Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Poland
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Poland, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, labour market, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 4.6.2025  COM(2025) 221 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Poland {SWD(2025) 221 final}  
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of Poland 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29 April  2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary surveillance and repealing Council Regulation (EC) No 1466/971, and in particular 
Article 3(3) 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: 

General considerations 

(1) 

Regulation (EU) 2024/1263, which entered into force on 30 April 2024, specifies the 
objectives  of  the  economic  governance  framework,  which  aims  at  promoting  sound 
and  sustainable  public  finances  and  sustainable  and  inclusive  growth  and  resilience 
through reforms and investments, and preventing excessive government deficits. The 
Regulation  stipulates  that  the  Council  and  the  Commission  conduct  multilateral 
surveillance in the context of the European Semester in accordance with the objectives 
and requirements set out in the TFEU. The European Semester includes, in particular, 
the  formulation,  and  the  surveillance  of  the  implementation  of  country-specific 
recommendations.  The  Regulation  also  promotes  national  ownership  of  fiscal  policy 
and  emphasises  its  medium-term  focus,  combined  with  more  effective  and  coherent 
enforcement. Each Member State must submit to  the Council and the Commission  a 
national  medium-term  fiscal-structural  plan,  containing  its  fiscal,  reform  and 
investment  commitments,  over  4  or  5  years,  depending  on  the  length  of the  national 
legislative  term.  The  net  expenditure2  path  in  these  plans  has  to  comply  with  the 

1 
2 

OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
Net  expenditure  as  defined  in  Article  2,  point  (2),  of  Regulation  (EU)  2024/1263:  ‘net  expenditure’ 
means government expenditure net of (i) interest expenditure; (ii) discretionary revenue measures; (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  revenue  from  Union  funds;  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union;  (v)  cyclical  elements  of 
unemployment benefit expenditure; and (vi) one-offs and other temporary measures. 

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(2) 

(3) 

(4) 

Regulation’s  requirements,  including  the  requirements  to  put  or  keep  general 
government debt on a plausibly downward path by the end of the adjustment period, or 
for it to remain at prudent levels below 60% of gross domestic product (GDP), and to 
bring  and/or  maintain  the  general  government  deficit  below  the  3%-of-GDP  Treaty 
reference value over the medium term. Where a Member State commits to a relevant 
set  of  reforms  and  investments  in  accordance  with  the  criteria  set  out  in  the 
Regulation, the adjustment period may be extended by up to three years.  
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility  (the  ‘RRF’),  entered  into  force  on 
19 February 2021.  The  RRF  provides  financial  support  to  Member  States  for 
implementing  reforms  and  investments,  delivering  a  fiscal  impulse  financed  by  the 
Union.  In  line  with  the  priorities  of  the  European  Semester  for  economic  policy 
coordination, the RRF fosters economic and social recovery while driving sustainable 
reforms and investments, in particular promoting the green and digital transitions and 
making  Member  States’  economies  more  resilient.  It  also  helps  strengthen  public 
finances  and  boost  growth  and  job  creation  in  the  medium  and  long  term,  improve 
territorial cohesion within the Union and support the continued implementation of the 
European Pillar of Social Rights. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council4  (the 
‘REPowerEU  Regulation’),  which  was  adopted  on  27 February 2023,  aims  to  phase 
out the Union’s dependence on Russian fossil-fuel imports. This helps achieve energy 
security  and  diversify  the  Union’s  energy  supply,  while  increasing  the  uptake  of 
renewables,  energy  storage  capacities  and  energy  efficiency.  Poland  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On  3 May  2021,  Poland  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to Article 19 of that Regulation, the Commission assessed the relevance, effectiveness, 
efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in  accordance  with  the 
assessment guidelines set out in Annex V. On  17 June 2022, the Council adopted its 
Implementing Decision approving the assessment of the recovery and resilience plan 
for  Poland5,  which  was  amended  under  Article 18(2)  on  8 December  2023  to  update 
the maximum financial contribution for non-repayable financial support, as well as to 
include  the  REPowerEU  chapter6.  The  release  of  instalments  is  conditional  on  the 
adoption  of  a  decision  by  the  Commission,  in  accordance  with  Article 24(5),  stating 
that Poland has satisfactorily achieved the relevant milestones and targets set out in the 
the 
Council 

Implementing  Decision.  Satisfactory  achievement 

requires 

that 

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4 

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6 

Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17, ELI: 
http://data.europa.eu/eli/reg/2021/241/oj). 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27 February 2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No 1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1, ELI: http://data.europa.eu/eli/reg/2023/435/oj). 
Council Implementing Decision of 17 June 2022 on the approval of the assessment of the recovery and 
resilience plan for Poland (11805/2022). 
Council Implementing Decision of 7 December 2023 amending the Implementing Decision of 17 June 
2022 on the approval of the assessment of the recovery and resilience plan for Poland (15835/2023). 

