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Business commentary and recommendations on the economic risks associated with the war in Ukraine



Warsaw, 17 March 2022 

 

Business commentary and recommendations on the economic risks associated with the war in Ukraine

 

The Russian aggression against Ukraine and its consequences have specific economic effects also felt by Polish businesses. Considering that further developments are difficult to predict and that some difficulties are already present, the Union of Entrepreneurs and Employers (ZPP) gathered comments, risk assessments and recommendations related to the current situation from affiliated industry organisations and companies. The material, broken down by sector, is presented below and submitted for the consideration of public administration bodies in the context of potential legislative and organisational measures to be taken.

 

  1. Transport

Urgent amendment of regulations governing the employment of foreigners

A significant threat to companies is the shortage of lorry drivers. Until now, Ukrainian drivers have constituted a large and growing group of drivers employed by Polish transport operators. We are already receiving indications from our transport operators that:

  • drivers on leave do not return to work in Poland,
  • drivers who have families in the danger zone want to return to their families,
  • drivers called up for military service also return to Ukraine.

This may cause both problems with the availability of transport services and further increases in transport prices (operators are already increasing service prices due to soaring fuel prices and extended service times at petrol stations).

The introduced Act on assistance to Ukrainian citizens has made it possible to employ refugees and legalise their stay. However, problems may arise in international transport. During checks, the driver must often show a passport, which includes a visa and work permit. In the current situation, it should be possible to quickly obtain documents enabling cross-border work so that a driver employed in Poland could easily travel to other EU countries and beyond, for example, to the United Kingdom.

  1. Motor vehicle rental

There is currently a large group of US citizens involved in helping refugees in our country. The military presence of our American ally in connection with the protection of NATO’s eastern borders is also increasing. In many cases, these people want to rent a car for their activities from a car rental company. Unfortunately, they usually do not have an international driving licence required in Poland for US citizens (the US driving licence is invalid). In such cases, rental companies are legally prohibited from renting cars to persons without a valid licence.

Given the above, to make it easier for United States citizens to function in Polish, it is desirable that US driving licences should be recognised in our country as a matter of urgency and treated the same as those issued in the European Union.

  1. Pharmacy
  • Enabling pharmacists and pharmacy technicians to access the labour market

The Act of 12 March 2022 on assistance to citizens of Ukraine in connection with armed conflict on the territory of their country has enabled doctors, dentists and nurses to access the Polish labour market. Given the current labour needs in the pharmaceutical sector, we are requesting that pharmacists and pharmacy technicians be granted a temporary licence to work on the same basis.

  • Allowing mail-order sales of prescription drugs

Currently, pharmacies are only allowed to carry out mail orders and delivery of medicines, but only over-the-counter medicines and only as far as online pharmacies are concerned. The most critical prescribed (Rx) medicines must be picked up by the patient in a pharmacy. The introduction of delivery of Rx medicines and other reimbursable products (e.g. adult nappies, which are difficult to transport for the elderly) is beneficial from the point of view of patients – in particular, those who need them the most (e.g. elderly and/or disabled individuals). Importantly, pharmacy employees could monitor the correct delivery and temperature, which is important for some products.

  • Amendments to the Pharmaceutical Law regarding advertising of pharmacies and pharmacy outlets

The Pharmaceutical Law provisions regarding the prohibition on advertising pharmacies make it very difficult to inform patients about the services provided. Pharmacists are faced with different interpretations of the law and different interpretations by the pharmaceutical inspection authorities. These regulations have been in place for ten years without any amendments and are not adequate in the current situation in the pharmacy market and the country as a whole. New services have been introduced in selected pharmacies, including immunisations and diagnostic tests. Moreover, further services, e.g. drug review, are planned to be implemented. For example, because of the advertising ban, pharmacists are afraid to advertise that people can be vaccinated against COVID-19 in their pharmacy, assuming that the pharmaceutical inspectorate will consider this prohibited advertising. Also, in the face of the war in Ukraine and the influx of refugees crossing Poland’s eastern border, placing information in Ukrainian on a pharmacy window or providing help to the needy may be treated as an “encouragement” to visit the indicated pharmacy. As a result, its owner and manager may face the consequences imposed by the pharmaceutical inspectorate. The most problematic issue is not the law itself but its interpretation. It is necessary to rationalise and standardise the ban on advertising in pharmacies so that entrepreneurs know how to operate in the market and so that their pro-patient initiatives are not blocked. Particularly in a state of emergency, war or natural disaster, it is essential for the patient to be adequately informed about the services available in a given establishment. Currently, the patient is deprived of such information.

