High unemployment and low social security

Maciej Dębski, Martyna Kulaszewska, Kinga Lohmann, Zofia Łapniewska, Anita Seibert, Aleksandra Solik, Joanna Szabunko, Małgorzata Tarasiewicz
Karat Coalition, Network of East-West Women (NEWW)

High unemployment in a society new to this concept makes for weak social security. The unemployed and their families are likely to live on or below the subsistence level, especially rural residents and women. Some resort to precarious work in the informal sector to meet their needs, while many Poles migrate to other EU countries in search of work. Meanwhile Poland is receiving refugees from other parts of the world who require social assistance.Accessible socialsecurity is often seen in Poland as a relic of communist economic policy. Since1989[1]many opportunities to positively reform aspects of the socio-economic spherehave been lost. Many people experienced a worsening economic situation, becomingunemployed and even homeless. At the same time poverty has become a persistent phenomenon and many people live inpoverty with no possibility of getting adequate support from the state.

Profile of Polish poverty

The average subsistence existence level of income in 2003 for single personhouseholds PLN 355 (USD 129), for pensioners PLN 351 (USD 128), for familieswith two children PLN 1,237 (USD 451) and with three children was PLN 1,560 (USD568). For a household consisting of two adults the minimum income is PLN 584(USD 213). Subsistence levels show us the upper limit of poverty whereassubsistence existence shows us the lower limit of poverty below which humansurvival is threatened.

Poverty is mainly rural, and the percentage of households living in poverty
is clearly rising in the small towns. Currently,the poorest groups in the country are children and youthwhereas in communist times poverty was primarily found among the elderly andpensioners. It should also be noted that poverty has been feminized by the high female unemployment rate, lower salaries, lower pensions andrising number of single mothers. However the most important cause of poverty isthe high rate of unemployment. No less than 51% of households with unemployedpersons in 2005 lived in poverty, while only 18% of households withoutunemployed persons lived in poverty (Panek, 2006).

In March 2005, 23% of Polish households lived below the poverty limit. However,figures are likely overstated since households tend to understate incomes intheir declarations (Panek, 2006) and not to declare income from the informaleconomy.

Roughly 36% of Polish families cannot afford
a meal with meat,poultry, fish or their vegetarian equivalent every second day and about 9% ofhouseholds cannot buy new, better clothes.Due to a lack of resources, one third of households were forced to forego dentalappointments and one fifth had to give up medical appointments entirely.[3]

In 2007, the average monthly income was PLN 489 (USD 178), having increasedfivefold since 1993 when the idea of a poverty threshold was first considered.

Approximately 25% of Poles think that Poland’s accession to the European Unioncaused a rise in the number of poor people in the country, with the elderly andthe poorly educated most fearful of this rise. Their fears are confirmed by thefact that well-educated people represent only 0.5% of the poor.

How welfare works

Support for people living below the poverty limit is determined by theWelfare Act, and distributed by
national and localauthorities, which cooperate with NGOs, the Catholic Church, other churches,religious associations, charities and individuals.

According to the Act, welfare is given to a person and families living inpoverty, those who have lost both parents, single parents in a difficultfinancial situation, large families, the homeless, the unemployed, the disabled,and those suffering from a long-term or serious disease, or experiencingdomestic violence. Victims of human trafficking, alcoholism or drug addiction,natural and ecological disasters, as well as refugees and children and adultswho leave detention centres are also covered by welfare.

Depending on the cause of poverty there are two kinds of social assistanceavailable: financial help which consists of permanent or temporary benefits andfinancial help for foster families, and non-financial assistance in the form ofsocial work, purchase of credit tickets, material help, legal
and psychological counselling, family guidance, and provision of shelter.

A public pension predicament

The current pensionsystem does not function well. In 2001 the risk of poverty for people over theage of 65 was 6.6%. This risk rises to 18% for those people between 60 and 64years of age (KSE, 2005). Current estimations predict that by 2025 the pensionfunds will be insufficient, and therefore, the current generation of 20 to30-year-olds cannot count on the public pension system (CSO, 2007).

The new retirement system started in 1999 by adopting a second, fully funded oldage security pillar consisting of privately managed but publicly owned pensionfunds (Stańko, 2003). The private pension funds have also been operating athird pillar separately but this only includes 2% of the insured since it is notfinancially accessible for the majority of employers (KSE, 2005).

