
23.5

-2.6
n.a
32.4
1.4
20.5
1.8

-2.9
n.a
-0.7
-4.2
1.3
n.a
n.a
n.a
96.0
102.4
151.8

Source :
Commission services' spring 2012 forecast

26 

 
 
 
 
 
 
 
Table II. Comparison of macroeconomic developments and forecasts 

Real GDP (% change)
Private consumption (% change)
Gross fixed capital formation (% change)
Exports of goods and services (% change)
Imports of goods and services (% change)
Contributions to real GDP growth:
- Final domestic demand
- Change in inventories
- Net exports
Output gap1
Employment (% change)
Unemployment rate (%)
Labour productivity (% change)
HICP inflation (%)
GDP deflator (% change)
Comp. of employees (per head, % change)
Net lending/borrowing vis-à-vis the rest of the 
world (% of GDP)

2011
COM CP
4.3
3.0
8.3
7.5
5.8

4.3
3.1
8.3
7.5
5.8

2012
COM CP
2.5
2.1
2.8
3.0
1.8

2.7
2.0
4.7
3.4
1.7

2013
COM CP
2.9
2.7
0.8
6.5
6.1

2.6
2.6
1.6
5.7
4.9

3.3
0.4
0.7
-0.2
1.0
9.7
3.3
3.9
3.2
5.1
-2.5

3.7
0.4
0.6
-0.1
1.1
9.7
3.2
4.3
3.2
4.2
2.1

2.2
-0.2
0.8
-0.9
0.3
9.8
2.4
3.7
3.2
4.7
-2.2

1.9
-0.2
0.5
-0.9
0.3
9.9
2.2
4.0
3.2
6.4
1.2

2.1
0.1
0.3
-1.5
0.4
9.6
2.2
2.9
2.3
5.1
-2.9

2.8
0.6
0.1
-1.3
0.6
9.7
2.3
2.7
2.2
5.7
1.8

2014
CP
3.2
3.1
2.9
7.4
7.6

3.4
0.6
-0.1
-1.2
0.8
9.3
2.4
2.3
2.2
5.1
2.3

2015
CP
3.8
3.3
6.0
5.3
5.1

3.7
0.2
0.1
-0.6
0.9
8.9
2.8
2.5
2.5
6.0
2.7

Note:
1In percent of potential GDP, with potential GDP growth according to the programme as recalculated by the Commission services.

Source :

Commission services’ spring 2012 forecasts (COM); Convergence programme (CP).

27 

 
 
 
 
Table III. Composition of the budgetary adjustment 

(% of GDP)

2011

2012

2013

2014

2015

Change: 
2011-2015

Revenue
of which:
- Taxes on production and imports
- Current taxes on income, wealth, etc.
- Social contributions
- Other (residual)
Expenditure
of which:
- Primary expenditure

of which:

Compensation of employees
Intermediate consumption
Social payments
Subsidies
Gross fixed capital formation
Other (residual)
- Interest expenditure
General government balance (GGB)
Primary balance
One-off and other temporary measures
GGB excl. one-offs
Output gap2
Cyclically adjusted balance2
Structural balance3
Change in structural balance
Structural primary balance3
Change in structural primary balance
Expenditure benchmark
Public expenditure growth4 (real)
Reference rate5,6
Lower reference rate5,7
Deviation in % of GDP 
   from applicable reference rate
Two-year average deviation in % of GDP 
   from applicable reference rate

