Warsaw, 10^th March 2020

European Enterprise Alliance welcomes a new member from Ukraine

During the first General Assembly of 2020 of the European Enterprise Alliance, the membership of a new organisation, the European Business Association of Ukraine, was approved.

“We are delighted to welcome our new member in the world of business and politics and we are looking forward to cooperating on enhancing the business environment for SMEs. The fact that the European Business Alliance joined the EEA is tribute to the appreciation we receive as a young, but highly active organisation within Europe, and not only within the EU,” – said Marcin Nowacki, President of the European Enterprise Alliance.

Established in 1999, the European Business Association provides a platform to work together with international partners, Ukrainian state officials and institutions to create a stable and reliable business climate in the country, strive to achieve new ambitious goals to make the voice of modern business in the country stronger. This initiative was initially supported by the European Commission and has grown to become one of the largest and most influential business communities in the nation. Today, the Association unites more than 1100 businesses.

Further information: https://eba.com.ua/en/.

***

European Enterprise Alliance is an independent organization of experts, entrepreneurs and pro-market intellectuals, convinced that the best way forward is to protect economic freedoms, and in particular to guarantee an equal playing field for small and medium-sized Enterprises.

Equal rights and a transparent business environment enable small and medium-sized enterprises to compete with global players, bringing continuity to the thoughts of the founding fathers of the EU, convinced that European integration can only be achieved by building a community of interests and increasing prosperity.

 

Photo. Kaufdex / pixabay.com

Warsaw, 11^th March 2020

Prime Minister,

Entrepreneurs are not giving in to panic, but they do observe with a high degree of anxiety how the situation related to the spread of the new coronavirus causing COVID-19 is developing. We fully understand the need to introduce certain exceptional solutions aimed at fighting the virus. Therefore, we would like to express our general support for the special act under works by the government.

We understand that the actions undertaken by the government, such as the closing of schools and universities or the ban on organising mass events, are aimed at fighting the virus. However, we must emphasise that they will cause complications and costs for many entrepreneurs who will have to bear the expenses associated with enabling employees to provide childcare or having to cancel scheduled events.

The negative impact of the coronavirus epidemic is already being felt on a global scale, primarily in the tourism industry, but it is likely that other sectors of the economy, such as the food catering industry, will also suffer. We will have to face the limited availability of staff resulting from the increasing number of people quarantined. Business processes are currently largely suspended due to the reduction in the number of trips and meetings, as well as due to preventive measures, such as ordering our employees to work remotely at home (home office mode).

Problems caused by the virus will encompass a wide range of industries – from food production and distribution, through pharmaceuticals, to the cosmetics industry and many others. Consequently, the epidemic becomes a problem not for individual sectors, but for the entire economy.

Considering the threats listed above, which will all have their specific impact on reducing the stability of supplies, as well as the entrepreneurs’ willingness, enforced by the circumstances, to submit to special rigors resulting from the growing extent of epidemic, we would like to appeal to the Prime Minister not to undertake in the nearest future and cease any and all legislative initiatives increasing the administrative obligations and public-legal burdens on companies. The ongoing legislative processes regarding legal acts introducing new bureaucratic or fiscal burdens (taxes, levies, fees, premiums etc.) should be suspended so as not to intensify the negative impact of the epidemic on the economy.

In order to avoid a deep recession (the record declines observed on stock exchanges around the world suggest the risk of it taking place), we should intervene by introducing an ambitious deregulation package. We postulate that a legislative review should be carried out whose aim should be to reduce existing burdens on businesses, including fiscal ones, so that the negative economic effects caused by the coronavirus can be offset.

Polish entrepreneurs have been expecting a certain slowdown for a long time, one that naturally results from the business cycle. However, the coronavirus epidemic may result not in a mild correction of the growth rate, but in its significant reduction whose impact will be felt by all participants of economy. It is already estimated that the GDP growth rate may fall by as much as 1.3 percent. Examples from other countries show that legislative interventions resulting from the state of emergency sparked by the epidemic can be very through, such as those introduced in Italy where mortgage repayment was suspended. We urge you to take advantage of this perilous situation for the Polish economy and introduce solutions that will not only alleviate the temporary problems of individual sectors and industries, but will remain useful in the long run.

