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A STUDY ON STRUCTURAL REFORM IN POLAND 2013-2018 Written by: Anna Dzienis, SGH Warsaw School of Economics, Collegium of World Economy, World Economy Research Institute Arkadiusz Michał Kowalski, SGH Warsaw School of Economics, Collegium of World Economy, World Economy Research Institute Marek Lachowicz, SGH Warsaw School of Economics, Collegium of World Economy, World Economy Research Institute Marta Mackiewicz, SGH Warsaw School of Economics, Collegium of World Economy, World Economy Research Institute Tomasz M. Napiórkowski, SGH Warsaw School of Economics, Collegium of World Economy, World Economy Research Institute Marzenna Anna Weresa, SGH Warsaw School of Economics, Collegium of World Economy, World Economy Research Institute 2018 EUROPEAN COMMISSION EUROPEAN COMMISSION Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs Directorate A — Competitiveness and European Semester Unit A.2 — European Semester and Member States’ Competitiveness Contact: Tomas Brännström E-mail: [email protected] European Commission B-1049 Brussels 2 A Study on Structural Reform in Poland 2013–2018 A STUDY ON STRUCTURAL REFORM IN POLAND 2013–2018 Final Report (30 November 2018) Study carried out within the Framework Service Contract 'Studies in the Area of European Competitiveness' (ENTR/300/PP/2013/FC-WIFO) World Economy Research Institute (WERI), Collegium of World Economy SGH Warsaw School of Economics, Poland Warsaw, December 2018 1 A Study on Structural Reform in Poland 2013–2018 Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission, however, it reflects the views only of the authors and the Commission cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available on the Internet (http://www.europa.eu). Luxembourg: Publications Office of the European Union, 2018 ISBN XXXXXXX doi: XXXXXXXXX © European Union, 2018 Reproduction is authorised provided the source is acknowledged. 2 A Study on Structural Reform in Poland 2013–2018 Contents EXECUTIVE SUMMARY 5 INTRODUCTION 12 Part I. INNOVATION AND R&D 14 Key elements of the Polish national innovation system (NIS) 14 Innovation and R&D: The innovation performance of Poland compared to selected EU member states 15 Research sector 15 Business environment institutions and industry-university collaboration 21 The effects of innovation activity 27 The regional dimension of innovation performance in Poland 29 Diagnosis: drivers of innovation in Poland 37 Cluster division of Polish NUTS 2 regions based on innovation-related indicators 38 Econometric modelling of innovation performance in Poland 45 Follow-up to econometrics – time series dissimilarity analysis 49 Innovation policy analysis 53 Government bodies involved in the design and implementation of R&I policy 54 Key strategic direction for innovation policy in Poland – an overview 55 An overview of selected policy instruments supporting R&I 56 Innovation policy instruments – successful case studies 60 Case study of an unsuccessful innovation policy instrument in Poland – ‘tax relief for buying new technologies’. 79 Conclusions and policy implications 82 Part II. AVAILABILITY OF SUITABLE LABOUR SUPPLY AND SKILLS 85 Labour supply and demand 85 Economic activity of the population in Poland 85 Employment 89 Employment and wages in the private sector 95 Unemployment 98 Labour market transition 100 Job creation 101 Emigration and immigration 112 Emigration 112 Immigration 115 Skills shortages 117 Skills upgrading: lifelong learning 119 Beveridge curve 120 Diagnosis: Labour market modelling 122 Restructuring the labour market in Poland: policy analysis 132 Labour contracts: regular employment contract and civil law contract (former - definite period of time cannot exceed 33 months, latter - minimum hourly wage) 132 Pension system: Open Pension Funds’ reform, reduction in retirement age to 60 for women and 65 for men, planned new pension system (for employees) 135 Social security and benefits: 500+ programme, 12 month-long maternity leave 136 Education: lifelong learning strategy, education reform with a focus on vocational education and training, etc. 137 3 A Study on Structural Reform in Poland 2013–2018 Conclusions and policy implications 138 Part III. IMPROVED BUSINESS (REGULATORY) ENVIRONMENT 139 The business (regulatory) environment in Poland 2013–2017 in an international perspective 139 Characteristics of the business regulatory environment 142 The business regulatory environment assessed by Polish entrepreneurs 142 Perception of the business (regulatory) environment in Poland by foreign investors 145 Diagnosis of the quality of the business (regulatory) environment in Poland 146 The main problems identified by entrepreneurs’ organisations 146 Frequent changes to the legal framework 148 Deficit in appropriate stakeholder consultations 149 Interpretation of law 153 Regulatory impact assessments 154 Changes in the regulatory burden as a result of legislative changes 161 Selected legal acts that make it difficult to conduct business 164 Recent policy initiatives to improve the situation 165 Conclusions and policy recommendations 168 Part IV. MEASURES TO FOSTER BUSINESS GROWTH 170 Description of the current state of business growth in Poland 170 Development of Polish business: the country perspective 171 Development of Polish businesses: the cross-voivodeship perspective 172 Development of Polish businesses: the sector and the size perspectives 177 Doing business in Poland – status quo 181 General perspective of doing business in Poland in 2018 181 General perspective of doing business across Polish cities 184 Reforms related to doing business in Poland 187 Conclusions from the descriptive analysis 190 Diagnosis – inhibitors of business growth in Poland 191 Diagnosis of the business climate in Poland from the scientific literature perspective 192 Diagnosis of the business climate in Poland from the business literature perspective 192 Diagnosis of the business climate in Poland from the governmental literature perspective 195 Diagnosis of the business climate in Poland – conclusions 200 Universities in Poland and their role in fostering business growth 202 Measures to foster business growth – policy analysis 205 Policy description 205 The connection between diagnosed inhibitors and analysed policies 211 Policy implementation 214 Policy analysis conclusions and recommendations 217 List of Abbreviations 219 References 221 4 A Study on Structural Reform in Poland 2013–2018 EXECUTIVE SUMMARY This report provides the analyses of four areas of structural reforms undertaken in Poland in the period 2013–2018, i.e.: 1) Innovation and R&D, analysed in Part I; 2) The availability of suitable labour supply and skills, analysed in Part II; 3) The improved business (regulatory) environment, analysed in Part III, and 4) Measures to foster business growth, such as “Strategy for Responsible Development”, “Constitution for Business” and “Constitution for Science”, which are the focus of Part IV. These four areas are interrelated. Strategic documents designed and approved in the years 2017–2018, such as “Strategy for Responsible Development”, “Constitution for Business” and “Constitution for Science” created a framework for the conditions for conducting business activity in Poland. The regulatory environment for doing business concerns the process of law making, which impacts not only the content of strategic documents and other legal acts, but also their quality. These two areas shape ‘the rules of the game’ in the Polish economy and have an impact on the other two areas studied in this report, i.e. the labour market and research and innovation. The key findings below summarise the results in the four studied areas. Innovation and R&D Poland’s national innovation system is of the ‘catching-up type’, but there is still a gap separating Poland from most other EU countries, as well as from the EU average with regard to innovation performance. Despite a continuous increase of R&D expenditure in Poland, it remains low (0.97% of GDP in 2016) in comparison with the EU-28 average (2.03%) and below the target set by the government for 2020 (1.7%). Business R&D in relation to GDP increased during the years 2013–2016, reaching 0.64% in 2016, i.e. the level corresponding to that noted in other CEE countries, as well as in Spain and Portugal. Poland’s strongest point of its R&I system is the share of the population aged 25–34 with tertiary education, which in the period 2010–2017 exceeded the EU average. Nevertheless, catching up with the EU average in a majority of R&I indicators (and with the EU leaders) still remains a challenge for Poland in the area of R&I. Another challenge that Poland has to face is related to the quality of its research base and its insufficient openness to the world, which can be seen in the low levels of the indicators describing the internationalisation of Poland’s innovation system, such as international scientific co- publications with Polish co-authors, the number of citations worldwide or the share of foreign doctorate students among all doctorate students in Poland. Compared to the EU average, as well as to its peers, Poland underperforms in -science- industry collaboration;
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