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(en) Poland, ozzip: Anti-crisis Shield - employees will pay for the crisis (again)[machine translation]

Date Tue, 31 Mar 2020 10:21:18 +0300

The plan of amendment of the so-called The "special act" against the coronavirus epidemic was presented as a "shield" to protect society against a deep economic and social crisis. Meanwhile, this project resembles rather the strictest "tightening" policies we know from the crises in 2001-2004 and 2009-2013: employers receive generous support, and the working majority of the society is to protect business through wage cuts and longer working hours. ---- "Protecting jobs" by hunger salaries ---- The only form of employment protection that was envisaged in the "shield" are subsidies to remuneration and contributions to the social security system targeted at companies whose turnover fell by at least 15% within 2 months after January 1, 2020. Employers who found themselves in in this situation, they receive two salary savings tools:
- taking over all or part of the crew "Economic downtime"[1]
- reducing the working time of some groups of employees or all employees to a maximum of 0.5 full-time.

Both of these tools allow the employer to significantly reduce wages - during economic downtime by up to 50%, and with a reduction of working time by 20%. In both cases, salaries after reductions cannot be lower than the minimum wage.

To such reduced wages, employers will receive additional payments from the budget, which will also include social security contributions. From the Guaranteed Employee Benefits Fund (FGSP) and the Labor Fund (FP), from half to 90% of the minimum wage (with economic downtime, depending on the source of funding) or 40% of the average remuneration (with reduced working hours) will be refunded.

The government's "shield" is therefore intended to "protect" jobs only through enormous savings of employers in expenditure on the wage bill - fully covered by employees and the state budget. Let us add that the Act does not require companies whose turnover has fallen, cut any other expenses, although there are many sources from which they could draw funds in such a situation. Dividends paid to shareholders (in the case of listed companies), representation expenses, sales and advertising, planned investments and remuneration of the management are safe. There are no savings measures such as flattening the pay structure, reducing overtime or simply freezing pay.

Importantly, co-financing for downtime does not impose any obligations on employers when it comes to, for example, prohibiting collective dismissals! Such conditions are provided only in the case of co-financing to reduce working hours - employers who receive them cannot make redundancies for a period of 6 months (but only in relation to jobs for which they received co-financing).

The government, which says so much about solidarity, in practice all the costs of the crisis are passed on to employees and does not require anything from employers, except for temporarily limiting the possibility of making redundancies after receiving funding.

Even more flexible working hours

Employers whose turnover has fallen due to the coronavirus epidemic will receive one more tool from the government that allows significant savings - much more freedom in organizing working time by themselves.

The "shield" gives employers the right to unilaterally (without consulting trade unions!) Reduce the minimum period and weekly rest to 8 and 32 hours, respectively (currently the minimum is 11 hours a day and 35 hours a week). In parallel, after making arrangements with trade unions or "employee representation" in establishments where the unions do not operate, the employer will be able to introduce an equivalent working time system allowing for 12-hour changes. Additionally, with the introduction of this system, it is possible to extend the reference period to 12 months.

What does this mean in practice? A shorter minimum rest period, with a longer billing period and facilitating the introduction of an equivalent working time system means that the employer will be able to avoid paying overtime supplements without any problems and organize the work in such a way that it will be possible to work for up to 16 hours a day. This solution is possible, if later - during the accounting period - these moments of more intensive work will be "balanced" by periods when you work less hours a day or fewer days a week, so that the average working time per week is 40 hours. With a one-year accounting period, however, this "sustainability" can only occur in December - so it's hard to talk about any "balance".

Although the Act introduces one "protection" against excessive extension of working time - employers shortening the minimum rest periods to 8 hours a day are obliged to "return" employees and employees taken in this way 3 hours a day, but they have 8 weeks. The problem, however, lies in the very introduction of the possibility of working 16 hours a day - without any restrictions related to e.g. the intensity of work performed.

