THE REPUBLIC OF POLAND UPDATE 2015/2016

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1 THE REPUBLIC OF POLAND UPDATE 2015/2016 Adopted by the Council of Ministers on 28 April

2 Table of Contents 1. Introduction Macroeconomic outlook Achievement of the national objectives of the Europe 2020 strategy and recommendations of the Council of the EU dated 8 July Employment objective R+D objective Energy objectives Education objectives Counteracting poverty objective Actions which contribute towards the implementation of other recommendations of the Council of the EU Actions related to flagship initiatives Institutional process of NRP update and stakeholder engagement Annex 1 - Implementation of the recommendations of the Council of the EU Annex 2 Involvement of socio-economic partners in works related to the European Semester and in public consultations

3 1. Introduction The National Reform Programmes (NRPs), updated in April each year, constitute the basic instrument for the implementation at the EU Member State level of the Europe 2020 strategy adopted in The update is carried out under the European Semester, along with the update of Stability and Convergence Programmes, which makes it possible to link the processes of structural reforms programming with budget planning. The National Reform Programme for the Implementation of the Europe 2020 Strategy. The Update 2015/2016 (hereinafter NRP 2015/2016) is the fifth edition of the NRP in this process. The National Reform Programme for the implementation of Europe 2020 strategy, adopted by the Council of Ministers on 26 April 2011, which specified how Poland in the 2020 perspective will fulfil the national commitments undertaken in terms of the five leading Europe 2020 strategy objectives, constituted the first, initial document in this regard. Taking into account specific national conditions and directions of activity established in Polish strategic documents, in the NRP the Government of the Republic of Poland concluded that it is necessary to focus on actions aimed at compensating for deficiencies in terms of development (catching-up) as well as building new competitive advantages in three priority areas: 1. Infrastructure for sustainable growth; 2. Innovation for smart growth; 3. Activity for inclusive growth. The process of catching-up will mainly consist in reducing the infrastructure gaps in areas such as transport, the energy sector, telecommunications, social infrastructure, as well as in enhancing the regulatory environment and in carrying out activities for improving the quality of law-making processes, while ensuring the high quality of the public administration services. Building new competitive advantages requires, above all, activities related to the improvement of the innovation capacity of enterprises and society. In particular, strengthening the links between universities, science and economy as well as attaining a state of digital momentum are also of major importance. Only in this way, it will be possible to obtain new competitive advantages that will be created based on advanced technologies. The priority areas of action designated in the original NRP continue to apply, although due to the need to attain greater precision in the monitoring of progress in the process of implementation of the Europe 2020 strategy as well as the monitoring of implementation of the recommendations of the Council of the EU formulated in the course of the European Semester, starting from update of NRP in 2013, the layout of the document was changed. The actions were grouped according to five national objectives, supplemented by actions which contribute towards the implementation of the recommendations of the Council of the EU. Actions which make an indirect contribution towards the objectives of the Europe 2020 strategy and at the same time meet the challenges identified in the flagship initiatives accompanying the said strategy have been described in a separate chapter. The list of actions is verified during each update of NRP actions implemented are removed, new implementation stages for the following years are indicated for the continued actions and the document is supplemented with new actions. NRP 2015/2016 retains the document layout referred to above, based on the national objectives of the Europe 2020 strategy as well as the Recommendations of the Council 3

4 of the EU for the Republic of Poland. NRP 2015/2016 takes into account the priorities contained in the Annual Growth Survey 2015 regarding supporting the economic and social policy of EU in 2015 on three main pillars: 1) a coordinated boost to investments, 2) a renewed commitment to structural reforms, 3) pursuing fiscal responsibility. Actions planned in the implementation documents for government integrated development strategies constitute also the base for developing the NRP updates. During the preparation of the NRP 2015/2016, the role of the NRP in the mechanisms for the implementation of EU cohesion policy in the new financial perspective was also taken into account. On one hand, funds provided under the cohesion policy constitute an important source of financing for tasks provided for in the NRP. On the other hand, the monitoring of the NRP implementation in line with the adopted regulations is meant to direct the cohesion policy towards the implementation of Europe 2020 strategy. Given the current macroeconomic situation, as well as economic forecasts and priorities of the Government of the Republic of Poland specified in strategic documents, the NRP 2015/2016 update identifies the most important actions that translate into meeting the national Europe 2020 strategy objectives and fulfil at least one of the following conditions: will contribute towards the implementation of the recommendations of the Council of the EU of 8 July 2014; have been indicated in the European Council conclusions and/or the Annual Growth Survey 2015; correspond with activities specified in the integrated strategies; are included in the list of legislative works of the Council of Ministers. The Inter-Ministerial Team for the Europe 2020 Strategy (hereinafter the Team), which is an advisory and consulting body of the Prime Minister, was involved in works on the NRP 2015/2016. The Team comprises socio-economic partners, in addition to representatives of the government administration, which is meant to contribute towards the promotion of the Europe 2020 strategy as well as to strengthen the cooperation between various stakeholders and the ownership of its implementation at the national and local level. The institutional process of the NRP as well as stakeholder involvement are described in chapter 5. 4

