Warsaw, 27^th October 2020

 

ANTI-CRISIS SHIELD: INDUSTRY POSTULATES

 

INTRODUCTION

IN ADDITION TO PROTECTING JOBS, QUICK AID IS NECESSARY FOR INDUSTRIES AT RISK

The Union of Entrepreneurs and Employers prepared and presented last week the concept of a PLN 100 billion shield for employment, which is a response to the economic challenges related to the development of the coronavirus epidemic in Poland. However, we are aware of the fact that apart from a comprehensive programme aimed at protecting jobs in the economy, regulatory support is also needed, targeted at industries threatened by the epidemic. One should remember that the difficulties related to the development of the epidemic are not limited only to the financial losses resulting from bans or restrictions to business operations. Hundreds of thousands of people who are quarantined and subjected to epidemiological supervision are also employees, and the mode of providing some services, due to the need to introduce special sanitary standards, has changed dramatically.

The necessity to launch aid is unquestionable. At the same time, the epidemic and the crisis it causes will result in structural changes to the economy – these factors must be taken into account when designing any kind of intervention programme. Their goal cannot be to keep companies unable to adapt to the new reality afloat, but rather to support and help those entities that make an effort to survive. Thus, it is possible that the above-mentioned changes in the structure of the economy eventually will, despite temporary perturbations, increase productivity due to a better use of available resources.

THE AID ACT MAY PROVE INSUFFICIENT

The parliament has already received a parliamentary draft act introducing an aid package for industries particularly affected by the second wave of the epidemic. It seems that the basic assumptions of the act coincide with the approach described above – aid is targeted at industries in the worst situation and it is at the moment de facto minimal, i.e. making it easier for companies to survive a difficult time. Therefore, we get the impression that the government is proceeding cautiously in grading the aid – in the first place, it is proposed to introduce a standstill salary and exemption from social security contributions for several listed industries, as well as to extend the validity of the solutions provided for in the previous anti-crisis shields.

The approach adopted in the above scope seems reasonable (we will publish a separate position with regard to the presented draft law). However, one cannot rule out that the prolonged epidemic crisis will necessitate the launch of further actions. With this in mind, we consulted with trade unions associated within the Union of Entrepreneurs and Employers.

INDUSTRY RECOMMENDATIONS

Below we have listed a set of recommendations presented by individual industries. For the sake of clarity of the document, we divided thsee recommendations into general and detailed ones, the latter in turn for individual industries. We hope that the recommendations presented will prove useful when working on the next stages of help for industries.

GENERAL RECOMMENDATIONS

• The key assumptions of the PLN 100 billion shield for employment presented by us are valid;
• There is a need for automatic exemption from social security contributions (and provision of standstill benefits for employees) for all industries subject to restrictions going beyond DDM;
• The introduction of any restrictions on economic activities should be allowed only on the basis of rational, evidence-based argumentation;
• We maintain the necessity to launch liquidity tools differentiated depending on the situation: for companies subject to the restrictions beyond DDM, a working capital loan in the amount of up to 10% of the turnover for the previous year; for entrepreneurs whose turnover has decreased year-on-year by at least 25%, a partially repayable subsidy or a 100% long-term repayable loan;
• Moreover, it is necessary to introduce a number of general simplifications as listed below:
• elimination of barriers to the employment of foreign nationals, including, in particular, the acceleration of procedures for issuing work permits;
• withdrawal from new taxes and administrative obligations (a moratorium of at least 12 months on all kinds of additional burdens, such as the sugar tax or “the rain tax”);
• making labour law more flexible so that its provisions take into account numerous absences resulting from infections or quarantine, including in the scope of abolishing the limit of overtime;
• enabling self-regulation by appointing COVID-19 coordinators in the form of, for example, people responsible for health and safety in companies – they could become contact persons for Poviat Sanitary Inspectorates;
• the introduction of a mechanism for reimbursing employers for the costs of coronavirus tests carried out among employees in the form of deduction of these amounts from contributions to the State Fund for Rehabilitation of Disabled People or the Social Insurance Institution, PFRON and ZUS respectively;
• postponing the possibility of settling the loss in income tax for another year;
• considering the possibility of renegotiating contracts concluded with entrepreneurs by the Polish Development Fund as part of the support granted from the financial shield – companies with a significant decrease in revenues should be able to postpone the repayment of liabilities towards the Fund by one year;
• considering the possibility of launching targeted financial support for the adaptation of companies to functioning in the reality of an epidemic (micro-loans for retrofitting equipment for remote work or changing the model of service provision);
• making financial aid dependent not only on the industry, but also on the decline in turnover (the postulate is consistent with the programme of financial support for companies presented in the “PLN 100 billion shield for employment”).

