Join us!
  • PL
  • EN
    • szukaj

    PRESS RELEASE – “Material situation, private income and assets of Polish entrepreneurs”

    Posted on by Wojtek Michalski

    PRESS RELEASE

    Polish micro-entrepreneurs – passionate individuals with a sense of mission. They are satisfied with their jobs, although the earnings are not too high. They save money, take short holidays and do not take sick leave. They value independence.

     

    The Union of Entrepreneurs and Employers presented the results of the original and one of a kind Polish survey entitled “Material situation, private income and assets of Polish entrepreneurs”, portraying the owners of Polish micro-businesses. The main objective of the project was to draw a portrait of the socio-demographic and material situation of small Polish entrepreneurs and to find out their attitudes and opinions on the conditions and prospects for doing business in Poland. The survey was commissioned by the the Union of Entrepreneurs and Employers to the research company Maison & Partners. The survey – as emphasised by experts during the presentation of the report – is unique in the country and shows a profile of the Polish micro-entrepreneur that differs from many prevailing stereotypes.

     

    Passionate individuals with a sense of mission and a need for independence…

    For the majority of Polish micro-entrepreneurs, the most frequently mentioned motive for setting up a business was the need for independence (37%) and the desire to pursue one’s passion (31%). The need for independence as a motive for setting up own business dominated among sole proprietors (43%). Among company owners, the more frequently indicated motive for setting up a company was reluctance to work full-time for someone else, as well as economic necessity. In turn, individuals combining a full-time job with running a business were more likely to explain their decision to start a business by coincidence.

     

    Confident in their decision to set up a business

    The majority of entrepreneurs (75%) positively assessed their decision to set up a business and would continue to run it if faced with a choice between this and other forms of employment (in this case, there were also more entrepreneurs who were not simultaneously working full-time and were mainly running a business). However, some entrepreneurs, mainly less educated and younger people, would be more willing to work full-time for someone else.

     

    Highly educated

    Polish micro-entrepreneurs are mainly educated individuals – there are more people with higher education in this group (69%) than in the population as a whole, and fewer with primary and vocational education (6%). In addition, there are also fewer residents of rural areas among entrepreneurs (19%) than among Poles in general (38%).

     

    Parents of children in state schools and kindergartens

    The majority of entrepreneurs have children (68%), 60% of whom have more than one child. The majority of children of small entrepreneurs benefit from public education (88%), attending state nurseries and kindergartens, state schools and universities. Polish entrepreneurs do not spend high amounts on their children – 39% do not spend more than PLN 1,000 per child per month.

     

    No spectacular earnings

    Around a third of Polish micro-entrepreneurs, after paying the necessary levies, earn no more than the national average. Only 10% of the respondents declared earnings of more than PLN 15,000 per month, while only 4% – above PLN 30,000. Larger monthly earnings were observed in the case entrepreneurs running larger companies, with higher turnover and number of employees.

     

    No spectacular property or luxurious cars

    The majority of Polish micro-entrepreneurs own their own flat or year-round house (86%) and private car (83%). This also means that 14% of respondents do not own their home and 17% do not own a private car. In addition, around a third of them own a house or flat for rent (30%), while fewer own a holiday cottage or apartment (27%).

    The dominant car makes owned by the entrepreneurs included Audi (10%, with significantly more cars of this make among this group than among Poles in general), as well as Opel, Skoda and Toyota – makes also popular among Poles who are not entrepreneurs. Only 14% of the respondents declared the value of their car to be over PLN 100,000

     

    But with savings

    Most micro-entrepreneurs are frugal. Polish entrepreneurs have more savings than the average Pole. However, it must be stressed that these savings are not always used for private purposes – as many as 47% of micro-entrepreneurs had to finance the operations of their business with private money at some point; quite obviously, this applies more often to sole proprietors than to companies. At the same time, the opposite also happens – small entrepreneurs borrow money from the company for private purposes.

     

    Content with life despite difficulties

    Interestingly, despite their material situation that is not much different from from that of Poles in general, it is entrepreneurs who seem more satisfied with their situation (56% of entrepreneurs vs. 36% of Poles in general). Of course, there are also people in financial difficulties among entrepreneurs who do not have enough money for their basic needs. Most of them come from the Łódzkie and Podlaskie provinces, have been in business for less than a year and mainly do physical work.

    On average, Polish micro-entrepreneurs show a similar level of satisfaction with their lives as the general Polish population. Interestingly, satisfaction with life is not really related to the type of business run, but to universal demographic characteristics (i.e. similar to other Poles) – entrepreneurs who are better educated, have children and are older tend to be more satisfied with life. This may show that family, education and experience acquired with age constitute assets that translate into a better life.

     

    Expert comments

    Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers

    The Union of Entrepreneurs and Employers is the only employers’ organisation dealing with the micro- and small-business segment. Poles are an exceptionally entrepreneurial nation and this spirit of entrepreneurship and courage to take matters into one’s own hands is one of the very important factors driving Poland’s development. Keeping the micro and small business segment in good shape ensures the stabilisation of the middle class and the development of small towns. It is often the case that 100 companies employing 10 people each contribute more to the stable development of a region than one company with 1,000 employees. We should take care of their development because, as our survey shows, micro-entrepreneurs are extremely hard-working, thrifty people who do not succumb to conspicuous consumption and who do not want to live off state benefits.

     

    Prof. Dominika Maison, Maison & Partners.

    Our survey has shown that the typical Polish micro-entrepreneur is not a rogue who just wants to make as much money as possible. Many micro-entrepreneurs are highly-educated people who set up their own business in order to be independent and pursue their passions. They work more than the average full-time employee, do not take sick leave and do not complain that they are not earning a fortune.

     

    Mariusz Filipek – Plenipotentiary of the Minister for Deregulation and Economic Dialogue, Ministry of Development and Technology

    The Union of Entrepreneurs and Employers has prepared a very valuable report for the economy and the business sector. It contains a range of data showing the largest segment of companies in Poland. From the perspective of the Ministry of Development, the key part was information on the development prospects of micro-enterprises. Taking into account the expectations of entrepreneurs, we are preparing a deregulation law to make it easier to do business in Poland.

     

    Ignacy Morawski, Chief Economist, Puls Biznesu

    Entrepreneurs play a very important role in the economy, creating companies and jobs, and at the same time providing the economy with flexibility to adapt to technological changes. Small companies tend to be quick to adopt new technologies, trends and products, playing a huge role in the growth of economy and productivity. At the same time, we must take into account that they are less efficient than large organisations. What surprised me most about the report of Union of Entrepreneurs and Employers was that almost half of those surveyed would be willing to change their current business for a full-time job, which shows how hard it is to run a business.

     

    About the survey

    The survey was conducted using the CAWI (Computer Assisted Web Interviews) method based on online surveys on the Ariadna survey panel. The persons invited to take part in the survey were representatives of the micro sector (companies with up to nine employees, regardless of employment form) and sole proprietors. The total sample size was N=658 respondents. The survey was conducted from 8-14 February 2024.

     

    Lifestyle and related expenses

    • Restaurants. Half of the entrepreneurs do not eat in restaurants at all, eat there rarely (21%) or once every few months (29%). The other half eat in restaurants at least once a month. Only 3% go to restaurants at least once a week.
    • Takeaway food delivery. Ordering takeaway food with home delivery is slightly less popular, with 31% of entrepreneurs not using this type of service at all. However, those who regularly order takeaway food (at least once a week) are slightly more numerous than those who frequently eat in restaurants (5%).
    • Eating-out expenses. Among those eating in restaurants and ordering takeaway food with home delivery, half spend on these services less than PLN 200 monthly.
    • Cultural events. 41% of the entrepreneurs surveyed declared that they participate in cultural events at least once a month. Half of them declared an average expenditure of up to PLN 200 per month for that purpose.
    • The dominant pattern of private travel is relatively frequent but short (2-3 days) domestic trips, which 78% of respondents declared in 2023. The most popular international destinations among Polish micro-entrepreneurs were Italy, Spain and Greece.

