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Poland – Reforms needed for higher growth

28 March 2011

Raising employment, improving skills, enhancing innovation and technology absorption will put Poland on track for higher growth rates, says the World Bank.
The new World Bank report entitled 'Europe 2020 Poland: Fuelling Growth and Competitiveness in Poland through Employment, Skills, and Innovation' analyses how Poland can make progress in attaining Europe 2020 targets in order to reach higher growth rates, and provides policy recommendations in that regard.
Raising employment: The main potential for increasing labour force participation is among older workers and women. This would yield substantial economic benefits, if older workers in Poland were as active as they are in Germany, then the Polish GDP would be up to +6% higher. A higher employment rate is also critical given the aging population and the growing life expectancy. The report recommends raising economic activity among older workers (and older female workers, in particular), through reform of social security benefits and development of flexible forms of employment, particularly of part-time employment, increasing skills, and raising the retirement age.

Closing the skills gap: According to the World Bank's analysis, employment in Poland highlights the need for enhanced generic 'soft' skills, job attitudes, and behavioural skills, such as responsibility, reliability, motivation, commitment, communication skills, and the ability to work in a team. The report recommends developing a 'learning outcomes approach' for all levels of learning, with more emphasis placed on generic skills as a basis for labour mobility.
Reforming education: The report recommends strengthening the Bachelor's degree, and making it an important part of the future lifelong learning system. It also recommends broadening the mission of tertiary education institutions and making them more efficient through performance-based financing.

Refocusing technology absorption and innovation: Growth in Poland in recent decades has been largely based on capital accumulation. In the longer term, however, growth will be mainly driven by diffusion and absorption of technologies that are new to the firm or new to the country, and innovation.

Therefore, the report recommends channelling public funding to support co-inventions with foreign partners, to promote international collaboration and knowledge spill-overs. Also, it suggests reforming the research and development institutes' financing system in order to strengthen applied research and links with the needs of Polish small and medium-sized enterprises and industry.

Marcin Piatkowski, World Bank Senior Economist and one of the authors of the report, said "Poland weathered the recent crisis very well, but there is uncertainty about whether it will be able to return to high growth rates, which exceeded 5% a year before the crisis, or, for that matter, to develop at a similar speed as a number of other high-achieving upper-middle-income countries such as Chile, the Republic of Korea, or Malaysia."

"Poland has already undertaken important reforms in many areas, but it needs to go further to sustain its impressive pre-crisis growth rates and meet the new targets on which Poland still lags behind."
As official estimates point to a decline in the potential growth rate by up to +1 percentage point a year in the post-crisis period, the World Bank report recommends reforms to be undertaken in the areas of employment, education, skills, technology, and innovation, which could offset the projected decline in potential growth, and put Poland back on track for even higher growth rates.

Thomas Laursen, World Bank Country Manager for Poland and Baltic Countries, commented "growth and competitiveness through employment, skills, and innovation and technology absorption are core to enabling EU member countries to meet the targets set out in Europe 2020. The Polish Government is on the right track to meet those targets. We hope that our report gives the government a range of options and recommendations that would add value to this challenging process."

To read the full report please click here


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