DETAILED RECOMMENDATIONS

FOOD CATERING INDUSTRY

• Introducing a temporarily uniform rate of 5% VAT on all catering services – including the sale of non-alcoholic and low-alcoholic beverages (beer, wine, ciders) and with the prospect of setting a uniform rate of 8% after the pandemic;
• Introducing the possibility of distance sales of low-alcohol beverages and enabling takeaway sales of low-alcohol beverages to premises with a licence to sell alcohol on premises;
• General temporary exemption from social security contributions for entrepreneurs in the catering sector and their employees;
• Introduction of a publicly funded “standstill” for employees from the catering sector (specific standstill regulations for employees particularly at risk of severe coronavirus infection, i.e. seniors or disabled people, to be considered).

WASTE MANAGEMENT INDUSTRY

• Introduction of the possibility of directing the waste stream to other installations operated by the same entity in the event of the necessity to shut down or limit the operations of an installation due to COVID-19, provided it is technically and organisationally possible and provided that environmental protection standards are met;
• Enabling changes in the system or schedule of employees’ working time and ordering to work overtime, to be ready to work and to exercise the right to rest in a designated place;
• Amendments to §11 sections 1-4 of the Regulation of the Minister of Climate of 11^th September 2020 on detailed requirements for the storage of waste in the scope of storage of infectious medical waste and infectious veterinary waste as part of waste collection, including in terms of enabling the storage of collected medical waste or infectious veterinary waste in specialised refrigerated containers or refrigerated trailers, characterised by parameters ensuring compliance with all rigors and requirements related to waste collection, or in the scope of extending the storage periods for infectious medical or veterinary waste at specific temperatures;
• Restoration of solutions known from the first anti-crisis shield, granting voivodes special powers in the field of administration over waste management systems.

PHARMACY INDUSTRY

• Amendments to the draft act on the profession of pharmacist with regard to:
• amendment of the provision enabling the withdrawal of a licence to operate a pharmacy in the event of a breach of the pharmacist’s professional independence so that this sanction can be applied in the event of persistent or gross violations,
• deletion of the provision enabling the “immobilization” of a pharmacy, pharmacy outlet or pharmaceutical wholesaler in the event of “preventing the performance of tasks” by the pharmacy manager or the person responsible at the wholesaler,
• deletion of the provision on the role of the pharmacy self-government in assessing the warranty of a candidate for a pharmacy manager,
• deletion of the obligation to run a pharmacy or pharmacy outlet in a specific legal form from the catalogue of a pharmacist’s professional tasks,
• amendment to the scope of powers of a pharmacy manager so that it covers only substantive tasks, not strictly related to running a business and being the responsibility of the pharmacy owner,
• opening a catalogue of healthcare services provided by generally accessible pharmacies.

BREWING INDUSTRY

• Maintaining the current mechanism of calculating the excise duty on beer and keeping the excise duty rate unchanged;
• Enabling (permanent) deduction of excise duty on beers past best before date (solution compliant with EU law and applied in several member states; in Poland, only a temporary option to deduct excise duty on beers after expiration date has been introduced);
• Revision of the Act on excise duty and of the Tax Ordinance through in particular:
• clarification that excise permits are not revoked in the event that a taxpayer submits a collateral for the implementation of decisions resulting in tax arrears,
• clarification of the rules for submitting collateral for the enforcement of tax decisions at the taxpayer’s request, also before issuing such decisions, and withholding secured decisions,
• allowing the possibility of issuing certificates of non-arrears in taxes in the event that the taxpayer submits a collateral for the implementation of tax decisions,
• permitting the authorities to suspend the proceedings in the event that the outcome of the case could be influenced by the outcome of another ongoing administrative, court-and-administrative or court proceedings.

PHARMACEUTICAL INDUSTRY

• Introducing the priority for coronavirus testing of critical workers involved in the manufacture and distribution of drugs;
• Taking into account the specificity of the pharmaceutical sector in the course of works on the amendment to the act on the national cybersecurity system, both in terms of respecting the security systems built by the entities and the risk of an excessive narrowing of the possible catalogue of automation and industrial electronics manufacturers, whose products are used in drug production lines;
• Introduction of a support system for domestic drug producers under the Reimbursement Mode of Development.

