Politics / You will have it worse!

You will have it worse!

Kultura Liberalna's Debate · 11 November 2014
The financial crisis is also a crisis of young Europeans. How many young Poles are concerned with the problems of unemployment and lack of perspectives? And how to help them? Katarzyna Kasia, Jacek Męcina, Piotr Szumlewicz, Joanna Tyrowicz and Karolina Wigura discussed these issues at “Kultura Liberalna”.

Karolina Wigura: Will we in fact- as the debate’s title suggests- have it worse? According to the Eurostat, the unemployment rate among the people under 25 years old is now 23%. Naturally, some of them are students- the number of people competing on the labour market is lower. Nonetheless, some of these working people are affected by the bamboccioni syndrome- they don’t earn enough to be financially independent from their parents. Firstly, I have a question to Jacek Męcina. What kind of legislative projects are being prepared by the Ministry of Labour and Social Policy in order to face these challenges?

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Jacek Męcina

Jacek Męcina: I would like to add only one thing to what you have just said- the number of unemployed young people in Poland has recently declined. Surely, our situation is not as dramatic as in the countries of, for instance, Southern Europe. At the end of the last year, we had prepared a programme supporting young people on the labour market ‘Guarantees for the youth.’ It is a part of the European Youth Pact, presented by the European Commission. This Pact means that Europe mobilizes for a common policy, which is supposed to have not only an interventionist character, but a holistic approach as well.

Karolina Wigura: What does this mean in practice?

Jacek Męcina: We focus on creating a strategy to support the youth. Its first pillar is based on the offers from the jobcentres, Today, young people participate in about 150,000 internship schemes annually. We have introduced an innovative form of coupons: for internships, full employment and for settlement. Few thousand people have used this opportunity so far. Altogether, about a half of the young people will use some form of activation- internships, workshops, postgraduate studies, and even financial support to start their own business or to get a full-employment contract. We can already see some effects: the unemployment rate hit 420,000 in January, now it is below 310,000.

 

In the beginning of their careers, full employment is not really the priority of the youth. A flexible contract has a bigger importance than a full-time contract.

Jacek Męcina

 

Karolina: That’s one of the pillars, and how about the rest?

Jacek Męcina: The second one is based on the European funds, which help to intervene in regions, basing on the competitions organized in every province. Apart from the projects which support employment and raising qualifications, the main difference lies in the mechanism of activation services. We have an assumption that public offices cannot help everyone, therefore we have decided to invite private enterprises to cooperate with us. In January 2015, about 60 ‘private jobcentres’ will be opened, which will broaden our activities, with more individualized approach, as one counselor will have only about 70-80 clients, while in some jobcentres one person has to serve even few hundreds unemployed. The next pillar coordinates activities related to the youngsters endangered with social exclusion. These are organized by Voluntary Labour Corps and others, which help young people to get back to education, get some skills, and sometimes even to help them to leave pathological environments, find some accommodation. We hope that about 20,000 people will get help through this channel to secure their position on the labour market.

Karolina Wigura: You’ve also had plans to introduce loans for young people.

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Karolina Wigura

Jacek Męcina: Yes, the plan would cover loans up to 74,000 PLN with a lowest possible interest rate of 0.6 % annually, paid in seven years, with a one-year delay and easy access- we require an assurance from only one person. We want to promote self-employment and entrepreneurship. A pilot program was introduced last year in Mazowsze, Świętokrzyskie and in Małopolska. The program will cover the whole country by the end of this year. It is addressed to university graduates and senior year students, who need financial support to start their own business, and as a target, all of the unemployed youth. So far we have granted more than a hundred of such loans. In addition, after one year, the borrower may apply for an additional grant of 20,000 PLN for his or her first job position, which would be written off after another year. This program is aimed at about 6 thousand young people, we can create next 6 thousand jobs. The academic entrepreneurship program should change Polish universities, but also develop new, more responsible approaches of the students and academics. It is easy to imagine, that such projects are an alternative to a classic dissertation, where a student, supervised by a professor, but also by the counsellors from the loan funds, prepares his own business plan and enters the market. With the experience of more than a hundred running firms, we can see that the brave and young people , can, and are willing to, think innovatively. In some cases, the program convinced them to stay in Poland, rather than to look for a better luck abroad.

Karolina Wigura: Plans, which you have described, are concerned with graduates or with students in their final years. I would like to ask a question to Joanna Tyrowicz. Perhaps, we should fight with unemployment much earlier, starting with our approach to education in general?