Weakening of trade unions and suspension of application of employment contract provisions

In theory, all the most important "anti-crisis" tools that employers receive require negotiations with trade unions or "employee representation" (in establishments where unions do not operate). In practice, however, so constructed "anti-crisis" mechanisms put trade union organizations against the wall: either consent to lower salaries or longer working hours, or dismissals. As we have already mentioned, the Act provides absolutely no alternative sources of looking for savings on expenses not related to salaries or working time - unions wanting to block "economic downtime" or changes in working time will therefore be presented by employers to the crew as "guilty" of possible subsequent bankruptcy or dismissal group.

The Act in practice forces unions to sign agreements with employers also because the possibility of co-financing salaries and contributions depends on the earlier signing of an agreement on introducing downtime or shortening working hours. At the same time, the Act does not specify the time for which such an agreement may be concluded and in theory it is possible to conclude an agreement for a longer period than the subsidies from the budget will be paid (3 months).

Moreover, in most workplaces, where trade union organizations do not operate, any negotiations will be a facade simulating "social dialogue", because most often "employee representation" in such places is in practice indicated by the employer and there is no protection against his repression, if, for example, she wanted to block changes that were unfavorable to employees.

The last "anti-crisis" mechanism contained in the shield is the possibility of concluding an agreement on the application of employment terms less favorable than those resulting from employment contracts. Here, "savings" may relate not only to basic salary or overtime, but also to: salary supplements, bonuses and awards (provided they are higher than those resulting from labor law provisions), additional breaks, or other regulations that are more favorable than the minimum specified in the Labor Code.

Draining the Labor Fund and Guaranteed Employee Benefits

The funds from which the "shield" is to be financed in the part concerning employment relations are to come mainly from two special purpose funds: the Labor Fund and the Guaranteed Employee Benefits Fund. FP finances support for the unemployed (benefits, training, internships, career counseling, public works, etc.), while the FGSP pays remuneration and benefits for employees of those employers who have declared bankruptcy. Both funds are supplemented with contributions that are paid from the salaries of persons employed under employment contracts and mandate contracts.

In essence, these are funds that constitute the "socialized" part of our salaries used to support employees in the event of bankruptcy or loss of employment. But the funds accumulated there can be consumed in their entirety by the government's subsidies for employers:

The draft state budget for 2020 assumes that at the end of the year FGSP will have approximately PLN 800 million, and FP - 10 billion (after including receivables that should be paid, i.e. unemployment benefits). According to the government's assumptions, the cost of the shield in the sections "employee security" and "enterprise financing" is a total of 104 billion (with 30 billion assumed for employees and 74 billion for enterprise financing) - so it is clear that these funds are not enough to finance such an extensive plan of providing companies with public money.

What's more, the government also assumes additional support for micro enterprises in the form of non-repayable (!) Loans up to 5,000. PLN - micro-employers will not have to return them unless they release them for half a year after receiving these loans.

There is also a problem with the sources of financing the "shield": the Act does not provide for increased taxes for entrepreneurs or the highest paid. It should be remembered that CIT rates (corporate tax) in Poland are systematically falling. Since 1992, they have been changed 8 times and decreased from 40% (in 1992-1996) to two rates in 2017 - 9% and 19%. It is similar with PIT rates (tax paid by individuals). We had the highest rates at three income thresholds in 1994-1996 (21% -33% -45%), and since 2009 we have two (18% and 32%), which in practice, due to the very small number of people achieving income included in the second rate, introduced a flat tax.

If the government is serious about an extensive support program for working people, it will not avoid changing the tax thresholds. This requires shifting the greater burden of dealing with the crisis to the richest people. In addition, CIT should be increased so that enterprises also cover part of the losses associated with the crisis - as a form of compensation for the years during which they paid minimum taxes.

Junk contracts - junk citizens

Strangely, the provisions regarding the possibility of applying for an allowance for persons employed under a mandate contract (referred to in the Act as "downtime benefit"). First, lost income should be demonstrated in the form of commission or work contracts signed before February 1, 2020. It can be seen that the originators have never experienced precarious work in their civil law contracts, unlike 2.6 million people in Poland who usually sign contracts during or after the execution of the order. This practice, although illegal, is widespread and widespread on the Polish labor market, which means that the majority of people working under civil law contracts have no evidence that they lost their earning opportunities in March 2020.

