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    Conclusions from the latest ZPP report monitoring the EU-ETS market – the participation of speculators in this market is underestimated

    Posted on by Weronika Marzec

    Warsaw, 6 June 2022 

     

    Conclusions from the latest ZPP report monitoring the EU-ETS market – the participation of speculators in this market is underestimated

    The European Union Emissions Trading System (EU-ETS) was launched in 2005 and was updated several times in subsequent years. The existence of this market was supposed to be an incentive for the Member States to choose more sustainable energy sources and decarbonise the European economy. As part of the Fit for 55 package, the European Commission has adopted a legislative proposal to revise the EU Emissions Trading System (ETS) with the intention of adapting it to meet the objective of a 55 % reduction in net greenhouse gas emissions in the EU by 2030 (compared to 1990 levels).

    At the same time, the price dynamics for European Union Allowance (EUA) have increased significantly over the past few months. The price of emission allowances (EUA price) sold under the EU Emissions Trading System (ETS) has risen from under EUR 30 per metric tonne of coal in 2020 to over EUR 90 by the beginning of 2022.

    The Union of Entrepreneurs and Employers has, over the past few quarters, systematically prepared and circulated among the organisation members a report aimed at a cyclical analysis of the specifics of transactions on the EU-ETS market, including in terms of speculator participation.

    In March this year, the European Securities and Markets Authority (ESMA) – following numerous critical opinions regarding the speculative rising of EUA prices on the EU-ETS market – issued a report on the state of the carbon market in the European Union. According to the report: “The analysis has not identified any serious shortcomings in the functioning of the EU market for emission allowances, based on the available data. However, the market analysis conducted by ESMA has led to a number of recommendations to improve the transparency and monitoring of this market.“

    And while the conclusions of the ESMA report are not satisfactory for those in favour of excluding speculators from the EU-ETS market, the authors themselves acknowledge that recently there is a growing interest in this market on the part of entities such as investment funds. Among other things, it was their speculative activities that have led to an intense increase in the price of this instrument over the past several months, which in turn has translated into a dramatic rise in energy prices.

    The ZPP report entitled “EUA: PRICE BUBBLES AND THE COMPETITIVENESS OF POLAND AND THE EUROPEAN UNION” clearly shows that the EU-ETS market is subject to a very high risk of price bubbles. The microeconomic characteristics of the market for CO2 emission allowances have not changed during the past year. The same flaws and weaknesses that have been highlighted for a year are still present. However, it is worth noting the change in narrative that has taken place over the last few months. In the spring of 2021, the possibility of price bubbles forming on EUAs was mentioned by a few, and their voices were ignored by the energy mainstream. Today, the subject is regarded quite differently by the public opinion, with more and more experts noting that this phenomenon is now real.

    The European Parliament is holding a debate on the possible exclusion of financial entities from the EU-ETS, which is supported directly by ZPP through Vice-President Marcin Nowacki’s involvement in the work of the European Economic and Social Committee (EESC).

    The report is the last in a series of quarterly monitorings of the situation on the market for CO2 emission allowances. This is the fourth version of the document, distributed exclusively to ZPP members. The current edition includes updated econometric modelling for Q1 2022. In the conclusions, we additionally focused on how the formation of price bubbles influences the competitiveness of Poland and the EU. We will continue monitoring the topic and following market behaviour and regulations in this area. We therefore encourage you to stay in touch with us. If you are interested in the report or the issues it addresses, please send a message to biuro@zpp.net.pl.

     

    The minimum CIT must either be radically simplified or abandoned – commentary of the Union of Entrepreneurs and Employers

    Posted on by Weronika Marzec

    Warsaw, 16 May 2022 

     

    The minimum CIT must either be radically simplified or abandoned – commentary of the Union of Entrepreneurs and Employers

     

    The process of ‘fixing’ the Polish Deal has been underway for several weeks. In recent weeks, we have been discussing the proposals for PIT changes put forward by the Ministry of Finance but we already know that in the near future we can expect a draft of amendments to CIT. Out of those, the topic of the so-called minimum CIT is particularly controversial. In our view, the situation is very simple – this solution should either be radically simplified or abandoned altogether.

    The Union of Entrepreneurs and Employers has been promoting the idea of abolishing CIT and replacing it with a simple revenue tax for years. We are unable to understand why we insist on keeping a system whereby the tax may simply not be paid, as exemplified by certain multinational corporations that successively pay CIT at an absolutely marginal rate. In the course of the discussion on the Polish Deal, in response to the plan for total financing of this reform by increasing the burden on Polish business and the middle class, we have proposed a solution consisting in the introduction of a uniform, universal minimum CIT of 1% of revenue. The Ministry of Finance has decided to take inspiration from our idea and include it in the forthcoming draft, yet in a completely altered version, completely incompatible with the original concept. 

