EUROPEAN COMMISSION

Brussels, 4.6.2025

SWD(2025) 221 final

COMMISSION STAFF WORKING DOCUMENT

2025 Country Report - Poland

Accompanying the document

Recommendation for a COUNCIL RECOMMENDATION

on the economic, social, employment, structural and budgetary policies of Poland

{COM(2025) 221 final}

   

Economic growth is accelerating but competitiveness challenges remain

Poland’s economy is one of the fastest growing in the EU. Polish GDP grew by 2.9% in 2024 and is set to surpass this figure in 2025, driven by strong private consumption and investment, including funded by the EU. The negative contribution to economic growth from net exports is expected to lessen as exports gradually increase. Risks to the economic outlook mainly stem from delays to public investments.

Graph 1.1:    Poland - real GDP growth and contributions

Source: AMECO

Price pressures are continuing to ease while concerns remain regarding cost competitiveness. Inflation decreased to 3.7% in 2024. In 2025, inflation is set to edge down including due to lower energy commodity prices. Large increases in unit labour costs, elevated inflation, and złoty exchange rate appreciation against the euro could pose a risk to cost competitiveness over the medium term.

Overall, macro-financial challenges and risks remain limited. The housing market has seen strong house price growth (15% compared to an EU average of 3.3% in 2024), further boosted by demand-side measures adopted in 2023 and a slow supply-side response (see Section “Skills, quality jobs and social fairness”). Nevertheless, financial stability risks from the residential real estate market remain contained. External sustainability improved in 2023 and 2024, with Poland’s current account moving into surplus. Financial sector risks remain limited, and bank profitability has increased (see Annex 5).

Labour market tightness eased somewhat in 2024, but unemployment remains at a historic low. Total employment decreased in 2024 following weak economic growth during the previous year and rapid rise in labour costs. The decrease in total employment was mainly observed in the agricultural sector, while job counts rose in manufacturing and in some service sectors. In 2024, the employment rate of 15–74-year-olds increased. The unemployment rate remained broadly unchanged, reaching 2.9% in 2024 in a context of a shrinking working-age population.

Challenges to competitiveness persist, in particular in relation to the business environment, research and innovation, skills and education, and the clean transition. These challenges are especially pronounced in regions outside the capital (see Annex 17). At 67% of the EU aggregate, labour productivity (GDP per hour worked) is low in Poland. To increase productivity, it is particularly important for Poland to ensure its business sector has a stable and clear legal framework and for barriers to the marketing of research and innovation to be addressed (see Section “Innovation, business environment and productivity”). Moreover, for the Polish economy to remain sustainable and competitive in the long term, it would help to ensure broader access to affordable renewable energy, decarbonise the heating sector, reduce energy prices and ensure proper management of water resources (see Section “Decarbonisation, energy affordability and sustainability”). Finally, it would be beneficial to address persistent labour and skills shortages, including in science, technology, engineering, and mathematics, and inadequacies in the education system (see Section “Skills, quality jobs and social fairness”).

Fiscal adjustment takes shape to tackle growing fiscal challenges

Poland faces fiscal challenges amid a rising budget deficit and public debt. As the general government deficit reached 5.3% of GDP in 2023, exceeding the Treaty reference value of 3%, in January 2025 the Council initiated the excessive deficit procedure ( 1 ) for Poland. At the same time, the Council endorsed Poland’s medium-term fiscal-structural plan, which sets a binding government expenditure path aimed at reducing the deficit to below 3% of GDP over the 2025-2028 period. According to the Commission’s Spring 2025 Economic Forecast, Poland’s budget deficit is projected to fall from 6.6% of GDP in 2024 to 6.4% of GDP in 2025. The consolidation of public finances will be challenging in the context of geopolitical situation and high and rising defence spending. Public debt is forecast to rise from 49.5% of GDP in 2023 to 58.0% of GDP in 2025.

The annual progress report sent on 30 April 2025 presents the state of implementation of the fiscal plan. In 2024, net expenditure ( 2 ) in Poland grew by 12.7% (see Annex 1). This increase was mainly driven by higher public consumption, including growth of salaries of the public sector employees, as well as higher than estimated defence investments. The increase of government expenditure was partially offset by government decisions on fiscal measures increasing revenues. The annual impact of those measures, estimated at 0.4% of GDP, is deducted from net expenditure. In 2025, net expenditure is forecast by the Commission to grow by 6.2%, which is below the maximum growth rate recommended by the Council ( 3 ).  The cumulative growth rate of net expenditure in 2024 and 2025 taken together is projected at 19.7%, which is above the maximum rate recommended by the Council. This is due to higher growth rate of net expenditure in 2024 compared to the growth rate of 12.5% assumed in the medium-term fiscal-structural plan The projected deviation is allowed under the conditions of the national escape clause on current projections for defence spending.