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(5) 

(6) 

(7) 

(8) 

achievement  of  preceding  milestones  and  targets  for  the  same  reform  or  investment 
has not been reversed. 

On  21  January  2025,  the  Council,  upon  the  recommendation  of  the  Commission, 
adopted a recommendation endorsing the national medium-term fiscal-structural plan 
of Poland7. The plan was submitted in accordance with Articles 11 and 36(1), point (a) 
of Regulation (EU) 2024/1263, covers the period from 2025 until 2028 and presents a 
fiscal adjustment spread over four years. 

On  26  November  2024,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  adopted  the  2025  Alert  Mechanism Report,  in  which  it  did  not  identify 
Poland as one of the Member States for which an in-depth  review would be needed. 
The  Commission  also  adopted  a  recommendation  for  a  Council  recommendation  on 
the economic policy of the euro  area and  a proposal  for the 2025 Joint  Employment 
Report,  which  analyses  the  implementation  of  the  Employment  Guidelines  and  the 
principles  of  the  European  Pillar  of  Social  Rights.  The  Council  adopted  the 
Recommendation  on  the  economic  policy  of  the  euro  area  on  13  May  2025  and  the 
Joint Employment Report on 10 March 2025. 

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic framework that aims to boost the EU’s global competitiveness over the next 
five  years.  It  identifies  the  three  transformative  imperatives  of  sustainable  economic 
growth: (i) innovation; (ii) decarbonisation and competitiveness; and (iii) security. To 
close  the  innovation  gap,  the  EU  aims  to  foster  industrial  innovation,  support  the 
growth of start-ups through initiatives like the EU Start-up and Scale-up Strategy, and 
promote the adoption of advanced technologies like artificial intelligence and quantum 
computing.  In  pursuit  of  a  greener  economy,  the  Commission  has  outlined  a 
comprehensive Affordable Energy Action Plan and a Clean Industrial Deal, ensuring 
that  the  shift  to  clean  energy  remains  cost-effective,  competitiveness-friendly, 
particularly  for  energy-intensive  sectors,  and  is  a  driver  for  growth.  To  reduce 
excessive dependencies and increase security, the Union is committed to strengthening 
global  trade  partnerships,  diversifying  supply  chains  and  securing  access  to  critical 
raw materials and clean energy sources. These priorities are underpinned by horizontal 
enablers, namely regulatory simplification, deepening of the single market, financing 
competitiveness and a Savings and Investments Union, promotion of skills and quality 
jobs, and better coordination of EU policies. The Competitiveness Compass is aligned 
with  the  European  Semester,  ensuring  that  Member  States’  economic  policies  are 
consistent with the Commission’s strategic objectives, creating a unified approach to 
economic governance that fosters sustainable growth, innovation and resilience across 
the Union. 

In  2025,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  implementation  of  the  RRF.  The  full  implementation  of  the 
recovery and resilience plans remains essential for delivering on the policy priorities 
under the European Semester, as the plans help effectively address all or a significant 
subset  of  challenges  identified  in  the  relevant  country-specific  recommendations 
issued  in  recent  years.  These  country-specific  remain  equally  relevant  for  the 
assessment of amended recovery and resilience plans in accordance with Article 21 of 
Regulation (EU) 2021/241. 

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Council  Recommendation  of  21  January  2025  endorsing  the  medium-term  fiscal-structural  plan  of 
Poland, OJ C/2025/642, 10.2.2025. 