COM
38.5

COM
40.1

13.7
7.0
11.4
6.3
43.6

14.0
7.3
12.4
6.4
43.1

CP
39.6

13.7
7.3
12.3
6.3
42.6

COM
39.8

14.1
7.4
12.4
6.0
42.4

CP
38.7

13.6
7.5
12.5
5.1
41.0

CP
37.9

12.9
7.7
12.6
4.7
39.5

CP
37.6

12.7
8.0
12.6
4.3
38.6

40.9

40.4

39.8

39.6

38.2

36.9

36.1

9.8
5.7
16.2
0.5
5.8
2.9
2.7
-5.1
-2.4
0.0
-5.1

-0.2

-5.0

-5.0

-2.3

9.7
5.6
16.1
0.4
5.6
3.0
2.7
-3.0
-0.3
0.1
-3.1

-0.9

-2.7

-2.8
2.3

-0.1
2.2

-0.66

3.77

2.58
-1.25

9.6
5.8
16.0
0.4
5.2
2.8
2.8
-2.9
-0.2
0.0
-2.9

-0.9

-2.5

-2.5
2.5

0.3
2.6

0.98

3.77

2.58
-0.59

9.6
5.5
16.3
0.3
4.9
3.0
2.7
-2.5
0.2
-0.1
-2.4

-1.5

-1.9

-1.9
0.9

0.9
0.9

2.81

3.77

2.58
0.09

9.6
5.7
15.8
0.4
3.9
2.7
2.8
-2.2
0.5
0.0
-2.2

-1.3

-1.7

-1.7
0.8

1.1
0.8

1.19

3.77

2.58
-0.51

9.4
5.5
15.8
0.4
3.0
2.7
2.6
-1.6
1.0
0.0
-1.6

-1.2

-1.1

-1.1
0.6

1.5
0.4

9.2
5.3
15.7
0.4
2.8
2.7
2.5
-0.9
1.6
0.0
-0.9

-0.6

-0.7

-0.7
0.5

1.8
0.4

0.62

3.77

2.58
-0.71

0.50

3.77

2.58
-1.16

n.a.

n.a.

-0.58

-0.55

-0.61

-0.93

CP
-0.9

-1.0
1.0
1.2
-2.0
-5.0

-4.8

-0.6
-0.4
-0.5
-0.1
-3.0
-0.2
-0.2
4.2
4.0
0.0
4.2

-0.4

4.4

4.4

4.1

-

-

-
-

-

Notes:
1On a no-policy-change basis.
2Output gap (in % of potential GDP) and cyclically-adjusted balance according to the programme as recalculated by the Commission services 
on the basis of the information in the programme.
3Structural (primary) balance = cyclically adjusted (primary) balance excluding one-off and other temporary measures.
4M odified expenditure aggregate used for the expenditure benchmark, growth rates net of non-discretionary changes in unemployment benefit 
and of discretionary measures.
5The reference rates applicable to 2014 onwards will be available from mid-2012. For illustrative purposes, the current reference rates have 
also been applied to the years 2014 onwards.
6The (standard) reference rate applies starting in the year following the one in which the country reaches its M TO.
7The lower reference rate applies as long as the country is adjusting towards its M TO, including the year in which it reaches the M TO.

Source :
Convergence programme (CP); Commission services’ spring 2012 forecasts (COM); Commission services’ calculations.

28 

 
 
 
Table IV. Debt dynamics  

Average 
2006-10

49.1
1.6

2.4
-0.8

2.5
-2.1
-1.2
0.0

2011

56.3
1.5

2.4
-1.1

2.7
-2.2
-1.6
0.3

(% of GDP)

Gross debt ratio1
Change in the ratio
Contributions 2 :