5 2. Macroeconomic scenerio In the second quarter of 2013 Polish economy entered the path of rapid economic growth. The GDP average growth rate (0.8% qoq, seasonly adjusted) was higher than in 2012, however it still remained below the long-term average. Exports continued its sharp uptrend, which was supported by the relatively high competitiveness of Polish enterprises and improvement of the situation on the Poland s major export markets. This was reflected in a higher growth rate of industrial production and investments. Gradual improvement was also observed on the labour market: growth of labour demand and decrease of unemployment rate, and moderate wage pressure. As a result, there was an increase in private consumption. Since the second half of 2013 an increasingly important role in the growth of GDP (yoy) played domestic demand, which from the second quarter of 2014 became the main source of economic growth, whereas the net exports contributed negatively to the GDP growth. In 2014 the GDP grew by 3.4% in real terms, ie. twice as comparing to the previous year result. For the second year in a row there was observed acceleration in exports growth. Rise in economic activity, including a significant increase in investments (up to 9.2% from 0.9% in 2013), resulted in an improvement in the labour market. It is estimated that last year the real GDP growth rate, for the first time in two years, exceeded the potential growth rate of the Polish economy (according to the methodology of the European Commission). This allowed for the reduction of the negative (since 2013) output gap to approximately -0.6% of potential GDP. Negative output gap and moderate wage pressure were determined by the low level of core inflation. The annual average change in the CPI, excluding food and energy prices, amounted to 0.6% in The overall rate of CPI was even lower (0.0%), which resulted from supply shocks on the agricultural and energy markets. It is predicted that this year the inflationary pressure will be very limited, and the prices of consumer goods and services will fall by 0.2%, and in the following years assuming the creation of correct policy mix CPI will gradually return to NBP inflation target. Current EC forecasts on the economic situation of Poland s main trading partner the EU allow for an optimistic assessment of the prospects for economic growth in Poland. According to estimates published in February 2015, the EC expects that EU imports, which is the most important indicator of changes in demand for Polish exports, will increase in the years by 4.3% and 5.4% respectively (compared to 4.0% in 2014). Assuming that the growth rate of imports of the EU will return to the long-term average, and given the high competitiveness of Polish enterprises, it is expected that the real growth rate of exports in the coming years will reach ca %, whereby the share of exports in GDP will achieve its historically high level of 49.2%. Assuming a higher real growth in imports - the net exports contribution to GDP growth will remain negative (-0.6 pp. in 2015 and -0.1 pp. in subsequent years). In the years the share of public investment in GDP will stabilize at 4.5% and will be close to the level registered in In the coming years we can expect a slight decline in this share, to approx. 4.2% of GDP in This is related to the expiration of projects financed under the Financial Perspective, which in the years will be carried out in parallel with the draft of New Financial Perspective for years Despite the relatively unfavorable situation in the external environment, since 2011 in Poland is also observed an increase in private investment. It is expected that this trend will be continued (for the period the average 5

6 annual increase of approx. 7.7%). One of the factors supporting the growth of private sector investment demand, apart from expected improvement in the external environment, will be the relatively low cost of capital due to low interest rates and the implementation of a program Inwestycje Polskie (Polish Investments for Development). It is expected that in 2015 the number of employed will increase by 1.1%. Taking into account the projected evolution of the economically active population and employment growth, it is expected further reduction in the unemployment rate. In 2015 the unemployment rate will decrease to 8.2% and in 2018 further to 6.5%. Decline in the unemployment rate and a gradual increase in inflation will favour the growth of nominal wages in the market sector. Taking into account the planned changes to wages in state budget units, nominal wage growth rate will reach 3.5%. In subsequent years, it will gradually increase. Favorable trends in the labour market, like increase of state aid to families with children and single increase indexation of pensions in 2015, should provide support disposable income of households. Considering the above factors, it is expected that in 2015 real growth in private consumption will increase to 3.4% - despite the expected increase in voluntary savings rate in subsequent years will accelerate to 3.8% on average. Real growth in public consumption will depend on the government actions aimed at achieving the medium-term budgetary objective. In conclusion, the expectations for the GDP components allow predict that GDP growth in Poland in 2015 will amount to 3.4%. The main driver of growth will remain private domestic demand. It is predicted that in the next few years, real GDP growth will gradually accelerate, to 4.0% in As a result, it is estimated that in 2015 the output gap, in relation to potential GDP, decline to -0.5% and - 0.2% in 2016, and in 2017 will reach 0.0% of potential GDP, then will remain at the same level in The expected development of the basic macroeconomic figures in the subsequent years Kategoria Real GDP growth rate (% yoy) 3,4 3,4 3,8 3,9 4,0 Exports (% change yoy) 5,7 5,7 5,9 5,6 5,5 Imports (% change yoy) 9,1 6,9 6,1 5,7 5,7 Private consumption (% change yoy) 3,0 3,4 3,7 3,8 3,8 Public consumption (% change yoy) 4,7 2,7 1,1 1,1 1,4 Gross fixed capital formation (% change yoy) 9,2 6,9 6,1 6,5 6,9 GDP in current prices (PLN bn) 1 728, , , , ,3 HICP (average % change yoy) 0,0-0,2 1,7 1,8 2,5 Employed population 1, (% change yoy) 1,9 1,1 0,7 0,6 0,5 Unemployment rate 2 (%) 9,0 8,2 7,6 7,0 6,5 1 According LFS (15 years and more). 2 Harmonized unemployment rate, according to Eurostat definition. 6