    Our idea for a revenue tax – regardless of whether it would replace CIT (in the ideal scenario) or whether it would provide a systemic guarantee that the corporate tax will be paid to the budget at a fair rate –is extremely simple. We are in favour of a universal mechanism covering all taxpayers, with no exclusions or exemptions. Similarly, the very method of calculating the amount of tax should be maximally simplified – 1% of revenue, without reliefs or any separate, special accounting methods.

    Meanwhile, the Ministry has proposed a very complex minimum tax design under which the tax base is the sum of a part (4%) of revenue other than revenue from capital gains and, inter alia, debt financing costs incurred on behalf of affiliates exceeding 30% of EBIDT. The subjective scope of the minimum CIT means that it is not a universal tax and, in addition, the legislator has included the possibility of applying reliefs and deductions that reduce the tax base, which has further increased the complexity of the provisions in question.

    Moreover, the tax calculation mechanism thus constructed generates a number of initially unintended consequences – as is usually the case with such complex solutions. We drew attention to this during the legislative process – complicating the regulations on minimum CIT will reduce their effectiveness and, even worse, contribute to a deterioration in the competitive position of entities that will be effectively covered by the solution. The market signals that reach both us and the Ministry of Finance clearly indicate that these concerns are now materialising and there is a serious risk that the minimum CIT in the current form will hit Polish business, not being an effective tool against aggressive optimisation.

    The idea behind the proposal to introduce a minimum CIT was to take effective action against international tax optimisation schemes which thus far allow some companies to pay marginal CIT in Poland. The solution adopted by the Ministry of Finance had no chance of achieving this objective. In view of the above, we see two possible ways out of the situation. The first is to radically simplify the design of the minimum CIT so that it becomes a universally binding mechanism whereby CIT paid in a given year cannot be lower than 1% of revenue achieved. The second is to abandon it altogether – introducing small adjustments and corrections is the easiest way to add to the chaos.

     

    See: 16.05.2022 The minimum CIT must either be radically simplified or abandoned – commentary of the Union of Entrepreneurs and Employers

    Commentary of the Union of Entrepreneurs and Employers (ZPP) on the proposal for establishing minimum gas storage obligations

    Posted on by Weronika Marzec

    Warsaw, 10 May 2022 

     

    Commentary of the Union of Entrepreneurs and Employers (ZPP) on the proposal for establishing minimum gas storage obligations

     

    EU leaders met at an informal meeting of heads of state and government in Versailles on 10 – 11 March 2022. The main reason was the response to the Russian invasion of Ukraine. The leaders adopted the Versailles Declaration which sets out a joint EU action plan for bolstering defence capabilities, reducing energy dependencies; building a more robust economic base and supporting investments. As a result of the above, on 22 March 2022, the European Commission proposed a regulation to establish minimum gas storage obligations (Gas Storage Regulation). On 23 March 2022, the Committee for Industry, Research and Energy (ITRE Committee) of the European Parliament adopted the above-mentioned regulation and called for the application of the urgent procedure to the project, which will be voted on in a plenary session from 4 – 7 April 2022. The rapporteur of the draft regulation in the European Parliament is Professor Jerzy Buzek. The appointed rapporteurs in the European Economic and Social Committee were Marcin Nowacki, Vice-President of ZPP, and Mateusz Szymański from the “Solidarity” trade union.

    Under the new rules, EU Member States will have to ensure that their gas storage facilities will be filled to a minimum of 90 per cent by the first day of November each year. The exception would be 2022, when the target would be 80 per cent. In addition, the intermediate targets would guarentee that the tanks are filled all year round. Another provision is the mandatory certification of storage system operators to reduce the risks arising from the influence on critical infrastructure. The third arrangement is an incentive for further use of storage capacity and possible exemptions from transmission tariffs at entry or exit points of storage facilities.

    The Union of Entrepreneurs and Employers supports the proposal for the regulation as a tool which can really contribute to the increased energy security of the EU. We particularly commend the fast reaction rate and work progress of the EU institutions. At the same time, ZPP calls for the following points to be added to the draft regulation.

    Firstly, in our view, it is necessary to introduce a short-term investment vehicle in order to develop a hydrogen-ready infrastructure. The success of the common gas storage policy depends largely on the ability to transport gas efficiently. Therefore, in order to increase Europe’s energy security in the long term, investments in infrastructure are necessary, including infrastructure suitable for hydrogen transmission, and especially interconnectors and storage facilities. This postulate is particularly important given that the recently completed revision of the TEN-E Regulation ended the possibility of supporting investments in gas infrastructure.

    Infrastructure investments will enhance EU energy security in the long term but due to the long implementation period, they will not solve the problems caused by Russian aggression right here and right now. Therefore, in the short term, the EU should consider cooperating with non-EU countries bordering the EU on the use of existing gas storage facilities. In our opinion, cooperation with non-EU countries, in particular Ukraine, can quickly lead to adequate gas storage filling levels and should therefore be given high priority.

