Microsoft Word - Wisneiwski_RERA_paper.doc Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 1 ………………………………………………………………… Convergence toward the European Social Model? Impact of EU accession on Polish social policy Jakub Wiśniewski Abstract In order to join the European Union (EU) Poland had to meet a wide range of conditions including adoption of acquis communautaire, significant administrative reforms and economic restructuring. This article deals with all these EU-membership commitments which directly influenced the Polish social policy, spanning such areas as free movement of persons (mainly workers), labour law, social dialogue, labour market and social inclusion policies and pensions. These changes - even if incremental and evolutionary - made the Polish welfare state more compatible with the European Social Model. Judging from the experience of Poland, the European Social Model (ESM) is far from vague and meaningless ideology. The ESM has had a significant impact on national social policies which is discernible at four general levels: values and general rules, which engender a welfare state philosophy shared by all Member States; Community-enforced social minimum standards; European-level institutional co-operative procedures; and monetary transfers in the framework of cohesion policy. The impact of the EU is visible to a varying degree – ranging from substantial in the peripheral areas such as gender equality or health and safety at work to purely theoretical in fiscal and monetary matters. The Polish welfare state has been heavily influenced by practical day-to-day administrative and institutional co-operation of Poland with the UE. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 2 Introduction The “Big Bang” enlargement of the European Union (EU) of 2004 was unprecedented in the number of acceding countries and the socio-economic disparities between member states resulting from it. The accession of Poland was perceived as part of an historic process, in which countries of Central Eastern Europe overcame the half-century-long division of the continent in order to join the peace, stability and prosperity guaranteed by the Union. The euphoria of May 1 was preceded by a lengthy and painstaking preparation on the part of candidate countries - adoption of acquis communautaire, significant administrative reforms, as well as necessary restructuring of their economies. The EU25 has been a reality for over a year now and some socio-economic ramifications of the accession are starting to be visible in Central Eastern Europe. Has the European Social Model (hereinafter “ESM”) left its mark on the Polish welfare state? If yes, to what extent has the social policy been affected? The answer carries weight not only in the eyes of “new” Europeans, but also for the whole of Europe in general, because it leads to another question: is ESM an important aspect of the European integration in its own right or a mere marginal supplement to the Single Market? In this article we assume that challenges that the Polish state must meet for full EU membership include elements of the European Social Model. Therefore, by studying the accession-influenced reforms in the Polish welfare state one can shed some light on the elusive notion of “Social Europe”. In the second half of 2004, Poland experienced the post-accession boom. It occurred despite the appreciation of the zloty (the Polish currency) and was reflected in the increase of foreign direct investments and a surge in exports. The results could be felt in the social sphere almost immediately. Socio-economic tensions in the Polish countryside have eased thanks to financial transfers through direct payments to farmers (in the framework of the Common Agriculture Policy). Preliminary assessments of the recent enlargement have tended to focus on the economic aspects of the process because these were relatively easy to measure thanks to readily available economic indicators such as the consumer prices index or the unemployment rate. Accession-related changes to the Polish social policy have not previously been analysed in a more systematic manner.1 In order to fill this gap, this article examines the 1 By comparison, in the 1980s and 1990s copious research was carried out as regards the influence of the European Community (EU since 1993) on social policy at the national level. See Simon Bulmer et al.: 1992, Robert Geyer et al.: 2000, Jonas Malmberg: 2004), Donald Sassoon: 1999, Lars Trägårdh: 2002, Antoni Zabalza and Zafiris Tzannatos: 1985. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 3 evidence about how and to what extent the welfare state in Poland has recently evolved under the influence of the European Social Model. European Social Model Although the debate over European social policy has been going on for a very long time, there is no consensus about the concrete definition of ESM. Many experts claim that the historical development of welfare states in Europe pushed them in divergent directions; so that it would be a gross misconception to define ESM as something more than just a very broad set of values which is shared by all Member States. Gøsta Esping-Andersen, known for his typology of “welfare regimes”, distinguished at least three different models of social policy in Europe (Gøsta Esping-Andersen: 1990 and Pekka Kosonen: 1995). The six original members of the European Economic Community belong to the conservative-corporatist group (France, Germany, Italy, Belgium, Luxembourg and, to certain extent, the Netherlands). Great Britain is classified as a case apart, with its social policy having much more in common with the liberal regime represented by the United States than with any other European regime. The third group consists of social-democratic regimes, such as Sweden or Denmark. To these three clusters some experts add a separate Southern European or Mediterranean model of welfare (Mark Kleinman: 2002, p. 33). Along with the enlargement of 2004, the question whether the post-communist countries of Europe represent another distinctive social policy model has come to the fore. The existing typologies notwithstanding, the notions of the “European social policy” or the “European social area” (l’espace social as Jacques Delors, the President of the European Commission, put it in 1985) are widely used in the political jargon of the European Union institutions. These expressions suggest there exists a pan-European model of social policy, which can be compared with other models such as that of the United States. Some politicians go even further in referring to ESM as the “European Welfare State” in statu nascendi - a preparatory stage in the long process of evolution toward common social policy of the European Union. European social policy has developed in response to political and economic integration, which in turn was partly triggered by such socio-economic factors as globalisation and demographic changes, followed by modifications in the employment structure. It is generally believed that there is a necessity for a holistic, co-ordinated at the European level approach to common challenges such as unemployment, social exclusion or population ageing. In this article, we assume that ESM can be analysed at four distinctive levels. First Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 4 and foremost, ESM is about values and general rules, which engender a philosophy shared by all Member States. Second, there is the hard law, i.e. the