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Against a backdrop of robust economic growth over the past two decades, economic participation in Poland has risen. By 2019, rates of economic inactivity – the share of the working-age population not in the labour market – as well as rates of unemployment and long-term unemployment, had dropped to historic lows.
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Spurred by robust economic growth, Poland’s inactivity rate has steadily declined since 2007 and reached a historic low in 2019. However, despite the positive long-term trend, Poland’s inactivity rate (the share of the working-age population not in the labour market) is still above the OECD average. That rate differed across regions by 13.3 percentage points in 2019, from 21.1% in the Warsaw capital region to 34.4% in Warmian-Masuria.
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Increasing labour force participation has a positive effect on public finances and removes constraints to economic growth. A larger labour force decreases public spending on social protection if the activated manage to find employment. Increasing economic participation also leads to better labour market matching by widening the pool of potential candidates. If structural non-economic barriers to employment persist, these can also constrain economic growth. Some individuals may be encouraged to become economically active as wage levels rise and the quality of work improves. However, other groups, such as women with caring responsibilities, face additional barriers. The problem of economic inactivity is exacerbated by a shrinking working age population. In 2019, Poland’s old-age dependency ratio – measured by the population aged 65 divided by the population aged 15 to 64 – stood at 26.4%, right at the OECD average, with little regional variation. Like in many other European countries, this ratio is projected to increase rapidly and reach 52.2% by 2050. Activating those of working age will be key to funding the pension system in the future.
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This chapter provides background information on economic inactivity in Poland. While the COVID-19 pandemic has had a relatively mild effect on the Polish labour market, it exposed inequalities between groups and places. The pandemic may drive some individuals durably outside the labour market as they become discouraged to look for work, or cannot work due to new caring responsibilities. It also revealed the relatively unfavourable position of vulnerable groups on the Polish labour market. Older people with low skills, amongst the most excluded before the pandemic, faced the highest risk of employment loss due to the pandemic. Those living in less economically dynamic regions face a compounded risk.
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This chapter explores the factors that drive economic inactivity in Poland, across target groups and places. The chapter highlights both group and regional level characteristics as potential explanations for differences in economic inactivity across Polish regions, emphasizing historical factors that put regions on differing trajectories. The chapter then sets economic inactivity within broader labour market megatrends. Polarisation, automation and the green transition are accentuating labour market divergences between people and regions.
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This chapter analyses public policies addressed to the economically inactive. The first part takes a close look at institutions in Poland that provide support to the unemployed and the economically inactive, the public employment services (4.2.) and social assistance (4.3.). The second part analyses the role of actors outside these main governmental service providers, with a particular focus on the social economy (4.4.). The final part then addresses local public policies targeted at key groups of economically inactive people: people with disabilities, older people of working age and women (4.5.).