Poland exempts under 26 years of income tax in the fight against emigration

The Polish economy is doing well. The unemployment rate is 3%, the lowest since 25 years, whereas the Polish government expects a growth of 3.8% to 2019. But de

Poland exempts under 26 years of income tax in the fight against emigration

The Polish economy is doing well. The unemployment rate is 3%, the lowest since 25 years, whereas the Polish government expects a growth of 3.8% to 2019. But despite this favourable context, the Polish companies face a major challenge: a shortage of labour. In order to combat this phenomenon, the Polish parliament has voted, on the 4th of July last, a new tax advantages for young people. It exempts from income tax the workers up to the age of 26 who earn less than 19.900 euros per year. This new measure, which covers two million people, according to the government seems very generous in view of the minimum wage in poland amounted to 13.980 euro per year.

emigration responsible for a shortage of labor

A study published in 2016 by the OECD states that more than 1.7 million Poles have emigrated in the past 15 years. Most have moved to the Uk, where they represent the first community of immigrants, others have chosen Germany or France. In the context of strong economic growth of the country of origin, these migration flows may at first sight surprise. But despite the full employment and strong growth, the amounts of wages Polish is still very weak. This new measure of the government, the cost of which is estimated at 590 million euros, is therefore an attempt to stem what looks to be a "massive brain".

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in a report released In 2017, the insurance group Coface, indicates that there is in Poland, as in other countries of central and eastern Europe (CEECS), a shortage of skilled workers among the skilled jobs. The engineering professions, the business sector and the positions of doctors are the most affected by this deficiency. Unlike other sectors of the economy such as agriculture, are suffering from unemployment. According to this same study, this shortage could, in the long term, represent a significant burden to the growth of the country.

A region in full demographic crisis

This new tax regulation is also an integral part of the social policy of the Polish government which aims to resolve the demographic crisis that has afflicted the country. Since 1995, the population of Poland decreased slightly. If it keeps up over 38 million people, it is thanks to the many contributions of migration. The country, in particular, had over a million and a half of Ukrainian nationals since the crisis in ukraine, 2014. At the same time, the fertility rate has collapsed from 2.06 to 1.32 children per woman in the space of 30 years.

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in Order to boost the demography of the Polish PiS (Law and justice), the conservative party has been in power since 2017, has implemented a family allowance of 125 euros per month and per child without conditions of income. Hungary, which is experiencing a decline in birth rates similar, also puts in place measures shocks. It offers, among other things, to provide 30 000 euros for married couples who have three or more children.

Updated Date: 03 August 2019, 00:00

Kathleen Lees

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