    Assessment of the material situation

    • Enough to survive. The vast majority of entrepreneurs surveyed described their material situation as sufficient to survive, but insufficient to afford additional major expenses (42%). 11% described their situation as bad to the point of not having enough to live, of which 8% had to significantly cut back on the spendings to “make ends meet”, while 3% did not have enough for even their immediate needs.
    • No changes. Two-thirds (63%) of the micro-entrepreneurs surveyed declared that there had been no change in their material situation over the past year. One in five respondents (20%) declared their material situation got worse, while 16% replied that it improved. Interestingly, the perception of a change in one’s situation compared to the previous year was less negative among entrepreneurs than among Poles in general.
    • Who was worse off and why? Deterioration of one’s material situation was declared more frequently by respondents from the Podlaskie, Łódzkie, Dolnośląskie and Kujawsko-Pomorskie provinces, by entrepreneurs performing both physical and white-collar work, not employing people, over 45 years of age. The most important reasons for the deterioration of one’s material situation were: inflation (25%), price increases / higher costs (25%), reduced income / turnover (17%), fewer customers (12%), government policies (8%), employment costs, social security contributions (6%) and the general economic situation in the country and around the world.
    • Who was better off and why? The improvement in one’s situation was more often felt by entrepreneurs from the Mazowieckie and Podlaskie provinces and by people with higher (post-secondary and tertiary) education. This was due to: an increase in own or partner’s earnings (35%), an increase in the number of orders/customers (19%), change of own or partner’s job (6%).
    • Satisfaction with life. Regardless of the assessment of one’s own material situation, the vast majority of entrepreneurs are satisfied with their lives and that level of satisfaction is not substantially different from that of Poles in general. As with Poles in general, also among entrepreneurs, those who are more satisfied with life tend to be older (over 55), better educated and have children.

    Reasons for setting up own company and retrospective assessment of this decision

    • Independence, passion and challenges. A very strong motive for starting own business was the desire to be independent and to have a sense of freedom (37% of answers to the open question), as well as reluctance to work full-time for someone else (22%). For 59% of the entrepreneurs surveyed, these were two key factors that had influenced their decision to set up own business. The desire to pursue one’s passions was mentioned as a motivating factor for setting up own business by 31% of the respondents. 16% decided to set up their own business because they had discovered a niche in the market, while 7% wanted to implement an interesting project they had come up with. For 12%, setting up own business was a form of investment or a way to raise money.
    • Coercion or coincidence. 19% of the respondents set up their own business due to economic necessity or unemployment, while 11% did so at the suggestion of their former employer. It is interesting to note that 22% of the respondents declared that they had set up their own business as a result of a coincidence. Probably this factor, as well as the sense of compulsion to open own business felt by some contributed to some extent to the fact that a significant proportion of respondents, in retrospect, viewed their decision to start their own business negatively (12%), while a very high proportion (47%) of them would be more willing to work for someone else if they had the choice. What is particularly interesting is that one-third of young and uneducated respondents, working physically in production, would be more willing to work for a multinational corporation, possibly a private company, than to continue running their own businesses. This suggests that the group in question fares worst at running their own business.
    • Assessment of the decision to set up own business. In retrospect, 75% of those surveyed assessed their decision to set up own business positively and, given a choice, just over half (53%) would continue to run it. Particularly for those aged 55 and over (70%), with more than 10 years of experience in the market (59%), operating in the service sector (57%), combining manual and white-collar work (59%), not hiring employees (57%), with a university or post-secondary education (56%), continuing running own business remains the best option.

    Obstacles and desire to continue running own business – summary

    • Labour costs and taxes. Entrepreneurs identified a great deal of barriers to running own business. These were linked to high costs, both due to rising fixed overheads (51%), high taxes (49%) or high labour costs (43%).
    • Law and bureaucracy. The second group of barriers was linked to the legal system and bureaucracy. Entrepreneurs frequently mentioned instability of the legal system (29%) and intricacies of the business law (20%), as well as excessive bureaucratic requirements (26%) and EU-imposed restrictions on the activity/development of companies and industries (13%).
    • The future of business. When thinking about the coming 12 months, only one-third of the respondents did not consider ending or suspending their business. The majority of the entrepreneurs surveyed (60%) did not think about the issue, while 11% admitted that it was likely that they would terminate or suspend their business. This proportion is significantly higher among entrepreneurs from medium-sized cities (20-99,000 inhabitants), those who have been on the market for 6-10 years and those with primary and basic education (it is worth noting that the latter are the group generally least satisfied with running their own business).
    • Reasons for continuing own business. The most frequently mentioned reason for continuing own business was its good condition. However, there were also less optimistic reasons, including lack of other alternatives (6%) or long-term commitments (4%). These answers indicate a certain bitterness about the situation, and may indicate that although running own business may not fulfil the expectations or aspirations of the entrepreneurs, at the moment some of them are bound by their choices and act in a sense ‘out of habit’, struggling to stay in the market.
    • Reasons for closing down business. Among the reasons forcing entrepreneurs to close or suspend their business the most frequently mentioned ones included the excessive cost of running a business, the amount of contributions and taxes paid (26%), as well as insufficient revenue to continue operations (13%). Other reasons mentioned included age (6%), lack of orders, customers (6%) and growth opportunities (4%).

     

    DOWNLOAD: PRESS RELEASE – “Material situation, private income and assets of Polish entrepreneurs”

    DOWNLOAD: Report “Material situation, private income and assets of Polish entrepreneurs”

     

    Extended Position Paper on the Extension of Autonomous Trade Measures for Ukraine

    Posted on by Wojtek Michalski

    23.04.2024

    Extended Position Paper on the Extension
    of Autonomous Trade Measures for Ukraine

    Union of Entrepreneurs and Employers and European Enterprise Alliance reaffirm our commitment to fostering economic cooperation between the EU and Ukraine. Amidst the ongoing invasion, the extension of Autonomous Trade Measures (ATMs) holds significant promise in bolstering Ukraine’s economic recovery. Nevertheless, the application of safeguard mechanisms must be approached with careful consideration to ensure they facilitate rather than hinder Ukraine’s progress.

    Background

    This week, during the plenary session in the European Parliament, the Regulation pertaining to the extension of Autonomous Trade Measures (ATMs) for Ukraine was voted on. This decision follows a series of pivotal events signaling the EU’s commitment to supporting Ukraine’s economic resilience. On February 23, the European Commission proposed to extend the regulation governing ATMs for another year. EU member states’ representatives (Coreper) confirmed the provisional deal reached earlier between the Council presidency and the European Parliament representatives to renew the suspension of import duties and quotas on Ukrainian exports on April 10, 2024. The next steps involve the adoption of the regulation by the Council, followed by its signing by the representatives of the Council and the European Parliament, and publication in the Official Journal, before entering into force on 6 June 2024.

    While safeguard mechanisms are crucial for maintaining market stability, we advocate for a nuanced approach to their implementation, ensuring they support Ukraine’s economic recovery without imposing undue restrictions.

    Safeguard Mechanisms

    It is important to underline that currently not all of Ukraine’s import duties are reduced to zero through 2025, with certain agri-food tariffs subject to limited linear reductions. Specifically, goods such as dairy, eggs, sugar, animal oils, and fats will also undergo reductions ranging from 20% to 60%, with residual tariffs applied thereafter for sugars, poultry meat, and pork meat. A new automatic safeguard will also be added for certain sensitive products, such as poultry, eggs, sugar, oats, maize, groats, and honey.

    The safeguard mechanism includes:

    Regular Monitoring: The Commission will regularly monitor the impact of the Regulation on exports, imports, and prices in the Union market or the market of one or several Member States.

    Assessment Procedure: The Commission will assess the situation of the Union market for like or directly competing products, considering factors such as import trends, production impacts, and market dynamics.

    Provisional Safeguard Measures: In critical circumstances, the Commission may provisionally impose necessary measures if delay would cause irreparable damage. This provision requires a substantiated request from a Member State and imposes a time limit of 21 days for adoption.

    Reintroduction of Tariff-Rate Quotas: if during the period 6 June to 31 December 2024, cumulative import volumes of either eggs, poultry, or sugar since 1 January 2024 reach the respective arithmetic mean of import volumes recorded in 2022 and 2023, the Commission shall, within 21 days and after informing the Committee on Safeguards established by Article 3(1) of Regulation (EU) 2015/478, reintroduce for that product the corresponding tariff-rate quota suspended by Article 1(1), point b, until 31 December 2024, and introduce from 1 January 2025 either a tariff-rate quota equal to five-twelfths of that arithmetic mean or the corresponding tariff-rate quota suspended by Article 1(1), point b, whichever is higher .

    While the provision for provisional safeguard measures acknowledges the need for swift action in critical circumstances, it also introduces uncertainty for Ukrainian exporters. The requirement for a substantiated request from a Member State may delay the imposition of necessary measures, potentially exacerbating the impact of market disruptions on Ukraine’s agricultural sector. Therefore, it is imperative to streamline the process for adopting provisional safeguard measures, ensuring prompt response to emerging challenges without undue bureaucratic hurdles. Additionally, the reintroduction of tariff-rate quotas based on cumulative import volumes poses a significant risk to Ukraine’s export stability. By linking import thresholds to historical averages, the mechanism may fail to account for evolving market dynamics or seasonal variations in demand. This rigidity could restrict Ukrainian exporters’ access to the EU market, undermining the benefits of trade liberalization measures and hindering Ukraine’s economic recovery efforts.

