Hurting Polish small business hurts Poland

Small businesses in Poland are not credited with the importance to the economy that they should be. The Polish Government pays attention to large business and proudlyly announces the creation of 3000 jobs here and 10,000 jobs there as foreign investors put money into projects in Poland. But it ignores small businesses, that if properly cared for, could create hundreds of thousands of jobs very quickly.

The tax burden on businesses in Poland is such that sometimes it costs a business in taxes and fees as much as five times the amount of money that it pays an employee.

Small businesses, and big businesses alike, avoid these costs by employing people illegally. The effect on the Polish labor picture is big. The Polish Government estimates that as many as 1.5 million people in Poland are illegally employed. See

Further, businesses are reluctant to hire new people because of the high-cost of hiring and because of their inability to terminate them without further costs and administrative burdens.

Were the Polish government to make changes to the labor and tax laws that would make it beneficial for small businesses to hire people, it is likely that many more jobs would be created.

At the same time, were the costs that were added on to the employee's wages reduced so that employers could pass some of the savings on to the employees in the form of wages, the wage level for employees in Poland would increase.

If conditions changed and were only 10 percent of the 2 1/2 million or so small businesses in Poland to add one employee, there would be an additional 250,000 people employed.

And were the laws changed such as the Polish small businesses could increase the pay scales, people might be drawn back into the legitimate labour force and it is possible at some reduction in emigration might occur.

But it makes a great press coverage to announce the opening of a new factory funded by foreign investors. And it does not make great press coverage to say that one is going to have to change the labor law to give employers more flexibility to hire and fire and to reduce their taxes.

As it stands now, there's no change in sight and small business will continue to work on the edge of the economy. And that hurts Poland.

Source:masterpage.com.pl