Box 1:

UN Sustainable Development Goals (SDGs) Poland has improved on the SDGs related to macroeconomic stability (SGDs 8, 16, 17), productivity (SDGs 4, 8, 9) and fairness (SDGs 1, 3, 4, 5, 7, 8, 10) and exceeds the EU average on SDG 1 (no poverty), SDG 4 (quality education), SDG 10 (reduced inequalities), SDG 17 (partnerships for the goals). Nevertheless, while Poland has been improving on some of the SDGs related to environmental sustainability (SDGs 6, 7, 9, 11, 12, 13, 14), it is moving away from some of the targets for SDG 2 (zero hunger, which includes indicators on malnutrition, sustainable agricultural production and the environmental impacts of agriculture), and SDG 15 (life on land). Source of data: Eurostat

Substantial reforms have been made to the national fiscal framework. In December 2024, the Polish parliament enacted legislation establishing a Fiscal Council which is set to become fully operational in January 2026. Initially, the Council will play a mostly advisory role, with its activities slated for review by 2029. Furthermore, in July 2024, several amendments were made to the stabilising expenditure rule, Poland’s primary national fiscal rule, following a comprehensive review. The aim of these amendments is to make the rule more effective and align it with the new EU fiscal framework.

Public spending efficiency could be further improved, particularly in the area of social expenditure. Public spending as a share of GDP has been increasing, reaching 49% in 2024. Social programmes could better target lower-income and vulnerable groups, thereby reducing expenditure flows to higher-income groups. Moreover, Poland could strengthen its currently limited use of spending reviews in the budgetary process to support the government’s consolidation efforts in the years to come.

Similarly, the efficiency of public investments could be further enhanced throughout the investment cycle. Public investments, including those by state-owned enterprises, would benefit from a more integrated and comprehensive planning approach. The public investment system would also benefit from improvements to the monitoring of large infrastructure projects, more systematic ex post evaluations and enhanced IT systems. More broadly, adopting a longer-term perspective and ensuring stability in the governance of state-owned enterprises would enable more strategic allocation of funds, and promote effective public investment (see Box 2).

The Polish tax framework is complex, which hampers innovation and sustainable growth. Despite recent efforts to reform the investment landscape, Polish companies continue to cite over-regulation as a significant obstacle to investment. Moreover, the tax system appears to be very complex ( 4 ), indicating a need for substantial improvement. There is considerable scope for simplifying tax regulations and tax administration processes. To enhance the business environment, efforts to achieve a simpler and more predictable tax system would need to continue. Potential measures include consolidating and eliminating numerous tax reliefs and preferences, as well as simplifying the system for calculating and collecting taxes and social security contributions.

Addressing challenges linked to an ageing society

Poland’s ageing society is putting pressure on its pension system and on health and long-term care. The statutory retirement age in Poland is 60 years for women and 65 years for men. Data from the Polish Social Insurance Institution (ZUS) for 2023 ( 5 ) shows that the average age at which men were awarded their pension equalled the statutory age, while for women, it was slightly above the statutory age (60.7 vs 60) having remained stable for several years. A recent evaluation report on tax relief (PIT-0) for senior citizens – which entered into force in 2022 and aims at increasing the effective retirement age – revealed small but growing uptake. The interest of PIT-0 could be higher, but the option often chosen by the insured is to receive a pension and a salary at the same time which lower total net income over the entire period after retirement ( 6 ). According to the 2024 Ageing Report ( 7 ), the pension system’s annuity factor will lead to a substantial decline in pension benefits due to rising life expectancy and will leave effective retirement ages broadly unchanged. If the current pension benefit ratio (average pension benefit as percentage of average wage) is maintained, pension spending is expected to increase by 2.5 percentage points of GDP by 2045. Retaining a very low retirement age for women amidst a rapidly aging population has the potential to increase pensioner poverty or cause government spending on pensions to rise sharply in the future, which could present a risk to the sustainability of government finances. Moreover, there are several special pension schemes in Poland, e.g. for judges, prosecutors, the police force and farmers, which have more generous conditions that are primarily financed by the general government budget. These schemes are considered to be highly complex when compared to other EU countries ( 8 ). Different schemes with specific rules reduce transparency and can have lock-in effects. For instance, the method of calculating social insurance contributions to be paid by farmers if they shift to the general pension scheme discourages them from taking up this option. The necessity of such special schemes could therefore be reviewed as those not clearly linked to occupational risks could be a source of inequality ( 9 ).

