Towards Eurosclerosis: Will Poland Escape?

The economic crisis has exacted a heavy price on labor markets throughout the world and raised serious questions about the ability of the flexicurity policies to deal with the consequences. In this regard, the experience of Poland with its more flexible approach is notable. Shortly before the tumult erupted, the country witnessed a dramatic decline in its unemployment rate from one of the highest in the EU-27 to a figure below the average. However, this turnaround was apparently driven by amendments to the country’s Labour Code, which generated an enormous increase in temporary working. Using consecutive annual panels from the Labour Force Survey, a strong link between this development and the fall in unemployment is identified. A multinomial logit model reveals that the flows were most heavily concentrated among males, young workers of both sexes and the less well educated. There is also evidence that fixed-term work lured previously discouraged individuals back into the labor market. However, the requirement that Poland aligns its temporary employment legislation with that of the EU could conceivably lead to at least a partial reversal of fortune.