Community-enforced social minimum standards. Third, there are the European-level institutional co-operative procedures. Last but not least, monetary transfers in the framework of cohesion policy of the EU play an important role in shaping the common European identity in social policy. Values and aims embodied by ESM are ex definitione of a general and imprecise nature. They are either mentioned explicitly in the Treaty establishing the European Community or in numerous strategic programmes such as conclusions of the European Council summits.2 The social objectives, as laid down in articles 2 and 136 of the Treaty establishing the European Community, are “improvement of employment, improvement of living and employment conditions, high level of social protection, social dialogue, development of human capital and combating social exclusion” (Didier Fouarge: 2003, p. 7). According to the European Council, which debated this question in Barcelona in 2002, ESM “is based on good economic performance, a high level of social protection and education and social dialogue” (European Commission: 2004, p. 5). ESM is also associated with notions of democracy, justice, participation and social cohesion, individual rights, free collective bargaining, market economy, equality of opportunity for all, and solidarity. Common ambitions and objectives “not only reflect shared aspirations, but perhaps more precipitously, a common concern with the new risks of social polarization which beset the advanced welfare states in the European Union” (Anton Hemericjk: 2002, p. 19). The European Commission perceives social policy as a productive factor, where activities at the European level focus not only on promoting growth, but also promoting quality of life. Although the “quality of life” principle does not seem to be properly defined, it points to alternative set of indicators (other than GDP growth rate) to reflect such phenomena as human development or high social efficiency (Fouarge Didier: 2003, p. 10). 2 In March 2000 the European Council adopted the Lisbon Strategy, an action plan for enhancement of the competitiveness of the European economy. The European Council stated explicitly that if the Lisbon Strategy is implemented, the EU will “become the most competitive and dynamic knowledge-based economy in the world, capable of sustained economic growth with more and better jobs and greater social cohesion” (European Council 2000). In 2002 in Barcelona the Strategy, hitherto seen as an economic project, was widened to embrace a bigger number of social goals such as inclusion or high level of social protection. A few years earlier, in 1989, eleven European Economic Community member countries signed the Community Charter of the Fundamental Rights of Workers (Great Britain decided for an opt-out), which is another example of the Community strategic approach. It is also worth noting that policies of the European Union have been heavily influenced by initiatives of the Council of Europe and other international organisations dealing with social affairs. For example in 1961 member countries of the Council of Europe signed the European Social Charter paving the way for various EU activities. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 5 In areas where the Community is given real competence, ESM can be considered in more practical terms. The social integration, propelled by the establishment of the European Economic Community in 1957, was initially a very limited process (due to the lack of power to legislate on the part of the European institutions). The powers of the European Community were extended substantially through subsequent revisions of the original Treaty – mainly The Single European Act signed in 1986, the Maastricht Treaty signed in 1992 and the Amsterdam Treaty signed in 1997. The amendments changed the voting system in the Council from the unanimous agreement to the qualified majority vote in certain areas of social policy (health and safety at work, working conditions, information and consultation of workers, gender equality, integration of persons excluded from the labour market). Given the subsidiarity principle, the Community does not, however, have extensive powers concerning employment policy, social inclusion or social integration. It does not deal much with healthcare, social care, family policy, education or housing. As far as institutional processes are concerned, European integration started with economics, but it gradually “spilled over” to social policy, politics and public administration. The European Union has been described as a “state of courts and technocrats.” At present, given the extent of the economic integration, social affairs are on the agenda of all the major European institutions and bodies. They are assisted by various interest groups, social partners and non-governmental organisations. These actors play an important role as a bridge between national and supra-national social policies. The last aspect of ESM is connected to financial transfers in the framework of structural policy, which is the second biggest component of the EU budget. The main policy instrument in the social field is the European Social Fund (ESF). Although it was established as early as in 1960, its role only started to become significant by the end of the 1980s. ESF provides funding on a major scale via programmes implemented through partnerships of national, regional and local authorities, educational and training institutions, voluntary organisations as well as social partners. The role of ESF is to invest in people – to contribute to the development of a skilled, adaptable and mobile workforce. ESF “focuses on providing citizens with appropriate work skills as well as developing their social interaction skills, thereby improving their self-confidence and adaptability in the job marketplace” (European Commission: 2005). The analysis of the Community-influenced changes in the Polish social policy must take into account the model of the welfare state in this country before the transition process Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 6 began. It is therefore necessary to present a brief outline of the communist social model that was put into practice in Poland between 1945 - 1989. Legacy of the communist social policy model Many typologies of the welfare state do not take into account the countries of Central Eastern Europe, as though an active social policy was never pursued in this region of the world. This is clearly wrong. The postcommunist countries deserve special attention because they – contrary to some of their Western counterparts – have been subject to ambitious social security and labour market reforms lately. The communist social policy model has been categorised as the “state-collectivist”, “bureaucratic-collectivist” welfare state or “an antiliberal, etatistic, hierarchic socialist policy mix with conservative elements” (Mirosław Księżopolski: 1999, p. 117). In communism the state played the role of “a stabiliser of societal production and consumption” (Kosonen, Pekka: 1995, p. 82). The state-collectivist model shared many characteristics with the conservative-corporatist and the social democratic models. Communist welfare states resembled social-democratic regimes to the extent that the state was bestowed with a role of a sole provider of all the social benefits and services. Moreover, social security provision was built upon the universalistic principle. The “social citizenship” idea was embodied in the universal rights to work and education. The state took up the role of employer of last resort, providing citizens with a guarantee of work. Communist countries - just like Nordic welfare states - were “work societies” in the sense that there was a right and an obligation of both men and women to work (Kosonen, Pekka: 1995, p. 85). The communist model was conservative-corporatist to the extent that social rights were closely linked to employment status as the social insurance system was built upon principles of the Bismarckian model. The main difference between market economy-based models and welfare states under soviet tutelage was the means by which the state intervened in the market. In Western Europe, the state influenced consumption of goods and services considerably, whereas the communist state intervened in the allocation of resources at the stage of production of goods (production of many goods such as dairy products or meat was subsidised by the state). Public sector institutions and companies employed surpluses of labour and thus salaries and wages played a role similar to social benefits. There were no unemployment benefits and the social assistance Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 7 system was – as a rule - residual. Although citizens were provided with a safety net against all major social risks (through entitlements to various benefits) communist welfare states did not try to redistribute incomes on a massive scale. The downfall of communism in 1989 led to a gradual reversal of these polices, deemed as incompatible with a free market economy. As a result, during the 1990s subsequent governments experimented with social policy instruments that had been used in Western Europe after World War II. In the context of ongoing economic restructuring, it was extremely difficult for the authorities to keep up high social security standards.3 On December 16, 1991 Poland signed the “European Agreement”. The treaty establishing association with the European Economic Community provided for approximation of legislation with Community law and co-operation on – among others - improving standards of health and safety at work and labour market policy as well as modernisation of the social security system. Additionally, it stipulated that Community workers legally employed in Poland and Poles working in the EU should be treated without discrimination on grounds of nationality as regards their working conditions. Poland submitted an application for EU membership on April 5, 1994. On March 31, 1999 the accession negotiations started. To assess the influence of the EU in the following paragraphs, we now turn to an overview of specific areas of the Polish welfare state. Free movement of persons Free movement of citizens and labour is closely linked to social policy, because travel and migration goes hand in hand with transfer of social security rights. During the negotiations, Poland raised no problems that would necessitate requests for a transitional period or derogations in the negotiation chapter of “free movement of persons” (apart from minor aspects of co-ordination of social security systems). On the day of accession, Poland joined the European Employment Services System (EURES). To a certain extent, it has given a much needed development boost to Polish labour market policy. Organisational activities included development of the national Internet portal, hardware and software investments in 3 During the early 1990s Poland and other postcommunist countries were not so unique in experiencing structural problems leading to reorganisation of the welfare state. Developed countries went through a painful process of transformation to the “postfordist” model of capitalism. With mass production companies in crisis and markets for mass-consumer durables saturated, social security systems came under financial strain. In response to the welfare crisis, social policies underwent significant reforms embracing the arguments of the New Public Management proponents. Mots de jour were “market-type mechanisms” in social policy (quasi-markets, Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 8 job centres as well as information campaigns for employers and job-seekers. Since the accession, services provided by voivodship and poviat4 labour offices have been supplemented by EURES services. Counsellors and assistants who started to be part of the EURES network were suddenly confronted with more the customer-friendly and responsive attitudes of their Western counterparts. More frequently, set against the more business-like approach in the labour offices in the “old” Member States, Polish labour institutions took to active and innovative ways by taking part in local job fairs and regularly sending promotional materials to social partners. There are several European directives concerning right of residence of different groups - workers, employees, entrepreneurs, persons who have ceased their occupational activity, and students in the EU territory. They stipulate conditions for the issuance of permanent residence permits by Member States to intra-Community migrants and their family members. Prior to the accession, Poland acknowledged the rights of the above mentioned categories of persons to enter and stay in Poland under conditions stipulated in the directives. By 2004, EU nationals as well as their family members were granted the right to take up and pursue an occupation without the obligation to obtain a work permit.5 Additionally, they were given the possibility of receiving, under certain conditions, unemployment benefits. All in all, minor modifications apart, the Polish social security system was not affected through legislative and administrative changes in this respect. During the negotiations, the European Commission put much pressure on Poland to introduce measures to ensure that all its professionals would - after the accession - meet all the requirements laid down in the directives. The Commission’s view reflected the anxieties of the national governments that underqualified professionals from “new” Member States would come in floods to settle down in the “old” Member States and lower the professional vouchers, user fees, etc.). Another facet of the ideological shift was a shift from “nanny state” toward “workfare state”. 4 Polish administrative structure is based on three levels of government: voivodships (“województwa” -16 regions), poviats (“powiaty”) and counties (“gminy”). 5 This right applied only to citizens of these Member States, which opened their labour markets to Polish citizens. This article deals only with implications of the EU enlargement on the Polish welfare state, without getting into the subject of “new” Member States’ influence on EU15. It is important to note however that negotiations in the chapter of “free movement of persons” were concluded in 2001 only after a hot and fiery debate. With the unemployment rate on the rise, some “old” Member States were extremely reluctant to open their labour markets to poorer and more cost-competitive newcomers. In the framework of the transitional arrangement agreed by the two parties, restrictions on the movement of workers from Poland to the EU apply for a minimum two-year period as of the date of accession and may remain in place for a maximum of seven years. Additionally, some EU15 countries were afraid of the inflow of migrants whose social security entitlements would put the national budgets under strain. There were even some tendencies to replace transfers with direct services and to replace the Beveridge insurance models with the Bismarck-type ones. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 9 standards in the Single Market. The requirement of Polish citizenship was abolished, wherever it was a precondition for the performance of a profession. The general system for the recognition of qualifications was implemented through amendments of all laws regulating the conditions for the exercise of professions to which the ‘general directives’ apply.6 The list of regulated professions was prepared by the Polish authorities and handed over to the European Commission. Special measures were taken in regard to certain professions – lawyers, nurses, midwives, doctors, dentists, veterinary surgeons, architects and pharmacists. In the case of dentists, a Polish system of professional qualifications had to be reconstructed, because the official titles in Poland and other Member States did not correspond to each other. As the European Commission put it in 2002, “shortcomings have been identified in the curricula and training of nurses and midwives” (European Commission: 2002, p. 53). Not until the Copenhagen summit in December 2002 was the problem of the qualifications of Polish nurses and midwives resolved. Shortly before the accession, Polish authorities expressed anxiety that inter- Community migrations would have a negative impact on the financial stability of the social security system. There were fears that the newly reformed healthcare and social security systems might not reach adequate financial stability to be able to fully participate in the Community co-ordination of social security systems. There was debate among experts in the government over whether to apply for a transitional period concerning financial transfers as regards the co-ordination of healthcare systems. In order to reduce the size of future financial transfers, Polish authorities undertook bilateral negotiations to complete waiver agreements with other Member States. Particularly important is the fact that Poland successfully improved its administrative capacity to apply detailed co-ordination rules in co-operation with other countries, although a lot of preparation, staffing and training was needed before the accession. Belatedly, in 2002, a computer system was set up in the Social Insurance Institution (Zakład Ubezpieczeń Społecznych – ZUS). Some issues connected with free movement of persons are of secondary importance to social policy. For example, European citizenship, which is derivative from nationality in a EU Member State, has more symbolic than real significance. European citizens are entitled to vote and stand as candidates in elections to the European Parliament in any Member State in which they reside. The right to vote and stand as a candidate applies also to municipal elections. Voting rights were conferred to EU citizens in Poland through amendment of the election law. 6 Council Directive 89/48/EEC and Council Directive 92/51/EEC. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 10 Labour law The Community labour law consists of a complex set of regulations dealing with various aspects of employment such as non-discrimination, industrial relations or health and safety at work. It often deals with very specific and narrow issues such as safety and health requirements at temporary or mobile construction sites or surface and underground mineral- extracting industries. Protection of workers is mainly about technicalities, e.g. protective measures in the workplace (work equipment, manual handling of heavy loads, exposure to noise or different chemical and biological substances, work with display screen monitors etc.). These standards include the rights and duties of workers and employers as well as the obligations of the state. The purpose of social directives is to ensure sufficient minimum standards in all the Member States. The transposition of the acquis communautaire to the Polish legal environment proceeded rather smoothly thanks to extensive subsequent revisions of the Labour Code of June 26, 1974 and other laws (e.g. anti-discrimination regulations) or issuing new regulations (health and safety). As early as July 1997, the European Commission stated that “the measures introduced by Poland in the area of labour law nearly bring their legislative situation in line with the EU” (European Commission: 1997, p. 87). This is when social standards concerning the working time, safety and hygiene, protection of juveniles at work, part-time, temporary and posted workers were introduced. Before the accession process began, the Polish labour code did not contain any specific measures to fight discrimination in employment. The term of “equality at work” started to be interpreted broadly, so that social insurance, salaries and wages, access to employment, and burden of proof in sex discrimination cases are included. In 2001, rules of equal pay, equal access to employment, professional training, promotion, working conditions were established (European Commission: 1997, p. 87). The rights of self-employed women were also recognised. Occupational health and safety of female workers who are pregnant or recently gave birth or are breast-feeding was enhanced. The right to parental leave was extended to fathers. Despite all these amendments the non-discrimination principle was not in the eyes of the Commission fully respected in Poland (European Commission: 1997, p. 87). The Commission pointed to the disparities in pay based on gender. In October 2001 Poland, urged by the European Commission, established the Government Plenipotentiary for Equal Status of Women and Men. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 11 Sometimes difficulties in the process of approximation of laws do not refer to high costs but technical issues - changing definitions, measures, indicators etc. For example, assuring compliance with high hygienic safety standards in medical facilities turned out to be expensive. Purchase of new equipment was a big one-time cost, especially for the healthcare providers, given that before the accession medical equipment (used to protect workers from exposure to biological agents) was in poor condition. Poland obtained only one transition period in the chapter of “employment and social affairs”, i.e. in regard to machinery in operation in businesses.7 The Polish authorities did not question the usefulness of the directive as such, appreciating its importance in ensuring safety of workers and creating the best possible protection of their health. There was a widely shared view, however, that rapid implementation of the directive might bring about cumulative increase of expenses, especially as far as small and medium sized enterprises were concerned. This would in turn have led to a decrease in their competitiveness and could have undermined their ability to operate in the Single Market. According to the agreement with the European Commission, new equipment installed in all businesses after December 31, 2002 would have to meet the requirements of the directive. In regard to equipment already operative in businesses by December 31, 2002 a three-year transition period started to be applied until December 31, 2005. During this period such equipment was allowed to operate in businesses. As regards the legal issues, there is another aspect that needs to be mentioned here. In the beginning of the accession process, Polish authorities were tempted to retain provisions restricting the social security entitlements so that only Polish citizens would be eligible, or stating that benefits could only be consumed within their own territory. The fact that the European Court of Justice proved to be insistent in the matter of interpretation of the Community regulations was a decisive factor in reshaping the Polish social security system into compliance with acquis communautaire. The Polish authorities had to accept the fact that they were not allowed to offer minimum unemployment or pension benefits to their own citizens without extending these rights to other EU nationals who also worked in the country. Social Dialogue and the institutional framework Another important area of the European social policy is social dialogue. The Treaty establishing the European Community vested the Commission with powers to undertake 7 Council Directive 89/655/EEC. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 12 measures to develop a dialogue between employers and employees at the European level. The Amsterdam Treaty sanctioned a legislative path whereby social partners are allowed to conclude legally binding agreements. During the accession negotiations this issue was uncontroversial – the Polish government expressed support for the idea of social dialogue and declared readiness to engage Polish representatives in all forums of discussion between employers and employees. Following the provisions of the European Agreement, Poland further developed institutions of social dialogue. In the early 1990s employer and employee organisations struggled to forge a consensus-based approach through engagement in tripartite negotiations (with the participation of the government). In 1997 the European Commission criticised Poland for the lack of a division of labour between social partners and the government. It pointed to the fact that employers were often represented by public companies so that differences between respective parties (employers and the government) got blurred. The Community requirements concerning protection of employees in cases of collective redundancies, transfer of enterprises, employers’ insolvency and functioning of European Work Councils in Poland were introduced without difficulty. Duty to inform employees on the conditions of the labour contract or labour relationship was imposed on employers. In 2001 the lower chamber of the Polish parliament (Sejm) enacted the Law on the Tripartite Commission for Social and Economic Issues. At the regional level the voivodship commissions for social dialogue started to operate in June 2002. Special task-groups were set up involving representatives of central and local government, Sejm, social partners and NGOs. Since the accession, social partners have been having their say in the distribution of the Community financial support in Poland. Thus the new political framework was created. At the European level, representatives of the Polish government and the public administration joined various co-operative bodies such as the Committee for Occupational Exposure Limits to Chemical Agents, the Committee of Senior Labour Inspectors and the Mines Safety Commission. One of the major policy exchange forums that Poland joined was the European Foundation for the Improvement of Living and Working Conditions (the so called Foundation of Dublin). The Foundation offers the possibility for the exchange of information, experience and documentation concerning such areas as health and safety at work and organisation of work. Moreover, Poland acquired member status in different forums of social dialogue sensu stricto at the Community level: the Standing Committee on Employment, sectoral joint committees concerning such areas as fisheries, agriculture, inland navigation, railways, road Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 13 transport, maritime transport, civil aviation, telecommunications services, as well as postal services. The process of integration in the field of social dialogue proved to be difficult for social partners in Poland. It soon became evident that social policy issues, just like any other matters, are discussed at the Community level through procedures and habits that had evolved over the years. “Policy-making in the EU is complex, involving co-operation between different levels. Policy networks involving private interest groups and scientific and technical expertise are important. Informal processes and informal agreements often precede formal (Council of the EU) policy-making, with a network of the EU and national agencies administering the outcome” (Mark Kleinman: 2002, p. 107). The European Commission expressed a view on several occasions that, given the numbers of communicable diseases, Poland needs to significantly improve its healthcare (European Commission: 1997, p. 86). In general, in the 1990s health condition of the Polish population were significantly lower than the EU average. Polish participation in numerous Community action programs (prevention of AIDS and other communicable diseases, drug addiction, combating cancer etc.) did not raise any fundamental issues for the Polish social policy. Council directives concerning labelling of tobacco products and tar yield in cigarettes were quickly transposed to the Polish legal environment. Poland developed a health monitoring system, so that many detailed health indicators, as of accession, started to be comparable with the rest of Member States. As the EU15 would be easily affected by the potential failures of Poland to introduce the Community standards, the European Commission put much pressure on outbreak management, systematic vigilance, greater data analysis, laboratory capability strengthening, data confidentiality, rapid response capability and implementation of Community case definitions (European Commission: 1997, p. 86). Economic integration and the common currency In the contemporary world social issues get increasingly interwoven with economic ones. This tight connection is particularly visible as far as the European Monetary Union (EMU) is concerned. Once monetary policies are integrated at the European level, the financial basis of national welfare state cannot possibly remain unaffected.8 The ongoing 8 Several authors point out that EMU reduces incentives to reform the labour market, because at this level of economic integration, burden of reforms in one Member State can be shifted onto other Member States. Some countries spill over their inefficiencies to others (free-riding) (Luisa Corrado et al.: 2003, p. 43). Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 14 liberalisation, which is triggered by the common currency, leads to a tax competition which, under certain circumstances, may result in the “race to the bottom”. (Anton Hemericjk: 2002, p. 11). Current debate about the “delocalisation” reflects the social and economic consequences of the establishment of the Single Market in 1992. High-tax countries with overregulated labour markets seem to be most affected by this phenomenon. According to estimates of the Polish National Bank, Poland will join EMU in 2011. Poland has however been bound by tight fiscal rules even before joining the eurozone (constraint of three percent of GDP for the budget deficit and sixty percent for the public debt). On several occasions the European Commission urged Poland to trim its fiscal deficit. If Poland is to meet Maastricht convergence criteria soon, its social security system must be put on a more sound financial footing. It entails less ambitious social programmes in the short term and a totally different philosophy of the welfare state in the longer term. This kind of thinking resembles the rhetoric of “Third Way” politicians in Great Britain who advocate merits of the “social investment state”, which merges fiscal responsibility and ambitious social aims into a distinctive policy-mix, characterised by lower but better-targeted social expenditure. The Keynesian welfare state with public deficit-financed social investments has been ruled out through the Stability and Growth Pact regulations. Furthermore, EMU might stimulate a radical shift in collective bargaining from the national to the Community level (Mark Kleinman: 2002, p. 147-148). Effective social dialogue can only be carried out in countries with either very decentralised wage bargaining structures (USA), or very centralised ones (Sweden). Once the European Monetary Union is in force “centralised bargaining at the national level becomes equivalent to decentralised bargaining at the continental level, and hence less beneficial to employment performance” (Mark Kleinman: 2002, p. 148). Thus the monetary integration will lead either to European- level bargaining (unlikely given the differences in productivity across European countries) or more decentralised systems of wage determination. When Poland joins EMU it is improbable that national-level bargaining procedures will remain unaffected. Employment and social inclusion policies In recent years the European Union has been busy taking up initiatives in employment policy that proceeded in parallel to the labour law harmonisation. The chief instrument for promotion of cohesive employment policies was given a name of the “Luxembourg process”. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 15 Four pillars of the European Employment Strategy were established: increased employability; development of business adaptability to new market requirements; development of entrepreneurship; and ensuring equal opportunities for women and men in the labour market. Given the macroeconomic context, the Polish labour market policy is doomed to have different priorities from other Member States for years to come. In the 1990s and 2000s it was heavily influenced by an alarmingly high unemployment rate (reaching 18 percent in 2005), structural inefficiencies in agriculture and industry, deeply entrenched gender inequalities, and low productivity. At the same time there was a rapid increase in the size of the productive-age population. Restructuring of several industries and somewhat different demographic challenges called for a different approach to labour market policy. Under these circumstances, it is understandable that some priorities were valued differently. Notwithstanding its difficult socio-economic situation, Poland did genuinely try to adapt its labour market policy to the recommendations voiced by the European Commission. On January 29, 2001, Poland and the European Commission signed an agreement to accelerate reform of employment systems in preparation for enlargement. The agreement committed the Polish authorities to a set of common labour market objectives and established channels of co- operation for both parties to assess progress on a regular basis.9 The Commission pointed to three priority areas for action by Poland: first, education and professional training (life-long learning, reform of the general education system); second, strengthening of public employment services; and third, tax and social security reform. Throughout the 1990s, the European Commission continued to push the Polish government to develop a regionalised employment service structure to handle active labour market policy (European Commission: 1997, p. 86). As far as macroeconomic policies are concerned, the Polish authorities were urged to reduce the tax burden on low incomes and reform the system of pre-retirement payments. In 2004, prior to the accession, Poland adopted the National Action Plan for Employment (NAP), the main programmatic document in the framework of the European Employment Strategy presenting a “roadmap” for the Polish labour market policy over the next couple of years. NAP was the chief means by which 9 Anna Diamontopolou, EU Commissioner for Employment and Social Affairs said on the occasion of signing the agreement: “(...) Lisbon [Agenda] set the goal of full employment in the EU as the key aim of economic and social policy. The Commission is already pushing ahead to make this vision a reality. We invite Poland and the other candidate countries to share this vision and to help transform it into reality in an enlarged EU. We are all in the same boat: the process of economic and social transition is not limited to the candidate countries. Central to the transition is a sound response to the challenge confronting employment policy and labour markets. European Commission, Poland and Commission sign agreement to accelerate reform of employment systems in preparation for enlargement; press release (Brussels, January 21 2001). Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 16 Poland sought to implement the European employment guidelines formulated in the decision of the Council.10 According to NAP, Polish employment priorities were the following: (Ministry of Economy and Labour: 2004, p. 4): 1. Curbing the institutional barriers for creation of employment opportunities through increased access to quality services of labour market institutions, support for adaptability of enterprises (especially those of small and medium enterprises), as well as promotion of activities enhancing the attractiveness of employment. 2. Development of active labour market policies at the regional and local level, supported by effective implementation of sectoral and regional operational programmes. 3. Occupational activation of disadvantaged unemployed persons, in particular by means of training as well as vocational and general development. 4. Strengthening institutional co-ordination and enhancing the transparency of decision- making. As for the first priority, it has already been mentioned that, throughout the first year of membership, there has been a steady improvement in the quality of services of labour market institutions in Poland. It is estimated that quantitative and qualitative support for the labour offices staff will grow further in the following years ((Ministry of Economy and Labour: 2004, p. 12). Public investments were coupled with the promotion of non-public labour market institutions (mainly job agencies). The Polish government tried to eliminate rigidities and institutional barriers to business such as tax wedges, an inflexible labour code, or unemployment trap. The authorities developed a more coherent system of business services and financial support for small and medium enterprises (covering expenditures for upgrading machinery and equipment, cost of research and development as well as implementation of innovative technologies). Access to external sources of financing investments for business was fostered through changes in the loan and guarantee fund system. Thanks to the EU co- financed Integrated Operational Programme for Regional Development a network of training centres for business start-ups was established. Even if all these initiatives bear fruit in the long term, they do reflect an important shift of the Polish welfare state towards a business-oriented approach in public activities. As regards the second priority, in recent years, Polish labour market policy has been overhauled to respond to the Commission’s recommendations. Instruments such as 10 Council Decision of July 22, 2003 (2003/578/EC). Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 17 apprenticeships, internships, active job placements, self-employment, and voluntary work have become used more widely. Polish labour market institutions started to pay attention to the unemployed having appropriate professional qualifications, including job-seeking skills. The youth was given priority, especially in the vocational training policy. The Voluntary Labour Corps (a governmental youth activation unit) was reformed so that young people could become better prepared for the exigencies of the market. The labour market policy and the education system started to be more closely interlinked, to reflect common goals of human capital development and lifelong learning. In 2005 the government (in co-operation with social partners, sectoral organisations and education authorities) began systematic research in order to set standards for specific vocational qualifications. Important preparatory steps were taken to create an electronic network of regional educational institutions and distance-learning centres. As far as the third priority is concerned, concrete measures were adopted to target sources of social exclusion more efficiently by reaching out to people with low levels of education, disabled, women and ethnic minorities. Social assistance system was reformed in March 2004 when “social contracts” were introduced, i.e. agreements between social officers and recipients of assistance laying down the obligations of both parties. The “welfare-to- work” governmental approach became visible as the unemployed recipients of social assistance were offered professional training programmes and were given responsibility for actively seeking work. At present, people on assistance benefits who have refused to take up employment on offer become ineligible for social assistance. Moreover, the pre-retirement benefits system was retrenched in order to reduce professional de-activation of elderly workers. The new approach of the Polish welfare state to the socially-disadvantaged groups is fully reflected in the gender equality policy. Projects co-financed by ESF helped to disseminate information concerning flexible forms of employment (to promote reconciliation of professional and family life) among women workers. Non-governmental organisations and employers were given resources to fight discrimination at work. The public authorities promoted knowledge and legal awareness concerning anti-discrimination law provisions protecting women. People with disabilities were given special attention through instruments aiming to raise their employability.11 A lot of effort was made to minimise the effects of 11 For example, according to the National Action Plan for Employment for 2005, activities carried out until 2006 will have covered 21 thousand people with a considerable and moderate degree of disability. It is assumed that Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 18 stereotypes and prejudice towards disabled persons. The law on social employment passed in June of 2003 provided for the creation of Social Integration Centres, assisting people returning to (or entering) the open labour market. Poland, urged by the European Commission, paid special attention to members of the Roma community, who were considered to be particularly at risk of social exclusion. The Roma-targeted measures included training, vocational workshops, subsidised employment and accompanying activities such as childcare. As for the fourth priority, one needs to once more emphasise the fact that the National Action Plan for Employment is a product of co-operation between ministries and central government offices and various social, economic and self-governmental partners. The importance of the Tripartite Commission for Social and Economic Issues or the Joint Commission of the Government and Territorial Self-government grew considerably. Given the cyclical character of the peer pressure mechanism, the consultation procedures became a permanent feature of the administrative procedures. The Polish government, having developed NAP, made a significant leap forward as far as the programming of Polish employment policy is concerned. New instruments such as the Labour Demand Forecasting System (LDFS) were introduced. NAP provided a tool to monitor occupational fluctuations in the national and regional labour markets. Thanks to financial resources from the EU co- financed Sectoral Operational Programme, “Human Resources Development” research was launched to develop an analytical methodology for labour market planning and forecasting. The Open Method of Co-ordination is not limited to employment policies. The Member States use this mechanism of peer pressure in the field of pensions (covered in the next section) as well as social inclusion and the fight against poverty. As for the latter, Poland, even as a candidate country, had gradually been invited to participate in the process since 2001 by means of a joint co-operation exercise. The Polish statistics concerning poverty and social exclusion have been adjusted to Eurostat methodology. The Polish government was put under pressure to develop a national, integrated strategy on promoting social inclusion, taking into account EU objectives.12 15-20 percent of the disabled will continue education or find employment after completion of activation programmes offered by labour offices (Ministry of Economy and Labour: 2004, p. 38). 12 “As poverty and social exclusion are multi-dimensional by nature, it is important to promote an integrated approach mobilising various governmental bodies and all relevant stakeholders in the process” (European Commission: 2002, p. 88). Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 19 Employment and social inclusion policies have been given additional resources from the budget of the European Union. The influence of financial transfers from the EU (pre- accession funds, Structural Funds) has already been substantial and according to estimates it will grow in the coming years. In the years 2004-2006 Poland will have received 13,549 billion EUR in total. 