FOOD INDUSTRY

• Unifying the practices of state authorities, including, in particular, sanitary inspections related to production safety;
• Enabling companies from the food industry, due to their special role in the economy, to use the inventory of personal protective equipment accumulated by the Material Reserves Agency in the event of problems with the purchase of these products on the market;
• Increasing the amount of exemption for cards and meal vouchers for employees from the Social Insurance Institution to 25% of the minimum wage;
• Creation of “corridors” at border crossings for employees of food industry facilities, as well as drivers carrying food products and loads necessary to maintain the continuity of food production, with special priority of passage for raw materials and perishable foods;
• In the event of significant difficulties in accessing logistics and transport services, priority should also be given to the entire food production and distribution chain, also within the framework of domestic traffic;
• Abolishing the Sunday trade ban;
• Withdrawal from the ban on breeding fur animals and the ban on ritual slaughter;
• Amendment to the provisions of the regulation on the restrictions related to the introduction of the state of the epidemic in the scope of clearly indicating that the restrictions on the number and age of people present on the premises of a retail outlet do not apply to people serving stores, including sales representatives of suppliers;
• Providing the sectors of food producers and processors the status of an element of critical infrastructure along with their entire supply chain, so that they are not subject to any bans or restrictions on transport, access to electricity or water.

 

27.10.2020 Anti-crisis shield: industry postulates

 

Fot. geralt / Pixabay.com

Warsaw, 22^nd October 2020

 

100-BILLION SHIELD FOR EMPLOYMENT
Proposals of support for companies during COVID 2.0 by the Union of Entrepreneurs and Employers

 

The second wave of the epidemic in Poland took on a scale that was still hard to expect several weeks ago. The increasing number of infections and the healthcare system reaching its limits of efficiency generate a sense of danger, in view of which the society naturally limits its activity and mobility. Therefore, due to the dynamics of the epidemic, the demand for certain services decreased organically. This effect was intensified by further restrictions introduced by the government. In addition to the standard sanitary regime encompassed by the DDM strategy (distance, disinfection, masks), restrictions have been introduced to the operation of catering establishments, the fitness industry, or the industry behind the organisation of events (interestingly enough, also those organised online). While only a few weeks ago, the government clearly declared that there would be no second shutdown of the economy, we can already conclude that we are operating in a creeping lockdown, which – in the light of the recent, slightly revised declarations of decision-makers – may soon become an actual lockdown.

Bearing this in mind, it has become necessary to prepare a new aid package for companies affected by restrictions and limitations. The key goal should be, as in the case of the hitherto existing anti-crisis shields, the protection of jobs, therefore we decided to call the package proposed by us “the 100-billion shield for employment”.

According to the available data, it is possible to implement this package without the need to exceed the debt limits resulting from the present framework for aid programmes shielding the economy against the negative effects of COVID-19. Out of the PLN 270 billion limit allocated to the launch of anti-crisis measures, PLN 145 billion have been used so far (for example: the Polish Development Fund has allocated PLN 60 billion out of the PLN 100 billion it has at its disposal for the implementation of the “financial shield”). Even assuming that some of the remaining money will be spent by the end of this year, it is safe and prudent to assume that, within the adopted limits, an amount of approximately PLN 100 billion will still be available.

Below, we present a comprehensive package of aid solutions that take into account the possibilities of allocating these funds – not limited, however, to financial support only. We have divided the recommendations into three sections: regulatory security, financial security, and security for the next year.

REGULATORY SECURITY

We believe that the exceptional situation in which we find ourselves creates the need to ensure strict regulatory security for employers, and thus also to adapt regulations to the conditions in which companies are operating and the challenges they have to face. With this in mind, we postulate the following measures:

• a temporary reduction of the VAT rate on products and services from all “socialising sectors” (food catering services, hospitality industry, fitness centres, beauty salons etc.) to the minimum level of 5%;
• exemption from social security contributions for all entrepreneurs and employees in industries subject to restrictions exceeding the DDM standard (including, among others, the event, catering, hotel, fitness, entertainment, and art industries) for the duration of these restrictions;
• basing any and all business activity restrictions to be introduced on data and objective argumentation. We find no justification for banning the fitness industry from operating, or for the restoration of “hours for the elderly” – therefore, we call for those restrictions that do not meet the above-mentioned requirements to be lifted and demand that these requirements are respected each time the list of restrictions is reviewed;
• the introduction of a 12-month-long moratorium on new taxes and regulatory burdens. Poland belongs to the infamous vanguard of OECD countries and decides to introduce new levies in the face of the crisis – in our view, any initiative of this kind ought to be postponed by at least 12 months;
• accepting the assumption that Poland cannot afford another lockdown. Consequently, the policy of fighting the virus should be based on strict adherence to the sanitary regime (DDM), not on shutting down more sectors of the economy.