    Next, ZPP calls for the expansion of the burden-sharing mechanism proposed by the Commission and for the supplementation of the Regulation with plans for the individual Member States, which would take account of the size of storage facilities, consumption in a given country and the warehouse’s capacity to serve other countries in the region, so as to avoid unbalanced sharing of burdens, risks and costs. We fear that a lack of proper coordination could lead to high gas price fluctuations in some Member States.

    ZPP supports the introduction of mandatory certification of storage system operators. Despite the short deadlines provided for in the Regulation and because of the possibility of appealing against an administrative decision, it will take several years to issue a final decision revoking the licences of storage facility operators. Therefore, we note that the mandatory certification of storage system operators is a measure which will improve EU energy security in the long term, and not in the short term. In light of the above, we consider it necessary to adopt an early implementation mechanism which will allow national regulatory authorities to start their preparatory work on the mandatory certification process as soon as possible. At the same time, we call on the EC to quickly issue guidelines that will ensure uniform implementation of the provisions of the Regulation by all Member States.

    See: 10.05.2022 Commentary of the Union of Entrepreneurs and Employers (ZPP) on the proposal for establishing minimum gas storage obligations

    Are we to expect a return to coal? What is the future of the Polish energy industry? – conclusions from the debate of the Union of Entrepreneurs and Employers

    Posted on by Weronika Marzec

    Warsaw, 8 June 2022 

     

    Are we to expect a return to coal? What is the future of the Polish energy industry? – conclusions from the debate of the Union of Entrepreneurs and Employers

    Are we to expect a return to coal? What is the future of the Polish energy industry? – this was the topic of the debate “Energy Transition – an Opportunity or a Threat to the Polish Economy” organised by the Union of Entrepreneurs and Employers (ZPP). The participants included the Undersecretary of State of the Ministry of State Assets, Piotr Pyzik.

    Other discussion participants were a journalist of Energetyka24.com, Daniel Czyżewski, the Chief Energy Technology Specialist at ZPP, Włodzimierz Ehrenhalt, and the moderator – Dominika Taranko, a director of the ZPP Energy Forum. The starting point for their conversation was the next edition of the ZPP report prepared by Włodzimierz Ehrenhalt on the energy transition and the accompanying opportunities and threats.

    Dominika Taranko started the debate by noting that the energy industry has recently ceased to be an exclusively economic or political subject, and has also begun to concern individual consumers and businesses. “The events that will happen in Poland in the coming years will concern everybody, including Polish companies. Hence the idea to hold a discussion as part of the ZPP Energy Forum on the pragmatic, realistic measures we need to take in order to at least approach the climate targets for 2030 and 2050,” she said.

    “Today’s debate is also intended to be a contribution to the discussion on the next ZPP report, published since 2019. In the latest document, we have compiled our findings for the previous year. Despite the fact that Russia invaded Ukraine and our geopolitical situation noticeably changed, we have decided to present the report and discuss it in order to establish the setting for the conversation about energy that we, as ZPP, want to have,” added Dominika Taranko.

    Włodzimierz Ehrenhalt explained that the report shows what can happen if we do not base Polish production on green energy. “Green energy is the foundation of a pro-export economy. In the report, I point out that if we do not produce it, we will not be able to sell our goods to EU countries – from yoghurts, through locomotives, furniture, to automotive parts. That is why today the transition to green energy is more important than all the other commitments we have,” he said.

    As emphasised by the Chief Energy Technology Specialist, the next twenty years will determine the economic position of the European Union in the global economy. According to him, full implementation of the Fit for 55 package – which envisages reducing net CO2 emissions by at least 55% (compared to 1990) by 2030 – in Polish conditions is not possible. That is why we need a discussion at European level that takes account of the circumstances and past events in Poland – in other words, the Polish transition process should take account of the specific historical conditions related to the position of coal in our economy.

    In the opinion of Włodzimierz Ehrenhalt, decision-makers in the energy sector should have two objectives for the coming years: ensuring energy supply at a level which will enable the state to function on its own resources as it did so far and ensuring the cheapest possible energy supply from outside. “This is a political task because we have to think carefully about where this energy will be the cheapest and operate wisely to obtain it,” said Ehrenhalt.

    Piotr Pyzik from the Ministry of State Assets admitted that he – also a Silesian – recognises transition as a topic concerning not only energy but also civilisation. “Mining is more than just energy, it is also culture and customs. I would like this phenomenon to be noticed from Warsaw’s perspective,” he said.

    According to the Minister, while designing the transition we must not forget that its goal should be, among other things, to keep the competitiveness of the Polish, and consequently European, economy at the highest possible level. “This is currently the basis of our activities. We also can’t deny that changing the climate is just as important,” he said.