7 3. Achievement of the national objectives of the Europe 2020 strategy and recommendations of the Council of the EU dated 8 July 2014 Taking into account the Commission guidelines of October 2013, this section of the NRP update presents the main activities which contribute directly towards Poland s implementation of Europe 2020 strategy objectives and the recommendations for Poland provided by the Council of the EU, dated 8 July Each subchapter is divided into a part summarising the main actions carried out since adoption of NRP 2014/2015 and a part presenting actions planned for 2015/2016. Relevant actions were assigned to ministries responsible for their implementation and are accompanied by the implementation schedule as well as financial consequences estimated. Data regarding financial consequences of actions/interventions planned constitute estimated calculations of their potential impact. In terms of 2015, the estimates result from the budgetary act for 2015 and were included in the financial plans for executors of particular actions in While the final level of funding in 2016 will arise from the budgetary act for 2016 and relevant legal acts. In the case of actions at the stages of projects, the amounts do not constitute a commitment until they are officially accepted by the Council of Ministers Employment objective Year 2014 has brought significant improvement in the Polish labour market. The number of employed persons aged 15 and over 3 amounted to 16 million which resulted in the increase of the employment rate among people aged to the level of 67.4% (data for Q4 2014). The increase of the employment rate occurred in both younger and older age groups, although it was the largest among persons aged (increase by 1.7 percentage points in relation to Q4 2013). Furthermore, in 2014 fast decline in unemployment continued from Q According to Eurostat, in Poland the unemployment rate amounted to 8.1% compared to 9.9% for the whole European Union in Q Data on flows on the labour market indicate that decreased level of unemployment resulted from growing number of persons changing their status from unemployed to employed due to the increased demand for work. In 2014, labour offices received over a million of job offers (over 220 thousand more than in the previous year). The increase in the so-called market job offers was also observed. Despite those undoubtedly positive signals, the increase in professional activity and employment rate as well as decline in unemployment still remain one of the main challenges in Poland. The total employment rate in the age group of years in Poland still remains 2.2 percentage points lower than the average for EU-28 (Eurostat data for Q4 2014). As for the employment rate of women, the difference is larger and amounts to 3.5 percentage points, while in the case of the elderly in total (50-64 years old) to 8.8 percentage points. The causes of low employment rate, especially of the elderlies, include low participation of the adults in education and training (in 2014, 4 4.1% in the case of persons aged compared to 10.6% in EU, 1.0% for persons aged compared to 5.9% in EU) and the low level of basic skills of approx. 1/5-1/4 of persons aged 16-3 According to the methodology of the Economic Activity of Population Survey. 4 Preliminary data 7

8 65 (according to OECD/PIAAC survey). Low level of digital skills concerning more than 1/4 persons in this age is a particular issue. The unemployment among young persons still remains high despite a significant improvement since April of the previous year. According to Eurostat data, in February 2015 the unemployment rate among the youth (persons aged under 25) in Poland amounted to 20.8% in comparison to 7.8% in total. Further improvement of the professional situation of this group requires continued actions planned under the Youth Guarantees. Moreover, the positive effects should be brought by implementation of series of actions for modernisation of education and training systems, both professional and general, as well as strengthening the ties between education and business which were described in the section concerning implementation of the education objectives under Europe 2020 strategy. In order to increase the employment rate among women, the development of childcare institutions for children up to 3 years of age as well as kindergarten facilities will also continue. The Toddler ( Maluch ) programme was expanded by another module dedicated to high schools, universities and entities already conducting or which intend to establish care institutions (day-care centres, children s clubs, day-care providers) for children of students, doctoral candidates and persons hired by university or performing tasks for its benefit on the basis of civil law contracts. According to the amendment of the Act on the education system of 2013, since 1 September 2015 each 4-year-old child will have a right to a place in pre-school. Since 1 September 2017, each 3-year-old child will also be entitled to such right. Due to the fact that the statutory retirement age was raised on 1 January 2013, measures aimed at improving employability of persons in the pre-retirement age group and of persons approaching retirement will continue to be implemented in order to allow such persons to function effectively on the labour market, which will contribute towards increasing the effective exit age. Furthermore, in 2015 implementation document to the renewed programme Solidarity between generations. Measures to increase the professional activity of persons aged 50+ will be adopted. Document will i.a. contain priority measures financed from EU funds for years which in the most effective way will contribute to the increase of effective age of professional activity. Recovery on the labour market has led to the increase in employment, including employment for a definite period of time. The proportion of these forms of employment remains high compared to other countries of the European Union. Recognising these trends, in order to limit unjustified use of employment contracts for a specified period of time a draft Act on amending the Act Labour Code and certain other acts was prepared, which introduced i.a. maximum limit both in terms of duration and number of subsequent fixed-term contracts concluded with the same employer. Despite the generally favorable macroeconomic situation in Poland, many companies felt consequences of the complex geopolitical conditions related to the situation behind eastern border (Russian embargo on many goods which not only is a response to sanctions imposed on this country, clearly limited trade with Ukraine). In order to reduce negative economic impacts which may lead to the increase in unemployment, some enterprises may apply for public support for co-financing of remunerations and costs of training of employees facing economic stoppage or reduced working time. 8

