We live in amazing times. The last dozen or so months have been marked by health concerns and fears about the future.
The COVID-19 pandemic might well have taken Poland back to the 1990s. Fortunately, the scenario has not materialised because, as opposed to the 1990s, Poles could count on the state that got actively involved in helping all those in need.
The unprecedented support offered as part of the Anti-Crisis Shield and Financial Shield enabled us to slow down the disastrous consequences of the pandemic and stop the fall in GDP for 2020 at the level of three per cent, a result that was the third best in Europe and unmatched in the group of large countries with a population of over 10 million. We have managed to keep the unemployment rate at around three per cent.
Other data confirm that the Polish economy has coped quite well during the crisis. Export figures registered an all-time record in March 2021, reaching over 110 billion Polish zlotys. In May, the PMI exceeded 57 points, the best result since the index started to be measured. A few months before, the European Commission said that Poland, as one of just four EU member states, ensured the stability of its public finances in both the short- and long-term perspective.
Time of crisis – opportunity or disaster?
A crisis from which no lessons are learnt is a disaster. Properly recognised and understood, however, it becomes an opportunity as well as a catalyst for change. These two sentences sum up the philosophy behind the Polish Deal.
Faced with the crisis of COVID-19, we must act like doctors do when they deal with the virus itself. We also know from history that a crisis, whatever its nature, requires increased presence of the state as it has to be managed rather than left to itself.
In 1933, American President Franklin D. Roosevelt announced the New Deal in response to the Great Depression. This is the scenario that inspires Poland today.
Polish Deal: a new quality
The objectives of the Polish Deal focus not only on rebuilding Poland after the pandemic but also on refashioning the Polish economic and social system to make it more equitable and crisis-proof so that the country can be set on a new path of development.
COVID-19 has pushed the healthcare system to the brink of collapse even in the richest countries. Poland was no exception. Had it not been for a very firm restrictions policy and a network of makeshift hospitals built at an amazing pace, our country would have also experienced a pandemic breakdown. It is hard to imagine its scale and the ensuing chaos that would have occurred if we had not digitalised much of the system before the crisis.
The objectives of the Polish Deal focus not only on rebuilding Poland after the pandemic but also on refashioning the Polish economic and social system- Mateusz Morawiecki
We have spent over 100 billion Polish zlotys on healthcare in the last five years and its quality is still not up to the standard expected by the public. This is a clear signal that the current system of healthcare funding has reached its limit.
If we want to take a qualitative leap forward to make Poland rise up to the level of Western countries, we must step up our efforts to set aside seven per cent of GDP for healthcare.
Polish taxation paradox
This requires that we change our model of healthcare funding and, thus, our taxation system. So far, Poland is the only country where part of the healthcare premium is tax-deductible.
The structure of the entire system means that those who earn the most can optimise their taxes relatively easily. Hence, the Polish tax system, although nominally progressive, has become, in fact, regressive. People of lower income pay proportionally higher taxes than people who earn more.
Recent studies show clearly that the pandemic year of 2020 aggravated income disparity. The rich got richer regardless of the crisis while the poorest lost precisely because of the difficult circumstances.
Towards a Poland of true solidarity
The Polish Deal addresses these challenges because it stems from the spirit of genuine solidarity which should be understood very broadly. It is horizontal in the sense of ensuring social justice, bridging income gaps and supporting those who earn the least.
To that end, we have increased the income tax threshold to 30,000 Polish zlotys (approximately €7,000), which is close to the thresholds used in Western countries: it is higher than in France and comparable to Denmark.
But the Polish Deal is also about vertical or inter-generational solidarity.
On the one hand, we turn towards the past by supporting old people through tax-exempt pensions.
We want to take care of future generations and lay the foundations for development that will help our children earn more, work in better conditions and, last but not least, live in an environment where they will breathe fresh air rather than read about it as a luxury for the select few.
The early 2020s is a crucial time for Poland. Due to historical circumstances, we were only passive witnesses of such changes in the past. Now we can be their active participants.
All we need to do now is put the Polish Deal into practice.
We will try to win the widest possible support for the strategy as it is only with social acceptance that it can be successful.
This article also appeared in the Polish monthly opinion magazine Wszystko Co Najważniejsze as part of a project carried out with the Institute of National Remembrance and Poland’s central bank.
Mateusz Morawiecki, Prime Minister of Poland