FINANCIAL SECURITY

As mentioned in the introduction, a growing number of industries has to face not only a demand lowered by the epidemic, but also the gradually increasing number of restrictions going beyond the DDM regime. There are certain sectors in which we can already speak of an actual lockdown. Accordingly, in order to protect jobs, it is necessary to quickly mobilise additional aid.

A part of the PLN 100 billion earmarked for the aid package during the second wave of the epidemic will be used to implement some of the regulatory demands (exemption from social security, VAT reduction). The remaining funds should be allocated to the mobilisation of the following instruments of direct financial support:

• for entrepreneurs from industries subject to restrictions exceeding the DDM regime: working capital loan in the current account, granted in the amount of up to 10% of turnover for 2019, guaranteed by the Polish Development Fund. The instrument ought to be 100% repayable (including the preferential interest rate on the loan). Access to the instrument should not be subject to any additional requirements, that is, it should be available to all entrepreneurs from the above-mentioned industries, regardless of employment, current turnover etc.;
• for all entrepreneurs whose turnover for September and October decreased year-on-year by over 25%, we propose two instruments:
• a subsidy granted by the Polish Development Fund up to 10% of turnover for 2019, which is an instrument analogous to the current “financial shield” programmes, that is, partially repayable. We propose that it should be possible to write off 75% of the granted amount, provided that at least 80% of jobs at the date of granting the support are maintained;
• long-term (10- and 15-year) loans guaranteed by the Polish Development Fund – granted in the amount of up to 10% of turnover from 2019, 100% repayable, with preferential interest.

SECURITY FOR THE NEXT YEAR

The development of the COVID-19 epidemic has so far been characterised by a high level of uncertainty. We do not fully know how the virus operates, nor how it might mutate. Therefore, one should also prepare for a worst-case scenario assuming a third wave of the epidemic in the spring of 2021. It seems that the proposed budget draft for the next year does not provide for the creation of an adequate “financial overlap” for the possible launch of additional support measures for the labour market. Taking this into account, we call for a revision of social spending planned for next year. Unfortunately, the programmes introduced at the peak of the economy are not suited for the crisis conditions in which we will find ourselves next year. In consequence, we believe that extending the 500+ programme to the first child without establishing an income threshold should be dropped, as well as the additional, 13^th and 14^th retirement benefits. The “good start” school starter kit should also be liquidated. The revision of the policy in the above scope will allow for the creation of a “financial cushion” in the amount of almost PLN 45 billion, which in the event of another wave of the epidemic can be quickly activated in order to save jobs.

 

22.10.2020 The 100-billion shield for employment – Proposals of support for companies during COVID 2.0 by the Union of Entrepreneurs and Employers

Warsaw, 1^st October 2020

 

Busometr: Investments are sinking, but the labour market is still in good shape

 

The “Busometr” index of business mood for the 2^nd half of 2020 amounted to 42.4 points (a drop from 44.5 points in the previous half-year) which means that entrepreneurs’ moods during the COVID-19 epidemic are worsening. Investments suffered hardest, while the labour market still enjoys a surprisingly good mood.

The drop in entrepreneurs’ moods has been recorded successively since the record-breaking 2^nd half of 2018, when the “Busometr” index amounted to 56.8 points. However, it is impossible to ignore the fact that the sentiment survey for the 2^nd half of 2020 took place in very particular conditions of the epidemic and economic perturbations related to it.

“We expected business moods to worsen,” explains Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “What may be surprising is that the difference caused by COVID is relatively small. We have seen regular declines since mid-2018 when the economy was at its peak. The epidemic caused this trend to continue rather than accelerate significantly.”

The analysis of individual components of the Busometr index suggests that entrepreneurs’ sentiments vary depending on the specific part of the economic reality being in question.

