VI - Euro Plus Pact

On March 11, 2011 the Heads of State or Government of the Eurozone endorsed the Pact for the Euro. At the 24/25 March 2011 European Council, the same Heads of State or Government agreed on the Euro Plus Pact and were joined – hence the ‘Plus’ – by six others: Bulgaria, Denmark, Latvia, Lithuania, Poland, Romania (leaving only the UK, Czech Republic, Sweden and Hungary out).          
The objective of the pact is to foster competitiveness, foster employment, contribute to the sustainability of public finances and reinforce financial stability. In the Euro-Plus-Pact the Heads of State or Government have entered into commitments on a number of policy areas, in which member states are competent.           

What political/legal difficulties
did Poland encounter in the negotiation of the Euro-Plus-Pact, in particular in relation to the implications of the Pact for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process.

The opposition (PiS) asked the government to present its position on the Euro-Plus Pact to the Sejm’s plenary session.[1]  According to the opposition, the government should have discussed the Pact with the parliament before agreeing to it.

During the debate, the Secretary of State in the Ministry of Foreign Affairs, Mikołaj Dowgielewicz summarised the negotiations of the Euro-Plus-Pact. In February 2011, according to Dowgielewicz, some Member States advanced the idea of the Pact so that the member states would agree to the financial aid for Greece. Dowgielewicz maintained that the government perceived this situation as possible to cause “Europe of two speeds”.  Hence, in the opinion of the government, it was necessary to open the Pact for non-Eurozone Member States. Other Member States supported this idea.[2] Dowgielewicz underlined also the good situation of Poland in the areas that the Pact refers to: the retirement system, consolidation of public finances or the salaries system in public administration.[3] Moreover, the Secretary of  State highlighted that the Pact incorporates the provisions stating that the pact cannot cause harm to the internal market, on which Poland insisted.[4]

The debate in the Sejm focused further on the questions from the PiS opposition with regard to the legal form of the Pact[5]; lack of previous information of the government to the parliament on the Pact[6] and on the CIT tax.[7] In general, in the view of the PiS opposition the Pact will decrease the competitiveness of Poland and Poland should not be joining it. The SLD opposition raised the question of obligations that the Pact will impose on Poland, including the accession to the Eurozone[8] or increase of the retirement age.[9] The coalition partner, PSL, sided with the government, underlining the possibility of creation of Two Speed Europe without the Pact.[10]

In addressing the questions of MPs, the Secretary of State underlined that the Euro-Plus-Pact is a political declaration approved in order to improve the supervision over competitiveness in the EU.[11] According to Dowgielewicz, Poland is not required to take any “radical steps” in the area of retirement and the EU does not get any competence to increase CIT.[12]

What other information is relevant with regard to Poland and the Euro-Plus-Pact?

The National Reform Programme 2011[13] indicated the intention for ‘institutional strengthening’ of public finances, which will contribute to the delivery of the Euro Plus Pact objectives. The ‘institutional strengthening’ concerned the establishment of the permanent expenditure rule will aim at stabilising the structural deficit at the level of the medium-term budgetary objective (-1% of GDP).

The following commitments were adopted under the Euro-Plus-Pact in 2012 (unless stated differently).[14]

Economic measures:

       a new fiscal rule (implementation underway).

       Introduction of a limit of deficit for the self-government sector – not implemented (the current provisions of the Act on public finance proved effective enough, thus introducing an additional rule for local self-government units was found ungrounded)

       changes in mining fees so that ‘the State participates in profits from exploitation of certain mineral resources that belong to the State’

       introduction of ‘elements of risk-based oversight to the current system of oversight of insurance and pension insurance market in Poland’

Social measures:

       ‘general pension reform (gradually equalising and raising the pensionable age of man and woman to reach 67 years for men in 2020 and women 2040)’.  In this regard, the government adopted the draft act amending the Act on pensions from the Social Insurance Fund and some other acts adopted by the Government in first half of 2012.

       continuation of ‘the policy of freezing wages in the public sector’, extending access to the regulated professions (which normally require certain qualifications provided for in the legislation),

       implementation of Applied Research Programme in 2012, implementation of the “TOP 500 Innovators” Programme,

       reducing the administrative burden and information obligations for pursuing business activity REGON). Assumptions for the draft act amending the Act on National Court Register and other acts

       fostering employment for the youngest and the oldest groups (implementation under way), under the Programme “Solidarity between Generations. Measures to Increase Professional Activity of people aged 50+” such aims as support for lifelong learning of persons 50+, etc.,

       introducing reduced disability pensions contribution of 8% instead of 13%,

       Implementation of the reform of vocational education system, adjusting the education/training system to the needs of the labour market. The Act of 19 September 2011 amending the Act on education system and certain other acts (Dz.U. No 205, item 1206) – the Act entered into force on 1 September 2012.

       introducing the “Toddler” programme for 2012  (care for children in childcare institutions below 3 years) and social insurance for 10.000 of nannies (partial implementation-in fact lower numbers).

       changes in the pension scheme for privileged groups (uniformed services – implemented, miners, clergymen – implementation underway), ‘(i) Assumptions for a draft act amending the Act on guarantees of freedom of conscience and religion, and some other acts, or (ii) assumptions for a draft act amending the Act on taking over mortmain estate by the State, on guarantees of farm ownership for parish priests and on establishing the Church Fund, and certain other acts’ (by the end of 2012) [implemented]

        limiting the number of recipients of the newborn allowance,

‘closing the possibility of circumvention of the capital gains tax on bank deposits’.

Finally, as regards as the Commitments for 2013 and 2014 under the Euro-Plus-Pact see further the National Reform Programme.

[1]  Sprawozdanie Stenograficzne z 89 posiedzenia Sejmu Rzeczypospolitej Polskiej w dniu 31 marca 2011 r., p. 162, http://orka2.sejm.gov.pl/StenoInter6.nsf/0/313BF2360B2FC51DC1257864007BC909/$file/89_b_ksiazka.pdf.

[2]  Id, p. 163.

[3]  Id, p. 164.

[4]  Id, p. 164.

[5]  Id, p. 165.

[6]  Id, p. 166.

[7]  Id, p. 170.

[8]  Id, p. 166.

[9]  Id, p. 171.

[10]  Id, p. 167.

[11]  Id, p. 179.

[12]  Id, p. 179.

[13]  National Reform Programme 2011, p. 11, http://ec.europa.eu/europe2020/pdf/nrp/nrp_poland_en.pdf,

[14]  This paragraph cites the National Reform Programme, Europe 2020, 2013/2014 Update, adopted by the Council of Ministers, 30.04.2013, Annex 3., p. 90-93.Available at: http://ec.europa.eu/europe2020/pdf/nd/nrp2013_poland_en.pdf