    While recognizing the necessity of safeguard measures outlined in the trade agreement, including tariff-rate quotas (TRQs) and entry-price systems for certain agricultural products, we stress the need for flexibility in their implementation. We urge policymakers to adopt a nuanced approach to safeguard measures, taking into account the evolving economic situation in Ukraine. Regular monitoring and impact assessments should guide the implementation of TRQs and other safeguard mechanisms, allowing for adjustments based on actual market dynamics. As Ukraine strives to rebuild its economy in the face of aggression, it is essential to strike a balance between solidarity with Ukraine and the economic realities of both parties. Collaborative efforts between the EU and Ukraine are crucial in ensuring that trade policies support economic stability and growth in both regions.

    As the European Enterprise Alliance and Union of Entrepreneurs and Employers, we emphasize the importance of fostering a cooperative and mutually beneficial relationship between the EU and Ukraine. While safeguard measures are integral to maintaining market stability, they must be implemented with flexibility and consideration for Ukraine’s economic recovery and growth.

    Download Position 

    Press Release – EU Competitiveness in a Global Arena: Charting the Path Forward

    Posted on by Wojtek Michalski

    Press Release
    11 April 2024
    Brussels

     

    EU Competitiveness in a Global Arena: Charting the Path Forward – Debate Summary

     

    On Wednesday, 10 April 2024, the European Enterprise Alliance and Union of Entrepreneurs and Employers held a working lunch titled “EU Competitiveness in a Global Arena: Charting the Path Forward” in partnership with SME Connect at Sofitel Europe in Brussels. The opening remarks were delivered by Dr Horst Heitz, Chair of the Steering Committee of SME Connect followed by the keynote presentations given by Agata Boutanos, Director of the Representation to the European Union, Union of Entrepreneurs and Employers & Seyide Direk, Policy Analyst at the European Enterprise Alliance. The panel discussion showcased Dr. Laurent Maurin, Head of the Economic Studies Division at the European Investment Bank, followed by Dr. Tudor Petru Fabian, Policy Advisor to Iuliu Winkler MEP; Coordinator of the Working Group on Trade with SME Europe of the EPP, Dr. Daniel Wennick, Policy Director at Orgalim, Harald Past, Head of International Trade & Taxation at EuroCommerce, Michael Jäger, President of the European Taxpayers Association, Ralph Kamphöner, Head of Brussels Office at textil+mode; moderated by Dr. Horst Heitz, Chair of the Steering Committee of SME Connect.

     

    Agata Boutanos, Director of the Representation to the European Union for the Union of Entrepreneurs and Employers, presented the ZPP report on “EU Competitiveness in a Global Perspective.” She emphasized the need for direct regulation over directives to ensure faster and more effective implementation, citing discrepancies in implementation across EU member states. Boutanos highlighted the importance of clarity in regulatory environments, particularly for the tech industry, to foster innovation and the development of future solutions. To enhance competitiveness, Boutanos advocated for equal and free market access for all EU members and the simplification of regulations to promote fair competition. She stressed the need to empower smaller states, including those in Central and Eastern Europe, and called for coherence in regulations across the EU. Boutanos suggested measures such as introducing e-declarations and standardizing procedures to facilitate compliance for small businesses. Moreover, she underscored the significance of strengthening transatlantic ties and cooperation in the tech sector to learn from other regions and develop together. Boutanos emphasized the importance of regulatory alignment and collaboration to ensure that the EU remains competitive and able to keep pace with global technological advancements.

     

    Seyide Direk, Policy Analyst at the European Enterprise Alliance, presented the report titled “Underrepresentation of Central and Eastern European (CEE) Region in EU Institutions.” Direk emphasized the significance of ensuring that the voices of these regions are heard in the institutions. Equal representation is not only a matter of fairness and inclusivity but also essential for effectively tackling the multifaceted challenges encountered by the EU. The report highlighted concerning trends in leadership positions, with Western and Southern Europe dominating appointments while the Central and Eastern European region is marginalized. For example, Poland’s overall representation percentage in EU institutions remains low despite notable appointments. Several factors contribute to this underrepresentation, including political dynamics, population demographics, and economic disparities. In conclusion, Direk provided recommendations for creating a more inclusive environment to ensure equal representation in policymaking within the EU institutions.

     

    “Europe leads in green technology, boosting its economy and future competitiveness. As renewable energy dominates, electricity costs drop, driving manufacturing power. With strong democratic and social policies, Europe offers ample support and subsidies.” — Laurent Maurin, Head of Economic Studies Division, European Investment Bank

     

    Dr. Laurent Maurin, Head of the Economic Studies Division at the European Investment Bank, emphasized the need to take a positive outlook on economic developments, considering the unexpected strength of the recovery despite challenges such as high energy costs and monetary policy tightening. Maurin then shifted to discuss the long-term trends in European growth, expressing concerns about demographic changes, lack of innovation, and the retention of innovators within Europe. He stressed the importance of implementing new policies to address these challenges and ensure Europe can maintain pace with the U.S. economy. Maurin highlighted strategic challenges such as securing European supply chains and enhancing territorial defense capabilities, suggesting these issues should be on the agenda of the new European Commission. Drawing from corporate surveys conducted by the European Investment Bank, Maurin noted that companies in the EU are more concerned about regulatory issues and skills shortages than financial conditions. Despite these challenges, Maurin highlighted Europe’s strengths in green technology and social policies, suggesting they could contribute to future competitiveness. He concluded by emphasizing the importance of raising the potential growth of the European Union through coordinated policy efforts.

     

    “Companies face heightened exposure while implementing regulations, blurring lines between business and politics globally. Increased investment in ongoing geopolitical risk assessments is imperative for both European and American companies.” – Dr. Tudor Petru Fabian, Policy Advisor to Iuliu Winkler MEP; Coordinator of the Working Group on Trade with SME Europe of the EPP.

     

    Dr. Tudor Petru Fabian, Policy Advisor to Iuliu Winkler MEP and Coordinator of the Working Group on Trade with SME Europe of the EPP, discussed EU competitiveness in the global arena, reflecting on insights from a Responsible Business Conference in the U.S. He highlighted companies’ proactive initiatives in sustainability and supply chain mapping, driven by the EU’s value-based policy push. Fabian noted companies’ concerns about regulatory coherence across the EU, U.S., and globally, particularly regarding compliance and the pace of regulatory changes. He emphasized the impact of China-related regulations on global supply chains and the need for greater investment in geopolitical risk assessments. Fabian stressed the interdependence of business and politics, calling for increased cooperation between public and private sectors. He highlighted trust disparities between government and companies and advocated for strategic alignment and cumulative impact assessments to ensure the feasibility of regulatory frameworks. In navigating the green and digital transitions, Fabian underscored the importance of aligning legal and statistical frameworks with the practical needs of businesses. He cautioned against both excessive speed and insufficient assessment of regulatory impacts, emphasizing the need for a balanced approach to policymaking.

     

    Dr. Daniel Wennick, Policy Director at Orgalim, emphasized the competitiveness of the EU, highlighting challenges in competition against the US and China. He pointed out the impact of factors such as regulations, innovation, and high energy prices on competitiveness. Wennick underscored the need for a market-driven framework to achieve climate goals, stable policies, and equitable taxation. He called for new legislation to ensure market conformity assessment processes and addressed geopolitical challenges regarding international and European standards. Wennick also stressed the importance of reducing trade barriers and strengthening partnerships with countries like the US, Switzerland, Australia, and the UK. In the long term, he advocated for funding support for sectors and enhancing public-private partnerships.

     

    Ralf Kampöner, Head of the Brussels office at the Confederation of the German Textile and Fashion Industry, highlighted the complexity of the textile sector and its role in innovation. He emphasized the sector’s reliance on small to medium-sized companies and the need for a conducive policy environment for competitiveness. Kampöner discussed the importance of global value chains and cautioned against protectionist measures, advocating for collaboration instead. He underscored the challenges of navigating international trade agreements and the risks of regulatory complexity, particularly for small businesses. Kampöner stressed the importance of considering the entrepreneurial perspective in policymaking to avoid unintended consequences and fragmentation of the internal market. Kampöner urged policymakers to prioritize the creation of a level playing field across the EU to avoid further fragmentation. He emphasized the need for coordinated efforts to strengthen Europe’s economic position globally.

     

    Harald Past, Head of International Trade & Taxation, at EuroCommerce, highlighted the challenges facing the retail and hotel sector in Europe, particularly emphasizing the digital, green, and skills transformations. He stressed the need for significant investment, estimating up to 600 billion euros by 2030, to address these challenges effectively. Past also pointed out the neglect of global competitiveness in the EU’s agenda, citing the disproportionate impact of certain measures on SMEs. He called for a more workable framework for small companies to succeed globally, emphasizing the importance of trade relations and urging the EU to take a more proactive approach in tackling global challenges like the green transition. Additionally, Past expressed concerns about potential barriers for smaller companies, particularly in customs reforms, and advocated for measures that would facilitate their ability to compete on the global stage.