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(9) 

The  2025  country-specific  recommendations  cover 
the  key  economic  policy 
challenges that are not sufficiently addressed by measures included in the recovery and 
resilience  plans,  taking  into  account  the  relevant  challenges  identified  in  the  2019-
2024 country-specific recommendations. 

in 

(10)  On  4  June  2025,  the  Commission  published  the  2025  country  report  for  Poland.  It 
assessed  Poland’s  progress 
country-specific 
recommendations  and  took  stock  of  Poland’s  implementation  of  the  recovery  and 
resilience plan. Based on this analysis, the country report identified the most pressing 
challenges  Poland  is  facing.  It  also  assessed  Poland’s  progress  in  implementing  the 
European  Pillar  of  Social  Rights  and  in  achieving  the  Union  headline  targets  on 
employment, skills and poverty reduction, as well as progress in achieving the United 
Nations Sustainable Development Goals. 

addressing 

relevant 

the 

Assessment of the Annual Progress Report 

(11)  On 21 January 2025, the Council recommended the following maximum growth rates 
of net expenditure for Poland: 6.3% in 2025, 4.4% in 2026, 4.0% in 2027, and 3.5% in 
2028, which correspond to the cumulative growth rates calculated by reference to 2023 
of 19.6% in 2025, 24.9% in 2026, 29.9% in 2027, and 34.4% in 2028. In 2025-2028, 
these  maximum  growth  rates  of  net  expenditure  coincide  with  the  corrective  path  in 
accordance with Article 3(4) of Regulation 1467/97, as recommended by the Council 
on  21  January  2025  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive 
deficit8.  On  30  April  2025,  Poland  submitted  its Annual  Progress  Report9,  on  action 
taken in response to the Council recommendation of 21 January 2025 with a view to 
bringing  an  end  to  the  situation  of  an  excessive  deficit,  and  the  implementation  of 
reforms and investments responding to the main challenges identified in the European 
Semester country-specific recommendations. The Annual Progress Report also reflects 
Poland’s  biannual  reporting  on  the  progress  made  in  achieving  its  recovery  and 
resilience plan in accordance with Article 27 of Regulation (EU) 2021/241. 

(12)  Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  recommended  to 
activate the national  escape clause of the Stability and Growth Pact  in  a coordinated 
manner to support the EU efforts to achieve a rapid and significant increase in defence 
spending and this proposal was welcomed by the European Council of 6 March 2025. 
Following  the  request  of  Poland  on  30  April  2025,  on  [date]  the  Council,  upon  the 
recommendation  of  the  Commission,  adopted  a  recommendation  allowing  Poland  to 
deviate from, and exceed, the maximum growth rates of net expenditure10.  

(13)  Based on data validated by Eurostat11, Poland’s general government deficit increased 
from 5.3% of GDP in 2023 to 6.6% in 2024, while the general government debt rose 
from 49.5% of GDP at the end of 2023 to 55.3% at the end of 2024. According to the 
Commission’s  calculations,  these  developments  correspond  to  a  net  expenditure 
growth rate of 12.7% in 2024. In the 2025 Annual Progress Report, Poland estimates 
the  net  expenditure  growth  in  2024  also  at  12.7%.  Based  on  the  Commission’s 

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9 

10 

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Council  Recommendation  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  deficit  in 
Poland, C/2025/5037. 
The  2025  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en 
Council  recommendation  allowing  Poland  to  deviate  from,  and  exceed,  the  recommended  net 
expenditure path (Activation of the national escape clause), OJ C/2025/xxx, x.x.2025. 
Eurostat-Euro Indicators, 22.4.2025. 

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estimates,  the  fiscal  stance12,  which  includes  both  nationally  and  EU  financed 
expenditure, was expansionary, by 1.8% of GDP, in 2024. 

(14)  According to the Annual Progress Report, the macroeconomic scenario underpinning 
the budgetary projections by Poland expects real GDP growth at 3.7% in 2025, while 
HICP  inflation  is  projected  at  4.5%  in  2025.  The  Commission  Spring  2025  Forecast 
projects real GDP to grow by 3.3% in 2025 and 3.0% in 2026, and HICP inflation to 
stand at 3.6% in 2025 and 2.8% in 2026.  

(15) 

In the Annual Progress Report, the general government deficit is expected to decrease 
to  6.3%  of  GDP  in  2025,  while  the  general  government  debt-to-GDP  ratio  is  set  to 
increase  to  57.8%  by  the  end  of  2025.  These  developments  correspond  to  net 
expenditure growth of 5.8% in 2025. The Commission Spring 2025 Forecast projects a 
general  government  deficit  of  6.4%  of  GDP  in  2025.  The  decrease  of  the  deficit  in 
2025  mainly  reflects  the  impact  of  discretionary  revenue  measures  including  excise 
duty increases and the non-indexation of personal income tax brackets.  According to 
the  Commission’s  calculations,  these  developments  correspond  to  net  expenditure 
growth  of  6.2%  in  2025.  Based  on  the  Commission’s  estimates,  the  fiscal  stance, 
which  includes  both  nationally  and  EU  financed  expenditure,  is  projected  to  be 
expansionary by 0.3% of GDP, in 2025. The general government debt-to-GDP ratio is 
set to increase to 58.0% by the end of 2025. The increase of the debt-to-GDP ratio in 
2025 mainly reflects the high projected government deficit and stock-flow adjustments 
related to defence investments. 

