Assessment and recommendations

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.