 

The scanned version of the paper document is available here.

Warsaw, 20^th January 2020

 

Serious symptoms of an economic slowdown. Record low investment indicator

 

The index measuring entrepreneurs’ mood “Busometr” for the second half of 2020 amounted to 44.5 points (a decrease from 48.8 points in the previous half year), which means that the mood of entrepreneurs continues to deteriorate. A decrease in mood among companies took place in all components measured (the economic situation, labour market, and investments). The level of investment sentiment reached the lowest level in the Index’s history. Despite the decrease, entrepreneurs show relative optimism regarding the situation on the labour market.

Over the last three half-year periods, the sentiment of entrepreneurs surveyed has been deteriorating. In the first half of 2020, micro-enterprises remain the most pessimistic (index amounted to 41.3). Moods improve as the size of the surveyed enterprise increases. Younger companies, operating on the market for no more than 5 years, also have a higher optimism index. Entities in central Poland show the worst moods. Companies in the northern part of the country look to the future most optimistically.

“After a record-breaking optimistic second half of 2018, we have seen a consistent decline in sentiment among entrepreneurs for three consecutive editions of the survey. These are undoubtedly symptoms of an economic slowdown in Poland. In the area of investment, we pay the price for the communication chaos generated by the government and hasty, enforced out of the blue regulations,” comments Cezary Kaźmierczak, president of the Union of Entrepreneurs and Employers.

The spirits are still highest in the manufacturing industry (index amounted to 49.3). The mood is worse in trade (45.4) and services (43.2). It should be pointed out that only a measurement exceeding 50 points indicates a positive trend in the evaluation of a given component.

Polish companies continue to positively assess the situation on the labour market. The value of the index in this component reached 55.8 points and only recorded a slight 1.3 points decrease compared to the previous half year. Interestingly, the percentage of both companies planning raises (29% compared to 25% in the previous half-year) and those that plan to reduce remuneration rose (6% compared to only 2% of companies in the second half of 2019).

 

***

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

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

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

The Union of Entrepreneurs and Employers along with Maison&Partners conduct the research among a representative group of small and medium enterprises employing up to 250 people. Busometr ZPP is published every six months.

The survey is carried out since 2011.

 

14.01.2020 Busometr Index. Forecast for the 1^st half of 2020

 

Fot. Mediamodifier/pixabay.com

Warsaw, 23^rd January 2020

 

The Union of Entrepreneurs and Employers:
One has to stop the trend of small stores in decline

 

Sales in small stores are consistently falling. As a result, their number decreases. Expert reports indicate that this negative phenomenon is exacerbated by the Act on Sunday trade restrictions. In spite of appeals from employers’ organizations, the legislature does not plan any attempts to liberalise the trade ban. We should undertake all actions that can stop the liquidation of small Polish stores – calls the Union of Entrepreneurs and Employers. As one of the solutions, the Union offers large-scale implementation of technological innovations in small trade.

Trade in Poland increases annual. The driving force of this phenomenon is growing consumption, which is the main component in the growth structure of the Polish gross domestic product. Despite this favourable environment, small stores are further being closed down. There is a consistent decline in sales in the traditional segment (unorganised, individual stores located primarily in small towns and in rural areas) at the level of about 7.7% annually. Expert opinions point to the impact of the Act on Sunday trade restrictions as the driver deepening the negative trend of a decline in the role of traditional trade – notes the Union of Entrepreneurs and Employers in a newly published report “Prospects for improving competitiveness on the retail market in Poland”.

“The law that was supposed to help small stores has the exact opposite effect. It is observed that 49% of small traders run two or more stores. Therefore, the regulations affect them directly,” says Piotr Palutkiewicz representing the Union of Entrepreneurs and Employers. “The share of discount stores actively running marketing policies is changing the purchasing behaviour of the Polish people. Furthermore, large networks, taking advantage of economies of scale, have a strong negotiating position vis-à-vis producers and manufacturers and are able to quickly reach consumers with special offers. Big producers, in turn, do not spend time negotiating and executing bargains with small partners,” he adds.