(16)  General  government  expenditure  amounting  to  1.2%  of  GDP  is  expected  to  be 
financed  by  non-repayable  support  (“grants”)  from  the  Recovery  and  Resilience 
Facility  in  2025,  compared  to  0.3%  of  GDP  in  2024,  according  to  the  Commission 
Spring 2025 Forecast. Expenditure financed by Recovery and Resilience Facility non-
repayable support enables high-quality investment and productivity-enhancing reforms 
without a direct impact on the general government balance and debt of Poland. 

(17)  General  government  defence  expenditure  in  Poland  amounted  to  1.6%  of  GDP  in 
2021,  1.6%  of  GDP  in  2022  and  2.0%  of  GDP  in  202313.  According  to  the 
Commission  Spring  2025  Forecast,  expenditure  on  defence  is  projected  at  2.7%  of 
GDP  in  2024  and  2.8%  of  GDP  in  2025.  This  corresponds  to  an  increase  of  1.2 
percentage  points  of  GDP  compared  to  2021.  The  period  when  the  national  escape 
clause is activated (2025-2028) allows Poland to reprioritise government  expenditure 
or increase government revenue so that lastingly higher defence expenditure would not 
endanger fiscal sustainability in the medium term.  

(18)  According  to  the  Commission  Spring  2025  Forecast,  net  expenditure  in  Poland  is 
projected to grow by 6.2% in 2025 and 19.7% cumulatively in 2024 and 2025. Based 
on  the  Commission  Spring  2025  Forecast,  the  net  expenditure  growth  of  Poland  in 
2025 is projected to be below the recommended maximum growth rate established by 
the corrective path. When considering 2024 and 2025 together, the cumulative growth 
rate  of  net  expenditure  is  projected  to  be  above  the  recommended  maximum  growth 

12 

13 

The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 
Eurostat, government expenditure by classification of functions of government (COFOG).  

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rate, corresponding to a deviation14 of less than 0.1% of GDP. The projected deviation 
is within the flexibility of the national escape clause based on current projections for 
defence  spending.  Therefore,  the  excessive  deficit  procedure  for  Poland  is  held  in 
abeyance. 

(19)  The  2025  Annual  Progress  Report  does  not  include  budgetary  projections  beyond 
2025.  Based  on  policy  measures  known  at  the  cut-off  date  of  the  forecast,  the 
Commission  Spring  2025  Forecast  projects  a  general  government  deficit  of  6.1%  of 
GDP  in  2026.  The  decrease  of  the  deficit  in  2026  mainly  reflects  the  impact  of 
discretionary  revenue  measures,  including  excise  duty  increases  and  the  non-
indexation  of  personal  income  tax  brackets.  These  developments  correspond  to  net 
expenditure growth of 5.4% in 2026. Based on the Commission’s estimates, the fiscal 
stance, which includes both nationally and EU financed expenditure, is projected to be 
broadly neutral in 2026. The general government debt-to-GDP ratio is projected by the 
Commission to increase to 65.3% by the end of 2026. The increase of the debt-to-GDP 
ratio  in  2026  mainly  reflects  the  high  projected  government  deficit  and  stock-flow 
adjustments related to defence investments and one-off transfers related to investments 
financed by Recovery and Resilience Facility loans in 2026. 

Key policy challenges 

(20)  Social benefits in Poland are largely untargeted and are not means tested at household 
level. This results in a welfare system with limited redistributive power. In budgetary 
documents,  transparency  regarding  ongoing  and  planned  investments  could  be 
improved.  There  is  currently  no  integrated  and  comprehensive  overview  of  ongoing 
investments and their sources of financing, including with regards to extra-budgetary 
funds  and  state-owned  enterprises.  While  available  to  varying  degrees,  such 
information 
investment 
is  scattered  across  documents,  such  as  multiannual 
programmes  and  financial  plans  of  state-owned  enterprises  or  of  extra-budgetary 
funds. Procedures for assessing and selecting public investment projects and carrying 
out ex post reviews are weak. Standardised project-assessment methodologies are only 
in  place  for  EU-financed  investments,  but  these  could  be  applied  to  all  major 
government-funded  investments.  Project  selection  procedures  vary  across  ministries 
and  are  based  on  the  type  of  project  and  source  of  financing.  There  are  no  standard 
criteria for selecting or prioritising projects at central government level. 

