Ill-thought legislation in Poland are more important than the cabinet reshuffle

Marek Tatala // 7 March 2018

The list of bad changes is long: lowering the retirement age, increased politicisation of the economy, a ban on Sunday trading, a ban on land trade, overproduction of bad quality legislation, deterioration of the rule of law –  the list goes on. New faces in the Kaczynski (the de facto political leader in Poland) government mean nothing if its policies stay the same.

The cabinet reshuffle has been extensively discussed by the media and politicians in the weeks following the designation of the new Prime Minister Mateusz Morawiecki. The attention it received would be better directed to a series of bad legislative changes that have already come into force or are just being adopted. These “achievements”, seemingly overlooked even by the new PM Morawiecki, provide a background against which the changes in the government should be analysed.

Morawiecki’s amnesia was was on display during his first speech as PM in December. Both political slogans and legitimate postulates he presented contradicted what the government and the ruling camp have been doing for the last two years, with a prominent participation of Mr. Morawiecki as the Minister of Finance and Development.

For example, Mr. Morawiecki criticised the excessive production of new legislation.  Indeed, a record number of pages of legal acts were adopted in the years 2016-17 (under the Law and Justice government), as confirmed by data published by the Law Barometer of Grant Thornton. In addition, many regulations have been created in a hurry, with only ostensible public consultations or no consultations at all. Was Mr. Morawiecki surreptitiously criticising two years of PiS rule?

Another slogan repeated many times by Mr. Morawiecki was the welfare of future generations. At the same time, the PiS government has compromised it by lowering the retirement age. Its cost will be borne mainly by future generations. Is reducing the retirement age at the expense of future generations an expression of concern for these generations, including unborn children?

Morawiecki talked also about the benefits of the sharing economy. At the same time, the government is working on regulation of Uber and similar transport applications that will eliminate most of the advantages that attract so many customers now. Will the new Minister of Entrepreneurship and Technology Jadwiga Emilewicz stop these bad changes or will she become a gravedigger of cheap and easily available transport services, which – thanks to an innovative idea, the Internet and mobile services – can compete with over-regulated taxis?

During his first speech, Mr. Morawiecki mentioned harmful regulations of the European Union which hit whole sectors of the economy.

But it is his political camp that has pushed through and continues to push through a series of sectoral regulations and burdens in the trade, banking, pharmaceuticals and transport sectors among others. Criticism of excessive EU regulation should not conceal much more harmful national regulations and burdens on enterprises imposed by the Law and Justice government.

In the FOR analysis “Polish PM Morawiecki’s Declarations Versus Reality“, we also pointed out other important inconsistencies between words and deeds. He and his colleagues are talking about the need to increase investment, and at the same time, legal and regulatory instability discourages private investments, so they do not grow despite the announcement of the so-called Morawiecki plan. As per the FOR analysis, “uncertainty caused by unpredictable changes in law made by the new government reduced private sector investment by 30-40 billion zlotys.”

While Mr. Morawiecki has spoken about the modernisation of farms, the policy of the PiS government de facto bans land trade and binds Polish farmers to the land, and perpetuates the backwardness of Polish agriculture. Instead of facilitating the consolidation of farms, it strengthens incentives for it to remain one of the most fragmented agricultural sectors in the European Union.

In our analysis we also discussed the popular myths promoted by Mr. Morawiecki on economic transformation, the fantastically good state of public finances (“Good economic climate and related higher tax revenues mask the problems of public finances”) or the role of the ruling party in reducing unemployment (which in fact is due to the economic cycle and the continuation of the trend started by the predecessors). It is also worth remembering that during the personnel changes in the government, the parliament was finalising the process of adopting a ban on Sunday trading, which will harm consumers, employees, entrepreneurs and the economy.

After the show called “the cabinet reshuffle” has ended, we should return to important topics, such as the grim prospects for long-term economic growth, the lack of serious economic reforms, the relentless destruction of the rule of law and the weakening of Poland’s role in the European Union (cf. FOR report “Perspectives for Poland. The Polish Economy from 2015–2017 Against the Background of the Previous Years and Future Forecasts”). Cosmetic changes in Jarosław Kaczyński’s government will change little if the policy implemented by these governments stays the same.

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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