3,894 billion EUR will come from the Structural Funds. The Community support from the European Social Fund will amount to 1,749 billion EUR (Ministerstwo Gospodarki: 2004). In order to absorb these resources a lot of preparatory work has been involved for the Polish administration. The Polish government had to set the criteria for selection of projects to be financed under the Sectoral Operational Programme “Human Resources Development” and allot particular tasks to various intermediate bodies such as the Ministry of Education and Sport and the Voivodship Labour Offices. Some degree of rationalisation of public social expenditure had to take place in order to meet the criteria for Community support.13 Pensions The accession to the European Union brought few direct changes to the Polish pension system. The only novelty was to include Poland in the Community co-ordination of social security systems. Since May 1, 2004 Poland has been obliged to transfer pension benefits to other Member States if a person who had worked in Poland moves to live in another EU country. The co-ordination is a big challenge as far as the administrative costs and preparatory procedures are concerned. More importantly, in recent years the European Union has exerted a growing influence over strategic choices for the future of the Polish pension system. In 2001, common objectives for pension system reform were adopted at the European level. The objectives were grouped around three key priorities: adequacy, sustainability and modernisation. Adequacy is mainly about prevention of social exclusion in old age, maintenance of living standards for pensioners and solidarity between generations. Sustainability has to do with co-ordination of pensions with labour market policy, active ageing strategies and sound public finances. Modernisation has to do with making pension systems more responsive to social and economic change through more efficient institutional 13 A radical improvement of the effectiveness of public employment services was a prerequisite for absorption of the European Social Fund resources. The new Law concerning employment promotion and labour market institutions of April 20, 2004 imposed on the Minister of Labour an obligation to formulate standards of labour market services and introduced the requirement of receiving licenses by public employment service employees – job placement officers and vocational counsellors. Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 20 arrangements. In 2002 Member States provided the European Commission with reports on national pension strategies (Poland was not included as a candidate country). In 2003 the European Commission and the European Council prepared jointly the analysis of developments in the Member States. In 2005 the Member States (Poland included) submitted updated National Strategy Reports (NSR). Given the intergovernmental character of the European initiatives, the peer pressure mechanism did not pose an immediate obligation to adopt policies prescribed by the European Commission. Moreover, specific measures of meeting common objectives were not determined at the European level. There are, however, some implications for the Polish pension system. Firstly, the European Union provided Poland with the methodological basis for efficient monitoring of pension reforms and policies, through a set of indicators comparable with other Member States. Secondly, certain policy prescriptions seem to have spilled over to the national agenda (Social Protection Committee: 2005, p. 2). Since the accession there have been efforts in Poland to eliminate these forms of unequal treatment between men and women that are entrenched in the pension system (retirement age, survivors’ benefits, special advantages for raising children, mortality tables used for calculation of benefits). Thirdly, Poland made a significant leap forward as far as the programming of pension reform agenda is concerned. For example the NSR commitments put the Polish authorities under obligation to discuss the likely evolution of incomes for the elderly, taking into account the employment histories of future pensioners, demographic developments and envisaged ongoing reforms in the pension system (Social Protection Committee: 2005, p. 6). National policy-makers were able to acquire a better understanding of the strengths (better demographic situation) and weaknesses (high level of profession deactivation) of Poland in a European perspective. European Social Model – Conclusions A broad overview of EU-influenced changes to the Polish social policy gives credence to the experts’ broad interpretation of the term “European Social Model”. There is more to the European Social Model than white papers, slogans and declarations. It seems justified, when referring to ESM, to include not only general values and objectives, but also legally sanctioned social standards, administrative procedures and financial transfers via the European Social Fund. Some of the effects on the social policy in Poland are hardly measurable. For example, practical day-to-day administrative and institutional co-operation of Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 21 Poland with the EU and other Member States helped to foster a new political framework with a bigger involvement of social partners. All in all, it seems that the Polish social policy has been affected most by ESF operating principles (programming procedures, necessary institutional arrangements) at the operational level. The ESF co-financed investments in Poland would not be possible but for national integrated strategies in the fields of social inclusion, employment and public health. These strategies take into account the EU objectives. Fiscal and monetary aspects of the European integration have had a visible impact on national welfare states, although Poland does not seem to have been affected very much during the first year of membership. The principle of fiscal restraint does not necessarily push “new” Member States into the welcoming arms of neoliberals advocating retrenchment of the welfare state towards American-style residual social policy. When joining the EU, the Central-Eastern countries were integrated into many Community initiatives in the field of social integration and combating poverty. The case of Poland shows clearly that the EU- promoted idea of social justice appeals more fully to the Central-Eastern Europeans than toward American-style liberal welfare states. This is especially visible in the context of popular attitudes and political decision-making procedures where bargaining, coalition- building and consensus are the standard rules. The tangible substance of ESM is visible in peripheral areas such as gender equality or health and safety at work. The EU initiatives contribute to building a network of organisations that are important players at the national level, affecting the context of national social policy. The traditional welfare state is hollowed out in two respects: on the one hand, European institutions pursue their autonomously formulated agenda; on the other, the subsidiarity principle is an effective tool for empowerment of various non-governmental bodies and interest groups. In conclusion, it is necessary to bring up another aspect of Poland’s social integration with the European Union. Recently, there have been numerous discussions at the European level about fundamental goals and practical means for an effective modern social policy. Given the economic problems of countries representing the continental model of the welfare state, some experts suggest that a new L’Europe à l’anglo-Saxonne is being born. Set against the drastic polarisation of visions of Social Europe between “neoliberals” and “etatists”, the political stance of “new” Member States on welfare reform becomes of crucial importance. To what extent has the Polish accession changed the balance of power between the existing Review of European and Russian Affairs vol. 1 no. 1 December 2005 © RERA 2005 all rights reserved 22 visions of reform in Europe? It is too early to answer this question in a decisive manner. Given the volatile political situation in Europe, the question as to whether there will be a shift toward a “European Welfare State” in the future remains open. The case of Poland, however, has shown beyond doubt that the notion of “Social Europe” cannot be simply dismissed as an empty, meaningless ideology. 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