Greater uptake of private pension schemes could help to improve financial security and future pension adequacy. The current pension system in Poland is largely made up of public pensions and will face significant challenges in the future due to demographic changes. Individuals who increase their retirement savings via private schemes can bolster their financial security and at the same time support economic growth by directing savings into investments, including in the Polish economy. Various private pension investment options exist in Poland, e.g. Employee Pension Plans (PPE) or Individual Pension Protection Accounts (IKZE). However, their use and assets under management remain limited, with only about 30% of the eligible population actively participating ( 10 ). The low level of private pensions in Poland with total assets valued at around 10% of GDP points to potential for growth over the long term ( 11 ). By expanding the use of default enrolment options, redesigning incentives for investment and enhancing financial literacy, Poland could increase private pension participation and ease the pressure on the public system.

Improving relatively poor health outcomes and working conditions is becoming increasingly challenging as the population ages. In Poland, mortality among working-age adults as a proportion of total mortality is significantly higher than the EU average, exacerbating the effects of population ageing on the labour force. According to Eurostat data, spending on preventive healthcare in Poland was among the lowest in the EU in 2022, amounting to only 1.9% of total healthcare spending. In fact, the rate of treatable mortality in Poland has barely improved since 2012. Cardiovascular diseases and cancer remain the leading causes of death, with mortality rates higher than the EU average. Under its recovery and resilience plan, Poland is carrying out major reforms in this area that should improve health outcomes in future years. The results of the SHARE international survey ( 12 ) show that job satisfaction in Poland among the 50+ age group is lower than in other countries. At the same time, the percentage of workers discouraged from working or tired of strenuous or routine work is higher than the EU average. Investing in better working conditions could help to convince older people to continue working beyond retirement age. Health expenditure per inhabitant in Poland (adjusted for differences in purchasing power) was EUR 1 960 in 2022, compared to an EU average of EUR 3 685. A large proportion of health expenditure (approximately 37%) is allocated to inpatient and day care ( 13 ). To improve health outcomes, a concerted effort is needed to shift resources away from hospital-centric models towards primary and outpatient/ambulatory care and to address persistent shortages in health professionals, in particular general practitioners and nurses (see Annex 14).

Increasing the availability of affordable long-term care services could support the labour market. Due to a lack of formal long-term care capacity, Poland’s informal carers face a heavy care burden without adequate support. The Minister for Senior Policy is planning to offer care vouchers for dependent older persons which could relieve family members from their care responsibilities. However, without legal recognition for informal carers, the planned support (training, information, psychological counselling) will not reach all those who need it. The number of long-term care workers per 100 individuals aged 65 and over is very low (0.3 in Poland compared to an EU average of 3.2 in 2023). The World Bank carried out a strategic review of long-term care in Poland ( 14 ). The results show a need to increase access to high-quality, affordable and accessible community-based long-term care services, while improving working conditions and work-life balance for carers going beyond the measures included in Poland’s recovery and resilience plan.

Box 2:

Barriers to private and public investment The share of Polish firms investing has been consistently fairly high (80%, slightly below the EU average of 87% ( 15 )). Overall, firms in Poland report higher investment obstacles than their EU counterparts. The main barriers to private investment were:      Uncertainty about the future (92%). A high share of Polish businesses expressed uncertainty about the future, above the EU average of 79%. This may be linked to frequent changes in the legal framework.     High energy costs (88%). High energy costs are a major investment obstacle. To overcome this, Polish firms are directing a high share of investment towards improving energy efficiency (17% in Poland vs an EU average of 12%).     Shortage of skilled staff (87%). Labour market shortages pose a challenge for many businesses, notably in the construction, manufacturing and service sectors. Regarding public investment, while Poland has effective procurement practices and ensures capital availability over the lifetime of an investment project, some challenges remain to achieving the most efficient public investment decisions:     Poland lacks a unified state investment plan aligned with the country’s long-term strategy and medium-term fiscal-structural plan in order to gain a comprehensive overview of investment spending and sources.     There is potential for enhanced transparency and predictability in public investment plans in order to foster a more favourable business environment for the private sector.     There are no standardised procedures for project selection or prioritisation at central level involving external quality assurance to minimise underrepresentation of risks and costs.     Standardised methodologies for project assessments are currently mainly used for EU co-financed projects but could be applied more widely especially for major projects.     Ex post assessments are not systematically required or frequently conducted, limiting the opportunity to correct earlier planning and implementation mistakes. The implementation of Poland’s RRP faces challenges. At present, Poland has fulfilled 25% of the milestones and targets in its RRP. It remains important to accelerate the implementation of cohesion policy programmes. The mid-term review offers opportunities to speed up progress and better address EU strategic priorities related to competitiveness, defence, housing, water resilience and the energy transition. While Poland has leveraged STEP to reallocate some cohesion policy resources towards competitiveness, it can further support the development or manufacturing of critical technologies in the areas of digital and deep tech, clean and resource efficient technologies, and biotechnologies.