Exactly 50% of respondents believe that the economic situation will deteriorate in the months to come. Owners of micro-enterprises are most pessimistic about the future – in their case, the component “Economic situation” is significantly lower than for small, medium and large companies.

The lowest in history result of the “Investments” component is certainly something to be worried about. The index in this respect amounted to 29.5 points compared to the record-breaking 53.7 points in the 2^nd half of 2018. Almost 70% of companies declared that they plan no investments at all.

“The problem with investments in Poland is of a structural nature, but the uncertainty related to COVID and the constantly changing regulations only deepen it,” stresses Jakub Bińkowski, the Union’s Director of the Law and Legislation Department. “The lowest result of the ‘Busometr’ index in history shows that a policy adjustment is necessary in this area.”

The Union of Entrepreneurs and Employers calls the government to abandon the incessant amendments to the conditions of running a business in Poland. The price of regulatory risk is rising rapidly, and companies are afraid to invest. One has to call it by its name: if the government does not calm down in terms of changes, there will be no investment. It will get even worse.

The following are the government’s surprises from only the last two months:

• the sugar tax;
• CIT for limited partnerships;
• rain tax;
• the announcement of the excise tax on used cars;
• advertising tax;
• the announcement of a digital tax;
• the ban on breeding fur animals and ritual slaughter;
• a restrictive implementation of the audio-visual directive.

In all this chaos, it is extremely difficult to plan and run any business activity. We call for reflection. There is no obligation to run business activity in Poland.

Considering the conditions in place as a result of the epidemic, the level of the “Labour market” component is surprisingly positive – 14% of companies plan to increase wages and employment, while job and wage cuts are planned by 7% and 5% of companies, respectively. The results of the survey seem to confirm the thesis that Polish entrepreneurs are not afraid of the negative effects of the pandemic and are trying to maintain employment.

 

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Busometr ZPP – the Index of Economic Mood in SME Sector is an economic index showcasing the level of optimism in small and medium enterprises, and their plans for the next six months.

Three components affect the index: (1) the economic situation, (2) labour market (remunerations and employment) and (3) investments.

A value within the range of 0-100 is assigned to each component.

The Union of Entrepreneurs and Employers along with Maison&Partners conduct the research among a representative group of small and medium enterprises (up to 250 employees). Busometr ZPP is published every six months. The sample size is N = 600 respondents from the SME sector.

The survey is carried out since 2011.

 

01.10.2020 Busometr ZPP. Forecast for the 2^nd half of 2020

Warsaw, 2^nd October 2020

 

CIT on limited partnerships will increase the burden on tens of thousands of Polish entrepreneurs

 

• Covering limited partnerships with CIT will lead to a significant increase in taxes for nearly 73,000 Polish entrepreneurs.
• The most thriving businesses will suffer the most, as they will not have the chance to benefit from the lower 9% CIT rate, and the actual taxation of the shareholders of these companies will increase to 34-38% instead of the current 19-23%.
• Only 1% of limited partnerships have foreign partners, and their share in the total number of partners of limited partnerships amounts to 0.4%, which means that the possible risk of a tax-free transfer of profits abroad is marginal.

– according to the report presented at the joint conference of CRIDO, the Union of Entrepreneurs and Employers and InfoCredit.

 

Dramatic consequences for business

In connection with the planned tax changes (as of 2^nd October 2020), there will be a significant increase in the tax rate for nearly 73,000 Polish entrepreneurs. Approximately 75% of companies with lower turnover will be able to benefit from the 9% CIT rate instead of the hitherto 19%. However, as many as a quarter of limited partnerships responsible for 90% of revenues generated by these businesses (i.e. nearly PLN 300 billion annually!) will pay 19% CIT. Effectively, the tax rate on the partners of these companies, mainly Polish entrepreneurs, will increase to 34% or, in the case of people paying the solidarity levy, to 38%.

Even Estonian CIT won’t help

The new tax benefit in the form of the so-called Estonian CIT does not include limited partnerships. Even assuming that some entrepreneurs will decide to transform their business into a capital company (LLC or joint-stock), others will probably remain in the current form. Apart from the preferential tax regime, this form of activity is popular, in particular, among entrepreneurs operating in the trade and service industry, as there is no capital expenditure which is a condition for using this form of taxation.

Limited partnerships are not widely used for international tax optimisation

Contrary to the justification of the proposed changes, the data do not indicate that limited partnerships are used in international tax optimisation schemes. In Poland, approximately 43,000 limited partnerships conduct active business activity. According to the analysis of CRIDO experts based on data from the InfoCredit database, 92% of limited partnerships are businesses of natural persons from Poland. As many as72,705 Poles run their businesses in this form.

