Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Poland and delivering a Council opinion on the 2022 Convergence Programme of Poland
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Poland, economic policy, economic recovery, economic reform, energy policy, independence of the judiciary, labour market, organisation of health care, public finance, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 622 final  Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Poland and delivering a Council opinion on the 2022 Convergence Programme of Poland {SWD(2022) 622 final} - {SWD(2022) 640 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2022 National Reform Programme of Poland and delivering a Council opinion on 
the 2022 Convergence Programme of Poland 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 9(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council5,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps to strengthen sustainable public finances 
and boost growth and job creation in the medium and long term. The final maximum 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 18(2) of Regulation (EU) 2021/241. 

On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights, 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 
Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it did not identify Poland as one of the Member States for which an 

1 

OJ L 209, 2.8.1997, p. 1. 

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in-depth  review2  would  be  needed.  On  the  same  date,  the  Commission  also  adopted 
the proposal  for the 2022 Joint Employment Report analysing the implementation  of 
the Employment Guidelines and the principles of the European Pillar of Social Rights, 
which was adopted by the Council on 14 March 2022.  

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices,  observed  already  back  in  2021, 
weigh particularly on the most vulnerable households experiencing or at risk of energy 
poverty. The EU is also seeing an unprecedented inflow of people fleeing Ukraine. In 
this context, on 4 March 2022, the Temporary Protection Directive was triggered for 
the first time, granting displaced persons from Ukraine the right to legally stay in the 
EU, as well as access to education and training, labour market, healthcare, housing and 
social welfare. Exceptional support is made available to Poland under the Cohesion’s 
Action of Refugee in  Europe (CARE) initiative and through additional pre-financing 
under the Recovery Assistance for Cohesion and the Territories of Europe (REACT-
EU) to urgently address reception and integration needs for those fleeing Ukraine.  

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated, or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20203. In its Communication 
of  3  March  20214,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 
in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and strong downside risks to  the economic outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 
supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023. 

Following  the  approach  in  the  Council  opinion  of  18  June  2021  on  the  2021 
Convergence Programme, the fiscal stance is currently best measured as the change in 
primary  expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19 
crisis-related  temporary  emergency  measures  but  including  expenditure  financed  by 
non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other 

Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 
on the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011, p. 25 
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 
Communication from the Commission to the Council on one year since the outbreak of COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

(3) 

(4) 

(5) 

(6) 

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(7) 

EU funds, relative to medium-term potential growth5. Going beyond the overall fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally  financed6  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination7.  The  Commission  noted  that,  based  on  the  macroeconomic  outlook  of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue  to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine. 

(9) 

On 29 April 2022, Poland submitted its 2022 National Reform Programme and, on 28 
April 2022, its 2022 Convergence Programme in line with the deadline established in 
Article 4 of Regulation  (EC) No 1466/97. To take account of their interlinkages,  the 
two  programmes  have  been  assessed  together.  In  accordance  with  Article  27  of 
Regulation  (EU)  2021/241,  the  2022  National  Reform  Programme  also  reflects 
Poland’s  bi-annual  reporting  on  the  progress  made  in  achieving  its  recovery  and 
resilience plan. 

(10)  The  Commission  published  the  2022  country  report  for  Poland8  on  23  May  2022.  It 
assessed  Poland’s  progress 
country-specific 
recommendations  adopted  by  the  Council  in  2019,  2020  and  2021.  It  also  assessed 
Poland's  progress  on  implementing  the  European  Pillar  of  Social  Rights  and  on 

addressing 

relevant 

the 

in 

5 

6 
7 

8 

The estimates on the fiscal stance and its components in this recommendation are Commission 
estimates based on the assumptions underlying the Commission 2022 spring forecast. The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  
Not financed by grants from the Recovery and Resilience Facility and other EU funds. 
Communication from the Commission to the Council: Fiscal policy guidance for 2023, Brussels, 
2.3.2022, COM(2022) 85 final. 
SWD(2022)622  final. 

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achieving  the  EU  headline  targets  on  employment,  skills  and  poverty  reduction,  as 
well as progress in achieving the UN’s Sustainable Development Goals. 