Simplification and reduced administrative burden for businesses

Poland’s institutional framework is crucial for its competitiveness. The country has improved regulatory governance and digitalisation which is an important step in building trust among citizens and businesses. Action is being taken to ensure judicial independence and to address concerns over corruption, with the roll-out of a new electronic case management and case allocation system (Annex 6). A stable judicial system which offers certainty is crucial for Poland’s future prosperity. To further increase trust among citizens, the government could prioritise limiting bureaucracy and increasing transparency around decision-making and the use of public money ( 16 ). Moreover, reducing transposition and conformity deficits, which are above the EU average, would enable the single market to function smoothly in Poland. (Annex 4)

The business environment in Poland is subject to a complex and fast-changing regulatory framework, which can deter investment and hinder economic growth. Frequent changes to laws and regulations which provide companies, on average, only 31 days to prepare, can be challenging, in particular for small to medium-sized enterprises. Measures have been taken to improve the law-making process, such as more frequent use of impact assessments and public consultations. However, persistent challenges remain with regard to administrative burden and ensuring regulations are proportionate and effective. More could also be done to strengthen legal certainty and make more frequent use of periodic in-depth reviews, codification, and regulatory consolidation, in conjunction with efforts to increase the average time between adoption and the entry into force of new laws. By streamlining the regulatory framework and reducing unnecessary bureaucracy, Poland could create a more favourable business environment that encourages entrepreneurship and investment.

Graph 2.1:    Four most frequently cited problems when doing business in Poland (%)

Source: Flash Eurobarometer 543. Businesses’ attitudes towards corruption in the EU. Fieldwork 02/04-23/04/2024

Government-led initiatives can improve productivity. Labour productivity in Poland is lower than the EU aggregate but is rapidly closing in on it ( 17 ). Recently, the government embarked on a simplification exercise to improve conditions for businesses and eliminate unnecessary administrative burdens for citizens ( 18 ). Moreover, it has set up a governmental task force that will work with business representatives ( 19 ). These initiatives are promising, but there remains scope for further action, for example, by setting up a dedicated institution (i.e. a National Productivity Board) to promote productivity-enhancing policies on a more permanent basis.

Digital transformation in fostering innovation and productivity

Digital transformation plays a crucial role in fostering innovation and enhancing productivity in Poland, but progress has not been uniform. As shown by Poland’s achievements in the key performance indicators on digitalisation identified in the Digital Decade Country Report ( 20 ), Poland made notable progress in terms of its connectivity and digital infrastructure, in particular gigabit connectivity and fibre-to-the-premises coverage. However, it is lagging behind in the roll-out of 5G technology, with coverage in Poland well below the EU average, primarily due to delays in authorisation of 5G pioneer bands (see Annex 4). This limits businesses’ ability to adopt advanced digital solutions, such as Internet of Things (IoT), AI-driven automation and cloud computing. Accelerating the allocation of 5G spectrum will thus be critical to closing this gap, enhancing business productivity and improving the share of ICT in Poland’s gross value added.

Challenges persist in the adoption of digital technologies by businesses, particularly small to medium-sized enterprises, negatively impacting productivity growth. Poland is underperforming in digitisation metrics which have a high potential impact on productivity and innovation, such as take-up of AI. Only 4.9% of small to medium-sized enterprises in Poland have adopted AI compared to an EU average of 12.6%. Furthermore, they are less likely to use data analytics, with usage at just 17.6%, compared to an EU average of 32.1%. A major barrier to progress is a shortage of ICT specialists, which is making it more difficult for businesses to implement digital solutions effectively. Strengthening the ICT workforce and fostering a robust start-up ecosystem will be essential to driving innovation and increasing productivity (see Annex 12).

Poland is achieving mixed results in digital public services. Poland scored below the EU average in terms of the availability, accessibility and use of digital public services by citizens and businesses. However, it excels in online access to e-health records, scoring well in excess of the EU average. In terms of the use of eID in public services, Poland scored slightly above the EU average. Work is ongoing to improve digital services, with the annual growth rate in such services for citizens exceeding the EU average (6.4% in Poland compared to an EU average of 3.1%). This trend is being reinforced by the development of an electronic documentation management system and the addition of new key public services (see Annex 6).