1. Primary balance
2. 'S now-ball' effect

Of which:
Interest expenditure
Growth effect
Inflation effect

3. S tock-flow adjustment

Of which:
Cash/accruals diff.
Accum. financial assets

Privatisation

Val. & residual effects

2012

2013

COM

53.7
-1.3

-0.2
0.2

2.7
-1.4
-1.2
-1.3

COM

55.0
-1.3

0.3
-0.4

2.7
-1.5
-1.7
-1.2

CP

53.7
-2.7

0.2
-0.3

2.7
-1.3
-1.7
-2.5

0.4
-0.9
-0.2
-5.2

2014
CP

50.6
-1.9

2015
CP

49.7
-0.9

-1.0
-0.1

2.6
-1.6
-1.1
-0.8

0.1
0.2
-0.1
-3.8

-1.6
-0.5

2.5
-1.8
-1.1
1.2

0.4
1.0
0.0
-3.1

CP

52.5
-1.2

-0.5
0.1

2.7
-1.5
-1.1
-0.8

0.1
-0.5
-0.1
-3.1

Notes:
1End of period.
2The snow-ball effect captures the impact of interest expenditure on accumulated debt, as well as the impact of real GDP 
growth and inflation on the debt ratio (through the denominator). The stock-flow adjustment includes differences in cash 
and accrual accounting, the accumulation of financial assets, and valuation and other residual effects. 

Source :
Convergence programme (CP); Commission services’ spring 2012 forecasts (COM); Commission services’ calculations.

29 

 
 
 
 
Table V. Long-term sustainability indicators 

PL

EU27

no-policy 
change 
scenario 

Programme 
(SP) 
scenario

no-policy 
change 
scenario 

SCPs 
scenario

S2
of which:

Initial budgetary position (IBP)
Long-term change in the primary balance (LTC)
 of which:
Pension
Care (HC and LTC)
Others

S1 (required adjustment)*

Debt,  % of GDP (2011)
Age-related expenditure, % of GDP (2011)

1.5

0.5
1.0

-0.6
1.7
-0.1
-0.1

0.5

-0.7
1.2

-0.5
1.7
0.0
-1.4

2.9

0.7
2.3

1.1
1.5
-0.3
2.2

0.7

-1.6
2.4

1.2
1.5
-0.3
-0.1

56.3
20.3

82.8
25.8

Notes:
The ‘no policy change’ scenario depicts the sustainability gap under the assumption that the budgetary position evolves according to 
the spring 2012 forecast until 2013. The ‘stability programme’ scenario depicts the sustainability gap under the assumption that the 
budgetary plans in the programme are fully implemented.     

*  The required adjustment of the primary balance until 2020 to reach a public debt of 60% of GDP by 2030.

Source:
Commission, 2012 stability and convergence programmes.

Figure. Medium-term debt projection 

(% of GDP)

60

Gross debt as % of GDP - PL - Medium term debt projections

50

40

30

20

10

0

0
0
0
2

2
0
0
2

4
0
0
2

6
0
0
2

8
0
0
2

0
1
0
2

2
1
0
2

4
1
0
2

6
1
0
2

8
1
0
2

0
2
0
2

COM no-policy change scenario
COM + Shock ( -1p.p. in the short-term/long-term interest rate on maturing and new debt from 2014)
COM + Shock (+1p.p. in the short-term/long-term interest rate on maturing and new debt from 2014)
COM consolidation scenario (0.5% per year on SB) in order to achieve MTO
COM consolidation scenario (1% per year on SB) in order to achieve MTO
SP scenario

30 

 
 
 
 
 
 
Table VI. Taxation 

Total tax revenues (incl. actual compulsory social 
contributions, % of GDP) 
Decomposition by economic function (% of GDP)1 

     Consumption 

              of which: 

              — VAT 

             — excise duties on tobacco and alcohol 

             — energy 

             — other (residual) 

     Labour employed 

     Labour non-employed 

     Capital and business income 

     Stocks of capital/wealth 
     p.m. Environmental taxes2 
VAT efficiency3 
     Actual VAT revenues as % of theoretical revenues 
at standard rate 

Note:  