    As Piotr Pyzik pointed out, the solutions for the transition to green energy should, however, be as prudent, rational and sensible as possible. “It should not happen that more energy is used to manufacture a wind turbine than it will produce in its entire lifetime,” he added. “When talking about green energy one simply has to be realistic,” he emphasised and added that, as much as we want to, we will not be able to erase coal from the Polish energy landscape so soon. “Primarily because we don’t have anything to replace it with. At present, we simply need coal,” he continued.

    Daniel Czyżewski from Energetyka24.com agreed with this thesis. However, the journalist drew attention to the issue of whether the need to switch to green energy is understandable to the majority of the population. “The question that comes to my mind is whether everyone is also able to bear the possible costs associated with the transition,” he said.

    “I can certainly agree that the energy transition –together with the full package of legislation, including a European Green Deal – is a civilisational change, indeed already visibly established in culture. However, I wonder if everyone realises how big of a change this will be for all of us,” he said.

    Full recording of the debate will be available soon on ZPP social media – Facebook, Twitter, LinkedIn and Youtube.

    Meanwhile, the full report by Włodzimierz Ehrenhalt is available at: https://zpp.net.pl/wp-content/uploads/2022/06/08.06.2022-Raport-ZPP-Transformacja-Energetyczna-szansa-czy-zagrozenie-dla-polskiej-gospodarki.pdf

    ***

    The debate “”Energy Transition – an Opportunity or a Threat to the Polish Economy” was held as part of the ZPP Energy Forum – a platform within which the Union of Entrepreneurs and Employers focuses all its activities in the field of energy. Details on its operation can be found on the website at: https://zpp.net.pl/forum-energetyczne-zpp/.

    If you have any questions or would like to cooperate, please contact the Director of the Forum, Dominika Taranko – d.taranko@zpp.net.pl.

    Nazar Bobitski appointed as ZPP Board Advisor and the Representative of the Union in Ukraine

    Posted on by Weronika Marzec

    Warsaw, 8 June 2022 

     

    Nazar Bobitski appointed as ZPP Board Advisor and the Representative of the Union in Ukraine

     

    The Union of Entrepreneurs and Employers (ZPP) confirms that Mr. Nazar Bobitski is a ZPP Board Advisor and the Representative of the Union in Ukraine.

    Nazar Bobitski will coordinate the project “Europe – Poland – Ukraine. Rebuild Together ”on the territory of Ukraine. The program is aimed at creating and strengthening relations between European, Polish and Ukrainian business circles and preparing a framework for cooperation in the future reconstruction of the Ukrainian state and economy.

    Position of the Union of Entrepreneurs and Employers (ZPP) on the reintroduction of stay-down obligation in the Digital Services Act

    Posted on by Weronika Marzec

    Warsaw, 7 June 2022

     

    Position of the Union of Entrepreneurs and Employers (ZPP) on the reintroduction of stay-down obligation in the Digital Services Act

     

    The Union of Entrepreneurs and Employers (ZPP) expresses its concern about the return of the so-called “stay down” provision to DSA compromise text. Stay down obligation requires companies to ensure that illegal content does not reappear on the platform after its removal. The proposal does not define exactly how intermediary service providers would have to fulfil the above obligation. There are concerns that in practice it may lead to general internet monitoring and set a standard, which is technically impossible to attain.

    The prohibition of general internet monitoring stems from the e-Commerce Directive, a 20 years-old predecessor of the Digital Services Act. The Directive urged intermediaries to step up their efforts to combat illegal or harmful content, and, at the same time, included the prohibition of general internet monitoring. Due to the risk of censorship and damaging influence on fundamental rights, this practice has been ruled out already in the early days of the internet. Later on, several court judgments confirmed that scanning content uploaded and circulated on the internet is illegal.

    The European Parliament has already rejected the stay down provision during the DSA negotiations. Therefore, it is all the more surprising that this obligation is suddenly reintroduced in the latest compromise text, appearing after the conclusion of a political agreement by European negotiators. A group of organizations including CCIA, Act the App, Dot Europe, Developers Alliance, Allied for Start Ups, Eco De and EUROISPA has criticized changing the compromise text on the eleventh hours. “We  urge the co-legislators to refrain from introducing a provision, that was already discussed at length and rejected in various staged of the co-legislative discussions and even during trlogue negotiations” – we read in the organizations’ statement.

    ZPP shared the aforementioned concerns. Ahead of the upcoming vote on the DSA scheduled for June 16, we call on the policymakers to stick to the results of previous rounds of negotiations. The introduction of the stay down obligation will not only be a form of overstepping negotiation mandate, but also will lead to clear negative effects for internet users. Finally, by demanding companies to ensure that deleted content does not reappear on the internet, the EU imposes on companies obligations that are impossible to fulfill.