     

    Michael Jäger, President of the European Taxpayers, highlighted concerns regarding EU competitiveness, particularly in the context of the green transition. He expressed reservations about the centralized approach to addressing challenges and emphasized the need for market-driven solutions and innovation. Jäger called for deeper engagement with entrepreneurs and stakeholders to ensure sustainable growth and advocated for a stronger voice for entrepreneurs in policymaking. He stressed the importance of effective communication and dialogue to address collective challenges and promote EU competitiveness.

     

    Pauline Weil, Economist, Bruegel presented research into the macroeconomic situation two years into the Russian aggression against Ukraine. She emphasized the significant role of the UK and Russia in the globally traded food supply, highlighting challenges in both production and logistics arising from the aggression. Weil expressed global concern over historically high food prices, noting the potential for heightened food insecurity, reminiscent of events like the Arab Spring. However, she mentioned that prices have eased since April 2022 due to strong harvests, declining shipping costs, and more affordable energy and fertilizer prices. Weil discussed the impact felt at local levels in the UK, EU, and Ukraine, particularly the disruptions in grain exports from Ukraine through the Black Sea. She highlighted the EU’s financial support package and measures to address import restrictions, emphasizing the enduring local impacts and the need to address competition distortions amid trade liberalization in the food sector.

     

    DOWNLOAD PRESS RELEASE

    Report ZPP Brussels |Focus on Europe| – Underrepresentation of CEE Region in the EU Institutions

    Posted on by Wojtek Michalski

    Report ZPP Brussels |Focus on Europe|
    Underrepresentation of CEE Region in the EU Institutions

    The European Union (EU), a complex mosaic of nations and policies, has continually shifted its contours to accommodate evolving geopolitical and internal dynamics. Central and Eastern Europe (CEE), with its rich historical tapestry, cultural diversity, and burgeoning economies, stands as a pivotal pillar in this European narrative. However, a palpable and persistent underrepresentation of the CEE region within the upper echelons of EU institutions has surfaced as a salient concern, particularly underscored by the 2019 European Elections where CEE countries found themselves conspicuously absent from high-level positions. This absence is not merely statistical but resonates with broader systemic challenges, geopolitical shifts, and policy implications, including the increasing economic importance of CEE in driving and sustaining the EU’s economic growth.

    Events such as Russia’s invasion of Ukraine have amplified the strategic importance of the CEE region, underscoring its proactive role and contributions on the European stage. Yet, the glaring disparity in representation within key EU roles impedes the region’s ability to advocate effectively for its interests, shape policy agendas, and contribute meaningfully to EU-wide decision-making processes. This report delves into the intricate backdrop of this underrepresentation, navigating through historical paradigms, geopolitical intricacies, and systemic biases that have perpetuated this imbalance. It underscores the complexities of EU appointment mechanisms, influenced by negotiations, party politics, and historical legacies, which have inadvertently resulted in a disproportionate emphasis on Western European representation.

     

    SEE THE ENTIRE REPORT

    Report ZPP Brussels |Focus on Europe| – EU Competitiveness in a global perspective

    Posted on by Wojtek Michalski

    Report ZPP Brussels |Focus on Europe|
    EU Competitiveness in a global perspective

    For decades, the pillar of European integration was economic cooperation (in particular, the creation of the customs union and the establishment of a common market based on the elimination of barriers to the movement of people, services, goods, and capital). This approach, along with further enlargement of the Community to include new Member States, has brought major economic benefits to the European Union, as evidenced by the fact that between 1970 and 1980, the European Union’s GDP grew significantly and reached a level higher than that of the United States.

    After 2008, the European Union’s GDP in nominal terms fell significantly and did not return to its value of that year until 2021, while at the same time both the U.S. and Chinese economies were growing steadily. The lack of significant expansion of the common market to new countries (only Bulgaria, Romania, and Croatia joined the EU at the time) and the focus on pursuing a unified policy on many non-economic issues did not produce good economic results for the EU.

     

    SEE THE ENTIRE REPORT

     

    Position Paper on the Extension of Autonomous Trade Measures for Ukraine

    Posted on by Wojtek Michalski

     

    Position Paper on the Extension of
    Autonomous Trade Measures for Ukraine


    European The European Enterprise Alliance and Union of Entrepreneurs and Employers (ZPP) present our position on the Extension of Autonomous Trade Measures for Ukraine. We emphasise the importance of these measures in enhancing economic cooperation, fostering resilience, and promoting sustainable development between the EU and Ukraine.


    Background Autonomous Trade Measures (ATMs) have been pivotal tools employed by the European Union (EU) since June
    4, 2022, as part of the ATM Regulation 2022/870, set to last for one year. These measures encompass a comprehensive removal of import duties on industrial products, including the complete elimination of all tariffrate quotas on agricultural and food products. Additionally, the EU has abolished entry prices on fruit and vegetables and suspended all trade defence measures, notably anti-dumping duties and safeguards, particularly applied to steel products. Moreover, the EU has taken additional steps to streamline transportation and border
    control for Ukraine’s exports. Specifically, it has temporarily liberalized freight transportation by road between the EU and Ukraine, eliminating the need for permits, a measure extended until June 30, 2024. Furthermore, Ukraine’s accession to the Common Transit Convention in October 2022 has simplified customs transit procedures between the EU and Ukraine, facilitating smoother trade operations. On February 23, the European Commission proposed a pivotal decision to extend the regulation governing Autonomous Trade Measures (ATMs) for another year, and on March 20, the Council and Parliament reached a deal to renew the EU’s autonomous trade measures for Ukraine until 5 June 2025. Ukraine’s trade landscape has been profoundly impacted by the ongoing invasion of Russia, necessitating further
    support to mitigate economic losses and bolster resilience. The economic toll of Russia’s aggression against Ukraine has been staggering, with the Ukrainian economy shrinking by approximately one-third and exports plummeting by 35.1% in 2022 compared to the previous year. This decline translated to a staggering $24 billion reduction in foreign currency revenue for Ukraine in 2022. Particularly hard-hit was the iron and steel industry, which experienced a 67.5% reduction in export supplies, amounting to $9.4 billion less in exports compared to
    the previous year. Other sectors, including ore exports, chemicals, machinery, and electronic equipment, also witnessed significant declines. Amidst these challenges, Ukraine’s reliance on agricultural and food exports has surged during wartime, accounting for more than half of all critically needed export revenues. However, even as agricultural and food products gained prominence, total exports in this sector declined by 15.5% or $4.3 billion in 2022. The conflict has also disrupted Ukraine’s key export routes, particularly through the blockade of Black Sea
    ports by Russia, and inflicted significant damage on production facilities and critical infrastructure, exacerbating the economic strain on Ukrainian producers. Internal and external supply chain disruptions, coupled with shortages of critical imports and rising production and logistics costs, have further compounded the challenges faced by Ukrainian exporters, threatening their profitability and competitiveness in global markets. Despite these adversities, Ukraine has witnessed a remarkable recovery in exports to the EU, which surpassed pre-invasion
    levels by the end of 2022. The EU emerged as Ukraine’s principal trading partner, with exports to the EU accounting for 63% of Ukraine’s total exports in 2022. Notably, the growth of agri-food exports to the EU played a pivotal role in this recovery, with exports increasing by more than $5.2 billion, driven by factors such as logistics problems, high freight and insurance costs, and increased demand in the EU due to a drought affecting Rue d’Arlon 46 EnterpriseNumber Belgium EU Transparency Register enterprisealliance.eu
    1000 Bruxelles 0733.737.395 329556137684-27 many regions of Europe. Temporary trade-liberalization measures, including the suspension of tariff rate quotas (TRQs), have played a crucial role in facilitating Ukrainian exports to the EU, providing Ukrainian products with a
    competitive edge in European markets. However, challenges persist, as evidenced by the need for compromise solutions between the Commission and EU member states to address concerns regarding the impact of Ukrainian mports on local markets. While the EU’s continued support signals its commitment to Ukraine, the risk of prolonged or new import restrictions underscores the uncertainties and pressures faced by Ukrainian agri-food producers amidst the evolving trade dynamics. Ukraine, endowed with fertile agricultural land and a favourable climate, holds significant potential as a supplier of agrifood products to the EU market. With its vast agricultural
    resources, Ukraine has emerged as one of the world’s leading exporters of commodities such as grains, oilseeds, and sunflower oil. Furthermore, the country’s agrifood sector has demonstrated a commitment to sustainable agricultural practices, aligning with the EU’s objectives regarding environmental protection and food safety standards.