2001 

2005 

2007 

2008 

2009 

2010 

32.2 

32.8 

34.8 

34.3 

31.8 

31.8 

11.1 

12.3 

12.9 

12.9 

11.5 

12.3 

6.8 

1.9 

1.8 

0.7 

7.7 

2.0 

2.3 

0.3 

8.3 

1.8 

2.3 

0.4 

8.0 

2.2 

2.2 

0.5 

7.4 

1.6 

2.1 

0.4 

7.8 

2.0 

2.1 

0.3 

13.6 

12.1 

12.2 

12.2 

11.5 

11.3 

0.8 

5.3 

1.7 

2.1 

0.7 

6.2 

1.8 

2.7 

0.8 

7.2 

1.9 

2.7 

0.8 

6.6 

1.9 

2.6 

0.8 

6.3 

1.8 

2.6 

0.3 

6.3 

1.8 

2.6 

40.5 

47.5 

54.1 

50.6 

46.8 

48.7 

1 Tax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See 
European Commission (2012), Taxation trends in the European Union, for a more detailed explanation. 
2 This category comprises taxes on energy, transport and pollution and resources included in taxes on consumption and capital. 
3 The VAT efficiency is measured via the VAT revenue ratio. The VAT revenue ratio is defined as the ratio between the actual VAT 

revenue collected and the revenue that would theoretically be raised if VAT was applied at the standard rate to all final consumption. A 

low ratio can indicate a reduction of the tax base due to large exemptions or the application of reduced rates to a wide range of goods and 

services (‘policy gap’) or a failure to collect all tax due to e.g. fraud (‘collection gap’). See European Commission (2011), Tax reforms in 
EU Member States, European Economy 5/2011, for a more detailed explanation. 

Source: Commission  

31 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
Table VII. Financial market indicators 

2007 
75.2 
46.6 
67.6 

2008 
72.3 
44.2 
84.9 

2009 
88.3 
43.9 
64.1  … 

2010 
87.9 
43.4  … 
… 

2011 
83.9 

Total assets of the banking sector (% of GDP) 
Share of assets of the five largest banks (% of total assets) 
Foreign ownership of banking system (% of total assets) 
Financial soundness indicators: 
              — non-performing loans (% of total loans) 1) 
              — capital adequacy ratio (%) 1)  
              — return on equity (%) 1) , 2) 
Bank loans to the private sector (y-o-y % change) 
Lending for house purchase (y-o-y % change) 
Loan to deposit ratio 
CB liquidity as % of liabilities 
Banks’ exposure to countries beneficiary of official financial assistance (% of GDP) 

4.5 
11.2 
20.4 
19.0 
42.2 
108.4 
2.0 

5.2 
12.0 
24.9 
40.6 
59.5 
93.7 
0.5 

8.0 
13.3 
10.6 
8.5 
12.7 
105.2 
1.6 

4.9 
13.9 
13.2 
11.9 
28.6 
104.2 
0.1 
… 

4.9 
13.2 
16.0 
1.2 
6.5 
105.4 
0.0 
…  …

… 
43.5 

… 
43.6 

54.8 

54.6  … 

17.4 
23.9 
126.8 

Private debt (% of GDP) 
Gross external debt (% of GDP) 3) 
            — Public 
            — Private 
Long term interest rates spread versus Bund (basis points)* 
Credit default swap spreads for sovereign securities (5-year)*  … 
Notes:  
1) Latest September 2011. 
2) Net income to equity ratio. After extraordinary items and taxes. Accumulated income of the last 12 months. Tier 1 
capital. Branches of foreign banks are excluded. 
3) Latest data 2011Q3. 
* Measured in basis points. 
Source: 
Bank for International Settlements and Eurostat (exposure to macro-financially vulnerable countries), IMF (financial 
soundness indicators), Commission (long-term interest rates), World Bank (gross external debt), ECB (all other 
indicators). 

14.1 
24.4 
208.8 
226.0 

18.9 
27.9 
289.8 
190.8 

22.8 
27.0 
303.8 
129.6 

22.3 
25.1 
334.8 
171.6 

32 

 
 
 
 
  
 
  
  
 
 
 
 
  
 