     

    See more: 07.06.2022 Position of the Union of Entrepreneurs and Employers (ZPP) on the reintroduction of stay-down obligation in the Digital Services Act

    Position of the Chief Expert in digital economy of the Union of Entrepreneurs and Employers (ZPP) on biometrics regulation

    Posted on by Weronika Marzec

    Warsaw, 31 May 2022

     

    Position of the Chief Expert in digital economy of the Union of Entrepreneurs and Employers (ZPP) on biometrics regulation

     

    In recent times it has been loud about the regulation of biometrics due to the EU’s Artificial Intelligence Act. Biometry is a scientific field that measures living creatures to determine their individual characteristics. It is widely used for identity verification, authorization of access to information systems or for identification of persons, and rapid technological progress is conducive to its popularization. In the Artificial Intelligence Act, the EU has decided to set certain limits for the development of technology in order to protect fundamental rights and freedoms. This is why, among other things, the European Commission’s proposal includes a ban on real-time biometric face recognition in public places.

    Using artificial intelligence to recognize faces without explicit permission and processing these data for a closer unknown purpose brings to mind the dystopian visions of sci-fi movies. The European Data Protection Board, together with Wojciech Wiewiórski, the European Data Protection Supervisor, called for a ban on the use of artificial intelligence to automatically recognize the biometric features of people in public space. In their opinion, such tools constitute an unacceptable interference with the rights and freedoms of citizens.

    On the opposite side than privacy defenders, there are law enforcement agencies, which emphasize the need to use new technologies to ensure security. Service officers call for the possibility of recognizing faces in the case of persons wanted or suspected offenders to be maintained. As they emphasize, the use of technology would remain limited and it would be used only in specific situations, rather than for screening the population.

    Member States remain divided on this idea. Just a few days ago, the French Presidency raised the issue, that it could be difficult to find an agreement on the rules on artificial intelligence for law enforcement authorities, including the ban on real-time face recognition in public space. Some EU countries are demanding stricter bans, while others want more freedom for law enforcement authorities to use face recognition and high-risk technology. After all, the EU is an area without borders, which is exploited by criminals moving between countries and making it difficult for justice to work. According to Europol data, 70% of organized criminal groups in the EU operate in more than three Member States, and in almost two-thirds of cases among their members there are people from different countries.

    Here we are coming to another point, namely the regulation that allows law enforcement authorities to exchange certain information, such as fingerprints, DNA data and vehicle owners information across the EU. The exchange of such information is possible under the 2005 Prüm Convention on a cross-border cooperation to combat terrorism, cross-border crime and illegal immigration. The convention was originally signed by seven Member States and, on the basis of this, the EU Council adopted in 2008 the Prüm Decision, which has already been applied to all Member States. In short, if Polish officers suspect that the person they are looking for is in Greece, they may ask the Greek authorities to check the fingerprints in their database. However, there is no centralized, automated system that would facilitate the exchange of information. This is about to change soon.

    In December 2021, the European Commission submitted a legislative package to strengthen cross-border police cooperation. The package included a proposal for a Prüm II regulation. The new regulation is intended to significantly automate the exchange of information between Member States’ services, but also to extend the catalog of information that can be processed, to inter alia facial images, photographs, criminal records and driving license data. The final effect will be a huge system for comparing suspects’ images using face recognition algorithms in an automated process.

    Human rights defenders warn that in this way the EU can create the largest system of mass biometric surveillance in the world. How has it happened that the EU, on the one hand, wants to prohibit the use of artificial intelligence for face recognition in the Artificial Intelligence Act
     and, on the other, is working on a system for the automation of face recognition in the Prüm II Regulation? The difference is in time. The Artificial Intelligence Act prohibits real-time face recognition. The Prüm II Regulation is intended to allow the search of databases, namely the retrospective identification of faces. How does this translate into respect for fundamental rights? EDRi (European Digital Rights) analysts, who are fighting for digital rights say that retrospective face analysis can have equally serious effects – for example, to determine where the person was and with whom the person was seen 5 years ago, which may be completely different in the light of the information currently available. Finally, the automation of the information exchange process is nothing else than a reduction in procedural and judicial safeguards, which ensure that data is only made available to the services of other countries when it is actually necessary.

    In conclusion, what we can see is undoubtedly a chaos in the area of biometrics regulation. The EU institutions praise their struggle to respect privacy in regulations such as the Artificial Intelligence Act, while at the same time implementing invasive solutions under the Prüm II Regulation. The ZPP has repeatedly stressed the consequences arising from creating conflicting rules, but we are deeply amazed at the level of inconsistencies in the solutions proposed for the regulation of biometric facial recognition.

