Paweł Jaworski interviews Ryszard Szarfenberg, professor at the University of Warsaw’s Social Policy Institute.
For nearly 30 years Polish society has been subject to progressive marketization and commodification. Nevertheless Poles remain egalitarian. Accusations that the government is “attacking democracy” have only strengthened the position of PiS (“Law and Justice”), the ruling party. However, in the wake of the scandal in March this year surrounding astronomical bonuses paid to government ministers there has been a clear drop in support for Law and Justice. Do you see a link here?
I am sure that it has contributed to the falling public support for PiS seen in recent opinion polls. The way PiS has responded to the scandal also points to this pressure. They initially said that the bonuses were “deserved”. Then the leader of PiS, Jarosław Kaczyński, announced that the bonuses were a mistake and that ministers would have to donate them to charity.
There were howls of protest in PiS after Kaczyński said that the bonuses would have to be paid back. Usually PiS is considered to be more egalitarian than the openly neoliberal PO (“Citizens’ Platform”) and Nowoczesna (“Modern”) parties. But do you think that PiS really is committed to economic equality, or is it just a pose?
I think that within PiS there really are people who feel it is important to reduce poverty in Poland, especially among children. But just wanting to tackle poverty does not, in and of itself, mean you are committed to egalitarianism.
Ever since PiS has been in power I’ve been wondering when, if ever, they would start to raise taxes and increase the progressivity of the fiscal system. Such measures would be signs of a consistently egalitarian approach. But with PiS I think it is legitimate to doubt whether they even feel sympathy towards people trapped in poverty. The main (though not only) goal which they emphasized when bringing in the Family 500 Plus programme (under which parents receive PLN 500 a month for the second and each subsequent child) was to increase the Polish birth rate. Now they’re also bringing in “Mama Plus” (which rewards mothers who have a second child within 24 months of their first, and promises pensions for mothers of four or more children). This is only focused on childbirth and ignores altogether the question of reducing inequality between men and women, or between women from different social classes, or even between wealthy and poor families.
The Polish Prime Minister, Mateusz Morawiecki, has stated a principle with which I agree: “The most important test of what kind of government we are, is how those fare who are in the worst situation.” But this is still just focusing on the poorest in society, not on the whole income distribution, and whether the rich pay in taxes relatively more than the poor. Experts emphasize that the Polish tax and social security contribution system is regressive: it puts a greater burden on poorer sections of society than on wealthier ones. In summary, PiS is not a party with a programme of reducing income inequality, or – as Piketty prefers – inequality in relation to property.
Jarosław Kaczyński boasts that he has read Piketty…
You can’t see any evidence of that in the government’s tax and contributions policy. For example, earlier reform proposals regarding more extensive taxation of inherited wealth have not been returned to, whereas Piketty advocates the taxation of capital. On the other hand the government has talked about abolishing the cap on national insurance contributions paid by high earners or, more recently, imposing a “solidarity tribute” payment on the rich. During discussions of tax code reforms there were also hopes that increased progressivity would be introduced, but this idea has been abandoned.
By and large not because progressivity is egalitarian; it was just too complicated to introduce.
But it would have meant a simpler tax system.
Yes, it would possibly be simpler, but it seems to me that the transition from what we have now to this simpler system could be very complicated. On the other hand, if PiS had said: “This proposal is our answer to the problem of social and economic inequality, and it is something essential to achieving greater equality”, then it would have been a priority and they would have introduced it. My assessment is that the drive for tax progressivity did not come from the PiS centre, but rather the periphery of the party. And this group failed to convince the rest that it was worth risking the potential problems with implementation.
Enhanced fiscal effectiveness would also have been an attraction of the proposal?
Actually fiscal effectiveness is something PiS boasts about, but not in relation to income tax, just VAT. Indirect taxes like VAT have the effect of placing a greater burden on poorer sections of society. So we do not have a progressive income tax system, or rather it has very limited progressivity, and VAT is inherently regressive, which means that the whole system is also more burdensome for the poor.
Because VAT is a consumption tax?
Yes, the poor spend most of their income on consumption, and that is why VAT is argued to be a regressive tax. Some economists, along with the European Commission, want the VAT system to be uniform throughout the EU, which would further strengthen its regressivity, because the prices of some products, such as certain items for children [on which there is a reduced VAT rate in Poland – editor], would increase with the addition of VAT. Of course it can be argued that the 500+ programme is sufficient compensation for these losses. However, that is debatable, and in any event the government is maintaining its stance vis-a-vis the EC that they will not introduce increased VAT rates since other countries also have exceptions, including reduced rates on certain products. Of course, for fiscal efficiency and systemic transparency it is better when there are no exceptions. So the question is why, in this case, PiS are open to the regressivity argument, but are unwilling to raise income tax thresholds or eliminate the flat rate privilege for businesses which has a very negative impact on progressivity. For the government it is more obvious that VAT is a heavier burden on the poor, than that the Polish income tax system shares the burden equally between the poor and the rich. Maybe their approach is simply due to the assumption that Poles do not want higher taxes, so it is a political decision.