9 This is another year in which the employment in agriculture was decreased. The share of people employed in this sector still remains one of the greatest in Europe 11.5% with persistently low productivity. Hence, measures aimed at increase in inter-sectoral mobility of the labour resources provided for in the Rural Development Programme for are still significant. The employment rate of persons aged (in percentages) overall figures for Poland for years total Source: Figures for based on data from the Labour Force Survey (LFS), Central Statistical Office of Poland 6. For estimates of the Ministry of Labour and Social Policy Main actions carried out since April 2014 Amendment of the Act on the promotion of employment and labour market institutions entered into force on 27 May The reform introduced solutions aiming, inter alia, at improving the quality and efficiency of services provided by employment offices as well as new instruments addressed to the most vulnerable groups on the labour market, including young people aged 30 or less, individuals aged 50+ as well as individuals returning to the labour market following a break in employment due to childcare. Monitoring of implementing new solutions was conducted in the following months. From 1 January 2014, Guarantee for Youth are implemented by the employment offices and units of the Voluntary Labour Corps. By way of an amendment of the Act on employment promotion and labor market institutions, the period within which public employment services are under an obligation to present job offers or perform activities pertaining to professional activation with respect to persons aged 25 and under was shortened from 6 to 4 months. Furthermore, the act introduces new labour market policy tools for young people, including training, internship and employment vouchers as well as vouchers for job-seekers who change their place of residence in order to obtain a job, telework grants, professional activation allowances, tripartite training agreements). In accordance with the Youth Guarantee Implementation Plan for Poland, in August 2014 as part of OP KED (Measure 1.3 Support of the youth in a particularly unfavourable situation ) the Voluntary Labour Corps commenced throughout the country the implementation of four non-competitive projects cofinanced from funds of the European Social Fund (ESF) and of the Youth Employment Initiative (YEI), i.e. two projects for persons aged entitled Idea for yourself - (YEI and ESF) and two projects addressed to year-olds entitled Equal on the labour market (YEI and EFS). The activities for socio-professional activation were carried out as part of Idea for yourself project (classes with CSR 2 Strenghten effords to reduce youth unemployment (...) 5 Working population = people aged 15 and over, who during the week of the survey carried out any work for at least one hour, for which they got paid or received income, and persons who helped (without remuneration) in running a family agricultural holding or family activity outside agriculture, as well as persons who formally had a job, but did not work (e.g. due to illness, being on a leave, or other reasons); if the period of time off from work amounted to 3 months or more than 3 months, but such persons were employed and at a time they received at least 50% of current remuneration(source: Central Statistical Office of Poland, LFS) 6 LFS-based indicators presented in the document are developed on the basis of data generalized in accordance with balance sheets prepared on the basis of the National Population and Housing Census of 2011 (NPC 2011). 9

10 CSR 3 Continue efforts to increase female labour market participation, in particular by taking further steps to increase the availability of affordable quality childcare and preschool education psychologist, compensatory workshops from school subjects, language courses, computer courses, professional qualification courses). The following activities were implemented as part of Equal on the labor market : activation and advisory support (psychological workshops and trainings, individual support of people from rural areas by tutors), vocational courses and general education support (language courses, computer courses, including with ECDL standard, classes with a lawyer, social skills training). In total, 7,500 persons not in employment, education or training, i.e. from the NEET group, will be covered by support under projects of the Voluntary Labour Corps. In November 2014, the second phase of the loan programme My first business Support at the Start was launched. The program provides support in form of loan for starting economic activity and for creating job for the unemployed. Final year students of schools and universities, graduates of schools and universities and unemployed from the entire country may apply for this support. Furthermore, preparatory works to launch central and regional competitions in 2015 as well as promotional activities were conducted. In 2014, competition of offers for financial support of tasks related to the development or childcare institution for children aged less than 3 was organised as part of the Toddler programme. It consisted of 3 modules: 1) addressed to communes and regarded funding from state s budget for creating new childcare institutions for small children and ensuring their operation, 2) addressed to communes and regarded funding from state s budget for operating new childcare institutions created under Toddler programme, 3) addressed to non-public entities and regarded funding from the state s budget operation of places at childcare institutions for children up to 3 years of age operating on the basis of the Act on care for children up to 3 years of age. The subsidy covered approx thousand newly created as well as existing places at childcare institutions for children up to 3 years of age. Since the launch of government Toddler programme, the number of institutions providing care to children has increased by over 300%. The number of day care centres, children s clubs and daily care providers increased from 571 in 2011 to almost 2.5 thousand in December Consequently, the number of children who can take advantage of the professional care increased from 32 thousand in 2011 to 71.1 thousand in December Within the framework of Measure 1.5 of the Human Capital Operational Programme Supporting solutions for reconciling career and family life, by the end of June 2014 the following institutions have commenced their activities: 303 day-care centres, 30 children s clubs and 47 institutions of day-care provider. Furthermore, support was provided with respect to the activities of non-governmental organizations in the field of ensuring equal opportunities for men and women on the labour market by providing cofinancing for selected projects. Due to the changes in the Act on education system of 2013, systematic increase in the availability of pre-school education for children under five years takes place. The percentage of children aged 3-5 covered by pre-school education in Poland is continuously increasing and according to the data for 2014 it is 79.4% (while in European benchmark of pre-school education of children above 4 to the age of compulsory school education is 89.2%). Due to the amendment of the act on the promotion of employment and labour market institutions, since May 2014 employers could obtain co-financing from the funds of the Labour Fund to part of remuneration for directed unemployed over 50 (approx