Joanna Tyrowicz: Absolutely. But in order to do that, we have to revise two myths. First of all, universities do not produce unemployed. The education system on earlier stages is to be blamed. We are all used to a message that half of high school graduates goes to further study. In fact, about 80% of students from the general-education schools goes to universities, while only 20% of those from the vocational schools does. Half of the other 80% from the vocational schools cannot find themselves on the labour market. Therefore, most of the future unemployed are people who were misguided with their choice of further education after the secondary school. The conclusion is that the decision, which is will decide about a future job, has to be made at the age of thirteen. Otherwise, you become a member of the NEET group- Not in Education, Employment or Training. This group does not have enough income to get back to education. They are not needed on a local labour market (they are too young with no experience). And they constitute the major problem of the jobcentres- assuming that they will register, because this does not happen that often.

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Joann Tyrowicz

Karolina Wigura: And the other myth?

Joanna Tyrowicz: The other myth concerns the actual amount of state funds that should help the unemployed. We often hear that, the funds minister Męcina has just talked about, would be sufficient to help around 47% of the registered unemployed. This figure- which comes from the number of those using the pensions’ system throughout the year, divided by those registered in any given month- is like dividing cows by horses, it does not tell us anything. We should rather divide the number of those using the pensions’ system in any given year, by the number of the newcomers in any given year. Then we can understand that the help gets to a much smaller number of people. Only one Pole in twenty has a chance to use these instruments of activation!

Karolina Wigura: A question to Piotr Szumlewicz. Does this convince you?

Piotr Szumlewicz: No. Nonpaid internships, selective financing of entrepreneurs, credits or coupons should not be the purpose of the government. They will not solve the most important problems of young people. First of all, the purpose of the government should be ensuring perspectives of a stable employment for the youth, i.e. contracts for indefinite period with all benefits. Second of all, a dignified policy for salaries, which includes assuring a minimum wage. I stress ‘assuring’, not ‘increasing’, since today more than 1,5 million Poles earn less than the minimum wage. Young people constitute a significant part of this group. At the same time, social benefits should be raised and more universal. The state should develop its own housing policy. In this way the youth would stop migrating to the West looking for better perspectives.

It is also important to point to the structural problems of Poland, including low spendings on social policy- the EU average is 29% of GDP, while in Poland it’s only 19%- an unfair tax system- the poor pay relatively high taxes, while the rich pay very low, which together result in a low income for the budget- and high social inequalities, that have been raising in recent years. The government’s challenge should not be changing the education system according to the market, but rather creating new jobs.

 

Nonpaid internships, selective financing of entrepreneurs, credits or coupons should not be the purpose of the government. The purpose of the government should be ensuring perspectives of a stable employment for the youth.

Piotr Szumlewicz

 

Karolina Wigura: Figures presented by GUS (Central Statistical Office of Poland) do not show that inequalities grow. Quite the opposite. How do you imagine that? For instance, when I started studying at the Sociology Institute of the Warsaw University, there were ten candidates for one place. Today, the population decline faces the public universities with completely new challenges. Besides, not only the market changes, some degrees are more or less popular at a given moment.

Piot Szumlewicz: Unfortunately, OECD data show that inequalities are growing, and the state does nothing to reduce them. When I hear minister Męcina talking about the future success of private jobcentres, I can only imagine growing numbers of highly unattractive job offers with very bad terms- minimum wage, commission contracts, or short-time contracts. Private jobcentres do not create jobs, but rather make a mess with the labour market, legitimizing horrible terms of employment. We need to limit the number of commission contracts, volunteering schemes, flexible worktime and liquidate nonpaid internships and temporary work agencies. We need an increase of public spending and creating new jobs, for instance in the social care sector. OPZZ (All-Poland Alliance of Trade Unions) insists on concluding sector collective labour agreements, which would include all the workers, young people as well.