 
Table VIII. Labour market and social indicators 

Labour market indicators
Employment rate 
(% of population aged 20-64)
Employment growth 
(% change from previous year)
Employment rate of women 
(% of female population aged 20-64)
Employment rate of men 
(% of male population aged 20-64)
Employment rate of older workers 
(% of population aged 55-64)
Part-time employment 
(% of total employment)
Part-time employment of women  
(% of women employment)
Part-time employment of men  
(% of men employment)
Fixed term employment 
(% of employees with a fixed term contract)
Unemployment rate1 (% of labour force)
Long-term unemployment2  (% of labour force)
Youth unemployment rate 
(% of youth labour force aged 15-24)

2006

2007

2008

2009

2010

2011

60.1

62.7

65.0

64.9

64.6

64.8

3.4

4.4

3.7

0.4

0.6

1.1

53.1

55.5

57.3

57.6

57.7

57.6

67.3

70.2

73.0

72.6

71.6

72.2

28.1

29.7

31.6

32.3

34.0

36.9

9.9

9.4

8.6

8.5

8.5

8.1

13.2

12.7

11.9

11.7

11.7

11.2

7.3

6.7

6.0

5.9

5.8

5.6

27.3

13.9

7.8

29.8

28.2

27.0

26.5

27.3

26.9

9.6

4.9

7.1

2.4

8.2

2.5

9.6

3.0

9.7

3.6

21.7

17.3

20.6

23.7

25.8

Youth NEET3 rate (% of population aged 15-24)

12.6

10.6

9.0

10.1

10.8

Early leavers from education and training (% of 
pop. 18-24 with at most lower sec. educ. and not 
in further education or training)
Tertiary educational attainment (% of population 
30-34 having successfully completed tertiary 
education)
Labour productivity per person employed 
(annual % change )
Hours worked per person employed  (annual % 
change)
Labour productivity per hour worked (annual % 
change; constant prices)
Compensation per employee (annual % change; 
constant prices)
Nominal unit labour cost growth (annual % 
change)

3.0

0.1

2.9

0.4

-1.0

5.4

5.0

5.0

5.3

5.4

28.0

30.0

32.1

35.5

37.4

:

:

:

2.2

1.2

1.2

3.5

3.3

-0.1

-0.2

-0.9

-0.2

-0.4

2.3

0.9

2.6

1.4

5.6

7.5

4.3

2.1

-0.2

2.2

-1.4

3.7

4.3

2.2

0.8

3.8

2.2

1.9

-1.2

Real unit labour cost growth (annual % change)

-2.5

-1.3

Notes:

1 According to ILO definition, age group 15-74)
2 Share of persons in the labour force who have been unemployed for at least 12 months.
3 NEET are persons that are neither in employment nor in any education or training.

Sources: 
Commission (EU Labour Force Survey and European National Accounts) 

33 

 
 
Expenditure on social protection 
benefits (% of GDP)
Sickness/Health care
Invalidity
Old age and survivors
Family/Children
Unemployment
Housing and Social exclusion n.e.c.
Total
of which:  Means tested benefits
Social inclusion indicators
Risk-of-poverty or exclusion1 (% of total 
population)
Risk-of-poverty or exclusion of children (% of 
people aged 0-17)
Risk-of-poverty or exclusion of elderly (% of 
people aged 65+)
At-risk-of-poverty rate2 (% of total population)
Value of relative poverty threshold (single 
household per year) - in PPS
Severe material deprivation3  (% of total 
population)
Share of people living in low work intensity 
households 4 (% of people aged 0-59 not 
student)
In-work at-risk-of poverty rate (% of persons 
employed)

Notes:

2005

2006

2007

2008

2009

3.81
2.05
9.28
0.84
0.63
0.13
19.7
1.23

3.84
1.88
9.38
0.82
0.57
0.11
19.4
0.99

3.93
1.70
8.72
0.79
0.40
0.09
18.1
0.90

4.45
1.60
8.88
0.73
0.35
0.06
18.6
0.78

4.75
1.43
9.82
0.75
0.40
0.06
19.7
0.71

2006

2007

2008

2009

2010

39.5

34.4

30.5

27.8

27.8

42.0

37.1

32.9

31.0

30.8

32.5

19.1

27.3

17.3

26.9

16.9

25.8

17.1

24.4

17.6

3057

3365

4039

4426

4540

27.6

22.3

17.7

15.0

14.2

12.3

10.0

7.9

6.9

7.3

12.8

11.7

11.5

11.1

11.5

1 People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) 
and/or suffering from severe material deprivation (SM D) and/or living in households with zero or very low 
work intensity (LWI).