Since the pension received depends on the sizeand number of the contributions paid over one’s working life, the currentsystem contributes to gender inequality and the significant gap in the economicstatus between men and women. On average women earn less then men, hence theirmonthly contributions are smaller. Furthermore, since the age of retirement isdifferent for women (60) and men (65), the contribution period for women isshorter by five years and results in their pensions being 30% lower thanmen’s. A woman retiring at the age of 60 receives 58% of her last salary, butif she worked five years longer she would receive 86%. The current politicaldiscourse about retirement age is not focused on gender equality. Earlierretirement by women is justified by the “the traditional institution of thegrandmother” since they are the ones who care for grandchildren and facilitateyoung women having large families (Kostrzewski and Miączyński, 2006).

Impacts of privatization

Privatization of the once almost entirely public economy has been extensive.Between 1990 and 1992, almost 30% of the state-owned enterprises were privatized(Gorzelak, 1994). In 2002 the private sector produced 72% of gross domesticproduct (GDP) while in the beginning of the 1990s it produced only 30%. Thegovernment planned that by 2005 state enterprises would produce less than 20% ofGDP (Ministry of the Treasury, 2002). However, this did not happen due to aslowing down of the privatization process, which practically stopped in 2006.This change in the privatization trend was unfortunately not the result of anytrue social concerns, but rather due to the populist nature of the rulingcoalition.

In 2006 only the RUCH company, a newsstand operation with over 30,000 kioskslocated throughout Poland, was undergoing privatization. Even in this caseprivatization was limited to the issue of 27% of share capital.[5]It was sold on the Warsaw Stock Exchange in the only manner of privatizationacceptable to the current economically inept government. Despite the governmentbeing extremely critical of privatization and not wanting to be perceived ashaving a negative impact on the economy, they did not include a social packagein the initial public offer. This is despite the fact that the privatization ofRUCH could lead to a 40% decrease in its largely female workforce. Furthermore,the 15% of shares which must be given to employees by Polish privatizationregulations were not awarded. Additionally, no effort was made to prepare RUCHemployees for the change in ownership and its possible consequences. In June2007 RUCH employee trade unions announced a strike alert in response to news offurther privatization.[6]

Public health hardships

Although the obligatory insurance system covers most social groups, somepeople are not entitled to this service and must buy voluntary insurance toaccess public health services. This rule does not apply to pregnant women andminors who are entitled to the public health services regardless of theirinsurance status. The public health system is highly inefficient, with longwaiting lists and limited access to quality services. This affects mainly thepoorest part of the society, especially the elderly, most of whom are women.

Reproductive and sexual health needs are neglected and women’s reproductiverights are being violated. Apart from a strict abortion law, family planningservices are not accessible in the public health system and contraceptives arenot subsidized. School curricula lack obligatory and comprehensive sexualeducation which affects mostly girls and young women who are exposed to a higherrisk of contracting sexually transmitteddiseases and getting pregnancy. Teenage mothers account for up to 7% ofall births in Poland (Federation for Women and Family Planning, n.d.).

Uninsured work force

The period after 1989 saw a loss in economic stability. Under the previoussystem employment was guaranteed for all; therefore Polish society wasill-prepared for the ‘new phenomenon’ of unemployment (Lohmann and Seibert, 2003). At the beginning of the transformationin 1990 the non-socialist Government introduced an unemployment benefit receivedby 70.2% of workers who had lost their jobs. Unemployment increased over theperiod from approximately 6% at the start of the transition to 20% at the timeof Poland’s accession to the EU in 2003. Unfortunately subsequent governmentsdramatically limited unemployment benefits.

A large legal migration to other EU countries contributed to a decrease inunemployment. In 2006, the unemployment rate was 13.6% but the percentage ofunemployed receiving benefits had decreased as well to only 13.4% in 2007.

The concept of unemployment insurance was rather unknown in Poland until thefirst democratic government opened a discussion on the subject. Unfortunately,there were no follow-up or legal proposals made by subsequent governments. On 14June 2007 this issue was presented by the Vice Minister of the Ministry ofLabour and Social Affairs to the Polish Parliamentarian Commission on Labourdemonstrating political will to establish an unemployment insurance system. Afirst draft of the new law could be ready in 2007 (Anka, 2007).

Protecting immigrants

Polish law divides immigrants into those looking for a job and refugees.Each group faces different laws; however these laws operate in a vacuum ofpolitical will and coherence.

According to Polish law, a refugee is a person whohas a justified fear of oppression and stays outside theborder of her or his country. By 2003 there were almost 30,000 petitionsfor refugee status in Poland. Immigrants seeking refuge are placed in refugeecentres, and receive material help, food, clothing,medical and psychologicalhelp, and pocket money since work is prohibited until refugee status is granted.

