Polish union leader: “Aid funds will end quickly, the scale of unemployment and bankruptcy will grow”

The coronavirus challenge in Poland

An interview with Piotr Szumlewicz, chairman of the trade union Trade Union Alternative, shortly after Polish prime minister Mateusz Morawiecki and president Andrzej Duda presented the essential ideas behind their Anti-crisis Shield.

Coronavirus has exposed the gigantic scale of illegality on the Polish labor market. An epidemic is a great challenge for the Polish state, and at the same time a chance to rethink the situation and adopt bold solutions that would make the quality of our life improve. Unfortunately, the government does not take advantage of this opportunity – says Piotr Szumlewicz, chairman of the trade union Trade Union Alternative, shortly after Polish prime minister Mateusz Morawiecki and president Andrzej Duda presented the essential ideas behind their Anti-crisis Shield.

In the speech preceding the announcement of the five pillars of the so-called Anti-crisis Shield President Andrzej Duda assured that the costs of the crisis caused by the epidemic will be “fairly shared by entrepreneurs, employees and the state”. Does the program really go in this direction?

The weakest are always the hardest-hitten by crises. And this time it will be no different. I have not heard anything in government declarations about separate support funds for the unemployed, the homeless, the disabled or those who are are employed under non-standard contracts. What is surprising and very worrying is that there is even no mention of any special support for the elderly, whose lives and health are most at risk during an epidemic. Or no plan for the development of care services. I do not need to explain how important they are now.

It is hard for me to say what the president intended to say when he talked about the fair distribution of the costs of the crisis. For a Polish citizen earning a minimum wage, an income drop by 20% often means falling into absolute poverty. For a millionaire it may be a serious loss as well, but definitely it does not mean a significant deterioration of living conditions.

The government says it will save the situation on labor market by funding 40% of the salary of those employed in companies affected by the crisis, while the other 40% would still be paid by the employer. In the case of self-employment or different non-standard contracts they even suggest 80% paid by the state, although it is not sure whether it would be a regular payment. I understand that you think they could do much more, even if we remember that Morawiecki’s crew has not intention to question the very foundations of capitalist order.

The first contradiction: on the one side, we hear about the need to stimulate demand, on the other, the government openly announces very serious reduction of wages. 20% is really a lot. What kind of stimulation of demand is it, if we cut wages and salaries?!

Next: the solutions for people working on non-standard contracts, that is, mandate contracts and specific work contracts and for self-employed are vague and very limited. The government proposes that employees employed under non-standard contracts should receive only 80% of the minimum wage, i.e. 2,000 PLN gross. This is a hunger wage that does not allow to meet basic needs! There is a minimum wage in Polish Labour Code so that no one earns less. The government explicitly discriminates workers employed under non-standard contracts and strengthens their exclusion.

In addition, it is not clear how the authorities want to help these people. Would the aid be provided every month or once? If only once, it’s difficult to even comment on that. I would call it almsgiving. If however it is paid every month, then further questions arise: will the employees with non-standard contracts receive full-time employees’ rights? [there are over 1,3 million people with such contracts in Poland – MKF]. Will employers who have forced fictitious self-employment or mandate contracts instead of standard contracts bear any costs related to the deterioration of the situation of employees who have previously worked for them? There are questions, no answers.

So we should act more firmly? Should the state take a look at non-standard, or “junk contracts”, as they are rightly called by journalists, and automatically turn them into work contracts when all the conditions foreseen by the Labour Code are met?

The Trade Union Alternative believes that the crisis should be used to drastically reduce non-standard contracts. In Poland, hundreds of thousands of security, trade, gastronomy and many other branches have a mandate contract or are self-employed in a situation where all the criteria of a full-time contract are met. In a crisis situation, everyone can see how destructive are the effects of maintaining hundreds of thousands of precarians, deprived of basic protection.

That is why we propose abolition for employers who will now change non-standard contracts into full-time jobs. The state would not punish them for having avoided full-time contracts earlier, and would even help them maintain the newly created jobs. If, however, the companies would still broke the rules, after a few months they would have to pay high fines.