(11)  On  23  May  2022,  the  Commission  issued  a  report  under  Article  126(3)  TFEU.  This 
report discussed the budgetary situation of Poland, as its general government deficit in 
2022  is  planned  to  exceed  the  3%  of  GDP  Treaty  reference  value.  The  report 
concluded that the deficit criterion was not fulfilled. In line with the Communication 
of  2  March  2022,  the  Commission  did  not  propose  to  open  new  excessive  deficit 
procedures  in  spring  2022  and  it  will  reassess  the  relevance  of  proposing  to  open 
excessive deficit procedures in autumn 2022. 

the  ensuing  recovery. 

the economy  and  support 

(12)  On  20  July  2020,  the  Council  recommended  Poland  to  take  in  2020  and  2021  all 
necessary measures, in  line with  the general  escape clause, to  effectively  address  the 
It  also 
pandemic,  sustain 
recommended  Poland  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 
sustainability,  while  enhancing  investment.    In  2021,  based  on  data  validated  by 
Eurostat, Poland’s general government deficit decreased from 6.9 % of GDP in 2020 
to  1.9%  in  2021.  The  fiscal  policy  response  by  Poland  supported  the  economic 
recovery in  2021, while temporary emergency support measures  declined from  4.5% 
of GDP in 2020 to 2.7% in 2021. The measures taken by Poland in 2021 have been in 
line with the Council Recommendation of 20 July 2020. The discretionary budgetary 
measures adopted by the government in 2020 and 2021 were temporary or matched by 
offsetting  measures.  Based  on  data  validated  by  Eurostat,  general  government  debt 
stood at 53.8 % of GDP in 2021. 

(13)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Convergence  Programme  is  realistic.  The  government  projects  real  GDP  to  grow  by 
3.8%  in  2022  and  3.2%  in  2023.  By  comparison,  the  Commission’s  2022  spring 
forecast projects a lower real GDP growth of 3.7% in 2022 and 3.0% in 2023, mainly 
due to higher projected inflation, which is expected to weigh on private consumption 
and  investment,  and  a  lower  contribution  of  net  exports.  In  its  2022  Convergence 
Programme, the government expects that the headline deficit will increase to 4.3 % of 
GDP in 2022 and decline to 3.7% in 2023. The increase in 2022 mainly reflects high 
cost of aid to displaced persons from Ukraine, measures related to high energy prices 
and  a  major  tax  reform  (the  Polish  Deal).  According  to  the  Programme,  the  general 
government debt-to-GDP ratio is expected to decrease to 52.1% in 2022, and to 51.5% 
in  2023. Based  on  policy  measures  known  at  the  cut-off  date  of  the  forecast,  the 
Commission 2022 spring forecast projects a government deficit for 2022 and 2023 of 
4.0% of GDP and 4.4% respectively. For 2022, this is lower than the deficit projected 
in  the 2022  Convergence Programme, mainly due to  higher projected nominal  GDP. 
For 2023, the estimated deficit is  higher than in  the Convergence Programme due to 
mainly to lower revenues and the assumed increase in cost of aid to displaced persons 
from  Ukraine.  The  Commission  2022  spring  forecast  projects  a  lower  general 
government debt-to-GDP ratio, of 50.8% in 2022 and 49.8% in 2023. The difference is 
due  to  the  higher  projected  inflation  and  to  different  assumptions  on  stock-flow 
adjustments in 2023. 

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 3.4 %. However, this estimate does not include 
the  impact  of  the  reforms  that  are  part  of  the  Recovery  and  Resilience  Plan  and  can 
boost Poland’s potential growth. 

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(14) 