11 employers used this instrument until the end of 2014). Additionally, the funds of the National Training Fund (NTF) designed for financing education and training of employees aged 45 and over supported over 10 thousand persons until the end of Measures aimed at supporting the professional activities of the elderly have been implemented. An informational and promotional campaign addressed to persons aged 50+ and their employers was run, which included airing of materials and spots on TV and the radio addressed to employees aged 50+ and to employers, publications in regional and national newspapers, and an on-line campaign. On 1 January 2015, the amendment of the Act on vocational and social rehabilitation and employment of persons with disabilities entered into force. According to the amendment, employer may apply for refund of costs of adapting the workplace for a disabled employee, regardless of the fact when the employee became disabled. The amendment also provides for easing the conditions of obtaining the subsidy for salaries of employees with disabilities. A significant change is also the fact that the employer will be able to receive an additional refund of costs of training of the employees who assist disabled workers in performing their job. By the end of 2014 on the basis of the Act on specific solutions related to protection of jobs within the limits granted, the administrator of the Guaranteed Employee Benefits Fund provided funds for 135 entrepreneurs for payment of benefits for 2,498 employees in a total value of PLN 12.1 million. Simultaneously, from 1 February 2015 the amendment of the above-mentioned Act is in force which aims at allowing to implement instruments provided for therein to support entrepreneurs who experience temporary decrease in business conditions following the restrictions imposed on import to the territory of other countries. Works towards enabling farmers and their household members to be voluntarily insured in the Agricultural Insurance Fund (KRUS) during performance of work on the basis of contracts for mandate or performance of function in the supervisory board due to which being subject to social insurance in general system is mandatory, have been completed. The amendments entered into force since 1 January Main actions for years Implementation of Youth Guarantees in Poland (Ministry of Labour and Social Policy) Implementation of the Youth Guarantee Implementation Plan for Poland will be continued, including actions described in the reporting section. According to the Implementation Plan, in 2015 the Ministry of Labour and Social Policy will launch competitions at the central level andthe voivodeship employment offices will launch competitions at the regional level within the Operational Programme Knowledge, Education and Development (OP KED). Under Measure 1.1. OP KED Support of the young people unemployed at the regional labour market, poviat employment offices implement additionally non-competition projects dedicated to unemployed persons aged registered in the poviat employment office who do not participate in education and training (qualified to first or second assistance profile). Under Measure 1.2. OP KED Support of the young people unemployed at the regional labour market, the voivodeship employment offices will implement regional competitions for the youth and non-competition projects addressed to unemployed 11 CSR 3 Underpin the general pension reform by stepping up efforts to promote the employability of older workers to raise exit ages from the labour market CSR 2 Strenghten effords to reduce youth unemployment (...)

12 persons aged registered in the poviat employment office who do not participate in education and training (persons below 25 years will be beneficiaries of the Youth Guarantee). Under Measure 1.3 Support of the youth in a particularly unfavourable situation (Submeasure Support granted from the European Social Fund ) OP KED, the Ministry of Labour and Social Policy will implement competitions at the national level. Projects selected in central competitions by the Ministry of Labour and Social Policy will be focused on the support of individual and complex professional and educational activity of the youth. Unemployed young persons, including the disabled aged 15-29, who do not participate in education and training the so-called NEET (not in employment, education or training) youth will participate in the projects. These will include persons from groups such as: young people leaving alternative care; young mothers leaving alternative care; young mother in alternative care or homes for single mothers; charges and graduates of youth educational centres and social therapy centres, special education as well as education and care centres; youth leaving prisons and detention centers. In order to increase the scope and accuracy of the activity offer for young people who find themselves in the most difficult situation on the labour market, the Ministry of Labour and Social Policy under Measure 2.4 Modernisation of public and private employment services and their better adaptation to the needs of the labour market OP KED, plans to announce competition for supporting partnerships whose aim will be to reach young people in the most unfavourable life and professional situation. These partnerships will formulate propositions of actions addressed to those people, to recommend selection criteria for products reflecting the needs of local and regional employers as well as possibilities and potentials of people being activated. The above measures will be implemented through inter-sectoral cooperation networks involving e.g. social partners, NGOs, entities functioning in the education system, government organisations, labor market institutions. Timetable Announcement of the central competition under Measure 1.3 Support of the youth in a particularly unfavourable situation OP KED Young people on the labour market - Q Announcement of the central competition under Measure 2.4 Modernisation of public and private employment services and their better adaptation to the needs of the labour market OP KED Effective public policies for the labour market, economy and education - Q2/Q Settlement of the central competition - Q3-Q Continued implementation of 4 projects by the Voluntary Labour Corps - Q1- Q Financing Funds for non-competition projects carried out by the District Employment Offices under Measure 1.1 OP KED Support of the young people unemployed at the regional labour market in years amount to EUR 1,564 million. Funds for regional competitions carried out by the Voivodeship Employment Offices under Measure 1.2 OP KED Support of the young people unemployed at the regional labour market in years amount to EUR million. Funds for the central competitions carried out by the Ministry of Labour and Social Policy and non-competition projects of 12

