Polish Economic Institute report: Poland is head towards greater social solidarity

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The Polish Economic Institute (currently still the IBRKK) presented its first report prepared for the Chancellery of the Prime Minister.

Written by the Institute’s analysts, “Capitalism – the Polish way” shows how Poland’s economic model has been changing in recent years. For years, Poland was a relatively liberal country in economic terms, but it has gone from the 20th country in the OECD in terms of solidarity in 2015 to 16th in 2017. If this trend continues, we can expect Poland to continue moving towards greater social solidarity in coming years.

Poland is the sixth-largest economy in the EU and the 22nd worldwide. It was one of the leaders of global economic growth after 1989. Since then, GDP per capita in Poland has increase by 135%. Only certain countries in Africa and Asia have grown faster.

For a long time, Poland’s economic development was focused on building competitiveness, rather than on social needs. Despite the transition’s economic success, average real national income per adult in Poland increased by 73% — which means growth of around 2.1% per year. Yet the revenue of the richest 10% grew very rapidly, which may confirm that they were the main beneficiaries of economic growth in Poland.

“The new economic model being built by Mateusz Morawiecki’s government is a tax and spending mix. On the one hand, we have improved VAT collection and taxation of the richest, while on the other hand, there is capital for investment and social solidarity,” says Bogusław Bławat, IBRKK’s director. “In this way, a competitive economy gearing towards exports and innovation while providing society with income security can be built.”

“Official social inequality in Poland may be underestimated because the latest research using tax data shows that Poland is closer to China than western Europe when it comes to income inequality,” adds Piotr Arak, the Institute’s deputy director. “Poland currently has the sixth-most generous family policy in the EU and the eighth-most generous among developed countries.”

Just two countries in Central Europe show more solidarity than Poland: Slovenia and the Czech Republic. Alongside Slovenia, Poland is the only country in the region that seems to be continuing to move towards solidarity, while other countries are moving to liberalise many principles of social and economic life. According to Bławat, “this points to the distinctness of capitalism à la polonaise, which, compared to other countries in the region, seems to be closer to old EU member states’ economies. Aware of its distinctness, Poland must promote what has worked in Poland in recent years, but also not rest on its laurels and, for example, prepare solutions aiming to limit European tax havens”.

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