In 2022, the government phased out the measures taken in response to the COVID-19 
crisis,  such  that  the  temporary  emergency  support  measures  are  projected  to  decline 
from 2.7% of GDP in 2021 to  0.0% in 2022. The government deficit is impacted by 
the  measures  adopted  to  counter  the  economic  and  social  impact  of  the  increase  in 
energy prices, which in the Commission spring 2022 forecast are estimated at 1.0% of 
GDP  in  2022  and  are  expected  to  be  phased  out  in  2023.9  These  measures  mainly 
consist of cuts to indirect taxes on energy consumption and social transfers to poorer 
households.  These  measures  have  been  announced  as  temporary.  However,  in  case 
energy  prices  remain  elevated  also  in  2023,  some  of  these  measures  could  be 
continued. Some of these measures are not targeted, notably across the board cuts in 
VAT/excise  duties.  The  government  deficit  is  also  impacted  by  the  costs  to  offer 
temporary  protection  to  displaced  persons  from  Ukraine,  which  in  the  Commission 
2022 spring forecast are projected at 0.6% of GDP in 2022 and 0.8% in 2023.10  
(15)  On  18  June  2021,  the  Council  recommended  that  in  2022  Poland11  pursues  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
It  also 
Resilience  Facility,  and  preserves  nationally 
recommended  Poland  to  pursue,  when  economic  conditions  allow,  a  fiscal  policy 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  fiscal 
sustainability  in  the  medium  term,  and  at  the  same  time,  to  enhance  investment  to 
boost growth potential. 

investment. 

financed 

(16) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information incorporated in Poland’s 2022 Convergence Programme, the fiscal stance 
is  projected  to  be  supportive  at  -3.4%  of  GDP,  as  recommended  by  the  Council.12 
Poland plans to  provide  support to  the  recovery  by making  use of the Recovery  and 
Resilience Facility to finance  additional investment as recommended by the Council. 
The  positive  contribution  to  economic  activity  of  expenditure  financed  by  Recovery 
and  Resilience  Facility  grants  and  other  EU  funds  is  projected  to  increase  by  0.1 
percentage  points  of  GDP  compared  to  2021.13  Nationally  financed  investment  is 
projected to provide an expansionary contribution to the fiscal stance of 0.3 percentage 
points in 2022.14 Therefore, Poland plans to preserve nationally financed investment, 
as recommended by the Council. At the same time, the growth in nationally financed 
primary  current  expenditure  (net  of  new  revenue  measures)  in  2022  is  projected  to 
provide  an  expansionary  contribution  of  2.7  percentage  points  to  the  overall  fiscal 
stance. This significant expansionary contribution includes the additional impact of the 

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11 

12 

13 

14 

The figures represent the level of annual budgetary costs of those measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 
The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 
Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Convergence 
Programme of Poland, OJ C 304, 29.7.2021, p. 98.  
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
These are Commission projections. The Commission has not yet assessed the Recovery and Resilience 
Plan for Poland. 
Other  nationally  financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.4 percentage points of GDP, including transfers to the Polish development bank (BGK). 

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measures to  address  the economic and social impact  of the increase in  energy prices 
(1.0% of GDP) as well as the costs to offer temporary protection to displaced persons 
from  Ukraine  (0.6%  of  GDP),  while  a  new  care  allowance  for  young  children  (the 
Family Care Capital) is  also  projected to  contribute (0.1%  of GDP) to  the growth  in 
net  current  expenditure.  On the revenue side, the cut  in  the personal  income tax rate 
under  the  Polish  Deal  (0.7%  of  GDP)  and  the  decrease  of  the  corporate  income  tax 
rates (0.1% of GDP) are also projected to contribute to the expansionary fiscal stance. 
The higher increase in consumer prices compared to the GDP deflator is projected to 
the  expansionary  contribution  of  nationally  financed  primary  current 
affect 
expenditure in 2022, by increasing spending on government consumption of goods and 
services. 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2022  spring  forecast  at 
+1.7%  of  GDP  on  a  no-policy  change  assumption.15  Poland  is  projected  to  continue 
using  the  grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance 
additional  investment  in  support  of  the  recovery.  The  positive  contribution  to 
economic activity of expenditure financed by Recovery and Resilience Facility grants 
and  other  EU  funds  is  projected  to  increase  by  0.1  percentage  points  compared  to 
2022.  Nationally  financed  investment  is  projected  to  provide  a  contractionary 
contribution to the fiscal stance of 0.3 percentage points in 2023.16 At the same time, 
the  growth  in  nationally  financed  primary  current  expenditure  (net  of  new  revenue 
measures)  in  2023  is  projected  to  provide  a  contractionary  contribution  of  1.4 
percentage  points  to  the  overall  fiscal  stance.  This  includes  the  impact  from  the 
phasing  out  of  the  measures  addressing  the  increased  energy  prices  (0.9  %  of  GDP) 
and additional costs to offer temporary protection to displaced persons from Ukraine 
(0.2% of GDP).  