Should one compare, only 0.4% of partners in limited partnerships in Poland are foreigners. The first place is taken by Germany (151 partners) for whom this form of business activity is quite commonplace and is indicated as one of the reasons behind Germany’s economic success. Our Western neighbour is followed by Luxembourg (113 partners), Cyprus (41) and the United Kingdom (39).

The whole country and many industries are in question

Limited partnerships are scattered all over the country. Most of them can be found in the following voivodships: Masovia (11,290), Greater Poland (5611), Lesser Poland (4744) and Silesia (3792). They operate in various sectors, most of them are involved in industrial processing, construction, and trade. Many transport, logistics, and catering companies operate in this way. This form has allowed many Polish entrepreneurs to develop, who with a “flair” for running business could at the same time limit the risk for their family.

“The combination of a 19% single taxation rate with reducing the risk of running a family business is a positive stimulus and motivating factor for the development of entrepreneurship. The example of Germany, whose economic power grew out of family businesses run in the form of limited partnerships, proves this concept to be right. The planned double taxation of limited partnerships will not only be a negative signal for Polish entrepreneurs, but will also put domestic companies in a worse market position in relation to their foreign competitors. Because considering the so-called Parent-Subsidiary EU directive, a foreign investor from the EU will pay no more than 19% of income tax,” comments Mateusz Stańczyk, Partner at CRIDO.

“Covering limited partnerships with CIT is a bad idea. The data do not indicate that these companies were entities used for international optimisation schemes. They are, on the other hand, an attractive form of business for Polish, dynamically developing businesses. It should be emphasised that this is yet another proposal to increase the taxes to emerge in a relatively short time. Meanwhile, the tendency of entrepreneurs to invest is, according to our research, the lowest in years and it is not without reason. Multiple changes in regulations, the sudden introduction of new levies, the lack of elementary legal security for companies are the main reasons why the investment rate in Poland is far from the 25% GDP expected by the Strategy for Responsible Development,” claims Jakub Bińkowski, Director of the Union’s Department of Law and Legislation.

“Today, more than ever before, any proposal to change to the tax system should also be analysed in the context of employment. Greater burdens for tens of thousands of Polish entrepreneurs may mean a diminished willingness to create new jobs or keep the existing ones. InfoCredit will soon conduct a survey among entrepreneurs so that they can assess the proposed changes in taxation in the context of employment and their market opportunities. We will share the results of this survey with you in October. For many months now, the InfoCredit index has been signalling that as the number of jobs is decreasing, the number of sole proprietorships is increasing. And these have a much smaller ability to achieve market success than companies with an established position,” says Jerzy Wonka, Development Director at InfoCredit.

 

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About the analysis

The above analysis was carried out on the basis of information from InfoCredit databases. For the purposes of this report, experts from InfoCredit and CRIDO studied the data and analysed approx.. 43,000 limited partnerships that actively conduct business activities, including 26,462 which published financial statements for 2019 and / or 2018, reporting revenues totalling approx. PLN 330 billion annually. The available data made it possible to identify the shareholders of approx. 41,500 limited partnerships.

 

02.10.2020 Limited partnerships in Poland – data analysis

 

Fot. stevepb / pixabay.com

Warsaw, 13^th October 2020

 

Necessary tightening measures in the customs and VAT system for foreign e-commerce vendors

 

The Union of Entrepreneurs and Employers, in its latest report, analysed the customs and tax system in terms of shipments from non-EU e-commerce vendors. The Union notes in its study that the e-commerce sector is gaining importance in the global, and thus also Polish economy. This phenomenon is influenced, among others, by the coronavirus epidemic. According to the Union, this market in Poland will grow in 2020 by 20%.

E-channels allowed domestic producers to survive during the epidemic crisis by filling the gaps in in traditional sales channels. By 2025, e-sales will account for 20% of the market. In other words, who will not sell online in 5 years will lose every fourth customer – claims the Union of Entrepreneurs and Employers.

“Poland is a large and attractive market for e-commerce platforms and vendors. Poles en masse fell in love with online shopping. However, the playing field for retailers and consumers is uneven. There are no equal rules of competition between Polish and Chinese e-commerce. Chinese companies have a number of domestic public support instruments at their disposal and make use of the gaps in the Polish system of public levies in a highly non-competitive manner,” says Marcin Nowacki, Vice-President of the Union of Entrepreneurs and Employers.