  • Speeding up administrative procedures conducted by pharmaceutical inspectorates that prevent pharmacies from opening

More than 200 pharmacies are currently closed to patients due to suspended operations. In many cases, the prolonged suspension is due to an administrative procedure by a pharmaceutical inspectorate. As a result, the establishment cannot provide its services and stocks medicines that cannot be delivered to patients. In cases where the administrative procedure does not concern matters where the pharmacy endangers patients’ safety or health, there should be a specific time frame for a final administrative decision, which allows the opening of the pharmacy to patients. Currently, there are known cases when administrative procedures, e.g. concerning the transfer of a licence to operate a pharmacy, last even a dozen or more months, while according to the Code of Administrative Court Procedure, they should last two months at most. This results in reduced access to medicines, huge costs for businesses and losses for the State Treasury. In case of a possible crisis or armed conflict, as many establishments as possible should be put into operation. The actions of the pharmaceutical inspectorates should not hinder and cause the prolonged closure of pharmacies that can help patients.

  • Developing ICT systems and official applications to confirm product availability in pharmacies

To confirm that a particular medicinal product is available in a given establishment, you need to contact the pharmacy directly – in person or by telephone or using a commercial app. Commercial applications only cover selected establishments that have chosen to make information on their stocks available on a paid basis. In recent years, the Polish pharmacy market has been facing the problem of shortages of goods and frequently selected particularly scarce products are available in only a few pharmacies. Introducing a central system indicating a pharmacy convenient to the patient where all the medicines needed are available would be extremely useful.

  1. Drug manufacturing

In case of a crisis or state of emergency, to ensure continuity in the production of medicines, it is necessary to ensure:

  • the possibility for workers in the domestic pharmaceutical industry to move to work;
  • keeping doctors, pharmacists employed in the domestic pharmaceutical industry in their jobs, fulfilling the obligations of the applicable laws, including but not limited to the pharmaceutical law, so that they are not transferred by the government administration to other tasks;
  • refraining from recruiting pharmaceutical workers in the event of military mobilisation;
  • maximum security of supply chains at the domestic, EU, non-EU and continental levels;
  • in the event of the reintroduction of internal borders within the European Union, the creation of the so-called “medical corridors” for the transport of medicines, active substances and materials necessary for their manufacture;
  • maintaining the mobility of workers within and outside the EU;
  • stopping all legislative work that would worsen the condition of the domestic pharmaceutical industry, including revisions of the Reimbursement Act, and introducing the so-called price corridors if need be;
  • enabling Responsible Persons, Skilled Persons and Competent Persons to work remotely;
  • actively and effectively counteracting speculation on the price of materials necessary for the manufacture of medicines by the institutions set up for this purpose;
  • access for drug manufacturers to the necessary materials for the manufacture of medicines;
  • simplification of procedures and electronic communication in all regulatory and administrative procedures, including the submission of all documents with a certified electronic signature;
  • providing pharmaceutical companies with the opportunity to purchase currency for raw materials for production at the pre-war exchange rate, which will enable the price of medicines to be maintained at its current level;
  • continuity of gas and energy supply to domestic manufacturers.
  1. Waste management

In providing continuous waste collection and management services (particularly hazardous waste) for both residents and institutions, one of the key issues is securing fuel for the motor vehicles of the services involved in this activity. The massive influx of refugees to Poland also requires additional capacity in plants and waste treatment facilities. Due to delays in the processing (due to the pandemic) of the relevant applications submitted by entrepreneurs, there is a very serious risk that the operations of almost 50% of waste treatment plants and facilities in the country will be unreasonably suspended.