13 the Voluntary Labour Corps under Measure 1.3 OP KED Support of the youth in a particularly unfavourable situation amount to EUR 175 million (they will be allocated to several competitions). Funds for the central competition carried out by the Ministry of Labour and Social Policy support for partnerships under Measure 2.4 OP KED Modernisation of public and private employment services and their better adaptation to the needs of the labour market amount to EUR 2 million. According to the financial plan of the Labour Fund attached to the Budget Act for 2015, expenditure for active forms of counteracting unemployment will amount to over PLN 5.5 billion. From the above-mentioned amount the employment offices will receive almost PLN 3.8 billion for the financing of programmes to promote employment, mitigate the effects of unemployment and vocational activation in accordance with the Act of 20 April 2004 on promotion of employment and labour market institutions, including implementation of measures for the young people. They will receive PLN 900 million, which is planned for implementation of project co-financed from the European Social Fund under the investment project permanent integration of young people into the labour market, including, in particular, those individuals who are unemployed and do not receive any education or training (including young people at risk of social exclusion and young people from disadvantaged groups), effected, inter alia, through the implementation of youth guarantees under OP KED. Simultaneously, BGK will continue to grant loans for undertaking business activity and creating jobs, including for young people. In 2014, the Labour Fund allocated for this purpose PLN 120 million, in 2015 this quota will be supported with PLN 22.9 million. Furthermore, in 2015 funds in amount of PLN 160 million were allocated from the funds of the Labour Fund for voivodeship employment offices for outsourcing of activisation measures for the unemployed by the employment agencies, including for young people. Support for the enterprises affected by the restricted import of goods to the territories of other countries (Ministry of Labour and Social Policy) On 1 February 2015, an amendment of the Act on special solutions to protect jobs which involves support for entrepreneurs who experience temporary decrease in business conditions following the restrictions imposed on import to the territory of other countries, entered into force. Companies which can apply for subsidy include those involved in trade, processing, transport, crop production and animal husbandry. The enterprises, which due to the above-mentioned restriction suffered economic drop in turnover by at least 15% during three months following 6 August 2014 compared with the same period in the previous year, may apply for support, which includes: (i) payment of benefits for partial compensation of remuneration of employees affected by the economic stoppage or reduced working hours, (ii) payment of social insurance contributions of employees payable by employer and (iii) co-financing of the training costs of those employees. Timetable Conclusion of agreements for the payment of benefits and agreements for the cofinancing of employee training expenses until 31 December Financing Funds from the Guaranteed Employee Benefits Fund are allocated for implementation of this measure in amount of PLN 250 million in 2015 and PLN 250 million in

14 CSR 2 Combatlabour market segmentation by increasing efforts to ensure a better transition from fixedterm to permanent employment by limiting the excessive use of civil law contracts CSR 3 Continue efforts to increase female labour market participation, in particular by taking further steps to increase the availability of affordable quality childcare and preschool education CSR 3 Continue efforts to increase female labour market participation, in particular by taking further steps to increase the availability of affordable quality childcare and preschool education Limitation of use of fixed-term contracts for a specified period of time (Ministry of Labour and Social Policy) In order to limit unjustified use of employment contracts for a specified period of time a draft Act on amending the Act Labour Code and certain other acts. The draft Act adopted on 31 March of this year by the Council of Ministers anticipates, among other things, the possibility to conclude fixed-term employment contracts by indicating the maximum permissible duration thereof and the permissible number of such contracts. Furtheremore, the draft law sets out conditions on the length of the termination period of the fixed term employment contract associating it with the period of employment at the given employer, analogically as in the case of an open-ended employment contract and narrows down the nature of the employment contract for a trial period. Timetable Estimated date of adoption of the Act by the Parliament Q Planned date of entry into force Q Financing Adoption of the Act will not have impact on the state budget. Providing universal preschool education (the Ministry of National Education) The current plans provide for continuing the implementation of the solutions provided for under the act of 13 June 2013 amending the Act on the educational system and certain other acts, intended to ensure a systematic increase of the availability of preschool education, which, by 1 September 2017, shall result in a situation where all children aged 3-5 will be able to take advantage of kindergartens or other forms of preschool education, with the amount of fees payable by parents for preschool education being subject to a statutory cap. This fee cannot exceed PLN 1.00 per hour of education and care over the free education and care and instruction time set by the body. Timetable Implementation of the duty to provide a place in preschool educational facilities to every child at the age of 4 1 September Implementation of the duty to provide a place in preschool educational facilities to every child at the age of 3 1 September Financing The Measure as an own task of local government units will be financed from local government budgets and supported by way of a specific purpose subsidy from the state budget in the amount of PLN 1,652 million in 2015 and PLN 1,713 million in Financial support of local government units in the implementation of the tasks of preschool education will continue in the upcoming years. Increasing the availability of childcare for children up to 3 years of age (Ministry of Labour and Social Policy) In order to increase the availability of places in childcare institutions for children aged 3 and under, in 2015 the ministerial programme Toddler ( Maluch ) for development of care institutions for children aged 3 or under will be continued. In the new edition, the Programme has been expanded by new priority (module) for funding from the state resources the establishment by public and private universities or other bodies of childcare places for children aged 3 and under of students, doctoral candidates and 14

15 persons hired by the university or performing tasks for the university of the basis of civil law contracts Toddler at the university. Timetable The announcement and settlement of the call for proposals under the Toddler ministry programme for the development of childcare facilities for children up to 3 years of age Q1 and Q Presentation a report from implementation of the Act on care for children up to 3 years of age to the Council of Ministers - Q Financing The Measure as an own task of local government units will be financed from local government budgets and supported by way of state budget subsidies. The state budget funds contemplated for the implementation of tasks provided for under the Act on the care for children up to 3 years of age shall amount to PLN 151 million in Ensuring equal opportunities for men and women on the labour market (Ministry of Labour and Social Policy) Several solutions implemented in the previous years facilitates increasing the participation of women in the labour market. These include: flexible working time, new labour market instruments aimed at the professional activation of persons willing to re-enter the labour market following a break in employment related to childbirth or childcare (grant for teleworking, activation benefit), development of the institution of the provision of care to young children and preschool institutions. Currently, the consistent implementation of these measures is of key importance. Nevertheless, merely introducing legal solutions does automatically not result in the increase the level of activity of women in the labour market. Further action is needed to support a policy of equal opportunities, as well as the analysis of solutions already undertaken, which will allow for their evaluation and development of conclusions and recommendations for future legal changes. Projects and competitions implemented for producing gender equality on the labour market and reconciliation between work and private life: the Non-governmental Organization Initiatives Competition (1.), Equality between men and women in the economic decision-making processes as a tool of social change project (2)., projects within the framework of Submeasure of the Human Capital Operational Programme (HC OP) as well as within the framework of Measure 1.5 of the HC OP (3.) and Measure 1.2 HC OP, "Formal and informal care institutions in Poland. Stage 1 of works (4.) 7 Furthermore, the evaluation report on the operation of regulations related to flexible work time will be prepared. Timetable the Non-governmental Organization Initiatives Competition - implementation of the competition - until Q CSR 3 Contiunue effords to increas efemale labour market participation 7 Numbers from (1.) to (4.) with respect to consecutive projects point towards the applicable lines in the financial table 15