The Union remarks in the report that the number of small grocery stores is steadily decreasing, while the so-called ‘small format’ has hitherto remained the main strength of the Polish FMCG market, which is a rarity on a European scale. As a consequence, the Union of Entrepreneurs and Employers recommends taking measures to stop further closing down the small stores. To achieve this goal, the Union pointed to the significance of implementing technological innovations aimed at meeting consumers’ expectations.

“This negative trend must be stopped at all cost. Poles still want to do their shopping in local stores. If these shops want to survive, they must adopt the practices used, for instance, by convenience stores. In this respect, the M/Platform created by the Polish company Comp Centrum Innowacji seems to be an interesting initiative. Already 9,000 small stores belong to this network. The tool provided by the company enables organising and managing offers and competitive price competition. This is a great opportunity for small Polish trade,” claims Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. The Union’s leader adds: “The use of technology must be combined with the modernisation of activities similar to convenience store practices. Thanks to these two elements put together, many small Polish stores might have the chance to survive and be profitable.”

The Union estimates that the use of the M/platform tool may contribute to a change in the structure and nature of Polish trade. The case study cited in the report shows that a small store, deciding to use the platform, receives a fiscal module combined with sales management software. Owing to this, the store has at its disposal software recording sales as well as data regarding, among others, historical sales, payment settlements, product indexation, or analytical reports that allow its users to track trends in customer purchases. As part of the application, they receive promotional offers directly from producers.

By using the tool, the customer receives a product at a lower price, a small store offers bargains previously unavailable, while maintaining a margin on the goods sold. The manufacturer or producer increase sales.

“It is a solution providing retail stores with access to promotions offered directly by FMCG manufacturers. As a consequence, small stores are able to compete in terms of price with large stores, discount stores, and large retail chains,” adds Piotr Palutkiewicz.

“We must put a stop to the trend of small stores closing down by all means necessary. If the Government does not want to help them by liberalising the Sunday trade ban act, shopkeepers have to take matters into their own hands again and implement all tools available to them that can be helpful in competing with large entities. At the same time, the Union will not give up on its activities aimed at amending to the trade ban act,” concludes Cezary Kaźmierczak.

 

23.01.2020 Report by the Union of Entrepreneurs and Employers: Prospects for improving competitiveness on the retail market in Poland

Warsaw, 22^nd January 2020

 

Commentary by the Union of Entrepreneurs and Employers regarding the notification
obligation concerning the draft act on the amendment of certain acts in connection with
promotion of healthy consumer choices

 

The draft act on the amendment of certain acts in connection with the promotion of healthy consumer choices appeared on the website of the Government Legislation Centre at the end of December 2019 and sparked an understandable stir in entrepreneurial circles. First of all, the draft assumes the introduction of a new tax (erroneously therein referred to as “the fee”) on the sale of drinks sweetened with sugar or other sweeteners – beginning in April 2020 – not from 2022 onwards as previously announced in the National Oncological Strategy. Haste in the manner how the draft act is being proceeded, apart from the fact that it is unacceptable from the point of view of the basic rules of honest public consultations, may have very serious consequences of a different nature. The Polish legislator completely fails to recognise the fact that the proposed legal provisions may constitute technical regulations subject to the obligation to notify the European Commission.

In accordance with Art. 1 section f subsection III of the Directive 2015/1535 of the European Parliament and of the Council of 9^th September 2015 establishing the procedure for the provision of information in the field of technical regulations and rules on information society services, the technical regulations de facto encompass technical specifications or other requirements or rules on services that are associated with fiscal or financial measures affecting the consumption of products or services by enforcing compliance with such technical specifications or other requirements or rules on services. Art. 5 of the Directive provides that member states shall immediately submit to the Commission all draft technical regulations, with the exception of those which fully transpose an international or European standard.

The proposed provisions contain specifications (sugar / sweeteners / active substances content) associated with fiscal measures (tax), which, according to legislators, are to have an impact on the consumption of products (sweetened drinks / beverages containing active substances). Therefore, these provisions meet all the prerequisites for being considered technical regulations subject to the notification obligation. This is further confirmed by the fact that the governments of Estonia or Ireland did notify the European Commission about similar regulations.

