ZPP Newsletter
Warsaw, 24th September 2019
The Union of Entrepreneurs and Employers evaluates positively –
THE ACTIONS OF THE LAW AND JUSTICE GOVERNMENT IN TERMS OF ECONOMY
IN THE PREVIOUS TERM
The last four years were a time of unprecedented development for the Polish economy – largely due to the fantastic economic situation in Europe, but one cannot deny the government certain successes of their own. We positively evaluate the actions undertaken by the Law and Justice government in terms of the economy – these are the basic conclusions from the report of the Union of Entrepreneurs and Employers published today.
In the period from 2015 to 2018, we ‘caught up’ to the average European GDP per capita taking into account purchasing power parity by 3.6 percentage points. The average salary increased by 15 percent, and budget revenues, thanks to growing consumption and tightening of the tax system, increased by almost 35 percent.
“These indicators are certainly quite impressive,” says Cezary Kaźmierczak, president of the Union of Entrepreneurs and Employers. “The level of wealth of the Polish people increase over the past four years and that is an undeniable fact. Of course, we experienced the best economic situation in Europe in that period since the times immediately preceding the economic crisis, but the government cannot be denied its merits. The development of the economies of other European countries is a favourable circumstance, but insufficient on its own”.
According to the Union’s experts, within the last four years, one of the objectives set by Law and Justice was achieved: to increase the standard of living of the Polish people. In some respects, however, the summary of their four years in power is slightly worse.
“According to strategic and program documents of the ruling party, the transformation of the Polish economy into an economy based on knowledge and investments was supposed to be the government’s key achievement,” emphasises Marcin Nowacki, vice president of the Union. “Unfortunately, the investment rate in 2018 was significantly lower than in 2015, the share of high technology exports in total exports also decreased. The government talked a lot about the industrial revolution 4.0 and modern re-industrialisation, but the results of hitherto efforts to transform the economy are dissatysfying”.
The Union’s experts point out that it is a difficult task to unambiguously assess how the rule of Law and Justice influenced the regulatory environment for Polish entrepreneurs. Based on international rankings of recognised institutions, it is hard to draw any constructive conclusions – in some rankings, such as Doing Business, our position decreased; in others – such as Paying Taxes, it increased.
“One can say that for every good regulation introduced by the government over the last term, there was one bad regulation,” claims Jakub Bińkowski, the Union’s Secretary of Department of Law and Legislation. “Undoubtedly, adopting the Constitution for Business or subsequent deregulation packages were a success. At the same time, however, provisions closing the market were introduced, such as the ‘pharmacy for a pharmacist’ rule, or increasing the level of fiscal burdens, e.g. solidarity levy establishing a de facto third tax threshold”.
The main conclusion from the report is that Law and Justice managed to achieve their basic goal, i.e. increasing the level of Poles’ wealth, but they neglected modernising the Polish economy. As a result, the threat of the “medium development trap”, which was already mentioned in their political program in 2014, remains valid.
“The indicators speak for themselves: the last four years in terms of the economy were good. An equal number of regulations beneficial and disadvantageous from the business point of view were introduced. The strategic goal of transforming the economy was not achieved, but it is a hard task to execute during only one term. It seems that an adequate assessment of this government’s economic policy is B on a school scale,” sums up Cezary Kaźmierczak.
Download the report: 4 years of Law and Justice in power and the economy