(21)  Poland is one of the fastest ageing countries in the EU and the long-term demographic 
trends  will  affect  its  pension  system.  The  statutory  retirement  age  allows  women  to 
retire  at  the  age  of  60,  which  has  an  impact  on  the  number  of  women  working  or 
looking for work compared to men whose statutory retirement age is 65. To raise the 
effective retirement age, Poland implemented one targeted measure in its recovery and 
resilience  plan  to  promote  working  beyond  the  statutory  retirement  age,  but  further 
efforts  would  be  needed  to  address  the  challenge  related  to  ensuring  that  future 
pensions  are  adequate  and  to  safeguard  the  sustainability  of  the  pension  system. 
Special pension benefits exist for various groups in Poland that are not always linked 
to the profession risks and warrant a thorough review to ensure system fairness. 

(22) 

In accordance with Article 19(3), point (b), of Regulation (EU) 2021/241 and criterion 
2.2  of  Annex  V  to  that  Regulation,  the  recovery  and  resilience  plan  includes  an 
extensive set  of mutually reinforcing  reforms and investments  to  be implemented by 

14 

From  2026  these  figures  will  appear  in  the  control  account  that  is  established  in  Article  22  of  the 
Regulation (EU) 2024/1263. 

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2026.  These  are  expected  to  help  effectively  address  all  or  a  significant  subset  of 
challenges  identified  in  the  relevant  country-specific  recommendations.  Within  this 
tight timeframe, finalising the effective implementation of the recovery and resilience 
plan  including  the  REPowerEU  chapter,  is  essential  to  boost  Poland’s  long-term 
competitiveness  through  the  green  and  digital  transitions,  while  ensuring  social 
fairness. To deliver on the commitments of the recovery and resilience plan by August 
2026,  it  is  essential  for  Poland  to  accelerate  the  implementation  of  reforms  and 
investments  by  addressing  relevant  challenges.  In  particular,  there  needs  to  be  close 
coordination  between public bodies, including  regional and local  administration, that 
are responsible for implementing measures under the recovery and resilience plan. The 
systematic involvement of local and regional authorities, social partners, civil society 
and other relevant  stakeholders remains essential  in  order to  ensure broad ownership 
for the successful implementation of the recovery and resilience plan. 

(23)  The implementation  of  cohesion  policy programmes, which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF), 
the European Social Fund Plus (ESF+) and the Cohesion Fund (CF), has accelerated in 
Poland. It is important to continue efforts to ensure the swift implementation of these 
programmes,  while  maximising  their impact  on  the  ground.  Poland  is  already  taking 
action under its cohesion policy programmes to boost competitiveness and growth. At 
the  same  time,  Poland  continues  to  face  challenges,  including  those  relating  to  the 
need  to  boost  the  competitiveness  of  eastern  regions  bordering  Russia  and  Belarus, 
accelerate the energy transition in the south-western regions reliant on coal and heavy 
industries  and  the  industrialised  centre,  tackle  skills  shortages  and  mismatches  and 
address  the high  housing demand. In accordance with  Article 18 of Regulation  (EU) 
2021/1060, Poland is required – as part of the mid-term review of the cohesion policy 
funds  –  to  review  each  programme  taking  into  account,  among  other  things,  the 
challenges identified in the 2024 country-specific recommendations. The Commission 
proposals adopted on 1 April 202515 extend the deadline for submitting an assessment 
–  for  each  programme  –  of  the  outcome  of  the  mid-term  review  beyond  31  March 
2025.  It  also  provides  flexibilities  to  help  speed  up  programme  implementation  and 
incentives  for  Member  States  to  allocate  cohesion  policy  resources  to  five  strategic 
priority areas of the Union, namely competitiveness in strategic technologies, defence, 
housing, water resilience and energy transition.  