In  the  2022  Convergence  Programme,  the  general  government  deficit  is  expected  to 
gradually decline to 3.1% of GDP in 2024 and to 2.5% by 2025. Therefore, the general 
government  deficit  is  planned  to  go  below  3%  of  GDP  by  2025.  However,  no 
information  is  provided  on  the  envisaged  underlying  consolidation  measures. 
According to the Programme, the general government debt-to-GDP ratio is expected to 
decrease by 2025, specifically with a decrease to 51.0% in 2024 and a further decline 
to  49.7%  in  2025.  Based  on  the  Commission’s  analysis,  debt  sustainability  risks 
appear medium over the medium term. 

(17) 

(18) 

(19)  The  ongoing  reform  of  the  budget  system,  when  fully  implemented,  is  expected  to 
increase  the  spending  efficiency  by  tackling  long-standing  weaknesses  in  the  budget 
process.  These  include  complex  and  outdated  budget  classifications;  suboptimal 
recording of information; lack of genuine medium-term planning, and a lack of direct 
leverage  of  spending  reviews  on  the  budget  process.  Poland’s  public  finances  are 
expected  to  face  pressures  for  higher  spending  in  the  long  term,  in  particular  due  to 
population  ageing.  These  factors  amplify  the  need  for  new  tools  to  strengthen 
expenditure  management,  including  a  regular  assessment  of  the  effectiveness  and 
efficiency.  Yet,  during  the  pandemic,  most  of  expenditure  on  COVID-19  measures 
was  channelled  via  a  dedicated  fund  managed  by  a  development  bank  and  via  a 
financial vehicle outside the budget. While this gave the authorities more flexibility in 

15 

16 

A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other nationally financed capital expenditure is projected to provide a contractionary contribution of 0.1 
percentage points of GDP. 

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the  crisis-related  expenditure  and  allowed  avoiding  breaching 

managing 
the 
constitutional central government debt levels, it also limited the parliamentary scrutiny 
of expenditure and public access to timely information on public spending.  

(20)  Poland  is  one  of  the  fastest  ageing  countries  in  the  EU  and  in  the  long  term 
demographic trends will impact the pension system. The current defined contribution 
pension system makes the system financially balanced but does not take into account 
adequacy of future benefits. However, due to the low effective retirement age, rising 
life expectancy and some other features of the system, future pension benefits are set 
to  drop  strongly  in  relation  to  the  final  salary.  This  would  mean  that  a  large  part  of 
pensioners  would  be  at  risk  of  poverty.  Commission  analysis  shows  that  only  to 
maintain  the  level  of  benefits  at  the  current  level,  Poland  would  need  to  spend  an 
additional 6.7% of its GDP by 2070. The main challenges in the Polish pension system 
concern the low effective retirement age and the special pension regimes (e.g. farmers, 
uniformed  services),  which  are  costly  and  favour  their  members  as  compared  to  the 
general system. 

(21)  Poland has submitted the cohesion policy programming documents17 on 15 December 
2021. In line with Regulation (EU) 2021/1060 of the European Parliament and of the 
Council of 24 June 2021, Poland shall take into account the relevant country-specific 
recommendations in the programming of the 2021-2027 cohesion policy funds. This is 
a prerequisite for improving the effectiveness and maximising the added value of the 
financial  support  to  be  received  from  cohesion  policy  funds,  while  promoting  the 
coordination,  complementarity  and  coherence  between  these  funds  and  other  Union 
instruments  and  funds.  The  successful  implementation  of  the  cohesion  policy 
programmes also depends on the removal of bottlenecks to investment to support the 
green and digital transitions and balanced territorial development.  

