(CC BY-SA Karen Chichester)
We don’t know exactly how many Poles are disabled. There are no national registers of people with disabilities and not all of them receive disability pensions or participate in rehabilitation plans. According to data from the National Censuses in 2002 and 2011, the number of disabled Poles decreased by 13.9 percent (from 5.46 million to 4.7 million). Their share in the total number of citizens decreased by 2.1 percentage points, to the level of 12.2 percent in 2011. More than 3.1 million people were legally recognized as disabled in 2011 which is about one third less than in 2002. Approx. 1.6 million are only biologically disabled, i.e. admit health problems that prevent normal functioning, but have no legal confirmation of the fact. These are mostly elders, because, unlike the societies of Western Europe, Poles do not age in good health.
The disabled according to the law
There are four legal way to obtain the disability status in Poland. In the early 1990s, the State Fund for Rehabilitation of Disabled Persons (PFRON) was established to support the employment and social rehabilitation of the disabled. Every employer with at least 25 FTEs is required to make contributions to PFRON, unless at least 6 percent of their employees are disabled.
Fewer and fewer disabled people are employed
In the early 1990s, when many large state-owned enterprises had the status of the so-called supported employment enterprises (which was granted to companies where disabled employees represent more than 50 percent of FTEs, out of which at least 20 percent have a considerable or moderate degree of disability), the rate of employment among the disabled reached 20 percent. The subsequent years of economic transformation brought a decline in this employment. The lowest rate of employment among people with disabilities (12.6 percent) was recorded in 2006. It has been growing since then, but only up to the level of 14.9 percent, the same as the unemployment rate among the disabled. Which, by the way, is higher that general unemployment rate in Poland.
Supported employment enterprises (still) exist
One of the popular myths concerning the employment of people with disabilities is that they work mainly in supported employment enterprises. The amount of the monthly subsidy for employees with a moderate degree of disability is 115 percent of the minimum wage and in the case of a light degree of disability – 45 percent. The subsidy for a considerable degree of disability is 130 percent of the minimum wage. Supported employment enterprises employ 4.7 percent of the disabled people, whereas open market entities employ 10.1 percent. The highest number of people with disabilities worked in ordinary companies in the year 1994 (17.3 percent), whereas supported employment enterprises were the most popular in the year 2010, when they employed 6 percent of the disabled people. Supported employment enterprises never managed to employ more people with disabilities than entities functioning in the regular labor market. It is worth noting, however, that the overwhelming majority of people with disabilities are not involved with the labor market at all.
The number of supported employment enterprises is falling every year. In 1992, when special regulations concerning this type of entities were introduced, there were 561 such facilities. Year 2000 marked the peak of their popularity – 3,367 such entities operated. Since then, the number has been decreasing. In 2014, there were only 1,306 such facilities and it is likely to fall below 1,000 in 2016. Why is the number of supported employment enterprises falling? Because employers in Poland prefer to employ workers on the basis of civil-law agreements. As a result, fewer companies have a full-time workforce exceeding 25 people so they do not have to pay additional contributions to PFRON. Additionally, the requirements set by the legislature for supported employment enterprises include considerable cost and, among others, the necessity of providing medical care, counselling, rehabilitation services, the necessity of maintaining a company fund for the rehabilitation of disabled persons, etc.
The financial benefits from the employment of people with disabilities, such as the subsidies to their salaries and the lack of additional taxes paid to PFRON, do not always outweigh the costs. If a company transitions to an open market, it is liberated from this set of additional security regulations. The least productive workers can be dismissed, and the public funding is reduced only slightly, because the company still gets 75 percent of the funds received by supported employment enterprises, with far less obligations. Any employer who employs a disabled person registered in the labor office for at least three years, may also apply for the reimbursement of the costs related to equipping work stations for people with disabilities from PFRON funds. The maximum available reimbursement in this case amounts to 15 times more than the average remuneration. The reimbursement of training costs is also possible (up to twice the average remuneration).
In recent years the Ministry of Labor limited the financial benefits resulting from operating a supported employment enterprise. The subsidies to wages were decreased and the thresholds for classification as a supported employment enterprise were increased to a half of the personnel in 2012. Exemptions from the property, agricultural and forest tax were lifted in 2010. Today, the debate concerning the policy towards people with disabilities revolves around the possibility of reduction of the PFRON contributions if a company purchases services or products from an employer which employs people with disabilities (at least 25 FTE). This reduction can reach up to 80 percent of the value of the service or product. The lobby of supported employment enterprises wants to limit this reduction, since it is not worth operating such entities when all that is required is a subcontractor that meets the statutory criteria. Approximately 6,400 companies make use of this provision per year.
Three supporting institutions
The main public body supporting people with disabilities is PFRON, which spends nearly PLN 5bn annually on this purpose. In 2014, the Fund’s revenues amounted to PLN 4.7bn, most of which (PLN 3.6bn) came from the contributions of employers who pay the tax for not employing enough people with disabilities. The fund also received PLN 745m from the state budget for the coverage of the social security contributions for employed people with disabilities. Its other revenues (PLN 270m) came from the European Union funds, the transfer of unspent funds from the previous year, etc. As we can see in the chart below, PFRON’s revenues have remained unchanged for the past several years. We should keep in mind that the contribution is paid primarily by enterprises which do not employ disabled people – in 2014 contributions from such employers amounted to 86 percent.