(24)  The  Strategic  Technologies  for  Europe  Platform  (STEP)  provides  the  opportunity  to 
invest in a key EU strategic priority by strengthening the EU’s competitiveness. STEP 
is channelled through 11 existing EU funds. Member States can also contribute to the 
InvestEU programme supporting investments in priority areas. Poland could use these 
initiatives  to  support  the  development  or  manufacturing  of  critical  technologies, 
including clean and resource-efficient technologies. 

(25)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Poland  faces  several  additional  challenges  related  to 
simplification,  research  and  innovation,  energy,  water  management,  skills  and 
education, and the inclusion of disadvantaged groups in the labour market. 

15 

Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL 
amending  Regulations  (EU)  2021/1058  and  (EU)  2021/1056  as  regards  specific  measures  to  address 
strategic challenges in the context of the mid-term review - COM(2025) 123 final. 

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(26)  As  set  in  the  Competitiveness  Compass,  all  the  EU,  national,  and  local  institutions 
must  make  a  major  effort  to  produce  simpler  rules  and  to  accelerate  the  speed  of 
administrative  procedures.  The  Commission  has  set  ambitious  goals  for  reducing 
administrative burden: by at least 25% and by at least 35% for SMEs; and has created 
new  tools  to  achieve  these  goals,  including  systematic  stress  test  of  the  stock  of  EU 
legislation and enhanced stakeholders’ dialogue. To match this ambition, Poland also 
needs  to  take  action.  66%  of  businesses  consider  the  complexity  of  administrative 
procedures to be a problem for their company when doing business in Poland16. While 
having  a  generally  pro-competitive  regulatory  framework,  Poland  still  faces  some 
challenges on legislative complexity and ensuring an effective institutional framework. 
These are related to  the  growing  volatility of the law and  reduced time available for 
companies to prepare for legislative changes. As a result, the administrative burden on 
firms  is  high,  for  example,  in  relation  to  tax  laws,  and  the  costs  that  companies, 
particularly SMEs, face in complying with labour and tax systems are comparatively 
high. According to the EIB Investment Survey, 25% of firms in Poland allocate more 
than 10% of their staff to regulatory requirements. Despite the recent increase, the rate 
of new businesses starting up remains low, particularly for firms with employees. The 
public  procurement  system  continues  to  suffer  from  the  low  number  of  companies 
submitting tenders, as well as lengthy and complex procedures. Further strengthening 
the digitisation of the public procurement process and developing the training offer for 
SMEs can help address these challenges. 

(27)  Poland’s future economic growth and competitiveness increasingly relies on its ability 
to  harness  the power of  science and innovation.  Despite steady increases in  business 
R&D  spending,  Poland’s  innovation  outcomes  remain  limited,  with  its  R&D 
performance reaching only 65.9% of the EU average in 2024 – an improvement of 3.3 
percentage  points from  2023.  Cooperation  between  science  and  business  is  limited, 
reducing Poland’s ability to commercialise its research. This issue is further amplified 
by  an  underdeveloped  research  base  and  insufficiently  targeted  programmes  that 
promote  applied  research  and  academic-private  partnerships.  Strengthening  science-
business  links  and  making  research  careers  more  attractive  will  be  essential. 
Reviewing  and  improving  current  support  instruments  and  creating  incentives  for 
researchers to work with industry are among the key steps towards achieving a high-
performing  innovation  and  science  ecosystem.  Further  progress  also  depends  on 
sustained  increases  in  public  R&D  expenditure  and  reforms  to  improve  the 
competitiveness and internationalisation of scientific institutions. 

(28)  High energy costs weigh on the competitiveness of businesses in Poland. The country 
should promote price signals for electricity that support investment in clean electricity 
generation and contribute to affordable energy prices. This can be done, for instance, 
by encouraging dynamic pricing and adjusting taxes and levies on electricity for both 
households  and  industry  through  shifting  of  the  tax  burden  from  electricity  to  fossil 
fuels.  Increased  grid  flexibility  and  cross-border  interconnections  could  also  help 
reduce  electricity  prices.  A  decarbonisation  pathway  needs  to  be  outlined  that 
prioritises energy efficiency, sustainable renewable heat sources and the use of waste 
heat. Poland records sizeable fossil fuel subsidies without a planned phase-out before 
2030.  In  particular,  fossil  fuel  subsidies  that  address  neither  energy  poverty  in  a 
targeted way nor genuine energy security concerns, hinder electrification and are not 

16 

‘Businesses' attitudes towards corruption in the EU’ Flash Report, Eurobarometer Report (April 2024) 
EIB Investment Survey 2024 Country Overview: Poland. 