“Naturally, we all want to pay as little as possible for goods. It is in all our interests to ensure the greatest possible variety of products, fair competition, and diversity of entities operating in the e-commerce industry. At the same time, the rules of operation in this sector must be equal and transparent,” adds Piotr Palutkiewicz, the Union’s Deputy Director of the Law and Legislation Department.

The Union of Entrepreneurs and Employers has presented a number of recommendations aimed at ensuring fair and high competition in the e-commerce industry. The solutions include, among others the need to introduce an IT system for the payment of customs duties under e-administration and its integration with e-commerce platform systems.

“Simultaneously, thanks to the introduction of a modern and customer-friendly system for paying customs duties, it will be easier to control, as well as pay taxes and custom duties for items shipped from non-EU markets. As a result, the State Treasury may gain over PLN 2 billion annually,” adds Marcin Nowacki.

The Union also indicates that EU funds from the National Reconstruction Plan after the COVID-19 crisis should be used to introduce solutions in the field of e-administration, customs, and tax.

“There is also work to be done by Polish authorities related to the implementation of EU rules into the Polish legal system regarding the principles of concluding contracts over distance and effective enforcement of standards in force in the Community,” adds Piotr Palutkiewicz.

The authors of the report also point to further necessary actions, such as the appointment by non-EU vendors of a representative in the European Union who will be responsible for the proper enforcement of consumer regulations, or the undertaking by Poczta Polska (Polish Post) of actions to help Polish exporters sell products on non-EU markets (especially in China) via the e-commerce channel. This would also allow Poczta Polska to generate additional revenues. The Union also calls for the initiation and active participation of Poland in the reform of the Chinese postal charges system in force under the Universal Postal Union. This action should be carried out both on the level of the European Union and in other international circles.

“As a result of implementing our recommendations, unfair competition on the part of Chinese vendors and e-commerce platforms would become limited. The protection of Polish consumers would be ensured at an equal level, regardless of the location of the purchasing platform. Owing to this, the competition of Polish and foreign vendors and online sales platforms would take place on an equal basis, and Polish entities operating in the e-commerce sector would have equal opportunities to expand on international markets,” concludes Nowacki.

 

See report: 13.10.2020 Necessary tightening measures in the customs and VAT system for foreign e-commerce vendors

 

Fot. rupixen.com / Unsplash.com

Warsaw, 12^th October 2020

 

Union of Entrepreneurs and Employers on a strategy to combat the second wave of the epidemic: radical organisational changes and compliance with sanitary restrictions are needed, we cannot afford another lockdown

 

The number of coronavirus infections is growing exponentially, data on occupied beds and respirators are becoming increasingly worrying. Subsequent changes in tactics announced at press conferences raise the question whether the country has managed in recent months to prepare for the second wave of the epidemic. According to the experts of the Union of Entrepreneurs and Employers, the lack of a clear strategy and effective procedures show that institutions in charge of Polish healthcare squandered the virus’s “dormant” period.

“One can assume that the Ministry of Health was busy “putting out fires” in March and April, but the period since May was the time to reconsider the course of action for the upcoming autumn and to equip the appropriate institutions. It was known, after all, that the second wave of the epidemic would come,” claims Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “We have been observing the total chaos and helplessness of institutions for several weeks. The procedures either don’t exist or they don’t work, we are testing a lot less people than we should, and the supply of beds and respirators is shrinking. The Minister of Health failed to prepare a real strategy to fight the coronavirus, because it is difficult to call the document published on the Ministry’s website a strategy.”

The basic goals of the Union’s strategy to combat COVID-19 are to reduce virus transmission through mass testing, to secure the maximum possible efficiency of the healthcare system and to ensure business continuity. According to the Union’s experts, despite the declarations of politicians that closing the economy again is out of the question, the restrictions introduced consistently affect business to a great extent and in practice mean a progressive lockdown.

“The Polish economy suffered enormously due to the lockdown. For the first time in years, we have recorded growth in GDP, the budget deficit has increased to a record size, we have spent tens of billions of zlotys on the necessary aid programs,” emphasises Jakub Bińkowski, the Union’s Director of the Law and Legislation Department. “We spent that money to buy the time needed to prepare the healthcare system to fight the virus. This was not done and now the costs of the sanitary regime are again being transferred onto business. It is unacceptable.”