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Piotr Szumlewicz i Katarzyna Kasia

Karolina Wigura: I have a feeling that we have really serious difficulties with discussing these issues- we should have agreed on the terms we are using first. For instance, if the data presented by GUS and OECD say completely different things about inequalities in Poland, perhaps it means we should take into account more factors than the finances? Maybe we need to consider also issues like a feeling of adequacy of our wages and the effort put into education? You Piotr are talking in terms of salaries though. Dear minister, the list of complaints about the public policies to fight the unemployment is getting dangerously long…

Jacek Męcina: I agree with Joanna Tyrowicz about the NEET group. I would only add that the competitions I have been talking about, are also addressed to that group: young people discouraged to find a job. But it is difficult to agree with most of the theses presented by Piotr Szumlewicz. Firstly, full-time employment is not a priority for young people at the beginning of their careers. Surveys recording high frequency of changing jobs confirm that. The same comes with employment’s flexibility. The alternative to that is a de facto non-employment work, or, unfortunately, grey market or unemployment. If we look at the beginning on a labour market in this way, flexible forms of employment are better, the problem is, nonetheless, that they last too long and the perspective for stability move away, which is an issue when people plan having families.

And concerning the temporary work agencies: when we were preparing the reform, we’ve had two possible solutions. We could either increase staff in the jobcentres, or buy a similar service on the market. Once we would have introduced the reform, the first option would mean reductions. Besides, agencies are accounted for the effects. They get 20% of their contract for an assessment of competences and creating a specific plan of action, while everything else, i.e. 80% is paid for successfully getting people into a permanent employment. Working this way, we follow the experiences of Denmark, Great Britain or Germany, as well as few pilot programs we did. The reform of the jobcentres was planned in such a way, so that the centres will gather new job offers. Over the last two years, the number of offers increased ten times and there are more than 70,000 offers in the Base of Job Offers every day, and we get about 115,000 new offers monthly. They are very different in terms of the type of the contract offered, as well as in terms of salary. Not every salary is a minimal wage, even if that’s the impression from Piotr Szumlewicz’s words.

Karolina Wigura: A question to Katarzyna Kasia. I wonder what’s your opinion as an academic at the Academy of Fine Arts and at the State Theatre Academy, that is, two very exceptional places. What is the situation of their graduates?

Katarzyna Kasia: Working with students at these two universities I have a feeling… that I am teaching the future unemployed. I teach people that will graduate only in order to be in a vacuum. For this reason, one of my aims is to tailor the curriculum so that it would be more useful on the labour market. To show that a dialogue between the world of art and between the market is possible. I also try to think about the quality of work. If a sculpture student, who made a wonderful diploma work, gets a job engraving letters on tombs, it’s difficult to call such a job satisfying. Only 1 out of 50 graduates of an artistic school continue his or her work as a painter or sculptor. I wonder whether we can have such a law that this trend would be reversed.

Karolina Wigura: But why that graduate shouldn’t do such an easy work at the beginning of his or her professional career? There are many sociology graduates, who had started their job as a language tutor, then run around the town and asked questions for surveys, and finally got a more responsible position in research. A difficult start might teach many people patience and respect for the simplest actions- and after that one might go further and higher. A good example might be Jarosław Kozakiewicz- a very famous and talented visual artist, who started as an assistant copying sculptures in a workshop of another artist.

 

Working with students at these two universities, I have a feeling that I am teaching the future unemployed. I teach people that will graduate only in order to be in a vacuum.  

Katarzyna Kasia

 

Katarzyna Kasia: But the problem with Fine Arts graduates is that in the end, only 2% of them work in the profession. Let’s try have a look at that from the other perspective. The state invests money in great, public universities: Academy of Fine Arts, Academy of Theatre. Students there have great classes in a tutor-student formula. These are the most expensive classes. And what’s the result? Nothing. And what’s the reason for that? The fact that there is no such a market, where these graduates could do their jobs.

Karolina Wigura: If we were to create jobs for every single graduate of these two universities, how many places would it be? Is this possible at all using public funds?

Piotr Szumlewicz: Many Poles would like to work in the public sector, and a vast majority wants a stable job. Telling people that stability is not important and that they want to change jobs frequently is an ideology without any empirical support.

Jacek Męcina: Surely, young people want to see their professional perspectives bright, they want opportunities for self-fulfilment, becoming independent. But I cannot agree that the only acceptable solution to that is a job in the public sector. Actions taken by the young people suggest that if they see an opportunity for a professional development, they follow that chance, they are willing to change the job, they accept a flexible labour market. The state cannot guarantee a job for everyone, but must give some opportunities for a professional take off. I know a project, where fine arts’ students and graduates cooperate with the technical school and management departments- their artistic talent is used in the design industry, and a dozen of graduates has a chance to get a job. We need more thinking of this kind at universities. We have to get used to the idea, that the economy is changing so fast, that we will have to change and develop our qualifications at least few times. And chances for a stable professional position are a function of your position at the labour market, measured by your qualifications and your relations with the employers. I agree that stability is important, that the Polish labour market must offer more jobs of a better quality, and I truly hope, that we are in the phase, when these good changes start to happen. There must be much more job offers of the best quality, but nonetheless, professional training of the graduates will be crucial in their chances for a job and good work conditions.