     

    Kamila Sotomska
    Chief Expert for the digital economy

     

    See more: 31.05.2022 Position of the Chief Expert in digital economy of the Union of Entrepreneurs and Employers (ZPP) on biometrics regulation

    The contribution of the Union of Entrepreneurs and Employers to the European Commission’s consultation on the Cyber Resilience Act – new cybersecurity rules for digital products and ancillary services

    Posted on by Weronika Marzec

    Warsaw, 26 May 2022

     

    The contribution of the Union of Entrepreneurs and Employers to the European Commission’s consultation on the Cyber Resilience Act – new cybersecurity rules for digital products and ancillary services

     

    On 16 March 2022, the European Commission launched the public consultation on the Cyber Resilience Act – new cybersecurity rules for digital products and ancillary services.[1] The act was announced by the President of the European Commission Ursula von der Leyen in her State of the Union address, in September 2021.[2] Launching the consultation, the Commission also issued a call for evidence for an assessment of the impact of the regulations. The act on cyber resilience is to supplement the delegated regulation of 29 October 2021 issued under the Radio Equipment Directive by formulating optimised cybersecurity requirements covering a wide range of digital products and ancillary services.[3] Moreover, the regulations will supplement the existing legal framework, which includes the NIS Directive[4] and the EU Cybersecurity Act[5], and which will fit into the future NIS 2 Directive.[6]

    The rationale for the consulted project is to prevent cyberattacks. The lack of adequate security features and insufficient response to vulnerabilities throughout the product lifecycle were identified as the cause of this situation. Moreover, the European Commission has pointed to the lack of sufficient information on product safety. The factors contributing to the lowering of security levels are the absence of economic incentives and the shortage of qualified experts on security.

    The regulation aims to establish simplified security requirements covering a wide range of digital products and ancillary services. The new act is to regulate tangible digital products (wired as well as wireless) and non-embedded software, which will be subject to the provisions of the act throughout the lifecycle of the product.

    According to the European Commission, the existing regulatory framework is insufficient, as it does not cover all digital products (e.g. non-embedded software) and does not specify detailed safety requirements covering the entire life cycle of products. Given the above, the Commission is considering various policy lines to prevent cyber threats, such as: ad hoc regulatory solutions within existing legislation, horizontal regulatory intervention, the adoption of voluntary measures (including the development of certification systems), a mixed regulatory approach, or maintaining the status quo.

    The Union of Entrepreneurs and Employers welcomes the Commission’s proposal aimed at improving the level of cyber security of European users. We have identified two key aspects that the proposed act seeks to regulate. The first is the assessment of security levels from the point of view of services provided to final users. It is understood as the security of users’ data and the access (as well as the reliability of access) to the services provided, especially by public networks. The second is the protection of public networks against threats related to cyberattacks. This should also include attacks from the inside of the networks, which may be caused by security gaps in software. The Polish Cybersecurity System Act and the regulatory framework it creates is also important in this context.[7]

    According to the Union of Entrepreneurs and Employers, it is especially important to develop hardware and software for radio access networks. It needs to be pointed out that the access to the operator’s RAN equipment is limited. The equipment is physically located at the operator’s premises, where it is protected against third-party interference. Moreover, the devices operate within a dedicated operator network, which ensures the security of remote access. It protects this dedicated network against unauthorised access. Given the above, the operator is in full control of the access to RAN equipment.

    User data security is described in the technical specification and operator settings relevant for the selected radio access technology (2G/3G/4G/5G). The technical specification determines encryption and security algorithms, and key lengths. This ensures that there are no differences between equipment suppliers in terms of providing security to both end users and the network itself.

    In the view of the above, we believe that ensuring an adequate level  of security should be the responsibility of operators who have the best-adapted tools to respond dynamically to arising threats. Similarly, in view of the existing security protection mechanisms applied by individual entities, we are in favour of maintaining the power to subject these entities to audits.

    In our opinion, operators have the best knowledge of techniques to protect their own networks and have their best interest in maintaining the security of their own environments, which is confirmed by past practice. We recommend verifying whether the security solutions and algorithms proposed in the technical specification are sufficient to ensure the cyber security of digital products and ancillary services.

    ***

    [1]https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13410-Cyber-resilience-act-new-cybersecurity-rules-for-digital-products-and-ancillary-services_pl

    [2] https://ec.europa.eu/info/strategy/strategic-planning/state-union-addresses/state-union-2021_pl

    [3] https://eur-lex.europa.eu/legal-content/PL/TXT/PDF/?uri=CELEX:32022R0030&from=PL

    [4] https://eur-lex.europa.eu/legal-content/PL/TXT/PDF/?uri=CELEX:32016L1148&from=BG

    [5] https://eur-lex.europa.eu/legal-content/PL/TXT/PDF/?uri=CELEX:32019R0881&from=EN

    [6]https://digital-strategy.ec.europa.eu/en/library/proposal-directive-measures-high-common-level-cybersecurity-across-union

    [7] https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20180001560/T/D20181560L.pdf