Another solution is to conclude collective agreements for all economy branches.

This is a solution that has been functioning in Western Europe for years. We could copy ready-made patterns.

And these are good examples. By concluding collective agreements, all employees in various industries would have identical forms of employment, pay rates, supplements and bonuses. In addition, the government could launch aid packages that would equally apply to all employees in a given industry, created on the basis of dialogue between employers and trade unions and with their approval, at any time when it is needed in the future.

However, Morawiecki’s government chose to follow another example… the Tusk’s government.

At the time of the trial, the “solidary” Law and Justice party turn out to be just as neoliberal?

Anti-crisis solutions of Civic Platform-Polish People’s Party coalition [very strongly criticized by the current government of Poland – MKF] were similar to the solutions presented by the Mateusz Morawiecki’s government. At that time, subsidies were also provided for entrepreneurs, the wages reduced, a possibility of increasing working time appeared. In his anti-crisis package, Donald Tusk virtually allowed the employers not to pay overtime. The current government recommends the same solution.

Let’s look for other options. One set of proposals comes from the All-Poland Aliance of Trade Unions (OPZZ). There we read: “the employee will receive a wage of at least 50% of his current salary, but not less than the applicable minimum wage. The state will cover that cost with the equivalent of 100% unemployment benefits from the Guaranteed Employee Benefits Fund. The employer will receive a refund from the Labor Fund of part of the paid salary (fe. up to 50%). At the same time, it is necessary to prohibit the employer from terminating the employment contract for reasons that are not related to the employee during the period of receiving support and 6 months after the end of this period”. Is this concept better than the one proposed by the government?

OPZZ proposal does not go far beyond the government’s proposals. In fact, they introduce just a little bit more security for the workers. They also assume and accept that the salaries will drop significantly. If the government is serious about stimulating demand, it should try to ensure that employees’ wages remain at least at their current level.

OPZZ, like other large trade unions in Poland, offers solutions primarily for full-time employees with a fairly paid and stable job. It is hardly surprising – OPZZ is organized mainly in large factories, where working conditions were relatively good so far. However, these solutions do not apply to the workers I mentioned before – under non-standard contracts or those who have already lost their jobs. In recent days many companies have gone bankrupt and this happened to thousands of people. Should they receive any support from the government or wait for low unemployment benefits?

Adrian Zandberg (an MP for The Left – MKF) suggested that the government should support employers, but on the condition that they do not sack anyone.

I support this principle: support for companies provided that jobs are preserved. I am afraid of the situation, when the employer sacks half of the workers and the remaining ones will receive lower wages that will be, in addition co-financed from the budget. Unemployment would increase, wages would fall, and the employer would be the only beneficiary of government benefits.

Conditions for aid for business must be clarified. Unfortunately, I’m afraid that there is no chance for that. Just a glance at the second pillar, addressed to business, confirms my belief that the government’s strategy is wrong.

On March 19, the Left showed its own anti-crisis package proposal. There was talk about securing people on “junk contracts”, about securing household income – it probably responds to your expectations towards stimulating demand.

The Left has prepared a more generous version of government proposals. I am glad that they intend to secure people employed under non-standard contracts, but still, it is not a vision of a structural change of the Polish labor market.

What we need is the imposition of sectoral collective agreements that I have mentioned, erasing the “junk contracts” of the labor market and increasing the role of the National Labor Inspectorate. Furthermore, the Left’s recommendations lack solutions to boost the economic situation and create new jobs. Pumping hundreds of billions into failing companies with no prospect of economic recovery means no more than postponing a catastrophe. If the epidemic lasts over three months, not only the government’s proposals, but also those of the Left will not help.

So what is the most lacking in all these proposals?

I’ll emphasize it once again: I don’t see any actions to stimulate demand in the package. What we have is the idea of pumping billions of Polish zlotys to make companies survive the crisis. In a monthly perspective, this might be a reasonable strategy, but if the epidemic lasts more than three months, we will be end up seeing the collapse of both the state and the economy.