Joanna Tyrowicz: Katarzyna Kasia pointed to a very interesting thing. She said that there is no place for artists on the labour market. But there is a similar situation with traders, since the Polish financial sector is not sophisticated enough. We need analysts that will work clearly and effectively, and not someone who can model an algorithm of automatic finances. Nonetheless, traders are still being trained. Furthermore, how many quantum physicists do we need in Poland? The situation of the well-trained artists is not something very exceptional. Thus, my conclusions are different from Katarzyna Kasia’s. I do not think that from the argument that there is no market for a specific sector in Poland, we should conclude that the state should create jobs for them. We must stop thinking about education as something automatic: I have graduate with this and that degree, so I should pursue such and such career. Note that most of us complain about the government’s policy, but on the other hand, we have learned how to function on our own terms. In the central system of job offers, there are about 70,000 offers. And how many in private online services providing similar services? Few times more!

And a short comment on Piotr Szumlewicz’s arguments. A usual Polish worker changes jobs every 2,5 year. If we take into account people under 30 only- every 17-21 months. Young Poles look for different alternatives, not only in financial terms, but they also look for better places to live, for opportunities to realize their personal passions, plans, aspirations. I want to stress again that Poles change their jobs more often than people from other European countries. This is not a result of fixed-time contracts- they change jobs whether they have a full-time employment or not. If we look at the people in Poland who start a new employment-relation, it turns out that after 12 months, 60% of them have a full-time employment. Age does not matter here as well. Therefore, a fixed-time contract is not an issue. The problem is the specific group of people, which we cannot diagnose and about whom we don’t know much- and in my view, trade unions know the least- it means, they are those, who move from one fixed-time contract to another. We do not have any research, which would explain the barriers for their development, from their side, and from the side of employers.

 

GUS and OECD say completely different things about inequalities in Poland, perhaps it means we should take into account more factors than the finances? Maybe we need to consider also issues like a feeling of adequacy of our wages and the effort put into education?

Karolina Wigura

 

 

Karolina Wigura: May we have a short ad vocem from Mr Szumlewicz?

 Piotr Szumlewicz: The amount of fixed-time contracts is a result of Polish law, and not of people’s acceptance for such forms of employment. Today, such contracts make 27% of all employment forms, with an EU average at 10%. Fortunately, the government (under the EU’s pressure) decided to limit this pathological situation. I think that we should treat young people in the same way as we treat other employees. I am not convinced by the suggestion that the youth can work on worse conditions, do nonpaid internships, be exploited because of their age. And the third thing- public institutions. Most of the research agree on a fictional model that we have some specific education system: that people are educated, and then join something called a free market, where they can freely choose a job. Some wants to be sculptors, but if there is no demand for that, it means they chose a wrong degree. It’s not like that. In the whole EU, including Poland, the labour market is to a great extent regulated by the state. Public spendings are about 160 bln PLN, which makes 50% of the annual budget! In short, the state decides to a great extent which sector will have more jobs.

Karolina Wigura: We would like to give the floor to the audience.

 

A usual young Polish worker changes jobs every 17-21 months. They look for different alternatives, not only in financial terms, but they also look for better places to live, for opportunities to realize their personal passions, plans, aspirations. It doesn’t matter whether they have a fixed-time contract.

Joanna Tyrowicz

 

Anna Grodzka: I would like to say few comments about Joanna Tyrowicz’s words. From what you were saying, it seems that Poles like to change jobs. Surely, some people change jobs because they look for a better path for themselves. Some people- because they cannot support their families for the wages they get. Mr Męcina said that the labour market should be flexible. Maybe that’s the reason why the reason why the Polish Labour Code does not look like a novel, but rather like a graphic novel. Businessmen compete not only with by their products, but also by reducing their costs. If one baker hires people on very bad conditions, the other will do exactly the same very soon- in order to reduce costs. And one more reference to Katarzyna Kasia. The state is also a player on the labour market. It hires policemen, soldiers, teachers. Why shouldn’t it hire artists?

Voice I: I would like to point to Piotr Szumlewicz’s remark about the unfair taxation system. There is no single force in Poland that would fight against too high taxes for small businesses and workers, and too low taxes for corporations on the other hand. CIT, paid by big corporations, is particularly important here. It’s on the 19% level, while it was 36% only in 1998. And a micro-businessman must pay 1,000 PLN a month, no matter what his income is.