The second strange thing among the proposed provisions is the possibility of obtaining a downtime benefit by persons working under civil law contracts only on condition that the contract (the one signed before February 1, 2020) amounts to an amount higher than half the minimum salary, i.e. PLN 1,300 gross. Thousands of people earning their living on small orders (e.g. training, translations, office work such as packaging, shipping) who sign several, and sometimes a dozen or so, contracts for several hundred zlotys per month, will only be able to apply for half-pay assistance minimum as long as their current monthly revenues from these contracts do not exceed the planned amount of the grant (PLN 1,300).

The third absurdity, excluding the majority of people working under civil law contracts from state support, is the necessity of submitting an application for a grant by ... the principal, not the contractor.

Not a word about the unemployed

Although the government plans to finance the "shield" from the Labor Fund, it does not say a word about the unemployed who will be coming at the moment. In January 2020, 922,000 were registered in labor offices. persons (the unemployment rate was 5.5%), but only 16.9% (155 thousand) were entitled to the benefit.

The Act does not assume an increase in the number of the unemployed (which must occur in a crisis). Nor does it provide for any change in its amount (currently the basic amount of the benefit is less than PLN 750 net) or the rules for granting unemployment benefit, which for many people is currently unavailable. At present, persons who have worked for a minimum of 12 months in the last 18 months under contracts of at least the minimum wage are entitled to unemployment benefit. This excludes a number of part-time employees with a salary below PLN 2,600 gross and a number of contractors and other persons working under civil law contracts, which have variable monthly income and are in a state of actual unemployment several times a year.

The question remains whether persons who register as unemployed in March and April will still have the right to apply for a downtime benefit for persons working under civil law contracts.

Entrepreneurs under protection, tenants not

The Act introduces provisional protection for tenants freezing rents and the possibility of terminating the lease agreement until June 30 this year. Evictions are also suspended for the duration of the epidemic.

The scandal, however, is that protection of the right to a roof over their heads does not apply to people who have had debt in paying for housing or other bills in the amount of one month's rent. This means that people who are already having difficulties paying bills and are at risk of homelessness have been excluded from protection.

In the current circumstances, the situation rather requires a 90% rent reduction for all tenants. Let us remind you that such a reduction in rents is assumed for entrepreneurs renting stores in shopping malls. It is also necessary to introduce protection for all tenants, especially those who are struggling to pay bills; extend the housing allowance program, and after the epidemic threat and epidemic situation cease, start a mass public rental housing program to provide affordable housing and stimulate the economy.

Summary - continuity of anti-crisis policy

Although the current government presents itself as a cabinet that has broken the legacy of eight years of the rule of the Civic Platform coalition and the Polish People's Party, in the field of anti-crisis policy it reproduces the solutions developed in 2009-2013. The main solutions aimed at "employment protection" are an extension of the provisions of the so-called "Second Anti-Crisis Act" of 2013 (Act on special solutions related to the protection of jobs) - both "economic downtime" and shortening the working time together with subsidies to "jobs saved" in this way were possible , if the decrease in turnover by 15% lasted for half a year. Due to the good economic situation, this act was "forgotten" in a way because few companies used the solutions it contained.

For the trade union movement, this means that we are again facing the necessity of mobilization against attempts to pass the costs of the crisis on to employees and workers, although this time we must organize it in extreme epidemic conditions.

Jakub Grzegorczyk, Katarzyna Rakowska


[1]Economic downtime is a different kind of downtime than the one described in art. 81 of the Labor Code - downtime within the meaning of the Labor Code results from unrelated to the decrease in turnover or the economic situation of the enterprise, and for the duration of such downtime the employee receives 100% or 60% of remuneration (60% in the case of persons paid on the basis of piecework or commissions)

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