A strong economy is important for security
Poland is back on the path to rapid economic growth as one of the leading countries in Europe. As of the second quarter of 2021, our gross domestic product (GDP) was higher than before the pandemic. The rebound occurred even earlier than expected, which only confirms that the anti-crisis measures we put in place have proven to be effective. Thanks to stable public finances, we have been able to build a financial cushion which has protected the interests of thousands of Polish companies and millions of employees. Not only have we succeeded in saving jobs, but we have also maintained wage growth. Without wage increases, GDP growth would be an empty ratio, a trap jeopardizing our social and economic policies.
For many years after the fall of communism, economic growth in Poland had little impact on increasing wages. Instead of being centered on solidarity, our economy was dominated by capital gains and was therefore doomed to the multiplication of inequalities. The Polish agreement prepared by the government aims to rectify this. We want to arrive at a situation where the fruits of growth are fairly distributed and where Polish workers can finally earn European wages. Poland looks forward to joining the group of European growth leaders. Therefore, we must abandon the model that growth is driven by reducing labor costs and the philosophy of improving our competitive advantage through cheap labor.
We have already done a lot of this work over the past few years. Poland is at the forefront of the Organization for Economic Co-operation and Development (OECD) countries in terms of wage growth. On average, wages in Poland increased by 25% compared to 2015, while the same figure for OECD countries is only 5%. We are also a country with one of the lowest unemployment rates in the EU. At the same time, labor productivity is on the rise – in 2015-2019 it grew by around 5% per year, the highest such growth among all OECD countries.
The pace of the recovery from the pandemic-induced recession is a signal that, given today’s global challenges, the Polish economy has moved in the right direction. The launch of the reindustrialisation process within the framework of the Responsible Development Strategy has proved to be a blessing in the context of the pandemic which has particularly affected the service sector. However, we must be aware that other negative global phenomena are on the horizon and could significantly slow the post-COVID-19 recovery. In particular, there is the great risk associated with the volatile situation in the Middle East which can trigger an avalanche of changes across the region with global ramifications. It must be assumed that the period of American hegemony is drawing to a close and that geopolitics abhors a vacuum. America’s place is sure to be taken by someone else, which means the constellation of global interests will change as well.
It is hardly surprising, then, that we are witnessing a resurgence of interest in the economy as one of the foundations of the security of modern political systems and states. Just as in the middle of the 20th century, the strength of a state was measured by its military potential, in the 21st century, it will be defined by the degree of its technological advancement.
Yet it would be a mistake to decide that economic potential can again be built along neoliberal lines. Placing the economy at the heart of our approach to security must be based on a synergy between market forces and the state. What are the consequences of the state abandoning the economy when many of its institutions are weak? The answer is provided by the example of Poland, a country that has followed neoliberal dogma for years. Far from encouraging the development of the free market, the passive attitude of the State has distorted competition and fostered an unbridled growth in tax crime. This was the case, among others, of the alleged VAT mafias.
Poland’s Achilles heel has always been its weak tax system and a number of loopholes in the tax system. Only a few years ago, we succeeded in bringing the country out of torpor by demonstrating that it is precisely the State which is decisive for the return of economic efficiency. The extent of neglect is evident from the fact that some people tend to view paying taxes owed as an aberration. But a change in attitude is not enough to restore public finances. It is absolutely necessary to put in place specific solutions that will tighten taxation. To this end, we created the National Tax Administration and decided to digitize tax audit activities. As a result, the VAT differential has halved from 24% to 12%. Effective tax administration has also boosted the operational potential of the state in the area of social policy. Poland could simultaneously achieve three seemingly contradictory goals: implementing an ambitious social and investment policy, reducing taxes and reducing the budget deficit.
The reduction in the amount of debt and a robust public finance system have enabled the state to respond adequately to the economic crisis and have helped develop tools to support employees and businesses through so-called anti-crisis and financial shields. In doing so, we have managed to save millions of jobs, while continuing social programs and investments in infrastructure. This is almost a scientific demonstration proving that overhauling the tax system automatically increases the level of state security.
Text published in the monthly Wszystko Co Najważniejsze (Poland) as part of an educational project carried out with the Warsaw Stock Exchange.