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# 52012DC0323

**Recommendation for a COUNCIL RECOMMENDATION on Poland’s 2012 national reform programme and delivering a Council Opinion on Poland’s convergence programme for 2012-2015 /\* COM/2012/0323 final \*/**

  

Recommendation for a

COUNCIL RECOMMENDATION

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

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 policies[1], and in particular Article 5(2)
thereof,

Having regard to the recommendation of the
European Commission[2],

Having regard to the resolutions of the
European Parliament[3],

Having regard to the conclusions of the
European Council,

Having regard to the opinion of the
Employment Committee,

After consulting the Economic and Financial
Committee,

Whereas:

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

(2)       On 13 July 2010, the
Council adopted a recommendation on the broad guidelines for the economic
policies of the Member States and the Union (2010 to 2014) and, on 21 October
2010, adopted a decision on guidelines for the employment policies of the
Member States[4],
which together form the ‘integrated guidelines’. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.

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

(4)       On 23 November 2011, the
Commission adopted the second Annual Growth Survey, marking the start of the second
European semester of ex-ante and integrated policy coordination, which is
anchored in the Europe 2020 strategy. On 14 February 2012, the Commission, on
the basis of Regulation (EU) 1176/2011, adopted the Alert Mechanism Report[5], in which it did not identify
Poland as one of the Member States for which an in-depth review would be
carried out.

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

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

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

(8)       Based on the assessment of
the 2012 convergence programme pursuant to Council Regulation (EC) No 1466/97,
the Council is of the opinion that the macroeconomic scenario underpinning the
budgetary projections in the programme is plausible and is in line with the
Commission's 2012 spring forecast. The objective of the budgetary strategy
outlined in the programme is to correct the excessive deficit by 2012 and reach
medium-term budgetary objective (MTO) by 2015. The programme confirms the MTO
of a deficit of 1% of GDP, which adequately reflects the requirements of the
Stability and Growth Pact. The planned correction of the deficit is in
line with the deadline set by the Council and the planned fiscal effort complies
with the recommendation under the Excessive Deficit Procedure. Based on the
(recalculated) structural deficit[6],
the planned annual progress towards the MTO is higher than 0.5% of GDP (in
structural terms). The growth rate of government expenditure, taking into
account discretionary revenue measures, is in line with the benchmark of the
Stability and Growth Pact over entire programme period, but exceeds the expenditure
benchmark by a small margin in 2013, according to the Commission's 2012 spring
forecast. Sufficient progress towards the MTO may require additional efforts as
it predominantly relies on sizeable cuts in public investment expenditure and
is not sufficiently supported by detailed measures in the outer years of the
programme. General government debt is projected to remain below 60 % of
GDP in Poland over the programme period. The national authorities forecast it
to decrease gradually from 56.3% of GDP in 2011 to 49.7% of GDP in 2015,
whereas the Commission, taking account of possible risks to the consolidation
plans, expects the improvement to be slower.

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

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

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

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

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

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

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

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

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

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

(19)     In the light of this
assessment, the Council has examined the 2012 convergence programme, and its
opinion[7]
is reflected in particular in recommendation (1) below,

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

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

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

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

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

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

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

Done at Brussels,

                                                                       For
the Council

                                                                       The
President

[1]               OJ L 209, 02.08.1997, p. 1

[2]               COM(2012)323 final

[3]               P7\_TA(2012)0048 and P7\_TA(2012)0047

[4]               Council Decision 2012/238/EU of 26 April 2012

[5]               COM(2012) 68 final

[6]               Cyclically adjusted balance net of one-off and
temporary measures, recalculated by the Commission services on the basis of the information provided in the programme, using
the commonly agreed methodology.

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

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