     

    See more: 26.05.2022 The contribution of the Union of Entrepreneurs and Employers to the European Commission’s consultation on the Cyber Resilience Act – new cybersecurity rules for digital products and ancillary services

    Position of the Union of Entrepreneurs and Employers (ZPP) on the report of the European Parliament for a Directive on improving the working conditions in platform work

    Posted on by Weronika Marzec

    Warsaw, 23 May 2022 

    Position of the Union of Entrepreneurs and Employers (ZPP) on the report of the European Parliament for a Directive on improving the working conditions in platform work

     

    Work carried out through digital labour platforms is developing in Europe with tremendous momentum. This is demonstrated by the pace of development of more than 500[1] platforms currently operating in the single EU market. The number of people who work through platforms is also growing rapidly. Currently, this is 28 million people, and it is expected that in 2025 there will be as many as 43 million “platform workers.”[2] The above shows, how prospective market is the provision of services through digital labour platforms.

    The European Commission presented on 9 December 2021 a proposal for a directive aimed at improving working conditions through digital platforms and supporting their sustainable development. In order to improve working conditions, the European Commission envisages for persons performing work, access to labour rights and social benefits.

    This would be achieved through the reclassification of the employment status. Today, most of the contractors are engaged in professional activities through digital platforms on the basis of self-employment. The Commission proposal seeks to substantially change this proportion in favour of work based on an employment relationship, the existence of which would be presumed. The removal of this presumption would lie on the platform side, which is intended to remove the burden of action from the person performing work. Furthermore, the Directive contains rules regarding the verification of decisions taken by automated algorithms and the right to human verification, and regulates access by public authorities to data collected and processed by platforms.

    The draft is currently under way in the European Parliament, which is working on its mandate for further interinstitutional negotiations. The rapporteur for the proposal concerning a directive on improving working conditions in the Committee on Employment and Social Affairs (EMPL) is Ms. Elisabetta Gualmini.

    At EMPL committee meeting on 19 May 2022, the presented project resulted in a considerable indignation among representatives of platform companies’ organizations, as was the case with experts and legislators on labour law and the digital economy. The report by Ms. Gualmini extends the set of criteria necessary to recognize the employment status of a person earning his/her living through a platform to a person working on the basis of an employment relationship. The Commission’s proposal contains five conditions, two of which must be met in order to create a presumption of employment through the digital labour platform. The proposal by Ms. Gualmini deletes this provision from Article 4, by which the set of criteria is extended to a “non-exhaustive list” and transfers it to the recitals in the draft directive, i.e. to a non-binding part of the provisions.

    The rapporteur’s proposal is highly interfering with the relationship between platforms and their contractors. This is due to the strong opinion held by the Member regarding the self-employed, which was expressed in the explanatory memorandum to the project – “False self-employment in the platform economy leads to uncertainty, low wages, security risks and the refusal of any rights arising from the employment status, including social protection.”[3]

    Extending the scope of the Directive to automated and partially automated monitoring and decision-making systems will in practice mean, that the vast majority of persons performing work will be within the scope of the Directive, since even the use of current common methods of organizing work by human resources departments (e.g. attendance reporting systems) will also be covered by the Directive.

    The division of persons performing work into self-employed and employed on the basis of an employment relationship is incomplete. It does not take into account the existence of other forms of employment in the Member States. For example, in Poland function civil law agreements which would not be reflected in the division proposed in the Directive.

    Moreover, the inconsistencies between the solutions presented in the proposal can be seen on the basis of the practice of working through platforms. In order to improve working conditions, the legislator has been driven largely by the model of operation of the largest digital labour platforms that act as an intermediary in supply or transport. Doubts arise when the above proposal is applied to other services such as repair, cleaning and care services. In this event, the platform only mediates in linking the consumers concerned and contracting parties. In view of the above, it is difficult to justify the reason why such a platform should employ a qualified professional, a cleaner or a care person. The platform is merely an intermediary and therefore it is not an entity in the labour relations of the self-employed.

    The intermediation in linking contractors with consumers is not a new market mechanism. Persons performing the work of cosmetics sellers, to whom the intermediary companies supplied products, catalogues and contact databases, were not considered to be employed by those companies. So far, the status of self-employment in the context of the above-described work, has not been called into question. For this reason, it is difficult to understand the justification for regulating similar work, which has the only difference that it is done via the internet digital platform.

    We welcome the initiative to regulate platform work. The European Union can become a pioneer in the field of legal solutions for this sector. However, from the moment the Commission presented its proposal, ZPP has drawn attention to the insufficient consideration of the voice of the “platform workers”, which are to be affected by these regulations.

    The majority of “platform workers” is satisfied with the current form of work done through digital labour platforms – this is the conclusion of a study carried out by ZPP among platform contractors.[4] The changes introduced by the Directive could lead to the loss of two main advantages for persons working through platforms, namely the flexibility and a low entry threshold.