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crucial  for  industrial  competitiveness  could  be  considered  a  phase-out  priority. In 
Poland,  fossil-fuel  subsidies  such  as  ongoing  subsidies  given  to  the  coal  mining 
industry  and  tax  exemptions  for  coal  and  fuel  oil  are  economically  inefficient  and 
prolong  reliance  on  fossil  fuels,  particularly  coal.  Poland  has  rolled  out  a  set  of 
national  policies  to  promote  renovations  of  residential  buildings,  including  major 
subsidy schemes financed under the recovery and resilience plan. These policies need 
to  be  further  strengthened  and  aligned  with  the  EU’s  2030  climate  objectives. 
Therefore, targeted action is needed to reduce carbon emissions from buildings, with a 
particular focus on improving energy efficiency and decarbonising district heating. 

(29)  Poland  faces  challenges  related  to  climate  change  adaptation,  for  instance,  risks  of 
drought and flooding. The recovery and resilience plan includes measures to improve 
water  retention  in  rural  areas.  The  country  could  achieve  better  policy  coherence 
through  closer  coordination  between  the  different  institutions  in  charge  of  relevant 
policies.  This  could  help  implement  sustainable  solutions  such  as  nature-based 
adaptation  solutions  to  increase  water  supplies  and  adapt  to  climate  change  while 
benefiting  the  long-term  sustainability  of  agriculture  and  other  sectors  that  rely  on 
ecosystem services. 

in  science, 

low  enrolment 

(30)  Persistent  skills  shortages, including  those for  the green and digital transition,  weigh 
on  the  Polish  competitiveness  and  hinder  investment  activity.  In  particular,  Poland 
faces  a  persistently 
technology,  engineering  and 
mathematics study programmes (STEM) and lags behind in the share of graduates in 
those fields, which limits the country’s innovation capacity. To address this issue, it is 
essential  to  improve  the  way  STEM  subjects  are  taught  in  schools,  provide  better 
career guidance to students, and encourage underrepresented groups to pursue STEM 
studies, particularly  women. Relevant  policies to  boost green competences  and skills 
through  education  and  training  need  to  be  stepped  up.  The  low  participation  rate  in 
adult  learning  also  exacerbates  shortages  of  skilled  staff.  Based  on  the most  recent 
adult  education  survey  (AES)  published  in  2024,  the  rate  of  adult  participation  in 
learning was 20.3%, far below the EU average of 39.5% and the 2030 target of 51.7%. 
More support from employers is also needed to increase participation in adult learning. 
Addressing  the  decline  in  basic  skill  levels  is  crucial  for  providing  people  with 
learning,  upskilling  and  employment  opportunities  in  later  life.  Poland’s  vocational 
education  and  training  system  lacks  effectiveness,  significantly  undermining  the 
supply  of  skills  that  are  in  demand,  reducing  the  employability  of  graduates  and 
putting them at greater risk of unemployment and social exclusion. 

(31)  There  continue  to  be  concerns  as  regards  integrating  disadvantaged  groups  into  the 
labour  market,  including  women,  people  with  disabilities  or  people  who  attained  a 
lower  level  of  education.  While  the  gender  employment  gap  (age  20-64)  decreased 
from 14.8 pps in 2020 to 11.6 pps in 2024, it remains above the EU average of 10 pps. 
The disability employment gap stood at 33.9 pps in 2023, much above the EU average 
of  21.5  pps.  This  suggests  scope  to  increase  the  effectiveness  of  activation  policies, 
particularly by: i) better targeting measures to help integrate disadvantaged groups into 
the  labour  market;  ii) improving  the  efficiency  of  public  employment  services;  and 
iii) continuing to improve the quality of and access to formal home- and community-
based  long-term  care  and  early  childhood  education  and  care.  While  these  areas  are 
covered in reforms and investment under the Polish recovery and resilience plan, more 
efforts  will  be  needed  in  future.  Together  with  upskilling  and  reskilling  policies, 
increasing  participation  groups  with  the  lowest  employment  rates,  including  people 
with disabilities, could have a positive effect on the Polish competitiveness in the long 

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term.  The  education  gap  of  people  with  disabilities  is  also  a  concern.  Their  rate  of 
post-secondary  educational  attainment  was  32%  in  2021/2022,  and  the  mean  post-
secondary  education gap in  those years stood at  18.4 pps (EU 11.3 pps).  In  addition, 
the  proportion  of  young  people  with  disabilities  not  in  education,  employment  or 
training (NEETs) (40%) is one of the highest in the EU. To improve the inclusiveness 
of  the  education  and  training  system,  a  comprehensive  strategic  approach  is  needed, 
that includes improving the skills of and the support provided to teachers. 

