Poland is certain to have 10 years of economic growth. Currently, we are not in danger of getting stuck in the middle income trap. That said, we will see the results of today’s decisions in about a decade. A small disturbance – for instance weakening government regulations, an annulment of educational reforms or regulations not conducive to investments – will suffice to hinder our development and position Poland firmly at the periphery of the developed world, ‘ explained Maciej Bukowski, the President of WISE, during the conference presenting the report ‘Employment in Poland in 2014 – Work in the time of innovations.’
What has to be done then to maintain the current pace of development, or better yet accelerate it? This question was answered by the authors of the report in their public policy recommendations. Maciej Bukowski, while presenting the recommendations that arose from the analysis carried out during the development of the report, indicated where to look for ways of raising productivity. Sources of convergence mentioned by him were: capital, expertise and market.
With respect to capital, he believes the development of financial markets to be a necessary condition for change. ‘Transforming national savings in manufactured capital requires an effective capital market – after the initial successes, Poland seems to have given way to other countries in this regard, which impedes Ministry of Treasury raising capital for development,’ explained the President of WISE.
As for expertise, important are employees’ and especially managers’ qualifications, which increase company’s productivity by even several dozen percent. Since the ’90s, Poland had to get crash course on this subject. In terms of competence, however, our managers are still not on a par with their colleagues from the USA.
Expenditure on research, development and innovation in Poland are, in his opinion, mystified. ‘Our analyses show that state’s direct expenses on science do not increase convergence. There has to be an industrial sector ready for this and able to intercept the research and development work. Without the fulfilment of this condition, the same expenses on science do not increase productivity,’ explains Maciej Bukowski.
The investments in ICT might be another important growth factor. Over the past two decades, their contribution to the increase in productivity is estimated to be at least at 40%, but Poland is still far from equal to the West Europe.
With regard to education, Poland is already fairly successful, as evidenced by the results of the tests. ‘What is missing right now, and what would contribute to the development and enhanced productivity of the entire economy, is the freedom to decide salaries and appoint personnel at the school level, as well as granting schools more autonomy,’ explains the President of WISE. According to the authors of the publication, Poland needs to improve most in the market area, i.e. institutions and regulations. Poland should focus on the development of large companies. According to the authors of the report, regulations’ instability and tendency to over-regulate have negative impact on the investments’ level in Poland – especially great investment gap is in the network sectors (such as the energy industry), the regulatory uncertainty of which is particularly high. In terms of industrial policy, the President of WISE considers it crucial to shift resources towards producing more advanced goods and services on a larger scale, through the refocusing of the functioning in Poland active aid to investors, provided by public investment (e.g. Polish Information and Foreign Investment Agency and local governments).
Another recommendation is a tax preference for companies investing in this – especially these companies which aim to achieve and maintain high-complexity by, among others, a high rate of investments in manufactured capital. In particular, we need to assume that a priority are investments opening new markets, not investments that create a lot of jobs. Moreover, we should quit promoting investment in industries with a low degree of technical sophistication. According to the authors of the report, the state ought to act as a modern regulator, instead of an inefficient owner. It should also cease providing direct and indirect support for state-owned companies. ‘Finally, when it comes to industrial policy, the State should promote the creation of industrial commons. Foreign investment and domestic capital are equally important for development, provided they form common industrial resources’, explained Maciej Bukowski. According to him, the state ought also to focus on the highest quality business services. In this respect, the authors recommend the introduction of tax concessions and investment support for R&D sector in Poland. Next, they recommend building an educational base for the development of highest quality administrative services by increasing the expenditure on basic research and higher education, as well as systematically increasing their quality (based on indicators) in the area of medicine, ICT, engineering, Management Sciences and STEM, among others. The authors also propose strengthening urbanization trends and fostering the population growth in 5-10 biggest centres in Poland.
‘From the industrial policy point of view, what is also crucial is supporting services of the highest export capacity combined with the industry development – productivity growth through outsourcing and specialization, industry as the facilitator of the development of services B2B and the B2B service as the element of industrial companies growth,’ explains Maciej Bukowski. In terms of labour market, digitisation of the employment services will be crucial. ‘Frequently emerging platforms for online employment become competition for public employment services, as they help millions of people find jobs that are more suited to their expectations and skills and do it much quicker than could be done through traditional ways,’ explained the President of WISE. The authors point out that today’s market regulations should also be adapted to the requirements of the digital era. In their opinion, increasing access to public data will be crucial as well. In the BOD (Big and Open Data) era, public institutions change the way of carrying out their activities by diminishing the distance between them and citizens, what is necessary for the economic growth in developed countries – this also applies to Public Employment Service and the potential of BOD to improve their services – profiling will be crucial.
