Dual labour market in Poland – proposals for overcoming the deadlock

The report discusses the phenomenon of dual labour market, which in Poland involves abuse of the possibility to hire employees under civil law contracts. The report also presents solutions aimed at curbing this phenomenon. We propose introducing a so-called single contract, adapted to the Polish specificity, which would make it easier for companies to hire employees in a flexible manner, at the same time opening to employees the door to stable employment. We also call for reducing those employment-related obligations placed on small companies which are not related to protecting employees against dismissal or to their wages, but generate additional costs. Furthermore, we propose reducing the taxation of low earners who are at risk of being forced to work under civil law contracts or self-employment. This can be achieved by increasing the tax deductible expenses and raising the basic income tax rate from 18% to 20%, such change being neutral for the state budget. Our proposals are aimed at finding a new balance between the interests of employers and the needs of workers in Poland.