Immigrants who receive the refugee status do not have any limitationon where they want to live, acquisitionof real property, recognition of certificates and diplomas or possibilityto study. They also have the right to social benefits and a EUR 250 (USD 344)scholarship to learn Polish. This integration assistance is provided for amaximum of six months.

Immigrants who prove Polish descent receive thestatus of repatriate and receive special help (financial,courses about Polish culture and history, vocational guidance, etc.). Otherimmigrants require a work permit to work legally. These are granted only inrelation to jobs no Polish person can perform. If a foreignerworks legally she or he has all rights and responsibilities defined in the LabourCode.

Under the PHARE programme, in place since 2000, a special unit manages resourcesfrom the European Refugee Fund. This fund benefits many Polish institutions suchas educational establishments, researchinstitutes, teaching institutions, and NGOs.

Informal employment

In 2004 more than 1.3 million people were ‘illegally’ employed inPoland. This represents 4% of the total labour force and 9% of the passivelabour force. For 63% of this group their informal activity is their sole sourceof income.

High taxes and unemployment rates leave workers in a vulnerable position. A 2005survey indicated the lack of opportunity to find formal work and insufficientincomes among the main reasons for working in the informal sector (CSO, 2005).

If informal work conditions are detected employees must pay unpaid taxes,while employers must pay penalty fees and face two years in prison. The socialinsurance institution does not often penalize illegal employees since theyalready face disadvantages as unofficial workers. Members of the EU are nowconsidering a common penalty system to increase the risks to employers of usingillegal labour. In some cases these firms would be excluded from receivingnational and European donations.

Approximately 1.5 million foreigners work illegally in Poland. Employers exploitthese undocumented immigrants by paying lower wages and expecting more work. Therisks in being employed illegally include not being fully paid for all work, notcontributing to a pension, and the lack of health insurance. Workers deal withthese circumstances by remaining insured in their home country.

Meanwhile, many women in the informal economy are also recipients of socialsecurity benefits such as pensions, stipends or grants. In most cases, illegalwork is a necessity because they are not able to find a job in their profession.


Anka (2007). “Kiedy będą ubezpieczenia od bezrobocia?”. ZycieWarszawy, 16 June.

Constitution of the Republic of Poland of 2 April 1997. Available from:<www.sejm.gov.pl>

CSO (Central Statistic Office)
(2005). “Work not Registered in Poland in 2004”.Warsaw.

CSO (2007). “Monthly Information about Unemployment In Poland”. May,

Federation for Women and Family Planning (n.d.). Available from:<www.federa.org.pl>

Gorzelak, G. (1994). “Regional patterns of Polish transformation,1990-2005”. In Wódz K. (ed.) Transformationof Old Industrial Regions as
aSociological Problem. Katowice.

Kostrzewski, L. and Miączyński, P. (2006). “Nie bedzie zrownaniawieku emerytalnego?”. Gazeta Wyborcza,14 September.

KSE (2005). “Krajowa Strategia Emerytalna”. Warsaw: Ministry of SocialAffairs.

Lohmann, K. and Seibert, A. (2003). “Gender Assessment of the Impact of EUAccession on the Status of Women in the Labour Market in CEE. National Study:Poland”. Warsaw: Karat Coalition.

Ministry of the Treasury (2002). “Spotkanie Ministra Skarbu Panstwa WieslawaKaczmarka z dziennikarzami z Austrii”. Available from:<www.msp.gov.pl/start.php>.

Panek, T. (2006). Diagnoza Społeczna 2005. Warunki i jakośćżycia Polaków. Warsaw:Wyższa Szkoła Finansów i Zarządzania w Warszawie.

Stańko, D. (2003). PerformanceEvaluation of Public Pension Funds: The Reformed Pension System in Poland.London: The Pensions Institute.


[1] The year when transition from planned to free market economy began in Poland.
[2] Developed by the Network of East-West Women (NEWW) in consultation with several organizations and institutions in Poland. NEWW also developed the following sections of the report: Protecting Immigrants and Informal Employment.
[3] <www.stat.gov.pl/cps/rde/xbcr/gus/PUBL_warunki_zycia_2004-2005.pdf>
[4] The sections of the report on pensions, privatization, health and unemployment insurance have been developed by the Karat Coalition.
[5] <www.ipo.pl>
[6] <www.bankier.pl>