    Key Points for Consideration
    Strengthening connectivity between Ukraine and the EU is imperative Ensuring the smooth operation and enhancing the capacity of the Solidarity Lanes are crucial for facilitating the transit of Ukraine’s agricultural and non-agricultural exports to both global markets and EU member states, particularly during wartime. Urgent investment is needed to improve EU-Ukraine road, rail, and river connections,
    deepen river canals, expand transport resources, upgrade EU-Ukraine border infrastructure, construct transshipment terminals, and augment grain and food storage facilities in Eastern European nations. These initiatives aim to streamline transit operations across these countries and bolster the resilience of Ukraine’s export channels. While alternative routes cannot fully substitute Ukrainian seaports currently under Russian occupation, they have contributed to diversifying Ukraine’s export routes, reducing Kyiv’s reliance on the grain
    agreement and seaport routes, and mitigating Russia’s control over shipping Ukraine’s exports. With Russia’s withdrawal from the grain agreement, the importance of the Solidarity Lanes has significantly increased for Ukraine’s trade. Expanding the Solidarity Lanes, extending European Transport Corridors (TEN-T) into Ukraine, and advancing the Ukrainian segment of the TEN-T network is pivotal for Ukraine’s post-war recovery and deeper integration into the EU Single Market. Improving connectivity and interoperability of transportation
    systems in Ukraine and the EU is also vital for enhancing the effectiveness and resilience of EU food supply chains. These endeavours will benefit Ukraine, the EU, and global food security while fostering stronger economic ties and fostering stability in the region.


    Common Agricultural Policy (CAP) Considerations
    The implementation of Autonomous Trade Measures and Temporary Trade Liberalization must consider the
    implications for the EU’s Common Agricultural Policy (CAP). Increased imports of Ukrainian agrifood products
    present an opportunity for the EU to diversify its sources and enhance food security. Moreover, access to highquality Ukrainian agricultural products can benefit European consumers by offering a wider variety of choices at
    competitive prices. However, it is crucial to ensure that such imports do not unduly harm domestic agricultural
    producers within the EU. Therefore, policymakers should explore mechanisms to support EU farmers in adapting
    to increased competition while preserving market stability, maintaining income support mechanisms, and
    upholding environmental and animal welfare standards.


    Data and Impact Assessment
    Robust data collection and impact assessments are essential for understanding the potential effects of increased
    Ukrainian agri-food imports on the EU market. Comprehensive analysis should consider factors such as
    production volumes, market prices, employment trends, and environmental impacts.
    Rue d’Arlon 46 EnterpriseNumber Belgium EU Transparency Register enterprisealliance.eu
    1000 Bruxelles 0733.737.395 329556137684-27


    Market Access and Regulatory Alignment
    Enhancing market access for Ukrainian agrifood products requires alignment with EU regulatory standards and
    certification requirements. Close cooperation between Ukrainian authorities and EU regulatory agencies is
    essential to ensure compliance with food safety, phytosanitary, and quality standards. By promoting regulatory
    alignment and mutual recognition agreements, policymakers can facilitate seamless trade flows and enhance
    consumer confidence in Ukrainian agri-food products. Moreover, fostering a collaborative regulatory environment
    can promote regulatory convergence and facilitate trade partnerships based on mutual trust and respect for
    international standards. 


    Conclusion
    The extension of Trade Liberalization represents a significant opportunity for both Ukraine and the European
    Union to enhance economic cooperation and foster mutual prosperity. By leveraging Ukraine’s agricultural
    potential and addressing concerns related to market stability, environmental sustainability, and regulatory
    compliance, the EU can strengthen its partnership with Ukraine and create opportunities for economic growth
    and development. As partners in progress, the EU and Ukraine must work collaboratively to realize the shared vision of a
    prosperous and interconnected agricultural sector. The European Enterprise Alliance and Union of Entrepreneurs
    and Employers stand ready to support and advocate for policies that promote a sustainable and mutually
    beneficial trade relationship between the EU and Ukraine.


    Bibliography
    Taran, Svitlana. EU-Ukraine Wartime Trade: Overcoming Difficulties, Forging a European Path.
    European Policy Centre, 21 Aug. 2023.
    Proposal for a REGULATION of the EUROPEAN PARLIAMENT and of the COUNCIL on Temporary
    Trade Liberalisation Supplementing Trade Concessions Applicable to Ukrainian Products under the
    Association Agreement between the European Union and the European Atomic Energy Community
    and Their Member States, of the One Part, and Ukraine, of the Other Part. 23 Feb. 2024.

     

     

    Download position: Position Paper on the Extension of Autonomous Trade Measures for Ukraine

    Position Paper of ZPP and EEA on Electricity Report by IEA

    Posted on by Wojtek Michalski

    Position Paper on Electricity Report by IEA

     

    European Enterprise Alliance and the Union of Entrepreneurs and Employers (ZPP) affirm their stance on the pivotal role of electricity reforms in the European Union. Committed to fostering a resilient and forward-thinking energy landscape, the European Enterprise Alliance stands in collective support of initiatives aimed at enhancing the efficiency and sustainability of the electricity market while ensuring economic stability.

    Background

    The European electricity market witnessed significant developments and reforms in 2023, driven by economic conditions, policy changes, technological advancements, and environmental concerns according to the report published by the International Energy Agency (IEA)[1]. What can be taken from the Report for the EU?

    Electricity Demand and Generation Trends:

    Across Europe, electricity demand experienced a decline in 2023, primarily due to slowdowns in manufacturing and industrial activities. While this trend was evident continent-wide, specific countries displayed varying patterns in electricity consumption. Notably, Portugal, Croatia, Cyprus, Malta, Ireland, Denmark, and Norway bucked the overall trend, witnessing increases in electricity usage. Although Germany experienced a decrease in electricity demand in 2023, largely attributed to weak industrial activity. However, signs of recovery are evident, particularly in the industrial sector, fueled by the increasing adoption of electric vehicles (EVs) and heat pumps. In parallel, the role of renewables is poised to expand, with coal and gas-fired generation witnessing declines. Similar to Germany, Italy observed a decrease in electricity demand in 2023.

    Nevertheless, the country saw growth in renewable generation and intensified its focus on energy efficiency projects and renewable energy initiatives. Italy aims to surpass a 50% share of renewables in total generation by 2024. Overall, Despite the overall decline in demand, renewable energy generation continued to grow, offsetting reductions in fossil-fired power generation.

    European Union Electricity Market Reform:

    Recognizing the need for comprehensive reform, the European Union embarked on a journey to revamp its electricity market in 2023. The reform aimed to mitigate price volatility, safeguard consumer interests, and adapt the energy system for higher renewable energy penetration. It introduced measures such as promoting power purchase agreements (PPAs), ensuring freedom of choice for energy providers, and facilitating energy-sharing schemes for self-consumption. Additionally, provisions were established to protect energy-vulnerable communities and establish backup suppliers during crises.

    Renewable Energy Directive and Grid Development:

    In tandem with market reforms, the European Union adopted the new Renewable Energy Directive (RED III) to accelerate the integration of renewable energy sources. Setting ambitious targets, RED III aimed for a renewable energy share of 42.5% by 2030, with aspirations to reach 45%. The directive seeks to expedite the approval of new renewable projects and increase renewable energy utilization across transport, industry, and buildings. Furthermore, the EU Action Plan for Grids highlighted the indispensable role of electricity grids in supporting decentralisation, digitalisation, and flexibility initiatives. Amid these overarching reforms, France experienced a resurgence in nuclear power generation in 2023, overcoming challenges in supply dynamics. Concurrently, renewable energy witnessed growth, contributing to decreased gas burn in the power sector. To further bolster renewable energy deployment, the French government passed the Renewable Acceleration Bill, aimed at easing the deployment of renewable technologies.

    Policy Recommendations for Strengthening Energy Security in the European Union

    The European Union should prioritize diversifying its energy sources to reduce reliance on external suppliers and enhance energy security. The IEA’s 2024 electricity report underscores the importance of this recommendation, highlighting the risks associated with dependency on external sources, particularly fossil fuels.

    EU can leverage its renewable energy potential and invest in domestic renewable energy production. For instance, countries like Germany and Spain have made significant strides in renewable energy deployment, with wind and solar power contributing substantially to their electricity generation mix. By promoting energy efficiency measures and incentivizing the adoption of renewable energy technologies, the EU can reduce its reliance on fossil fuels and transition towards a more sustainable and resilient energy system.

    Moreover, exploring alternative energy sources such as hydrogen and nuclear energy can further diversify the EU’s energy mix and enhance energy security. Countries like France, with its extensive nuclear energy infrastructure, serve as examples of successful nuclear energy deployment. However, careful consideration should be given to safety and environmental concerns associated with nuclear energy, highlighting the importance of robust regulatory frameworks and technological innovation in ensuring safe and sustainable nuclear energy production.

    Cross-border cooperation in infrastructure development is also essential for enhancing resilience and promoting energy security in the EU. By investing in interconnection projects and cross-border transmission lines, the EU can improve energy market integration and facilitate the exchange of electricity between member states. Initiatives like the North Sea Wind Power Hub, which aims to create a network of interconnected offshore wind farms in the North Sea, demonstrate the potential of cross-border collaboration in advancing renewable energy deployment and strengthening energy security.