The Directive does not explicitly determine specific sanctions arising from violation of the obligation to notify on technical regulations. However, the jurisdiction of the Court of Justice of the European Union states that failure to notify may result in ineffectiveness of regulations against natural persons. The practical consequences of such an outcome in the case of notification absence of the provisions introducing the “sugar tax” in Poland are difficult to predict.

The Union of Entrepreneurs and Employers emphasises its negative attitude towards the discussed regulation. However, apart from its substantive content, the unusually fast pace of the legislative process may impact negatively not only the quality of the regulations, but also the implementation of obligations incumbent on Poland as a member state of the European Union. We urge the legislator to consider and re-examine the project in terms of the necessity to inform the European Commission.

 

Fot. Saramukitza/pixabay.com

The Union of Entrepreneurs and Employers launches its new tool for entrepreneurs with raising employees’ awareness in mind as to how much the state takes away from their remuneration. The Salary Calculator has been designed to show the difference between earned and received remuneration in an easy and transparent way.

The state takes a lot more money from us than we dare think. Most Poles working on a contract of employment do not realise how much their employment costs. The idea of the Union of Employers and Entrepreneurs is to show real amounts and costs incurred by both employee and their employers.

Using the Union’s Salary Calculator, you gain the following:

• an easy to use salary cost calculator,
• a transparent report for your employees,
• a print- and send-ready document,
• percentage and amount calculations regarding the salary of a specific employee.

Raise your employee’s awareness – make use of the Union’s Salary Calculator!

 

Fot. Shutterbug75/pixabay.com

Warsaw, 28th January 2020

 

JUST TRANSITION FUND – POLISH PERSPECTIVE

 

The Polish energy sector is to a significant degree dependent on coal. Approx. 78% of all domestically produced electricity comes from this raw material – at the same time, the average share of solid fuels in the energy mix in the EU amounts to ca. 17%. A gradual reduction of coal-derived electricity and the development of renewable energy sources, required from the point of view of achieving the ambitious climate goals set at the European Union level, will certainly be an enormous infrastructural, economic, and social challenge. The scale of the project is evidenced by the fact that the total cost of Poland’s energy transformation does indeed vary depending on who presents it; however, in any and all scenarios, it reaches several hundred billion euros. The estimates differ depending on their complexity from EUR 140 billion to even EUR 900 billion. Moreover, according to a report by the European Commission, from all the regions in Europe, Silesia will suffer the most negative consequences of this transformation, where up to 40,000 people may lose their jobs.

There is no doubt that Poland’s incurring of the costs indicated above on its very own, even if it were spread over multiple years, basically borders on the impossible. The draft budget act for 2020 assumes that revenues will be equal to expenses, and will amount to PLN 429.5 billion, which is equivalent to approx. EUR 100 billion. In the most comprehensive of the options presented in the course of public debate, enforcing the energy transformation would therefore require devoting all budget revenues to this end for a period of nine years. Given this, the possibilities for financial participation of the European Union in a gigantic economic transformation project seem to be particularly interesting.

The Just Transition Fund, a key element of the mechanism that is to launch, according to the assumptions, EUR 100 billion of investments may become one of the financing tools for this transformation. In connection with the lively discussion over recent weeks about the gravity of the Fund and its benefits for Poland, several remarks should be made.

First of all, whatever funds were to be transferred to Poland from the Just Transition Fund, they will not be sufficient to cover all costs of Poland’s energy transformation. The “fresh” money in the Fund is to be EUR 7.5 billion, constituting the basis to mobilise a total of EUR 100 billion within seven years under public and private investment. Even if the mechanism worked with 100% efficiency and if all the money from it went to Poland only, it would still not allow for a complete financing of our country’s energy transformation.

Secondly, owing to the fact that the Fund is to be credited with only EUR 7.5 billion, doubts have been raised on numerous occasions regarding the possibility of generating with these funds the expected capital expenditure. It should be noted, however, that a similar mechanism proved successful (in terms of efficiency of generating investments) in the case of the Juncker Plan, under which it was possible to mobilise by December 2019 almost EUR 460 billion in investments from the initial EUR 21 billion, by co-financing projects by member states, private investment or instruments of the EIB. Furthermore, Poland was one of the main beneficiaries of the plan in terms of euro invested per GDP. This experience suggests that although there is relatively little “fresh money” in the fund, it may serve as leverage to stimulate capital expenditure higher many times over.