(22)  The  unemployment  rate  in  Poland  is  reaching  all-time  lows,  but  the  labour  market 
participation  of  some  groups  continues  to  be  constrained.  The  enrolment  rate  for 
children under the age of three in formal childcare remains one of the lowest among 
EU countries, and limited access to childcare prevents women from entering the labour 
market. In addition, the lack of support for long-term care and the lower retirement age 
result  in  an  outflow  of  workforce  from  the  market.  Labour  market  disparities  also 
affect  people  with  disabilities,  the  elderly  and  the  low-skilled,  who  witness 
employment rates below the respective EU averages. Whereas a constant drop in non-
standard  labour  contracts  can  be  observed  in  recent  years,  employment  under 
temporary  contracts  and  self-employment  with  low  social  contributions  continues  to 
affect young and low-skilled workers, increasing the risk of inadequacy of their future 
pensions. 

(23)  Poland’s education and training system continues to face challenges in terms of quality 
and  inclusiveness.  These  challenges  have  been  exacerbated  by  the  pandemic,  with 
prolonged periods of remote learning. Digital skills are lacking among teachers, pupils 
and the general population. At the same time, ICT equipment and connectivity remain 

17 
Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund  Plus,  the 
Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and  Aquaculture  Fund  and 
financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the 
Instrument for Financial Support for Border Management and Visa Policy. OJ L 231, 30.6.2021, p. 159. 

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insufficiently  available  to  schools  and  households  with  children.  The  quality  of  the 
initial  education  received  by  teachers  is  insufficient.  Additionally,  teachers’  salaries 
are  relatively  low  compared  to  OECD  standards.  This  affects  the  financial 
attractiveness  of  the  profession  and,  together  with  the  lack  of  professional 
development,  contributes  to  significant  staff  shortages.  The  large  inflow  of  people 
displaced from Ukraine requires substantial efforts to provide an adequate response in 
the area of education and training. Significant  mismatches  between skills  and labour 
market  needs  lead  to  labour  shortages,  as  demonstrated  by  the  difficulties  faced  by 
employers to fill open positions. 

(24)  Overall spending on healthcare relative to GDP remains low, at only 6.5 % against an 
average of 9.9 % for the EU in 2019. The Polish healthcare system relies excessively 
on  hospitals,  which  suffer  from  a  deteriorating  financial  situation,  a  lack  of  quality 
assessment and deficiencies in management. Primary and ambulatory care  are under-
used. The limited attractiveness of medical professions contributes to staff shortages. 
The  number  of  doctors  and  nurses  per  1000  population  (respectively  2.4  and  5.1)  is 
among the lowest of EU Member States. The primary care system is understaffed, and 
its  services  are  overstretched.  Its  potential  remains  untapped  thus  overburdening 
higher levels  of care.  Whereas  e-health services  help  address  some of the challenges 
faced by the health system, their development has been limited so far.   

(25)  A significant part of social expenditure does not  account  for different income levels, 
leaving  scope  for  better  targeting.  Some  social  expenditures  are  not  targeted  and 
means-tested, for example the additional one-off benefit paid  annually to pensioners. 
At  the  same  time,  social  benefits  coverage  for  people  working  under  civil  law 
contracts  is  limited,  making  this  group  more  vulnerable.  Although  the  share  of 
population  at  risk  of  poverty  has  continued  to  decline  from  21%  in  2016  to  17%  in 
2020,  challenges  remain.  In  particular,  some  elderly  people  will  be  exposed  to  an 
increasing  risk  of  poverty.  This  will  particularly  affect  women,  due  to  their  shorter 
careers  resulting  in  lower  future  pension  benefits.    Better  targeting  of  benefits,  for 
example  by  more  common  application  of    means-tested  approach,  would  lead  to  a 
more efficient use of public resources in combatting poverty and supporting those who 
are most in need.  

(26)  Poland  will  increasingly  rely  on  science  and  innovation  to  ensure  long-term 
sustainable  economic  growth  and  competitiveness.  However,  despite  some  progress, 
Poland  lags  behind  in  terms  of  innovative  outputs.  Total  R&D  spending  is  low  at 
1.39%  of  GDP.  Business  R&D  expenditure  remains  well  below  the  EU  average  at 
0.87% in 2020, and the share of innovative companies continues to be weak, according 
to  the  Community  Innovation  Survey.  Poland  ranks  fourth-to-last  in  the  2021 
European  Innovation  Scoreboard  and  is  qualified  in  the  last  category  of  ‘Emerging 
Innovators’.  Increasing  fragmentation  of  the  current  research  support  instruments 
impair  science-business  cooperation,  representing  a  key  obstacle  for  strengthening 
innovation. Furthermore, low management skills and adoption of technologies in firms 
contribute  to  significant  productivity  gaps  between  SMEs  and  large  companies, 
limiting innovation and productivity growth.  