If the economy continues to operate as it does today for over two months, a disaster awaits us. Aid funds will end quickly, the scale of unemployment and bankruptcy of companies will grow, while demand will fall. The government’s program will temporarily save the economy, but it won’t cure it. If the government allows to postpone the payment of social security contributions on a massive scale , postpone repayment of loan installments, launches a program of low interest loans, subsidizes non-functioning companies, then if the economy does not get well quickly, after a few months the system will crumble like a house of cards. Neither private individuals nor companies will be able to afford the repayment of accrued liabilities, and the state will be gradually deprived of the possibility of intervention. The government’s plan is therefore not calculated to counteract the recession systematically, but to treat the current symptoms of the crisis.

So how should the state act?

If the Polish state and economy are to be prepared for at least a few months of the epidemic or for a short-term fall in the number of infections in the summer and a return of the virus in the autumn, then the government should take action to boost at least a few industries. Epidemic is a chance to develop the health service, care sector, remote teaching and training, online commerce, development of new technologies, modernization of state and local government offices. But to invest in new areas of the economy, the government should change its general approach.

We cannot “roll up” the state and the economy during the epidemic. On the contrary: everything must be done to increase employment in selected sectors of the economy. If the government would be brave enough to act innovatively, people who lose jobs today could have find new ones in the sectors that are needed during the epidemic…

Can we afford such innovations?

Creating new jobs in a few months perspective will be cheaper than regular financing of sectors of the economy that fall. It is not money that is the problem. It is the general philosophy of Polish right-wing government. They haven’t understood yet that it is not enough to lock people in homes. Tt is also necessary to invest in work safety, protection of employees and their clients against coronavirus. Unfortunately, so far this dimension of the state’s activity practically doesn’t exist.

Are there any other important solutions missing in the package, from your point of view as a trade union leader?

There are practically no solutions in the package that would permanently improve the situation of employees! Law and Justice did not limit the “junk contracts” when the economic situation was good, nor does it plan to limit them during the epidemic. There are also no ideas on stabilizing the labor market, raising wages, reducing violations of employee rights, increasing the role of trade unions, reducing income inequalities, and improving work security.

The coronavirus pandemic is a great challenge for the Polish state, and also a chance to adopt bold solutions that would make the quality of our life permanently improve. Unfortunately, the government does not take advantage of this opportunity.

How do you assess the announcement of spending 30 billion for state investments – what can be realistically achieved for this amount to stimulate the economy?

The idea of public investment during the crisis is very good, but I have the impression that this is merely a ritual gesture, not a real plan. During the rule of Law and Justice, several state entities have already been created with the aim “to contribute to the development and modernization of the economy”. Most of them were used to create new positions for party nominees. I also don’t know how the government wants to develop public investments during the epidemic, if at the same time people are encouraged to stay home. Many sensible solutions can be presented in this area, but it is difficult to judge them as long as there are no details.

And 7.5 billion for health care? Is that a lot or just a little?

Even if we add 7.5 billion PLN to Poland’s annual expenses on health care, we will still belong to the countries with the lowest expenses on medical care among developed countries. But of course we could do a lot for 7.5 billion PLN, if there was a good plan. Once again – I don’t think there is. We hear many generalities, and the government’s actions during the epidemic leave much to be desired.

The number of tests for coronavirus in Poland is one of the lowest in the European Union, many surgeries are being postponed, thousands of patients cannot get to their family doctors, a large number of hospitals are not prepared for the influx of infected people, and medical workers are still very low paid. So I fully support the increase in spending on healthcare, but I have the impression that the government completely does not know where to allocate the additional funds.

Is the package ill-considered, not calculated?

On a whole, it sounds so vague that I have the feeling that the amounts mentioned by the Prime minister were invented on the spot, just to impress listeners and make people believe that someone is taking care of them.

In fact, we don’t really know anything so far – how many people will get help, what the criteria will be, how the government wants to handle the requests of hundreds of thousands of people affected by the epidemic. And bankruptcies and dismissals are taking place right now.

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