2 At-risk-of poverty rate: share of people with an equivalised disposable income below 60% of the national 
equivalised median income. 

3 Share of people who experience at least 4 out of 9 deprivations: people cannot afford to i) pay their rent or 
utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish, or a protein 
equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a car, vii) have 
a washing machine, viii) have a colour TV, or ix) have a telephone.

4 People living in households with very low work intensity: share of people aged 0-59 living in households 
where the adults work less than 20% of their total work-time potential during the previous 12 months.

Sources: 
For expenditure on social protection benefits ESSPROS; for social inclusion EU-SILC.

34 

 
 
 
Table IX. Product market performance and policy indicators 

2002-
2006

3.6

7.8

4.4

2.7

0.3

2002-
2006

n.a.

n.a.
0.6

Performance indicators

Labour productivity1 total economy (annual 
growth in %)
Labour productivity1 in manufacturing (annual 
growth in %)
Labour productivity1 in electricity, gas, water 
(annual growth in %)
Labour productivity1 in the construction sector 
(annual growth in %)
Patent intensity in manufacturing2 (patents of the 
EPO divided by gross value added of the sector)

Policy indicators

Enforcing contracts 3 (days)
Time to start a business 3 (days)
R&D expenditure (% of GDP)
Tertiary educational attainment 
(% of 30-34 years old population)
Total public expenditure on education 
(% of GDP)

Product market regulation4, Overall
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Retail
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Network Industries 5
(Index; 0=not regulated; 6=most regulated)

2007

2008

2009

2010

2011

2.2

7.0

3.2

1.3

4.0

1.3

6.4

3.4

2.9

17.7

n.a.

-8.6

-6.4

n.a.

n.a.

-3.2

-9.4

5.1

5.2

n.a.

0.4

0.3

n.a.

n.a.

n.a.

2007

2008

2009

2010

2011

830

31
0.6

830

31
0.6

830

32
0.7

830

32
0.7

19.9

27.0

29.7

32.8

35.3

830

32
n.a.

n.a.

5.4

4.9

5.1

n.a.

n.a.

n.a.

2005

2006

2008

2009

2010

2011

n.a.

n.a.

n.a.

n.a.

2.3

3.2

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

2.4

2.4

2.3*

n.a.

n.a.

n.a.

Notes:
1Labour productivity is defined as gross value added (in constant prices) divided by the number of persons employed.
2 Patent data refer to applications to the European Patent Office (EPO). They are counted according to the year in which 
they were filed at the EPO. They are broken down according to the inventor's place of residence, using fractional counting if 
multiple inventors or IPC classes are provided to avoid double counting. 
3 The methodologies, including the assumptions, for this indicator are presented in detail on the website 
http://www.doingbusiness.org/methodology. 
4 The methodologies for the product market regulation indicators are presented in detail on the website 
http://www.oecd.org/document/1/0,3746,en_2649_34323_2367297_1_1_1_1,00.html. The latest available product market 
regulation indicators refer to 2003 and 2008, except for Network Industries.

5 Aggregate ET CR.

*figure for 2007.

Source :

Commission, World Bank - Doing Business  (for enforcing contracts and time to start a business) and OECD (for the 
product market regulation indicators). 