HEREBY RECOMMENDS that Poland take action in 2025 and 2026 to: 

1. 

2. 

3. 

4. 

Reinforce overall defence spending and readiness in line with the European Council 
conclusions  of  6  March  2025.  Adhere  to  the  maximum  growth  rates  of  net 
expenditure  recommended  by  the  Council  on  21  January  2025,  with  a  view  to 
bringing  an  end  to  the  situation  of  an  excessive  deficit  while  making  use  of  the 
allowance under the national escape clause for higher defence expenditure. Improve 
the  efficiency  of  public  spending,  including  through  better  targeting  of  social 
benefits,  improving  the  budgetary  process,  providing  more  transparency  in 
investment  planning  and  using  standardised  procedures  for  project  assessment  and 
selection  more  extensively.  Front-load  mature  public  investment  projects  and 
promote private investment to further the economic recovery. Ensure the adequacy of 
future  pension  benefits  and  strengthen  the  sustainability  of  the  pension  system, 
including  by  taking  measures  on  the  effective  retirement  age  and  reforming 
preferential pension schemes. 

In  view  of  the  applicable  deadlines  for  the  timely  completion  of  reforms  and 
investments  under  Regulation  (EU)  2021/241,  accelerate  the  implementation  of  the 
recovery  and  resilience  plan,  including  the  REPowerEU  chapter.  Accelerate  the 
implementation  of  cohesion  policy  programmes  (ERDF,  JTF,  ESF+,  CF),  building, 
where  appropriate,  on  the  opportunities  offered  by  the  mid-term  review.  Make 
optimal use of EU instruments, including the scope provided by the InvestEU and the 
Strategic Technologies for Europe Platform, to improve competitiveness.  

Simplify  regulation,  improve  regulatory  tools  and  ensure  the  legal  framework  is 
stable  and  clear  for  the  business  sector.  Introduce  measures  to  reduce  the 
administrative  burden  placed  on  companies.  Encourage  competition  in  public 
procurement processes, making them more efficient and less cumbersome, especially 
for  SMEs.  Strengthen  science-business  links  by  improving  support  structures, 
implementing  targeted  funding  schemes,  and  creating  incentives  for  researchers  to 
engage with the private sector. Improve and modernise the public research system by 
making  research  careers  more  attractive,  raising  public  R&I  investment,  and 
supporting  research  institutions.  Focus  investment-related  economic  policy  on 
innovation. 

Promote  balanced  electricity  price  signals  that  support  investments  in  clean 
electricity generation by adjusting taxes and levies on electricity for households and 
industry relative to those on fossil fuels. Boost grid capacity and flexibility, increase 
cross-border  electricity  trading,  and  limit  restrictions  to  cases  justified  under  EU 
energy market rules, particularly in cases involving constraints in allocating national 
capacity. Reduce the reliance on fossil fuels by accelerating the phasing-out of coal 
in  the  heating  sector  by  transitioning  to  decarbonised  systems  that  integrate 
renewable  energy,  improve  energy  efficiency,  and  phase  out  fossil-fuel  subsidies, 
especially  those  related  to  coal  mining.  Improve  climate  adaptation  governance, 
particularly  policies focused on the management,  protection, and sustainable use of 

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5. 

water  resources,  incorporating  current  assessments  of  climate  change  impacts  to 
ensure  the  long-term  sustainability  of  sectors  and  activities  dependent  on  water 
ecosystem services. 

Foster  quality  and  inclusive  education  and  skills  relevant  to  the  labour  market, 
including  green  and  digital  skills,  step  up  participation  in  STEM  fields  in  higher 
education,  and  improve  the  quality  of  teacher  education  and  further  strengthen  the 
efficiency  of  vocational  education  and  training.  Facilitate  and  increase  adult 
participation  in  learning,  including  in  non-formal  learning  and  in  areas  key  for 
Poland’s competitiveness.  Take steps to  increase the participation  of disadvantaged 
groups  in  the  labour  market,  including  through  effective  education  to  employment 
transitions. 

Done at Brussels, 

For the Council 
The President 

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