You mentioned the “Mama+” proposal. Both the PiS leader, Kaczyński, and Prime Minister Morawiecki regularly come up with new social welfare promises. But these are selective and fragmentary, and at times opaque, as in the case of the “solidarity tribute”. On the other hand, they did actually implement the breakthrough 500+ programme, which has turned out to be a success. Can their new promises be taken seriously?
For me “Mama+” is not an egalitarian programme. Its narrative is rather: “Families are children, families are the future”, and this is presented as a solution to the demographic problem. It should also be seen in the context of the upcoming local government elections. At their recent convention PiS didn’t have much to offer by way of ideas for local government, so possibly they are hoping their national programmes will garner support for the party in the local elections.
Their new proposals in the field of social policy have been costed at around 5.5 billion zloty (1.2 billion euros), although not all of this amount is social spending. They’ve also recently pledged an increase in disability benefit to bring it up to the level of the minimum old age pension, which it is estimated will cost an additional 550 million zloty (120 million euros). So these are serious promises. But you’ve got be aware that if someone appeals to the concept of the family and says that we will spend money to make life better for families with children in Poland, it does not follow that wealth will be spread more evenly. After all, these benefits also apply to those who are already better off.
What then is the 500+ programme in essence? In an earlier publication you stated that although it is an enormous social transfer, it is not particularly egalitarian. In fact, only just over half of Poland’s children qualify.
In my opinion, the introduction of means testing for the first child was also aimed at encouraging larger families. That’s how Deputy Minister Marczuk justified it. I have a problem with that approach as I prefer universal benefits, at least for the middle class and the poor (but not necessarily the rich). It is also perceived as problematic by economists monitoring the behaviour of women of childbearing age. They have warned that making the 500+ benefit automatically available only for the second child onwards is having a negative effect on female participation in the workforce. It also encourages suppression of declared income in order to qualify for the first child.
Data from the Polish Central Statistical Office indicates that workforce participation among young women has dropped. Can this be linked in some way to 500+?
Not only can it be linked – it must be! The Institute for Structural Research has done high quality research on this subject and they reckon that as a result of the 500+ programme a minimum of 90,000 to 100,000 women have left the labour market, i.e. either resigned from their jobs or become unemployed.
Could this mean that 500+ has actually empowered women to a certain degree, because they finally have some economic choice?
Most experts believe that a system of incentives should be put in place which makes it more worthwhile for women to work. Under such a system women will have higher incomes and pensions, experience less poverty and inequality, and their children will do better – everyone will benefit. An alternative would be a system which is neutral regarding the choice of whether to work or not – one that does not push women out of the labour market or drag them into it. Increasing childcare-related benefits weakens the economic compulsion to work. This can be justified as a means of achieving a family policy with a neutral labour market impact. However, we must be careful not to go too far the other way, that is, from pushing women into the labour market, to dragging them home.
And what about men and their family responsibilities? Paternity leave is supposed to encourage this.
This is an important policy measure which allows men to become more involved in parenting. However, this goal also requires the gender pay gap to be reduced. PiS has very big problems accepting mandatory paternity leave. The EC is now working on a directive providing for this. The Polish government has issued vehement protests, appealing to the right of families to choose.
What does Poland need more today? A systemic fight against poverty, or action to correct the injustices generated by the market even among people who are not particularly poor? Or perhaps more equal opportunities for the younger generation or a levelling of the pay of men and women?
As the main goal, I always advocate counteracting poverty in the broad sense, i.e. not only drawing people out of poverty who are now in it, but also preventing people from falling into it in the first place.
How we define poverty is also an important issue. If we stop looking through the prism of the minimum required to exist, and take rather the measure of 50% of the average income, then we come close to thinking in terms of inequality. When society gets richer, this threshold goes up, which means that relative poverty continues to exist. Focusing on poverty is also important in the context of gender. Especially if we recognize that women are more at risk of poverty than men, and children more than adults.
Equalizing opportunities is of course important in the fight against poverty understood in the relative way described. That is why there is a need for universal childcare services, including increased care for pregnant women in poorer circumstances. Similarly, measures to ensure that women can enter the workforce and have wages as high as men also contribute to a reduction in inequality and poverty.
Ryszard Szarfenberg is a Polish political scientist, Assistant Professor at the Faculty of Journalism and Political Science at the University of Warsaw, at the Social Policy Institute. He is a member of the Board of the Polish Society of Social Policy. From 2004 to 2010 he was an expert in the National Strategy for Social Integration program. He was also the chairman of the Executive Board of the Polish Committee of the European Anti-Poverty Network. His work Criticism and affirmation of social policy published in 2008 was recognized by the Committee of Labor Sciences and Social Policy of the Polish Academy of Sciences for the best scientific work of 2008.