(27)  Digitalisation  is  lagging  behind  in  Poland.  In  particular,  low  levels  of  digital  skills 
hamper the ability of firms to invest in advanced digitalised solutions and move up the 
value-chain,  while  also  contributing  to  labour  and  skill  shortages.  As  for  digital 
infrastructure,  while  the  take-up  in  fixed  broadband  is  increasing,  challenges  in  the 
development of 5G remain high. In particular, only 34% of households were covered 
by 5G technology in 2021, which is below the EU average of 65%, and 5G readiness 

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is  not  progressing  as  the  harmonised  radio  spectrum  for  5G  deployment  is  yet  to  be 
assigned.  Finally, a  greater use of digital  technologies in  public administration could 
improve  the  provision  of  governmental  services  and  help  reduce  unnecessary 
regulatory and administrative burden. 

(28)  A stable and predictable business environment and a friendly investment climate play 
an  important  role  in  both  the  post-pandemic  economic  recovery  and  a  sustainable 
economic  growth  over  the  medium  to  long  term.  The  independence,  efficiency  and 
quality  of  the  justice  system  are  essential  components  in  this  respect.  In  Poland,  the 
rule of law has deteriorated, and judicial independence remains a serious concern, as 
follows  from  several  rulings  of  the  Court  of  Justice  of  the  European  Union  and  the 
European Court of Human Rights.  In addition, in 2021 the Commission launched an 
infringement  procedure  against  Poland  following  certain  rulings  from  the  Polish 
Constitutional Tribunal, which challenged notably the primacy of EU law, putting at 
risk the functioning of the Polish and the Union’s legal order. 

(29)  A  sound  and  stable  regulatory  environment  is  the  basis  for  sustaining  economic 
growth  and  private  investment.  However,  the  investment  climate  continues  to  be 
hindered  by  an  unpredictable  and  burdensome  regulatory  environment.  Frequent 
changes to key laws add uncertainty and compliance costs to businesses, mainly due to 
poor  consultation  of  stakeholders  during  the  law-making  process.  Private  investment 
as a percentage of GDP has been decreasing since 2016 and is low at 18.5% in 2020, 
well  below  the  EU-wide  average  and  regional  peers.  This  could  limit  further 
productivity  gains  and  hamper  Poland’s  ability  to  sustain  economic  growth  over  the 
long-term,  particularly  given  that  increasing  unit  labour  costs  are  weighing  on  cost-
competitiveness.  

(30) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government,  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuels’ imports from Russia as soon as possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels and to shift fossil fuel imports away from Russia.  

(31)  Poland’s energy mix remains heavily reliant on fossil fuels, which provided 86% of its 
energy  supply  in  2020,  with  coal  alone  accounting  for  40%  of  it.  Natural  gas 
represents  17%  of  the  energy  mix,  whilst  oil  accounts  for  28.9%,  with  its  share 
increasing in  recent  years. Poland’s rate of decarbonisation has  been slow. By 2020, 
the Polish economy has registered only 8% reduction in total emissions compared to 
200518. The greenhouse gas emissions intensity of the economy stands 54% above the 
EU average. A revised, more ambitious energy policy and targeted action on non-ETS 
sectors  are  necessary  to  advance  emissions  reduction  across  the  economy.  While 
Poland  produces  around  80%  of  the  coal  it  consumes,  its  dependence  on  Russia  - 
calculated as the share of import from Russia over total coal imports  - has increased 
and reached 74% in 2020, compared to the 54% EU average. On oil, Poland depends 
on  foreign  suppliers  for  the  quasi  totality  of  its  demand  and  imports  from  Russia 
account  for  72%  of  total  foreign  supply,  against  an  EU  average  of  26%.  Poland’s 
dependency  on  Russia  for  natural  gas  stands  at  55%,  compared  to  44%  for  EU 

18 

Climate Action Progress Report (2021) 