And thirdly, the EUR 2 billion that are to be transferred from the Fund’s budget to Poland are simultaneously a lot and a little. A lot, because all signs point to the fact that Poland will be the country to receive the largest amount of funds. A little, because – as Małgorzata Jarosińska-Jedynak, the Minister of Development Funds and Regional Policy, rightly pointed out – this is still a drop in the vast ocean of needs. And contrary to initial reports, the funds are to reach not only regions strongly dependent on coal, but also those in which peat is extracted or oil from shale is exploited.

To sum up, the Just Transition Fund might be an interesting tool to support Poland’s energy transformation, but it certainly will not be the primary source of its financing. Poland will still have to make use of other sources of support from the EU and mobilise considerable resources of its own.

The Act of 21^st November 2019 amending the Act on Excise Tax – signed on 27^th December 2019, entered into force on 1^st January 2020

 

Politician responsible for the Act: Tadeusz Kościński

Ministry: Finance

Description of Act: The draft act changes the rate of excise duty on selected products. Cigarettes and various forms pf alcohol will be subject to a rate of excise duty 10% higher than before

Minuses:

–  A very short vacatio legis. The industry was not prepared for such a high excise duty increase;

–  Violation of the legal certainty principle. The increase announced was much smaller than the one introduced (by 3%);

–  Increased risk of a grey area in industries where it had successfully been reduced in recent years due to, among others, no major tax changes.

 

Visit our portal Plusy Ujemne (Negative Pluses).

 

Fot. 4924546/ pixabay.com

Warsaw, 3^rd January 2020

 

Commentary of the Union of Entrepreneurs and Employers
on new regulations regarding the transport of persons

 

The regulations establishing the legal framework for the functioning of intermediaries in the transport of persons are theoretically in force since 1^st January 2020. Only theoretically, as there are still no executive provisions of key importance from the point of view of their implementation. We are extremely perplexed that having enforced a very reasonable reform which is the result of months of work and dialogue between the Ministry of Infrastructure and the social side, the legislator was unable to prepare relevant regulations in a timely manner. The consequent of said delay is an unacceptable lack of legal certainty – both for platforms and drivers as well as passengers.

The Act of 16^th May 2019 amending the Act on road transport and some other acts significantly changed the operating conditions for a large number of entities on the passenger transport market. The wording of the regulations would change at individual stages of the two-year-long period of works, but the final approach was a very reasonable compromise: the level of restrictiveness of regulations regarding the taxi market was reduced (e.g. by eliminating municipal topography exams), the provisions were adapted to the requirements of modern times (e.g. introducing the possibility of settling fares using a mobile application, and not necessarily a taximeter) and regulated the activity of platforms providing brokering services for the transport of persons, for instance, by obliging them to obtain a separate licence or brokering services only for entrepreneurs licenced for the transport of persons.

Many technical issues, such as the model brokering licence for transport of persons, as well as standards and requirements for cash registers in the form of software or a mobile application used to settle fares for passenger transport, were not regulated directly in the Act. These were delegated and to be introduced in the form of individual ministerial regulations. While the result of the legislative process regarding the amendment to the Act on road transport can be assessed positively, the legislator has failed the exam in terms of issuing executive acts. For example, the regulation of the Minister of Infrastructure amending the ordinance on the technical conditions of vehicles and the scope of their necessary equipment, eliminating the requirement to equip taxis with taximeters, was announced on 31^st December 2019, which is exactly one day before the amendment to the Act on road transport entered into force – an act that to a certain extent amended the Traffic Law Act by allowing the possibility to use a mobile application in taxis instead of a taximeter. The regulation of the Minister of Infrastructure on the model permit for the profession of road transport operator and the model licence for the performance of road transport and extracts from these documents, containing the model licence for the provision of brokering services for passengers, was not announced until 10^th December 2019. In this case, however, the problem is less worrying, because according to the Act of 16^th May 2019, intermediaries have three months to obtain the appropriate licence.