16 CSR 3 Underpin the general pension reform by stepping up efforts to promote the employability of older workers to raise exit ages from the labour market CSR 2 Increase the adult participation in lifelong learning in order to adjust the skills supply to skuills demand The implementation of the Equality Between Men and Women in the Process of Economic Decision-making as a Tool of Social Change project until Q The implementation of projects under Submeasure of OP HC and Measure 1.5 OP HC by Q The implementation of the "Formal and informal care institutions in Poland. Stage 1. project - until the end of Q The presentation of the evaluation report on the operation of regulations related to flexible work time - Q Financing 2015 Total public finance sector spending (in PLN thousand) of which from state budget funds (in PLN thousand) of which EU funds budget (in PLN thousand) ,700 2,500 14, , ,574 Support for the employment of persons aged 50+ (Ministry of Labour and Social Policy) In order to increase the employment rate among the elderly and prepare for the imminent demographic change which will result in the increased rate of ageing of society, certain initiatives are implemented in order to ensure a more efficient use of the potential of persons aged 50+. In recent years, several initiatives for professional activation of older people, such as the adoption of a renewed Programme "Solidarity across generations. Measures to increase the activity of people aged 50+ "or amendment of the Act on employment promotion and labor market institutions, which inter alia established the National Training Fund (NTF) to subsidize the cost of training for workers aged over 45. Currently, implementation of the adopted legal solutions as well as allocation of European funds from the current financial perspective for years on measures which will contribute the most to increasing the exit age from the labour market, are of key importance. Timetable Preparation of a draft Implementation Document for the 50+ Programme - Q Financing The amounts of expenditure with respect to tasks which shall be submitted for implementation within the framework of the renewed 50+ Programme shall be defined at the Implementation Document development stage. Support for the employment of disabled persons/measures for the professional activation of disabled persons (Ministry of Labour and Social Policy) In years , apart from continuing the tasks provided for under the act on professional and social rehabilitation and the employment of persons with disabilities, projects intended to provide support for the professional activation of disabled persons will be implemented. At the beginning of 2015 (Q1-Q2), the implementation of projects co-financed under OP HC will be completed. Furthermore, a series of training sessions intended for the representatives of poviat organisational units and aimed at the dissemination of knowledge and good practices in the area of disability management at the workplace, will be held in April and May 16

17 2015. Further measures to be implemented include the ones related to promotion of accessibility and universal designing as effective ways to integrate the disabled with special needs on the labour market. Besides, it is planned to include in the Act on vocational and social rehabilitation and employment of persons with disabilities, the new institution called supported employment, which should contribute to increase the employment rate of the disables at risk of exclusion and being in the most difficult situation on the labour market. Works will also continue to provide the disabled support in form of personal assistant services. Assistant services will include measures to ensure maximum independence for people with disabilities, enabling them to function independently in society. This service will be implemented in a complex way, depending on the identified needs of a certain disabled person. Timetable Support for graduates entering the labour market Q Support to 45+ people with rare disabilities and some multiple disabilities in the labour market - Q The Disability management at the workplace training project Q Provision of support related to personal assistant services for the disabled - Q Inclusion of the supported employment institutions in the Act on vocational and social rehabilitation and employment of persons with disabilities - Q Financing A total amount of approximately PLN 12.8 million was earmarked for the implementation of projects co-financed from the HC OP in 2015 (including those which are to be completed in Q1 2015; including PLN 10.9 million from the European Social Fund and approximately PLN 1.9 million from the State Fund for Rehabilitation of Disabled Persons). The Disability management at the workplace training project will not result in additional expenditure for the public finance system due to the fact that it will be implemented by the Ministry of Labour and Social Policy within the framework of budget funds for Assistant services will be financed by the State Fund for the Rehabilitation of the Disabled, planned in the financial plan of the Fund for the year. Improvement of inter-sectoral mobility of employees (Ministry of Agriculture and Rural Development) The works for the improvement of inter-sectoral mobility of employees will be continued. The Rural Development Programme for under the measure "Development of households and economic activity," provides a number of mechanisms for the development of agriculture and non-agricultural activities, in particular the establishment and development of micro-enterprises, as well as the restructuring of small agricultural holdings. The RDP also provides the opportunity to assist farmers who will permanently hand over their agricultural holdings to other farmers for enlargement of the agricultural holding and as a consequence, they will cease their agricultural activity. It is also assumed that investments related to the start of non-agricultural activities, which will involve the 17

