The war for eastern European talent is so intense that Poland’s business owners are using perks in an active attempt to help limit the skills exodus, says Clarissa Dann

If you read nothing else, read this …

  • Poland has the highest social security tax in Western Europe.
  • But state health and pension provision are generally regarded as poor.
  • Mobile phones and company cars are the most popular employee benefits.
  • Some employers arrange work practices to minimise individuals’ tax liability on cars.

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Poland has had an uphill battle to shake off its Communist past after joining the European Union in May 2004. The new centre-right government has some major challenges, not least of which is hanging on to local talent. Britain, Ireland and Sweden are attractive to Polish workers as there are no restrictions on labour movements. So far more than 160,000 have registered to work in the UK.

Poland is larger than the seven other ex-Communist countries put together and with a GDP at $294bn is well ahead of neighbouring Hungary, Slovakia and the Czech Republic. Key to its further expansion is the rapidly-growing service sector, which now represents over 60% of GDP as traditional industries such as agriculture and manufacturing are no longer competitive on the open markets. Over the past few years, unemployment has risen as a side-effect of state-run industries declining and a market economy taking over. But the unskilled, unemployed are not being courted by employers to help take their businesses forward. Instead, employers have arranged their benefits offering to attract highly-prized workers with specialist skills and professional qualifications.

So, what incentives are there for Polish workers to stay at home and contribute to their own economy? Not nearly enough, it would seem. Poland has the highest social security contribution rate in Europe, which on top of a comparatively high level of income tax, does not leave much in the way of net pay. According to Mercer Human Resource Consulting, these contributions do not deliver particularly generous state benefits. The pension system was reformed in 1999 but levels of provision remain low and state healthcare is regarded as poor. Andrzej Narkiewicz, senior associate at Mercer HR Consulting’s Warsaw office, says: “Employers offer benefits to plug this gap in pension and healthcare provision.”

Holiday entitlement is similar to the UK, ranging from 20 to 26 days, not including statutory holidays and depending on length of service. But time off is not at the top of the benefits shopping list. “In my opinion, the most popular benefits are mobile phones, cars for senior staff, healthcare benefits, life insurance and pension provision,” explains Narkiewicz.

Agnieszka Lakinska, a management consultant at the Hay Group, agrees. “Holidays are not a driver of employee satisfaction in Poland. Cars and mobile phones are what people want. But employers see a benefit for themselves as well as their staff in providing health maintenance packages to employees.” She adds that if these healthcare benefits are available to the whole workforce and not just a privileged few senior staff, the business can treat it as a cost before corporation tax is applied.

Mercer’s Total remuneration survey in Poland indicated that 90% of organisations offer company cars as a benefit. As in the UK, there are rules on the benefit being taxed if employees use it privately, but a number of employers maintain the vehicle is used exclusively for work, thereby removing the tax burden on the individual beneficiary.

Performance-based bonuses are becoming more common now that private companies are employing more workers than the former state-run and heavily-unionised organisations. However, it remains to be seen whether such alluring benefits packages will stem the current skills exodus.