The real problem, however, concerns the regulations that ought to have been issued by the Minister of Finance and the Minister of Digital Affairs, i.e. dedicated to cash registers in the form of software and a mobile application for settling the passenger transport fee. These provisions have not yet been announced at all, and are of key importance for the proper functioning of entities operating in the field of passenger brokerage. There is no doubt that one of the most important changes introduced as part of the amendment to the Act on road transport was the change enabling settlement of fares using the mobile application.

One of the objectives of the amendment was to reorganise the Polish passenger transport market. Unfortunately, the effect of the lack of relevant regulations is quite the opposite; the present situation generates chaos and a huge sense of uncertainty as to the legal situation of entrepreneurs operating on this market. The Union of Entrepreneurs and Employers has consistently supported legislative changes aimed at modernising regulations regarding market of transport of persons in Poland. We believe that the act resulting from months of work is a good act that fulfils its role. It would be terrible if those efforts were to be wasted by sheer sluggishness in preparing the relevant executive provisions. Therefore, we urge the Minister of Digital Affairs and the Minister of Finance to publish the relevant regulations as soon as possible.

 

Fot. MichaelGaida/pixabay.com

Warsaw, 27^th November 2019

 

Union of Entrepreneurs and Employers presents 5 challenges for
Poland and the new government

 

Public services are currently the biggest challenges for Poland. Healthcare, education, energy transformation, environmental protection and infrastructure – these are the areas which, according to the Union of Entrepreneurs and Employers, are key from the point of view of further development of Poland. The organisation’s experts prepared a 250-page-long report discussing each of them separately.

There can be no doubt that, after the last four years, one could say Poles are much more well off than before. Economic indicators speak for themselves: salaries have increased along with the GDP, and the standard of living of many people has improved significantly. It seems that having achieved this short-term goal, the time has now come to face much more serious challenges. In addition to regulatory changes in the legal environment for business operations, the judicial system and other areas critical for the economy, a number of state policies must be addressed, often associated with public services, the quality of which still leaves much to be desired, and to which we must make significant adjustments to advance as a civilisation.

“The choice of these areas is quite obvious. Besides, Law and Justice had once defined them at one of the Congresses in Katowice,” states Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “Healthcare is in a permanent crisis, and it might get even worse, because we are getting older. Environmental protection is a topic that is very high on the list of EU policy priorities, yet we still do not have a coherent approach to this issue. The energy transformation that we have to accomplish over the next decades is also directly related to it. In the face of changing geopolitical parameters, large infrastructure investments are becoming of key importance. And to finish with, we need a well-educated society to implement all our ambitious plans.”

The report published today is in fact a package of five documents that are the result of many months of hard work of the Union’s experts and consultations with selected external specialists. Each part of the publication contains a diagnosis of the current state of affairs and key recommendations for the future together with a justification. According to the Union’s experts, their implementation may influence the developmental pace of Poland. The thematic scope of the report is, of course, very wide and covers issues from waste management, through the structure of the healthcare market, to the manner educational institutions are managed.

“In all of the analysed areas, we can distinguish some special challenges that we will have to face over the next few years,” notes Jakub Bińkowski, the Union’s director of the Department of Law and Legislation. “We are talking about demographic problems affecting the situation in the healthcare system or the transformation of the economy into a knowledge-based model, forcing changes in the education system or, finally, the implementation of EU environmental and energy policies. All these issues are real phenomena that we will have to face.”

According to the experts of the Union of Entrepreneurs and Employers, the time for the implementation of subsequent social programs has already ended, and the priority for the coming years should be to begin facing the long-term key challenges ahead of Poland.

“One can thinks of this report as a set of strategic assumptions for the state in areas that we believe are an absolutely priority,” concludes Cezary Kaźmierczak. “We worked on it for a long time and consulted with industry experts, because we did not want this report to be considered a collection of our wishful thinking. All the recommendations it contains are realistic and possible to implement.”

Download the report: 27.11.2019 Report by the Union of Entrepreneurs and Employers: 5 challenges for Poland