Every year PFRON spends roughly the same amount of money that it receives. There were some problems in this respect at the beginning of the first decade of the 21st century, because the management of the Fund allocated resources according to fairly broad statutory provisions, which created the possibility of corruption. Today, the Fund’s choice in financed activities is limited. In 2014, PFRON spent PLN 3.35bn on subsidizing the employment of people with disabilities in supported employment enterprises and other entities. Approximately PLN 880m was spent on vocational rehabilitation, and the remaining funds (PLN 620m) were spent on other national and local projects financed by the Fund. However, the financial policy towards disabled people is solely not determined by PFRON.
The percentage of funds spent by the Social Insurance Institution on disability pensions in relation to GDP is decreasing. In 2013, it reached a record low (1.7 percent of GDP), which still amounted to over PLN 32bn spent from the budget of the Social Insurance Fund and other funds managed by the Social Insurance Institution. This is mainly due to the fact that the number of disability pensioners is falling each year. At the beginning of 2015, less than 1 million Poles received a disability pension due to incapacity for work. This is almost three times fewer than in the record year of 1998, when there were more than 2.7 million disability pensioners. In the 1990s, the granting of disability pensions was a form of combating unemployment – people were able to obtain it in cases of minor health loss. As a result, almost 300,000 people were granted disability pensions annually. Today, less than 50,000 people are granted disability pensions. However, they are not granted disability pension for an indefinite period (only a maximum of five years). In addition, disability committees have been replaced by certifying physicians, which has ended the collective responsibility for the rulings.
The National Health Fund, a special purpose fund subordinate to the Minister of Health, is an another source of spending on policies for people with disabilities. In 2013, it allocated PLN 2bn for the medical rehabilitation of people with disabilities, but also for those returning to health, e.g. following mechanical injuries. Back in 2008, this expenditure amounted to PLN 1.5bn. The total amount spent on the policy towards disabled people is about PLN 38bn, or 2.1 percent of Polish GDP in 2013. This amount, however, excludes the expenses of the Agricultural Social Insurance Fund, which does not provide reliable reporting.
PFRON under investigation
The Supreme Audit Office has never been lenient with PFRON and has enforced a number of changes in the institution over the years. Lately it has controlled PFRON’s subsidies to the local governments for the rehabilitation of people with disabilities. In the years 2011-2013, the poviats’ governments authorities received approx. PLN 2.5bn for rehabilitation. Only 10 percent was allocated to create jobs for people with disabilities. The local governments used the majority of funds (half of PFRON funds and 94 percent of own funds) on occupational therapy workshops. The audit of the Supreme Chamber of Control showed that these workshops failed to fulfil their role – only 1-2 percent of their participants took up employment. It is hard to tell what is happening with other projects financed by the Fund, or how the spending of the National Health Fund, the National Insurance Institution and PFRON is coordinated in order to reach the objective of the highest possible employment of people with disabilities on the open labor market.
Strategic change is necessary
How can we improve this policy? Should we liquidate PFRON? This solution was proposed over a decade ago by Tom Hoopengardner from the World Bank. In 2001 he suggested that the special status of supported employment enterprises and the Fund itself should be abolished. According to experts, those enterprises should transform into ordinary companies or cooperatives. PFRON’s tasks – occupational therapy workshops, rehabilitation of children and youth, etc. – could be taken over by local governments and the Government’s Plenipotentiary for Disabled People in the Ministry of Labor (with broader powers). The latter has happened anyway, as PFRON serves solely as the administrator of the funds, and regulatory functions are executed by a government official. There are increasingly fewer supported employment enterprises and a growing number of people with disabilities are employed in the open labor market. The increase in the employment of people with disabilities in the open labor market leads to a reduction in employers’ contributions to PFRON because they fulfil the statutory criteria.
This limits PFRON’s budget, which in turn affects the scope of support provided to people with disabilities. When this process deepens, the only solution would be to radically increase the state budget’s subsidy to PFRON or to completely overhaul the entire support system. According to the authors of the government strategy „Poland 2030. Third wave of modernity”, it should be rebuilt from scratch, so that companies receive funds for helping a person with a disability to quickly become independent and to work on the open labor market. Supported employment enterprises should receive funds for the transfer of employees with disabilities to the open labor market in tranches dependent on the length of employment of the given disabled person.
Support for other people who are not able to gain employment in the open labor market due to deficits should be provided by entities of the social economy (cooperatives, foundations and associations). In addition, the methods used to encourage employers to employ people with disabilities should involve the removal of stigmatization concerning, among others, working hours or length of leave, and the reimbursement of the costs of investment in the adaptation of work stations. There is no need for special tax exemptions and other support instruments.
The activities of the state should be directed at removing the causes (deficits), as a result of which a disabled person is seen as a worse or more expensive employee. These are interesting proposals, completely absent from the current discussions on our – fairly costly – policy towards people with disabilities.