    Conclusion:

    The European electricity market underwent significant transformations in 2023, characterized by declining demand, increasing renewable energy penetration, and comprehensive market reforms. As countries across Europe transition towards a cleaner and more sustainable energy future, continued investment in renewable energy, grid infrastructure, and policy initiatives will be crucial to achieving long-term energy objectives. it is crucial to highlight the significant potential of the Baltic Sea for offshore wind energy projects, exemplified by initiatives such as Baltic Power and the ongoing construction of PGE Baltica. The emerging opportunities for renewable energy development in the region are highlighted by this project and emphasizing the need to strengthen the European Union’s supply chain to support ambitious ventures is essential for advancing the continent’s sustainability goals. Additionally, advocating for streamlined revisions in the renewable energy sources (RES) auction framework, as outlined in the Net Zero Industry Act, is vital for creating an environment conducive to innovation and investment. Recognizing and harnessing the Baltic Sea’s potential for offshore wind energy and advocating for systemic reforms will enable the European Union to pave the way for a resilient and sustainable energy future.

    European Enterprise Alliance and the Union of Entrepreneurs and Employers envision a stable, resilient, and sustainable electricity sector. The IEA Report on Electricity underscores the pivotal role of concerted efforts in achieving these aspirations, ensuring a future aligned with Europe’s economic and environmental goals. As we navigate these critical steps, the EU and its member states should act decisively to foster the development of policies and initiatives outlined in the IEA Report to secure a sustainable electrification future.

    [1] “Electricity 2024 – Analysis.” IEA, Jan. 2024, www.iea.org/reports/electricity-2024.

     

    See more: Position Paper of ZPP and EEA on Electricity Report by IEA

    Press Release – European Food Security & Impact of Ukraine 13.02.2024 – Lunch Debate Summary

    Posted on by Wojtek Michalski

    Press Release
    14 February 2024
    Brussels

    European Food Security & Impact of Ukraine – Lunch Debate Summary

     

    On Tuesday, 13 February 2024, the Union of Entrepreneurs and Employers (ZPP) held a working lunch titled “European Food Security and
    Impact of Ukraine” in partnership with SME Europe of the European People’s Party (EPP) at the European Parliament. ZPP partnered also with the European Enterprise Alliance.  The opening remarks were delivered by Ivan Štefanec, MEP and President of SME Europe followed by the keynote address given by Janusz Wojciechowski, the European Commissioner for Agriculture. Taras Kachka, Deputy Minister of the Economy of Ukraine, and Trade Representative of Ukraine provided an intervention about the importance of the topic to set up the floor for the panel. The panel discussion featured Marcin Nowacki, Vice President of Union of Entrepreneurs and Employers, along with Michaela Šojdrová, MEP, Nazar Bobitski, Director of the EU office, Ukrainian Agribusiness Club Association (UCAB) and Pauline Weil, Economist at Bruegel; moderated by Dr. Horst Heitz, Executive Director of SME Europe.

    Ivan Stefanec, MEP, IMCO, ITRE Committees, President of SME Europe, In his welcome speech, as the host of the event, extended his gratitude to the distinguished guests, including Commissioner Janusz Wojciechowski for their valuable presence. He emphasized the critical importance of European food security, particularly amidst the challenges posed by Russia’s unjust military aggression against Ukraine as well as the significance of the EU’s Common Agricultural Policy (CAP) in ensuring food availability and supporting European farmers. Regarding Ukraine, Stefanec highlighted its pivotal role as the “breadbasket of Europe” and a major supplier of essential commodities to the EU. Despite disruptions caused by Russia’s invasion, Ukraine remains a reliable partner in ensuring global food security. The EU’s adoption of trade liberalization measures, including Autonomous Trade Measures (ATMs), underscores its commitment to supporting Ukraine in this challenging time. Crucially, Stefanec acknowledged the concerns raised by European farmers regarding the impact of unlimited imports from Ukraine, which have led to a sharp decline in the value of cereals production in the EU. MEPs’ calls for a comprehensive EU food security plan and the importance of the Strategic Dialogue on the Future of EU Agriculture in shaping the EU’s farming and food system carry a strategic development. Policymakers need to ensure that they implement policies to strengthen European food security while addressing the challenges faced by the agricultural sector. 

     

    “Europe is safe; there is no need for future concerns regarding food security as the EU, the biggest food exporter in the world, boasts surplus agricultural products.’’ — Janusz Wojciechowski, European Commissioner for Agriculture.

     

    Janusz Wojciechowski, European Commissioner for Agriculture, addressed several critical points regarding the EU’s agricultural landscape and its relations with Ukraine, highlighting the significant surplus of agricultural products within the EU, boasting a surplus of over 20 million tonnes, and emphasizing the region’s robust food security measures. Regarding Ukraine, Wojciechowski noted a substantial increase in Ukraine’s exports to the EU post-2020, reaching a value of over €12 billion. Despite this increase, he expressed concerns about the negative balance of trade between the EU and Ukraine, which stood at approximately €10 billion in recent years, underscoring the challenges posed by Russia’s influence in pushing Ukraine out of certain markets and stressing the need to support Ukraine’s transport infrastructure, particularly focusing on Baltic ports and Germany. Additionally, he discussed the need for harmonized standards between Ukraine and other trading partners like Morocco to ensure fair competition for EU farmers, addressing legislative procedures affecting agricultural markets. Emphasizing the importance of European cooperation, Wojciechowski also highlighted the need to diversify export markets beyond neighbouring countries, shedding light on the complex dynamics of EU-Ukraine agricultural relations and the challenges ahead in ensuring fair trade practices and food security.

     

    Taras Kachka, Deputy Minister of Economy of Ukraine – Trade Representative of Ukraine, discussed various challenges impacting Ukraine’s agriculture, including security concerns and disruptions in global trade patterns. He highlighted logistical issues faced by traders, particularly regarding port blockades, which led to market turbulence and increased reliance on Romanian ports. Kachka emphasized the importance of security support from the EU and emphasized positive relations with Romania. He also noted the evolving dynamics in the Black Sea region and the ongoing efforts to align with EU standards. There is a necessity of support in adapting to EU policies and caution against speculative practices. Furthermore, he underscored the significance of strategic partnerships for ensuring food security and maintaining a balanced trade approach, especially amidst invitations to join the EU. Overall, Kachka shed light on the intricate challenges within Ukraine’s agricultural sector, advocating for informed decision-making to sustainably navigate trade dynamics and ensure long-term stability.

     

    “Failing to address the economic and social challenges jeopardizes Ukraine’s integration momentum and risks losing crucial social support. Monitoring and mediating activities along the Ukraine border, especially regarding agriculture and carriers, are vital for maintaining stability.” — Marcin Nowacki, Vice President of Union of Entrepreneurs and Employers.

     

    Marcin Nowacki, Vice President of Union of Entrepreneurs and Employers, highlighted crucial aspects of the EU’s policy toward Ukraine. He emphasized the need for transparent and predictable trade policies between Ukraine and the EU, urging against sudden trade blockades and recommending revisions to the embargo on Ukrainian agri-food products. In addressing EU food security, he advocated for a shift away from restrictive climate policies, stricter mechanisms to combat animal diseases, and mandatory compliance with EU production standards for imported food. Nowacki also stressed the necessity of a careful review of EU trade agreements and support for organized forms of farming to bolster small farms’ market position. Additionally, he highlighted the importance of developing transport infrastructure on the eastern flank of the EU, emphasizing increased state border capacities and investment in warehousing, storage, rail, and port infrastructure in Poland to facilitate goods redistribution from Ukraine, backed by EU financial support.

     

    Michaela Šojdrová, MEP, CULT, AGRI Committees, echoed the urgent concerns of farmers grappling with the repercussions of climate change and the European Green Deal’s stringent regulations on fertilizer usage. She deliberated extensively on Ukraine’s internal agricultural policies, particularly its ongoing accreditation process, highlighting the need for swift interventions to mitigate unfair competition and uphold EU standards. Notably, there was also an emphasis on the imperative of proactive measures to safeguard the livelihoods of farmers amidst the influx of imports from Ukraine. A collective call for a thorough examination of the Commission’s proposed strategies to address these challenges effectively is a necessity. Moreover, It is significant to engage in constructive dialogues to foster collaboration and ensure equitable conditions for all farmers. The exchange of insights and perspectives paved the way for innovative solutions and actionable steps to protect the interests of European agriculture while promoting sustainable practices. As the discussions progressed, Mep Šojdrová articulated the expectations from the Commission, urging it to take decisive actions that align with the best interests of farmers and uphold the integrity of the agricultural sector. 