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average19.  Ongoing  and  planned  infrastructure  projects  within  Poland  and  with 
neighbouring  countries  (including  the  GIPL  interconnector  with  Lithuania  that  is 
operational  as  of  1st  May  2022),  when  accompanied  by  corresponding  supply 
contracts, are expected to substantially replace Poland’s reliance on Russian gas. New 
infrastructure and network investments  related to  gas are recommended to  be future-
proof where possible, in order to avoid carbon lock-in and stranded assets as well as to 
facilitate  their  long-term  sustainability  through  future  repurposing  for  sustainable 
fuels.  Poland’s  long-term  gas  supply  contract  with  Russia’s  Gazprom  expires  at  the 
end  of  the  2022  and  Poland  has  no  plans  to  renew  it.  The  direct  impact  of  the 
suspension of gas supplies by Gazprom as of April 2022 on Poland’s energy security 
is significantly mitigated by Poland’s access to alternative supplies, within and outside 
the  EU.  However,  the  suspension  requires  an  acceleration  of  ongoing  and  planned 
supply  diversification  projects,  as  well  as  increased  coordination  of  further  actions 
within the EU. 

(32)  An accelerated deployment of new renewable energy generation capacity is crucial to 
lower  Poland’s  dependency  on  fossil  fuel  imports  and  reduce  greenhouse  gas 
emissions.  Current  renewable  energy  targets  under  the  National  Energy  and  Climate 
Plans  lack  sufficient  ambitions.  However,  there  are  important  regulatory,  procedural 
and administrative barriers which limit the deployment of renewable capacity and slow 
down the integration of  RES with  the grid.  These  include restrictive rules on energy 
co-operatives,  restrictive  rules  and  lengthy  permitting  procedures  for  onshore  wind 
development, complexity and instability of tax regulations or lengthy grid connection 
procedures.  Infrastructural  barriers  such  as  an  insufficient  distribution  grid  capacity 
also slow down the integration of renewables and should be addressed with adequate 
incentives.  Moreover,  the  REPowerEU  Communication  has  indicated  that  increasing 
sustainable biomethane production will contribute to phasing out the EU’s dependency 
on  Russian  fossil  fuels.  In  this  context,  Poland  has  room  to  exploit  the  untapped 
potential of biomethane complying with the relevant sustainability criteria through an 
appropriate  strategy  for  the  establishment  of  a  sustainable  biomethane  market  and 
concrete  proposals  concerning  its  structure.  Sustainable  biomethane  can  be  notably 
employed  in  the  cogeneration  of  heat  and  electricity  and  of  renewable  hydrogen, 
which  could  help  to  decarbonize  hard-to-abate  sectors.  Poland’s  national  renovation 
scheme,  is  a  major  initiative  to  replace  air-polluting  boilers  and  improve  the  energy 
efficiency of buildings. However, it could be further streamlined and better targeted to 
low-income households and worst performing buildings. Moreover, there is room for 
better  designing  subsidies  for  heat  source  replacements  to  avoid  gas  lock-in  and 
provide  stronger  incentives  for  deep  renovations  and  heat  pump  deployment, 
coherently with the objectives of the Renovation Wave strategy and the REPowerEU 
communication.  The  significant  cost  saving  potential  of  energy  efficiency 
improvements  enables  the  use  of  repayable  financial  instruments,  which  could  be 
deployed  to  increase  rate  of  renovations  among  residential,  public  and  commercial 
buildings.  This  would  further  improve  air  quality,  accelerate  energy  savings  and 
reduce demand for fossil fuels in heating. Further ambition in reducing greenhouse gas 
emissions and increasing renewable  energy  and energy efficiency will be  needed  for 
Poland to be in line with the “Fit for 55” objectives. 

19 

Eurostat (2020), share of Russian imports over total imports of natural gas, crude oil and hard coal. For 
the EU27 average, the total imports are based on extra-EU27 imports. For Poland, total imports include 
intra-EU trade. Crude oil does not include refined oil products.  