  1. Hospitality and catering

Amendment of sanitary regulations to facilitate opening accommodation and catering facilities for refugees (hospitality and catering sector).

  1. Metallurgy

Manufacture of specialised machinery and equipment – metallurgy sector

  • Government-level economic meetings/missions to countries that can support steel supply (Moldova, China, India). Emergency supply agreements are needed.
  • Joint action with the EU on maritime transport to identify priorities for the EU in compliance with WTO rules.
  1. Research and development (R&D)

Laboratory tests (physical and chemical, microbiological tests, analyses and measurements)

Recommendations

Justification

Applicable regulations

Accreditation, permits, licences, other applicable regulations

Renewal of accreditation without periodic evaluation

Polish Centre for Accreditation (PCA) is a domestic accreditation body authorised to accredit conformity assessment bodies under applicable law.

No PCA assessment is equivalent to the loss of accreditation for testing/sampling.

Law regulates the areas where accredited methods are required. In case of difficulties related
to the PCA operations, the legal possibility of extending the validity of licences already granted seems appropriate.

 

Act of
13 April 2016
on conformity assessment and market surveillance systems (consolidated text of Dz.U./Journal of Laws/ 2022, item 5)

 

Polish Centre for Accreditation Procedures/Policies

 

Act of
27 April 2001 – Environmental Law
(consolidated text of Journal of Laws of 2021, item 1973).

Reducing the frequency of testing of the working environment and pollutant emissions/imissions

The frequency of testing is regulated by law; if the laboratories’ capacity to carry out tests and measurements concerning the working environment and emissions is reduced, it is reasonable to reduce their frequency temporarily.

Ø Regulation of the Minister of Climate
and Environment of
7 September 2021
on the requirements
for measuring emission levels
(Journal of Laws of 2021, item 1710);

 

Ø Regulation of the Minister of Climate
and Environment of
11 December 2020
on the evaluation of levels of substances in ambient air (Journal of Laws of 2020, item 2279)

 

Ø Regulation of the Minister of Health
of 2 February 2011 on tests and measurements of health risk factors in the working environment
(Journal of Laws of 2011, No. 33,
 item 166).

Renewal of other permits held by economic operators (e.g. water permits), licences
(e.g. ones issued by sanitary and epidemiological stations)

In case of difficulties related to public administration operations, the legal possibility of extending the validity of licences already granted seems appropriate.

 

Continuity of key services

Ensuring access to chemical reagents and consumables for key economic operators

Lack of access to chemical reagents and consumables will result in an inability to provide services to:

Ø process line entities;

Ø local government administration, the population
in the area of testing water for consumption
and food.

 

 

Simplification of customs procedures for the purchase of reagents and consumables outside the EU

In the case of the need to supply essential inputs from outside the European Union, it would seem advisable to simplify customs procedures or even reduce customs duties and fees.

 

Environmental protection

Provision of hazardous waste collection

In case of armed conflict – given the possibility that authorised entities may cease to provide services in this area – takeover of the provision of services relating to the disposal of hazardous waste, including veterinary waste, by municipalities.

Act of
14 December 2012
on Waste
(consolidated text of Journal of Laws of 2021,
item 779)

Energy security

Ensuring access to electricity for key economic operators

In case of armed conflict – giving priority to energy consumers who are key economic actors to maintain production continuity.

 

Finance and taxation

Simplification and extension of deadlines for the settlement of corporate taxes (CIT, VAT)

 

Extension of the reporting deadline.

In case of armed conflict, communication problems with the public administration will affect the ability to settle taxes on time.