35 

 
 
 
 
 
Table X. Green growth performance 

Poland

Macroeconomic
Energy intensity 
Carbon intensity 
Resource intensity (reciprocal of resource productivity)
Waste intensity 
Energy balance of trade 
Energy weight in HICP
Difference between change energy price and inflation 
Environmental taxes over labour taxes
Environmental taxes over total taxes

Sectoral 

Industry energy intensity 
Share of energy-intensive industries in the economy
Electricity prices for medium-sized industrial users 
Public R&D for energy 
Public R&D for the environment
Recycling rate of municipal waste
Share of GHG emissions covered by ETS
Transport energy intensity
Transport carbon intensity
Change in the ratio of passenger transport and GDP

Security of energy supply
Energy import dependency
Diversification of oil import sources 
Diversification of energy mix
Share of renewable energy in energy mix

2001-
2005

0.46
1.92
2.70
n.a.
-1.8%
15
2.58
18.4%
7.5%

0.39
12.7
0.05
n.a.
n.a.
4.1%
n.a.
0.78
2.44
0.5%

13.4%
n.a.
0.43
4.6%

kgoe / €
kg / €
kg / €
kg / €
% GDP
%
%
ratio
ratio

kgoe / € 
% GDP
€ / kWh
% GDP
% GDP
ratio
%
kgoe / €
kg / €
%

%
HHI
HHI
%

2006

2007

2008

2009

2010

0.43
1.75
2.50
0.74
-2.4%
16
5.5
20.6%
8.2%

0.29
5.9
0.05
0.00%
0.00%
6.9%
52.1%
0.79
2.20
2.3%

20.1%
0.93
0.42
4.8%

0.40
1.63
2.60
0.63
-2.6%
16
1
20.7%
7.7%

0.27
5.6
0.05
0.01%
0.01%
7.7%
52.3%
0.80
2.11
1.1%

25.7%
0.91
0.41
5.0%

0.38
1.54
2.54
0.54
-3.1%
13
5.7
20.0%
7.6%

0.21
5.6
0.08
0.01%
0.01%
10.5%
51.6%
0.75
2.02
6.5%

30.6%
0.86
0.39
5.6%

0.36
1.44
2.40
n.a.
-2.3%
13
6.8
21.1%
8.0%

0.22
5.9
0.09
0.01%
0.01%
17.4%
50.8%
0.81
2.17
n.a.

31.7%
0.89
0.38
6.6%

0.37
n.a.
n.a.
n.a.
-2.8%
13
1.4
n.a.
n.a.

n.a.
n.a.
0.09
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

n.a.
n.a.
n.a.
n.a.

Country-specific notes: 
The year 2011 is not included in the table due to lack of data.
General explanation of the table items:
Source: Eurostat unless indicated otherwise; ECFIN explanations given below
All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2000 prices)
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR)
          Carbon intensity: Greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR)
          Resource intensity: Domestic Material Consumption (in kg) divided by GDP (in EUR)
          Waste intensity: waste (in kg) divided by GDP (in EUR)
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP  
Energy weight in HICP: the share of the "energy" items in the consumption basket used in the construction of the HICP
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual %-change)
Environmental taxes over labour or total taxes: from DG TAXUD's database "Taxation trends in the European Union"
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in EUR) 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP
Recycling rate of municipal waste: ratio of municipal waste recycled over total municipal waste
Public R&D for energy or for the environment: government spending on R&D (GBAORD) for these categories as % of GDP
Share of GHG emissions covered by ETS: based on greenhouse gas emissions as reported by Member States to EEA (excl LULUCF)
Transport energy intensity: final energy consumption of transport (in kgoe) divided by gross value added of industry (in EUR) 
Transport carbon intensity:  greenhouse gas emissions in transport divided by gross value added of the transport sector
Passenger transport growth : measured in %-change in passenger kilometres
Energy import dependency: net energy imports divided by gross inland energy consumption incl. of international bunkers
Diversification of oil import sources: Herfindahl index (HHI), calculated as the sum of the squared market shares of countries of origin 

Diversification of the energy mix: Herfindahl Index over natural gas, total petrol products, nuclear heat, renewable energies and solid fuels

Share of renewable energy in energy mix: percentage-share in  gross inland energy consumption, expressed in tonne oil equivalents

36