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(33)  Transport is the second most polluting sector after energy production and accounts for 
around 70% of total oil consumption. Road transport is responsible for the lion share 
of  the  sectoral  emissions.  Accelerated  actions  to  decarbonise  mobility  are  therefore 
crucial. Incentives for collective, low-carbon and active modes of transport would help 
in  this  respect.  Increasing  the  attractiveness  and  accessibility  of  public  transport, 
including in rural areas and better connecting suburbs with centres of agglomerations, 
would help reduce air pollution, address exclusion and improve the quality of life. The 
share of zero-emission cars in new registration was 0.8% in 2020, well below the EU 
average  of  5.3%.  Further  support  in  facilitating  the  purchase  of  electric  cars  and 
significant investments in the charging infrastructure should be considered. 

(34)  The  targets  of  Poland’s  national  energy  strategy  need  to  be  revised  upwards  in  line 
with  the  more  ambitious  2030  EU  climate  target.  A  robust,  stable  and  up-to-date 
strategic  framework  is  critical  for  guiding  and  stimulating  public  and  private 
investment in the green transition. Poland should consider this increase in the level of 
ambition  to  provide  certainty  to  investors  and  increase  the  predictability  of  the 
business  environment,  while  also  accelerating  its  energy  transition  in  line  with  the 
REPowerEU communication. 

(35)  While  the  acceleration  of  the  transition  towards  climate  neutrality  and  away  from 
fossil  fuels  will  create  significant  restructuring  costs  in  several  sectors,  Poland  can 
make  use  of  the  Just  Transition  Mechanism  in  the  context  of  cohesion  policy  to 
alleviate the socio-economic impact  of the transition  in  the most  affected  regions.  In 
addition,  Poland  can  make  use  of  the  European  Social  Fund  Plus  to  improve 
employment opportunities and strengthen social cohesion. 

(36) 

In  the  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2022 
Convergence Programme and its opinion20 is reflected in recommendation (1) below. 

HEREBY RECOMMENDS that Poland take action in 2022 and 2023 to:  

1. 

2. 

3. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term  fiscal  positions.  Improve  the  efficiency  of  public  spending,  including 
by  continuing  the  reform  of  the  budget  process.  Ensure  the  adequacy  of  future 
pension benefits and the sustainability of the pension system by taking measures to 
increase  the  effective  retirement  age  and  by  reforming  the  preferential  pension 
schemes. 

Swiftly  finalise  the  negotiations  with  the  Commission  of  the  2021-2027  cohesion 
policy programming documents with a view to starting their implementation.  

Increase labour market participation, including by improving access to childcare and 
long-term  care,  and  remove  remaining  obstacles  to  more  permanent  types  of 
employment.  Foster  quality  education  and  skills  relevant  to  the  labour  market, 
especially  through  adult  learning  and  improving  digital  skills.  Better  target  social 
benefits and ensure access to those in need.  

20 

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

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4. 

5. 

6. 

Improve the resilience, accessibility and effectiveness of the health system, including 
by providing sufficient resources to reverse the pyramid of care and accelerating the 
deployment of e-health services. Strengthen the innovative capacity of the economy, 
including  by  supporting  research  institutions  and  their  closer  collaboration  with 
business.  Enhance  further  digitalisation  of  businesses  and  public  administration, 
including through development of infrastructure.  

Enhance the investment climate, in particular by safeguarding judicial independence. 
Ensure  effective  public  consultations  and  involvement  of  social  partners  in  the 
policy-making process. 

Reduce  overall  reliance  on  fossil  fuels  by  removing  regulatory,  administrative  and 
infrastructural barriers to accelerate permitting and deployment of renewable energy 
sources.  Reform  building  renovation  policies  and  support  schemes  to  incentivise 
deeper energy efficiency, promote energy savings and faster phase-out of fossil fuels 
in  heating  and  accelerated  deployment  of  heat  pumps.  Accelerate  modal  shift 
towards  public  transport  and  active  mobility  and  promote  faster  uptake  of  electric 
vehicles  with  incentives  and  investment  in  charging  infrastructure.  Improve  long- 
and  medium-term  strategic  planning  of  the  green  transition  by  updating  national 
energy policies in line with the European Green Deal objectives and the REPowerEU 
Communication  to  provide  certainty  to  the  business  community  and  use  funding 
effectively with a view to accelerating clean energy investments. 

Done at Brussels, 

For the Council 
The President 

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