Voice II: Some of the panellists seem to forget that apart from the university students, many people end their education at the vocational schools level. Employers do not engage in these schools at all. It’s different abroad. Another appalling thing is the minimal level of those passing the vocational exams- less than 10% of those who take them!

Voice III: I have come back to Poland four years ago after two decades. I am terrified by the Polish version of neoliberalism: mobbing, rat race, never-ending competition, lack of cooperation. Perhaps Polish companies would need more sociologists and psychologists. But which corporation would want to hire them? They look for cogs, not for people that think independently.

 Karolina Wigura: Before I hand over to the panellists, I would like to add few more things, using my position as the moderator of this discussion. First of all, no one can make private companies to hire psychologists. But I have a sense- and I have worked in Polish corporations for six years- that Polish companies lack not necessarily psychologists, but rather good bosses. But it’s difficult to be very surprised with that: people who become managers, are mostly people without such experience either in their own resume, or in the family history. Unfortunately, as a society we must be patient. Second of all, I am convinced, that if it is so unpleasant in big corporations, then perhaps at least part of our generation has no other option than starting their own companies and organizations, where we could provide convenient work conditions for ourselves and for others. Third of all, I am a boss myself, and I will say few words about the Polish competences of cooperation. Young people often come to us without any cooperation skills. We have to teach them everything from the beginning. Is this a consequence of the ‘Polish neoliberalism’, as you say, or rather, is this some deeper Polish feature? I don’t know. But here again, I suggest we should be patient. Now I would like to ask the panellists for some conclusions.

 Piotr Szumlewicz: Public benefit organizations get annually about 500 mln PLN from tax-deductions. They are also the target group of the European programmes. So the system supports them in a way. Entrepreneurs also have many reliefs, exemptions and extra payments. They also have a CIT flat tax rate at 19%, which is one of the lowest in Europe, and besides that, there are many special economic zones in Poland, which are not found in any other EU country. If the state supports business, why shouldn’t it finance nurses and dentists at schools? Why shouldn’t it create new jobs?

And if we talk about starting your own business, we have to remember that the average salary in micro-businesses is only 2145 PLN before taxes, 40% of self-employed work more than 50 hours a week, and 25%- even more than 60 hours. I don’t have to explain, what are the consequences of such work conditions for family life. But people are not stupid, and in most cases they don’t want to start their own business, but the system forces them to do so. They prefer to work in the public sector, or in big private companies. It is worth to remember that non-insurance contracts virtually do not exist in most of the developed countries, even in those considered to be liberal, like Switzerland.

Katarzyna Kasia: At the Academy of Fine Arts we try to work on interaction between the employers and the academic world, so that our graduates have better chances to get a job. Concerning the question whether the state should finance the artists, I am not so sure about that. I have doubts, because I don’t know who should choose such artists. It is not easy to decide who is talented, and who isn’t.

Joanna Tyrowicz: To make things clear: CIT is a flat tax in Poland, but the PIT tax for workers is also a flat tax, unfortunately. And in the case of the self-employed, they are even regressive- the more you earn, the less are your fiscal obligations. Concerning the issue of the influence of public spendings on the creation of new jobs, all research I have done myself shows, that there is no correlation like that. Creating jobs by the public sector is not so easy. Let’s look at the Spanish case: jobs were created by the state, especially in the construction sector, and everything ended very badly; the last economic crisis has proven that.

 And now the most important thing: we say a lot about strategic thinking, long-term planning. Meanwhile, we discuss the issue of flexible employment since 2006, but ‘flexibility’ might have many different dimensions and most of us understand it in a different way. Wages for instance. Basically, employer in Poland does not have any tools to lower wages- it requires a special changing notice, and if the worker does not accept it, huge compensations might follow. What is the effect of such regulations? About 30% of Polish salaries is something, what is called as a flexible component of the salary: we have some base (2,000 for example), and the rest is paid basing on our record (few hundreds or few thousands). In this way employers are manipulating the ban on lowering salaries. Focusing on the bonus, employees accept such terms, since no one has thought about the crisis. Next time, when we will try to regulate something, we should about the real- and not only the postulated- results of such actions.

 

The debate was held as a part of ‘The Crisis of Trust in Europe’ series organised in cooperation with Time To Talk, an international network of debating houses.