The strategy presented by the Union of Entrepreneurs and Employers assumes far-reaching changes in the model of combating the epidemic. The Union’s experts call for the creation of a specialised agency, similar to the Polish Development Fund PFR, reporting directly to the prime minister, which would take over administrative and managerial tasks. From the medical point of view, the strategy is based on the recommendation of mass testing (currently Poland ranks 84^th in terms of the number of tests per million inhabitants globally) and the strict enforcement of key sanitary restrictions resulting from the current broadly accepted consensus DDM (distance – disinfection – masks). At the same time, the Union is against any restrictions on running a business; the Union has consistently considered it appropriate to eliminate the yellow zone throughout the country.

An integral part of the strategy is the case study on the strategies to combat COVID-19 implemented in Sweden and Germany. The experiences of these countries are not conclusive, yet they provide useful insight into possible effects of various strategic models.

“Sweden ‘went rogue’ and, being in the European avant-garde, introduced no particular restrictions during the first wave. The country paid a high price for this in terms of economics, but above all, in terms of health, reporting a very high number of infections and deaths,” says Kamila Sotomska, Analyst at the Union’s Department of Law and Legislation. “The country has been going through the second wave of the epidemic relatively mildly so far, but there’s no saying whether this is the result of an approach adopted earlier this year. Also Germany seems to be coping with the virus well. This is obviously a consequence of high healthcare expenditure, but also of mass testing. It is an approach in this respect that we propose to replicate in Poland.”

“It must be said as it is: the authorities in whose competencies it was to prepare the strategy of combating COVID-19 in the autumn did not do their job,” concludes Cezary Kaźmierczak. “Therefore, we have done this work instead and we hope that the approach to fighting the epidemic will be modified rapidly. We have less and less time to respond to the increasing number of infections and to prevent our healthcare system from collapsing.”

 

See the study: 12.10.2020 The Strategy to Combat COVID-19: Recommendations of the Union of Entrepreneurs and Employers

Warsaw, 2 October 2020

 

Commentary to the Opinion of the European Economic and Social Committee on the European Minimum Wage

 

On 18 September 2020, the European Economic and Social Committee has adopted its’ Opinion on decent minimum wages across Europe or so-called European minimum wage. This explanatory opinion was requested by the European Parliament with a view to the forthcoming Commission’s initiative. The European Economic and Social Committee (‘EESC’) did not come to a consensus on a number of contentious points, including the EU competence to act in the field of minimum wages.

The Union of Entrepreneurs and Employers have participated in the European Commission’s consultations regarding the subject of European minimum wage and has critically assessed the proposal due to a number of reasons. First, the regulation of the minimum wage remains within the exclusive competence of Member States, and that EU instruments referring to these issues should be of a non-binding nature, should they be at all adopted. Second, even though the Commission has stated that it will respect national traditions, to include collective bargaining mechanisms, however, this proposal suffered from lack of precision. Third, the Commission analysed the issue of minimum wages solely from workers’ perspective, and hence overlooked the fact that the introduction of additional regulations may increase the scarcity of full-time employment in the labour market, which – so it would seem – is not consistent with the EU concept of social policy.

The EESC opinions reflect a divide between the Workers’ and Diversity Europe Groups and the Employers’ Group. On the one hand, the EESC has acknowledged inter alia that important disparities remain in the statutory minimum wage levels in the Member States and minimum wages are an important aspect of the EU’s social market economy model. On the other hand, the EESC noted that any potential changes may have an impact on employment, competitiveness and macro-economic demand. Moreover, while the Workers’ Group and the Diversity Europe Group were of the opinion that a binding instrument is necessary, the Employers’ group highlighted that introduction of mandatory requirements can lead to adverse consequences in the labour market. Furthermore, the Employers’ Group recalled that the European institutions do not have the competence to act on “pay”, including pay levels. What is, however, more important is that such action could undermine the autonomy of social partners and efficiency of collective bargaining systems, especially in the Member States where there are no statutory minimum wages.

The Union of Entrepreneurs welcomes the fact that the European Economic and Social Committee took due account of the concerns presented by the Employers’ Group. We hope that the European Commission will take issues such as lack of competence or potential adverse effects on the European economy under consideration in its’ subsequent work related to the European minimum wage. 

 

02.10.2020 Commentary to the Opinion of the European Economic and Social Committee on European Minimum Wage

 

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