Stanisław Skarżyński, London
Poland doesn’t have an early warning system of an economic breakdown similar to the ones that are flashing bright red literally everywhere: in nine days half a million people applied to the Universal Credit system in the UK, 3.3 million filed for unemployment benefits in the US, the unemployment rate skyrocketed in Norway from 2,4 to 10,4 per cent.
There are no reasons to believe that the economic fallout of the Covid-19 pandemic is going be any different in Poland, nor to assume that far from perfect, but an overall healthy economy wouldn’t be able to resist this storm as well as those in the other countries - was it given a proper support.
Instead, the economy is in a free fall because the Law and Justice government approaches the outbreak rather as a PR exercise than a disaster that will cost people lives and livelihoods.
In fact, the response to the economic challenge mirrors the way the outbreak is tackled as a public health emergency, where the authorities forbade doctors and nurses to disclose to the media or on social media platforms what is happening at the hospitals, and the Ministry of Health is doing all in its power to reduce the number of listed fatalities by distinguishing between people who have died ‘because of the virus’ and ‘while having the virus’, with only the former included into the official statistic. What the officials are doing does not help the ill or the families of those who have died, the only beneficiary of all these efforts is the government’s PR department.
The image of a country where people exist to serve the government is completed with the decision not to postpone the presidential elections scheduled for May 10. No one knows really whether the reason is that the Law and Justice’s leader Jarosław Kaczyński does not understand what is happening around him, or that he decided that the party cannot risk Andrzej Duda not being re-elected. Whatever it is, the ruling party appears simply not to take under consideration that opening the polling stations will result in a surge in infections and deaths.
The brutal reality of the economic crisis – by some described already as ‘the Great Depression played out in three weeks’ - seems to be equally unacknowledged. While the governments all around the globe deploy unprecedented measures and indeed throw all they have to the front line, the Polish ruling party appears incapable to even comprehend the enormity of the challenge.
The policymakers' aim in Europe is to put entire economies with its agents in stasis with a mix of solutions.
Paying the wages of those affected enable companies to retain employment. Praised fot its approach, the UK will reimburse the companies with 80 per cent of wages of those who are not working, up to £2,500 for three months or longer and generally the same rule applies to self-employed. Similar schemes are launched all around the EU, with 75-90 per cent of the wage paid in Denmark, 87 per cent in France, 60-67 per cent in Germany.
Secondly, direct grants as well as enormous, government-backed lending programmes (with low or no interest rate) are to allow the businesses to pay the remainder of the wages and other bills while the doors are shut. Taxes and contributions are either deterred or waived altogether, as the business rate for the hospitality industry in the UK.
On top of that are the measures taken by the central banks to prevent the financial sector from collapsing. Regulators pump billions to the economy by slashing the interest rates to record-low levels and launching huge programs of quantitative easing.
What the Polish government has presented and branded as the ‘anti-crisis shield’ is mimicking these measures, but due to its very limited scope and lack of even basic structural consistency it is as useful as an umbrella during a bombardment.
First of all, the price tag of PLN 212bn, printed on the ‘anti-crisis shield’ looks decent. It is roughly a tenth of the Polish GDP and it corresponds to the stimulus packages launched in the West, ranging from 10 to 15 per cent.
But unlike other other governments the one in Poland calculated its support for the economy by adding what it is really going to spend to the approximate lending guarantees and estimated quotes of taxes and contributions which are only deterred.
The real amount of new spending is more likely to be around 3-4 per cent of the GDP, as the employment retention scheme is worth about PLN 40bn and 10bn is estimated to be spent on support for the self-employed and those relying on other 'flexible' forms of employment.
The scope of taxes and contributions waived is minimal: only the self-employed and firms employing up to nine employees can apply to have their healthcare and pensions contributions scrapped if they meet elaborate requirements. Larger companies can only apply to deter contributions until June, so they will be required to pay a quadrupled contribution in three months.
The employment retention scheme is limited to 40 per cent of the average wage (for those who maintain operation) or to the unemployment benefit (for those who stopped their operation altogether).
In both cases employees see their income severely reduced and business-owners are required to pay about a half of the salaries. Self-employed and those on zero-hours contracts can apply for a one-off handout of about PLN 2,000 (80 per cent of the living wage).
Effectively, the 'anti-crisis shield' is not only between three to five times smaller than the Danish and British aid packages praised by the economists, but similarly to the American programme fails to prevent the structures from crumbling by encouraging firms to aim at coming out of the crisis with an ability to resume operation.
Instead, Polish companies are encouraged to do what the government's PR department is doing: lay people off and cut the costs in every possible way. The difference is that the Law and Justice leader does not have to look beyond the presidential election to see his 'firm' secured for the next five years. Business-owners are not in such a privileged position.
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