     

    Nazar Bobitski, Director of the EU office, of the Ukrainian Agribusiness Club​ Association (UCAB) presented significant points regarding Ukraine’s macroeconomic outlook for 2024. He highlighted the country’s grim economic situation, citing a record-high NBU currency reserves at the beginning of the year but a concerning balance of payments deficit reaching the worst levels since the 2008 financial crisis. He also raised concerns about the 2024 national budget deficit and the potential consequences of inadequate financial support, including significant currency devaluation and economic shocks. Moreover, Bobitski underscored the importance of preserving access for Ukrainian agri-food products to the EU market, highlighting their critical role in Ukraine’s trade balance and economic stability. He also discussed the challenges posed by Russian aggression, including production losses and environmental damage. Looking ahead, a need for Ukraine to align with EU agricultural policies while ensuring a level playing field for Ukrainian agroproducers and promoting sustainability principles.


    Pauline Weil, Economist, Bruegel, presented research into the macroeconomic situation two years into the Russian aggression against Ukraine. She emphasized the significant role of the UK and Russia in the globally traded food supply, highlighting challenges in both production and logistics arising from the aggression. Weil expressed global concern over historically high food prices, noting the potential for heightened food insecurity, reminiscent of events like the Arab Spring. However, she mentioned that prices have eased since April 2022 due to strong harvests, declining shipping costs, and more affordable energy and fertilizer prices. Weil discussed the impact felt at local levels in the UK, EU, and Ukraine, particularly the disruptions in grain exports from Ukraine through the Black Sea. She highlighted the EU’s financial support package and measures to address import restrictions, emphasizing the enduring local impacts and the need to address competition distortions amid trade liberalization in the food sector.

    Press release: European Food Security & Impact of Ukraine

    Position Paper on Measures to facilitate Economic inflows in Ukraine

    Posted on by Weronika Marzec

    Position Paper on Measures to facilitate Economic inflows in Ukraine

     

    European Enterprise Alliance, Union of Entrepreneurs and Employers (ZPP) and Union of Ukrainian Entrepreneurs (SUP) express our support for the Ukraine Facility, an innovative and strategic initiative that holds the key to shaping the economic recovery and modernization of Ukraine. Our exploration delves deeply into vital sectors, offering actionable examples and detailed recommendations to bolster the Ukraine Facility’s efficacy and foster sustainable economic recovery. We believe the following steps are necessary to facilitate economic inflows into Ukraine.

    Strategic State Property Management System

    Ukraine’s economic foundation necessitates the establishment of a robust State Property Management System. Within this framework, the identification and legislative delineation of strategic companies emerge as imperatives. Notably, entities such as “Ukrposhta,” the national postal service, and “Ukrzaliznytsia,” the national railway company, serve as linchpins in Ukraine’s infrastructural framework and connectivity matrix. Introducing foreign entities into these strategic sectors holds promise for catalyzing technological innovations, refining service delivery, and optimizing operational efficacy. To navigate this collaboration, an unequivocally transparent bidding mechanism, fortified by rigorous regulatory oversight, is paramount. Concurrently, Ukraine’s governmental apparatus should proactively curate a comprehensive database, delineating eligible organizations poised for foreign investments. From the European Union’s vantage point, this symbiotic engagement crystallizes a conduit for intensified economic harmonization with Ukraine. Such collaboration harbours the potential to invigorate trade corridors, stimulate investments, and nurture mutual growth trajectories. Furthermore, the infusion of European acumen and technological prowess augments Ukraine’s infrastructural landscape, catalyzing advancements, and modernizations across pivotal sectors. Consequently, for Ukraine, this collaborative nexus metamorphoses into an avenue for accelerated infrastructural progression and technology assimilation.

    Capacity Building at the Local Level

    In the wake of the invasion, the imperative lies in prioritizing the reconstruction endeavours of local communities (hromadas). To enhance their efficacy, local governing entities necessitate comprehensive training initiatives, specialized technical acumen, and requisite financial allocations. The inception of regional development funds serves as a catalyst, empowering hromadas to spearhead pivotal infrastructure undertakings, ranging from the refurbishment of thoroughfares to the rejuvenation of educational and healthcare infrastructures. Collaborative frameworks, notably encompassing public-private synergies, become instrumental in engendering knowledge dissemination, galvanizing resource allocation, and fostering robust community engagement. Such mechanisms ensure that the tenor of reconstruction resonates harmoniously with localized imperatives and aspirations. From the European Union’s strategic standpoint, the cultivation of stability within contiguous territories emerges as a linchpin. Through amplifying support mechanisms for localized governance paradigms and developmental trajectories, the EU champions the realization of a harmonious and prosperous European environment. Furthermore, the deep-seated interregional collaborations fortify diplomatic and economic bonds, thereby cultivating a propitious milieu conducive to expansive trade, investments, and multifaceted partnerships. For Ukraine, this manifests as a pivotal juncture for grassroots empowerment, endowing communities with the requisite instruments and mandates to orchestrate their developmental blueprints. This overarching strategy accentuates the ethos of inclusivity, ensuring an equitable distribution of benefits across all regions vis-à-vis Ukraine’s expansive reconstruction and developmental ventures.

    EU Support: Joint Investment Funds and Guarantees

    To invigorate and channel private direct foreign investments, Ukraine’s collaboration with the European Union becomes imperative in establishing synergistic investment frameworks and assurances. Consider the conceptualization of a “Ukraine-EU Investment Fund” as an exemplar, facilitating the amalgamation of financial reservoirs, risk attenuation, and offering enticing fiscal incentives tailored for foreign investors. Instituting safeguards for a designated portion of investments serves to assuage apprehensions stemming from potential political volatility, legislative modifications, and currency oscillations, thereby galvanizing foreign enterprises to venture into burgeoning sectors encompassing renewable energy, technological innovation, and advanced manufacturing. Such collaborative endeavours between Ukraine and the EU are paramount to invigorating private foreign direct investments, underpinned by the creation of collaborative investment mechanisms that attenuate associated risks, thereby fashioning an alluring investment milieu within Ukraine’s promising sectors. From the vantage point of the European Union, the ramifications are manifold, encapsulating accelerated economic proliferation and enriched trade conduits with Ukraine. Such investment ventures not merely invigorate economic dynamism but also engender strategic congruence, bolstering regional stability and affluence. Conversely, for Ukraine, this symbiotic engagement bequeaths a plethora of advantages, encompassing substantial financial influxes, infrastructural amplification, and catalyzed innovation trajectories. The acquisition of EU-endorsed investment assurances augments investor trust and confidence, constituting a quintessential linchpin for Ukraine’s multifaceted recuperation, contemporary evolution, and sustainable growth trajectory.

    Simplification of Tax Administration

    Traversing the intricate labyrinth of Ukraine’s tax architecture presents formidable hurdles for Micro, Small, and Medium Enterprises (MSMEs). The imperative lies in orchestrating a more streamlined tax milieu, necessitating the recalibration of fiscal statutes, diminution of administrative impediments, and proffering stimulants tailored for nascent ventures and SMEs. Consider the implementation of a graduated tax framework tethered to revenue metrics, dispensing fiscal concessions to enterprises propelled by innovation, and instituting a specialized hotline dedicated to addressing tax quandaries as pivotal mechanisms fostering an amiable commercial ecosystem. Engaging with global tax mavens, periodic evaluations, and assimilating digital innovations serve to refine fiscal protocols, augment compliance metrics, and catalyze economic momentum. The simplification of Ukraine’s fiscal landscape emerges as a linchpin for nurturing an amicable commercial milieu, wherein the revision of fiscal statutes, diminution of bureaucratic impediments, and incentivization converge to galvanize entrepreneurial dynamism, innovation, and commercial expansion. The simplification also provides both parties with better trade opportunities and market access, it can simply encourage European businesses to invest and operate more freely in Ukraine. Conversely, for Ukraine, this presents entrepreneurial growth, economic diversification, and job creation.

    Reforms in Property Rights Protection, Judicial System, and Anti-Corruption Measures

    Enhancing property rights, instigating meaningful judicial reforms, and fortifying anti-corruption measures stand as indispensable pillars for Ukraine’s governance and economic progression. The introduction of transparent land registration mechanisms, coupled with an invigorated commitment to judicial independence and the inception of specialized anti-corruption tribunals, holds the promise to substantially elevate investor confidence and ensure a just societal framework. It would be prudent to explore innovations like blockchain in land registry processes, prioritize comprehensive training modules for the judiciary, and institute stringent anti-corruption statutes accompanied by consequential penalties.

    Insurance and Reinsurance of Investments

    In a volatile post-conflict environment, insuring and reinsuring investments become essential. Ukraine can collaborate with international insurance agencies, financial institutions, and risk assessment firms to develop customized insurance products tailored to investors’ needs. Offering political risk insurance, property insurance, and investment guarantees can safeguard foreign investments, mitigate risks associated with geopolitical uncertainties, and foster long-term partnerships. Creating a dedicated investment protection agency, offering incentives for insured investments, and establishing clear dispute resolution mechanisms can further enhance investor confidence and attract capital inflows. This is a basic requirement for mutual trust and collaboration that lays the groundwork for a transparent, predictable business environment.