    ***

    [1] https://ec.europa.eu/social/BlobServlet?docId=24991&langId=en

    [2] https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6605

    [3] https://www.europarl.europa.eu/doceo/document/EMPL-PR-731497_EN.docx

    [4]https://zpp.net.pl/en/zpp-survey-95-of-platform-workers-are-satisfied-with-the-cooperation-with-the-platforms-most-of-them-are-against-compulsory-employment-contracts/

     

    See more: 23.05.2022 Position of the Union of Entrepreneurs and Employers (ZPP) on the report of the European Parliament for a Directive on improving the working conditions in platform work

    Position of the Union of Entrepreneurs and Employers (ZPP) on a proposal for a Directive on improving the working conditions in platform work

    Posted on by Weronika Marzec

    Warsaw, 11 May 2022

     

    Position of the Union of Entrepreneurs and Employers (ZPP) on a proposal for a Directive on improving the working conditions in platform work

     

    In December 2021, the European Commission presented a proposal for legislation to improve the situation of workers performing work through digital labour platforms.[1] There are over 500 platforms in the European Union, which create 28 million jobs.[2] The growing popularity of this form of earning money is directly related to the ongoing digitization and the increasingly common need for flexibility in employment. At the same time, it is important to recognize that this model of work is not new and has been used in the traditional economy.

    The proposed directive sets out several conditions determining whether the existing relationship between the platform and the worker is an employment relationship. For a platform to be considered an employer, its relationship with the person carrying out the work would have to meet two of the five criteria laid down. Such legal requirements would lead to a change in the form of employment of some self-employed contractors into employees contracted by platforms. In our opinion, the introduction of provisions imposing on “platform workers” a specific formula of cooperation with the platform is unnecessary and, what is more – as our study shows – contrary to the will and expectations of the interested parties themselves.

    Flexibility in employment is a precious value for many people. It is related to, inter alia, self-regulation of working time by the person performing the work, which is convenient for people who cannot take up full-time employment or at fixed times. Often, people experiencing difficulties entering the labour market decide to cooperate with the intermediary of digital platforms. This applies to young people with no professional experience or people of migrant origin. Limiting the earning potential of these groups of people, especially in the current context, would be inadvisable.

    At the beginning of 2022, ZPP conducted a survey among platform workers, based on individual interviews. As much as 95 per cent of respondents confirmed their satisfaction with the economic activity performed via online platforms, and the terms of cooperation with them were described as understandable and fair respectively by 98 and 96 per cent of respondents.[3] Moreover, despite the low market entry threshold, 93 per cent of respondents indicated that they were satisfied with their financial situation.

    The main argument of the European Commission for the adoption of the directive is to strengthen the position of platform workers by improving their social protection and access to benefits conditional on having full-time employment.[4] However, this goal does not meet the expectations of the workers themselves. Most respondents say they do not want a law that would require the platform to hire them full time.[5]

    It should be noted that the proposal for the directive includes certain solutions that can be damaging to the development of services based on digital platforms. For instance, we are concerned about the obligation to apply the provisions of the jurisdiction territorially corresponding to the place of work. In the

    case of cross-border employment, workers often change their place of residence due to the nature of the work. Considering the treaty principle of free movement of workers, performing online work in one Member State should be regarded as equivalent in each Member State and its jurisdiction, irrespective of the declared workplace.

    The legal presumption of the existence of an employment relationship is not beneficial to the functioning of enterprises. The draft directive leaves it to the Member States to determine the legal framework. This can lead to significantly different legal conditions in the Member States, creating severe obstacles to the uniform functioning of online platforms on the EU market.

    In addition, the possibility of rebutting the presumption of an employment relationship may lead to an increase in legal disputes, which will be time-consuming and entail high administrative costs. It will be a mechanism with an increased risk of abuse, and thus it should be expected that a high percentage of disputes will not have a factual basis for its initiation.

    ***

    [1] https://data.consilium.europa.eu/doc/document/ST-14450-2021-INIT/en/pdf

    [2] https://ec.europa.eu/social/BlobServlet?docId=24991&langId=pl

    [3] https://zpp.net.pl/en/zpp-survey-95-of-platform-workers-are-satisfied-with-the-cooperation-with-the-platforms-most-of-them-are-against-compulsory-employment-contracts/

    [4] https://ec.europa.eu/social/BlobServlet?docId=24991&langId=en

    [5] https://zpp.net.pl/en/zpp-survey-95-of-platform-workers-are-satisfied-with-the-cooperation-with-the-platforms-most-of-them-are-against-compulsory-employment-contracts/

     

    See more: 11.05.2022 Position of the Union of Entrepreneurs and Employers (ZPP) on a proposal for a Directive on improving the working conditions in platform work

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