18 CSR 3 Include farmers in the general pension system, starting by speeding up the creation of the system for the assessment and recording the farmers income termination of insurance in Agricultural Insurance Fund will be financed under Submeasure RFP for years Support for starting non-agricultural activity in rural activities as part of Premiums to start non-agricultural activity. The RDP also provides for the operation titled "Payments for farmers handing over small agricultural holdings". This is an assistance granted to those farmers who qualify to the system for small agricultural holdings established in the regulation on direct payments and permanently hand over their agricultural holding to other farmer. Support corresponding to annual assistance amount - 120% of the annual payment, which can be received by the beneficiary qualified under the system of small agricultural holdings. The above-mentioned assistance amount is granted for a year, in which beneficiary permanently hands over the agricultural holding and for the following years, including The Submeasure Support for implementation of operation as part of the local development strategy directed by the society is planned as part of LEADER RDP designed to improve qualifications of farmers and consequently, searching employment outside of agriculture and diversification of activity towards nonagricultural activity. Timetable The launch of RDP operation Support for starting non-agricultural activity in rural activities, Payments for farmers handing over small agricultural holdings and LEADER RDP Support for implementation of operation as part of the local development strategy directed by the society Financing The allocation for Support for starting non-agricultural activity in rural activities amounts to approx. EUR million; LEADER RDP Implementation of operation as part of local development strategy - approx. EUR 735 million; Payments for farmers handing over small agricultural holdings - approx. EUR 130 million. Specified amounts relate to financing and implementation of the objectives laid down in RDP under the operations in question. Gradual implementation of the relevant registers in the agricultural holdings (Ministry of Agriculture and Rural Development) In the Rural Development Programme (RDP) for the period , the requirement of maintaining relevant registers as part of several support instruments ( Modernisation of agricultural holdings, Support for young farmers, Restructuration of small holdings ) was introduced. Furthermore, in the draft Act on the Mutual Assistance Fund in Stabilisation of Agricultural Income, the possibility of applying for compensation due to lowering the income is dependent on submitting by the agricultural producer a statement about maintaining register of revenues and expenses or account book. Timetable The adoption of the Act on Mutual Assistance Fund in Stabilisation of Agricultural Income by Polish Parliament - Q Entry into force of the Act on Mutual Assistance Fund in Stabilisation of Agricultural Income - Q The launch of RDP operation - Modernisation of agricultural holdings, Support for young farmers, Restructurisation of small holdings - Q2-Q

19 Financing The adoption of the Act on Mutual Assistance Fund in Stabilisation of Agricultural Income is neutral for the public finance sector. Allocation for RDP operations : Modernisation of agricultural holdings - approx. EUR 2.4 billion, Support for young farmers - approx. EUR 718 million, Restructuring of small holdings - approx. EUR 883 million. Specified amounts relate to financing and implementation of the objectives laid down in RDP under the operations in question. During work on the shape of the Council s Recommendations, Poland opposed the wording of the recommendation no. 3 proposed by the European Commission, and petitioned for the reinstatement of the provisions from 2013, talking about the reform of the Agricultural Insurance Fund, leading to greater mobility of the work resources from agriculture to other sectors of the economy. In the recent years, Poland has introduced changes in pension system, including ones in terms of raising the statutory retirement age and limiting the special pension rights of various professional groups, e.g. uniformed groups. In the nearest future, there are no changes planned in the pension schemes of miners and farmers. CSR 3 Include farmers in the general pension system (...). Phase out the special pension system for minerswith a view to integrating include them into the general scheme 19

20 3.2. R+D objective The path of innovation and knowledge-based development represent an opportunity for ensuring the dynamic growth of Polish economy, especially in the context of diminishing impact of traditional sources of economic growth. Therefore, it is necessary to conduct actions supporting the increase of innovations, including increasing expenditure on research and development. Expenditure on R+D between 2012 and 2013 slightly increased by PLN 70.9 million. This means a decline in expenditure in relation to GDP (by 0.02 percentage points). However, the positive trend related to expenditure of the enterprises sector remained the same in the previous years, their significant growth could be observed in 2011 they amounted to PLN million (0.23% GDP), in 2012 PLN million (0.33% GDP) and in 2013 PLN million (0.38% GDP). Thereby, the share of expenditure of the enterprises sector in overall expenditure on R+D is increasing in 2013, it amounted to 43.6% (37.2% in the previous year). In order to achieve the national target, the increase of the enterprise sector is of key importance. In all EU countries, in which expenditure on R+D reaches 1.7% of GDP or higher, expenditure of enterprices account for over a half of the total expenditure, whereas in the countries in which expenditure on R+D in total account for 2.5% of GDP, the expenditure of enterprises constitute approx. 2/3 of the entire expenditure. In order to increase innovativeness of enterprises, the measures in numerous fields are necessary - removing barriers for conducting business activity, improving the quality of education to provide competent personnel, expanding access to finance, promoting knowledge transfer, developing business environment institutions, stimulating cooperation between science and business. The support system for innovative activities of enterprises was included in the Enterprises Development Programme until 2020 and vast majority of instruments was included in the operational programmes. Estimated allocation of funds within the framework of the Enterprises Development Programme for years amounts to approximately PLN 25.5 billion. The amount of European funds contemplated under the OP Smart Growth (OP SG) is approximately EUR 8.61 billion. The basic component of the OP SG include support instruments addressed to enterprises it is estimated that the level of financing shall be approximately EUR 3.85 billion for the support of conducting R+D works performed by enterprises or business consortia, approximately EUR 2.20 billion for the support of innovativeness in enterprises and approximately EUR 1.04 billion for the support of the business environment and potential of innovative enterprises. Furthermore, approx. EUR 1.22 billion will be allocated for support of R+D projects implemented by scientists in cooperation with entrepreneurs or projects oriented at the needs of business. The innovativeness support system was designed so that it will completely correspond to the cycle of creating innovations. The phase related to the production of new idea, R+D works and implementation of the results of the above-mentioned works as well as development of enterprises innovativeness understood as absorption of technology will be supported. Other goals to be supported include expansion to the international markets and staff development process being the basis for all innovative activities. 20

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