    Financing green transformation

    On June 23, 2022, Ukraine gained the status of a candidate for accession to the European Union[1]. The experience of other countries shows that accession to the EU usually requires considerable effort and time from candidate countries, especially in terms of economic and regulatory reforms. Thus, the national economy will face profound transformations related to the EU requirements and standards implementation.

    The “green” energy transition and achieving carbon neutrality are among the most significant issues that have always required significant financial resources. And in the context of war, along with constant shelling and logistical constraints, the cost of each green project for business increases significantly.

    The Ukraine Facility is one of the updates to the EU’s Multiannual Financial Framework, which should complement existing mechanisms to support Ukraine on its path to the EU. It is expected that 78% of the funds will be allocated to the state budget to ensure macro-financial stability, and 16% will be used to create an investment instrument to cover risks in priority sectors[2]. Only 5%, or €2.5 billion, will be allocated to support reforms and economic transformations necessary for European integration, including environmental and climate protection.

    At the same time, the EU plans to replace some other support programs with the Ukraine Facility. As a result, not only will Ukraine not receive €923 million for green transformation under the MIP (a separate seven-year plan (Multi-annual Indicative Program, MIP) approved for Ukraine in 2021 as a signatory to the Association Agreement with the EU), but it may also forget about €3.5 billion in aid it would have been eligible for under the Instrument for Pre-Accession Assistance until 2027[3]. Therefore, it is advisable to consider supporting the green transition of the Ukrainian economy within the Ukraine Facility, for example, in the form of grants or other forms of co-financing for projects in leading industries. Taking into account that only a minor part of Ukraine Facility funds will be allocated to support reforms for environmental and climate protection, it is vital to keep and expand other sources of funding as well. Moreover, not only small and medium-sized businesses, but also large industrial companies should have access to financing. At the same time, every project should comply with the EU taxonomy framework. This would be in line with the established practice of supporting EU candidate countries.

    Also, in the process of implementing joint projects, the European Commission will receive a positive signal about our country’s steps toward harmonizing the economic and climate goals of Ukraine and the EU. The experience of European institutions in supporting the “green” transformation of the economy will contribute to the development of similar financing instruments in Ukraine.

    Conclusion

    The European Enterprise Alliance, Union of Entrepreneurs and Employers (ZPP), Union of Ukrainian Entrepreneurs (SUP) and European Business Association (EBA) advocate for strategic reforms, capacity-building initiatives, EU collaboration, tax simplification, governance strengthening, and investment protection measures. By providing concrete examples and detailed recommendations, we aim to ensure the Ukraine Facility’s success, support Ukraine’s economic recovery, and pave the way for sustainable growth, prosperity, and European integration.

    ***

    [1] European Council. “Ukraine.” Www.consilium.europa.eu, 10 Feb. 2023, www.consilium.europa.eu/en/policies/enlargement/ukraine/.

    [2] “Proposal for a REGULATION of the EUROPEAN PARLIAMENT and of the COUNCIL on Establishing the Ukraine Facility.” 20 June 2023.

    [3] NEIGHBOURHOOD, DEVELOPMENT and INTERNATIONAL COOPERATION INSTRUMENT MULTI-ANNUAL INDICATIVE PROGRAMME (2021-2027). European Commission.

     

    See more: 18.01.2024 Position Paper on Measures to facilitate Economic

    An infrastructural puzzle. Official opinion of Piotr Koryś, the Chief Economist of the Union of Entrepreneurs and Employers

    Posted on by Weronika Marzec

    Warsaw, 9th January 2024

     

    An infrastructural puzzle.
    Official opinion of Piotr Koryś, the Chief Economist of the Union of Entrepreneurs and Employers

     

    In a rather interesting interview, Marcin Piątkowski, this year’s recipient of the ZPP Award for Economist of the Year, stated that Poland could follow the path of Spain or Italy, that is, achieve a comparable level of prosperity and subsequently stop catching up with the global leaders of growth. Or gamble like Real Madrid CF and advance to the top league. Piątkowski listed out several factors that may determine this. What characterises the countries that have achieved the greatest economic success, and are in fact today in the top league, is not only their attention to the quality of institutions, audacity in the pursuit of development policies, readiness to implement measured public policies and infrastructural investments – in a nutshell: investing in the future – but also, and perhaps above all, cohesion and continuity of development policies.

    Let’s have a look at this in the context of the political changes taking place in Poland, shall we? Continuity concerns infrastructural policies or regulatory and institutional solutions. Disputes regarding the latter group aside, what signals are the “brigands” of the newly formed coalition sending about the projects that are to become a driver of development in the decades to come? I’m not pondering whether they were completely well designed or not; one could probably find a fault here and there. I’m contemplating the modus operandi of the Polish state itself – stretched between two options: policies and investments implemented within the perspective of a single term, or policies and investments implemented beyond political divisions.

    Two major projects left by the Law and Justice (PiS) government to their successors are the remodelling of the country’s transport infrastructure basing on a centrally-located airport of an at least regional scale and a high-speed railway network, and yet another attempt to construct a Polish nuclear energy sector, or rather to continue the project initiated by Donald Tusk’s previous government. The former was reduced in the public debate to a three-letter abbreviation: CPK. Some defend it, others question the point of a large airport. Some even consider it to be a supposed symbol of gigantomania, so typical of authoritarians(!).

    Nevertheless, CPK is, first and foremost, a project of a thorough modernisation of the Polish transport infrastructure, which may become the starting line to the next development leap. Those were infrastructural investments that allowed “Asia’s next giants” (to quote Alice Amsden) to maintain their dynamics of development. New, fast infrastructure should support the transformation of Poland into the new “industrial heart of Europe” is what Piątkowski talked about in the above-mentioned interview.

    In a sense, the nuclear project is complementary. Over the next dozen years, the power units of coal-fired power plants (both hard and brown coal) are to be phased out – a result of not only consumption, but also of the EU’s climate policy. Nuclear power plants can provide a stable basis for the future energy mix: gas-fired energy is insufficiently certain for future development, while renewable technologies are still a far cry from ensuring supply (and probably also price) stability. Stability of energy supplies, along with the process of further electrification of the economy, will be key to ensure we develop. From the point of view of entrepreneurs, it will be one of the crucial decision-making factors when undertaking and developing new investments.

    Neither of these projects could be implemented within a horizon of 4 or 8 years, which is a typical term in democratic Poland. Their implementation can only be based on a vision across party lines and in the long term. A vision that is not undermined by petty disputes and conflicts or personal dislikes. One can have a number of reservations towards the policies (and politics) of the previous administration, so perhaps the reasons to hold the predecessors accountable are justified. It must, however, be stressed that PiS had never actually broken continuity in the area of infrastructural projects. This was perhaps the result, critics will surely say, of regulatory pressure from the EU. Infrastructural projects carried out in the first and second decades of the 21st century were usually largely financed from EU aid funds. Therefore, any redefinition of investment goals was out of the question. Regardless – even if this was the case – the road network project or railway investments were carried out in a continuous manner.

    With regard to Law and Justice’s large infrastructural projects, there are varying signals coming from the camp that will soon take over power. There are fears both in relation to CPK and nuclear energy that investments might at least slow down. Meaning, for example, that nuclear power plants may not be built when they are really needed. Perhaps the party that will no longer be in government has only itself to blame – both projects are in their infancy. And yet recently, the politician responsible for CPK assured that the first planes would take off in… 2027.

    Both projects are essential. Decisions regarding audits, new investors or better (optimal) solutions are resolutions that postpone their implementation increasingly into the distant future. Just look around. Having made the decision to build an airport near Berlin, its implementation was continued in spite of rising costs and better ideas. Having made the decision to develop nuclear energy in Finland, locations would not change, and no further audits were carried out despite changing government.

    These projects are just but two examples. Were the best possible solutions selected? Probably not. This is never the case – no government ever chooses perfectly. However, large public investments have been thus far one of the few areas of political consensus. Abandoning it today will probably mean not only postponing the implementation of these projects that Poland needs into an unknown future, but also starting a new series of conflicts and ruptures in continuity. Who will stop the new champions in 4 or 8 years from doing what is being done today? Unless someone believes again (and this is probably the norm in our country) that they would never lose again…

    Piotr Koryś, Ph.D.
    Chief Economist of the Union of Entrepreneurs and Employers

    See more: 09.01.2024 Opinion An infrastructural puzzle. Official opinion of Piotr Koryś, the Chief Economist of the Union of Entrepreneurs and Employers

    For members of the ZPP

    Bulletin of Law and Legislation
    Knowledge base

    Our websites

    Subscribe to our newsletter