Act of 15 February 1992 on Corporate Income Tax
(consolidated text of Journal of Laws of 2021,
item 1800).

 

  1. Sports
  • Keeping activities and procedures to a minimum;
  • Systematic monitoring of the course of actions in Poland and Ukraine (support of services responsible for public security, cooperation of administration bodies, entrepreneurs, groups of companies, etc. support of security divisions);
  • Efficient communication (including crisis communication), defining a list of communication priorities;
  • Designation of alternative venues for major sports activities/meetings/events;
  • Designation of a crisis centre coordinator and responsibilities for individual persons;
  • Creation of a backup of IT resources;
  • Periodic workplace safety procedure refreshers for employees, i.e. information on emergency exits, muster areas, first aid kits, etc.
  1. Glassmaking, glass packaging

Risks associated with reduced gas supply to the glass packaging industry

It is necessary to ensure a continuous (uninterrupted) gas supply to the glass packaging industry. A potential interruption of supply, even a short one, can cause irreparable damage and jeopardise safety. 

  1. Potential effects of a natural gas shut-off on the industry
  1. Due to the very high temperatures (approx. 1500°C), the sudden interruption of the operation of glass-melting furnaces as a result of restrictions on the supply of gas poses an immediate danger to the workers’ life and health and also threatens to destroy industrial facilities used in the manufacture of glass.
  2. There are over 40 large and many smaller glass-melting furnaces in operation in Poland. In the largest ones, there are approx. 400 tonnes of liquid glass.
  3. Shutting off the natural gas supply to a glass-melting furnace means:
    – the solidification of liquid glass in the furnace;
     – the irreversible destruction of the entire furnace – the most important part of a glass factory that typically operates continuously for 15 to 20 years.
  4. Due to the nature of the production process and the design of the furnaces required, it is impossible to empty them of liquid glass within a short period (e.g. several hours).
  5. Draining glass from the furnace takes several days, preceded by many days of preparation and constructing a dedicated system.
  6. Bearing in mind the potential scale of the problem (number of systems, availability of ceramic and refractory materials from which the glass-melting furnaces are built and availability of specialist companies), the time for reconstruction of the systems should be counted in years (making a very optimistic assumption that in such conditions the owners will decide to reinvest in them at all).
  1. Potential economic effects
  1. In case of the destruction of most Polish glassmaking facilities, these consequences would potentially affect not only around 20 glass factories but would also result in the dismissal of several thousand workers and the bankruptcy of the owners of these factories.
  2. The associated damage would include months of halting or significantly reducing the production of the food and beverage industries, which are vital to the functioning of the country and life. The number of domestic customers for glass products ranges from a few dozen to more than a hundred per glass manufacturer.
  3. Import substitution of domestic production of glass products destined for other industries must be considered impossible in practice.
  4. The vast majority of recipients of glass products are not in a position to store glass packaging for the manufacture of their products in large quantities – greater than the stock corresponding to their production of a few days.
  5. Poland is the fifth largest producer of glass in Europe. Production is carried out on a very large scale – in the case of container glass, it amounts to approx. 1.8 million tonnes per year and approx. 8.5 billion pieces of glass packaging. 
  6. Polish glassworks also have a positive impact on the balance of trade. A large proportion of the glass industry’s products is sold on foreign markets.
  7. The glass industry also supplies a number of key sectors for the foreign trade balance (e.g. producers of premium spirits, beer, processed foods).
  8. The number of regular suppliers of raw materials, packaging, spare parts for machinery and equipment and specialised services can reach up to 50 per glassworks. Natural and chemical raw materials of domestic origin predominate among the raw materials. The stoppage of production at glassworks also means production cuts and probably a reduction in employment at these suppliers.
  9. Due to the consumption of around 700,000 tonnes per year of recycled raw material (cullet) – keeping glassworks running is crucial not only for the glass recycling industry but for the entire waste management system.

 

See: 17 March 2022 Business commentary and recommendations on the economic risks associated with the war in Ukraine

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