Poland’s recovery and resilience plan and cohesion policy funding are driving forward the digital transition. Poland has already implemented three reforms under its recovery and resilience plan to improve the development of and access to wired and wireless communication. The Polish recovery and resilience plan and cohesion policy funding have supported investment in ultra-fast broadband coverage for households and schools in white spots. Moreover, companies will receive support to: (i) invest in advanced technologies and artificial intelligence in manufacturing and business processes; (ii) implement smart production lines and construct smart factories; and (iii) deploy digital technologies to reduce the environmental impact of manufacturing. Absorption of funds under the Recovery and Resilience Facility and cohesion policy will also help to increase the efficiency of public administration. This will be achieved by investing in interoperable and secure e-services for individuals and businesses (see Annex 6).

Enhancing innovation through stronger science-business collaboration and an attractive research career system

Poland has improved its R&D performance but continues to face structural challenges. As an emerging innovator, Poland has made visible progress in its R&D performance, narrowing the gap with the EU average (65.9% in 2024, up 3.3 percentage points on 2023) ( 21 ). As past improvements were largely driven by gradual increases in R&D spending, further increases would therefore be beneficial. Improvements to Poland’s R&D performance will also depend on whether structural challenges are addressed in relation to weak collaboration between science and business and Poland’s underperforming research career system. These efforts should be tailored to differences across regional innovation ecosystems and local competitiveness potential (see Annex 17).

Cooperation between science and business is limited, reducing Poland’s ability to bring innovation to the market. While the general regulatory and legal environment in Poland is conducive to innovation, Poland faces difficulties in joining up scientific research with business needs. Despite some improvement, Poland remains well below the EU average in terms of business participation in research and innovation activities run by public institutions and the number of joint scientific publications (Annex 3). The potential for small to medium-sized enterprises to engage in innovation activities and collaboration with academic researchers and institutions is particularly underused. This is further exacerbated by insufficient targeting of programmes promoting applied research and academic-private collaboration and a lack of systemic incentives for researchers to cooperate with industry.

Poland has established various instruments to bridge the gap between its research community and business. The Łukasiewicz Research Network and the Polish Association of Centres for Technology Transfer (PACCT) are important initiatives which will, if effectively implemented, help to translate knowledge into business solutions. The ‘implementation doctorate’ programme allowing PhD students to work in the business sector while studying, aims at linking academic knowledge with practical business applications. Additionally, a set of R&D tax incentives has been introduced. Assessing, monitoring and possibly improving those initiatives will be key to their success.

A strong public research career system with systemic incentives for researchers to cooperate with industry would also reinforce science-business collaboration. To this end, criteria and rewards encouraging science-business collaboration could be considered as part of an ongoing review of Poland’s research evaluation system. Moreover, better salaries and career prospects, mobility programmes and a support framework for academics could help to make research careers more attractive and address the shortage of public sector researchers (see Annex 3 and Annex 10).

Funding under cohesion policy and the Recovery and Resilience Facility is instrumental in supporting the development of science-business collaboration in Poland. Crucial to this will be the timely roll-out of the European Funds for a Modern Economy (FENG) under which Poland and the EU have jointly earmarked EUR 10 billion over a seven-year period ( 22 ) and the swift implementation of investments in modern laboratories financed under the Recovery and Resilience Facility.

Decarbonising industry and supporting the development of clean technologies

Poland is making progress on decarbonising the economy but remains heavily reliant on fossil fuels. Poland’s share of renewables in the electricity generation mix increased to 30% in 2024, up from 27.2% in 2023, although this remains far below the EU average (47%). Fossil fuels, including coal, lignite and natural gas, account for 70% of electricity generation, which exacerbates price surges (see Annex 8). Relatively high electricity prices are leading consumers to choose different energy sources, such as gas, slowing down the electrification of the economy, which stands at 16.6%, compared to an EU average of 22.9%.

Poland has emerged as a clean tech hub in the EU and is playing a growing role in clean technology manufacturing, while conventional industries are facing a complex challenge in shifting to clean modes of production to remain competitive. 60% of all European-made lithium batteries are manufactured in Poland. Meanwhile, other clean tech industries, such as heat pump manufacturing, are growing in Poland (see Annex 7). Clean technology manufacturing would benefit from a clear strategic outlook, better regulatory certainty and forward-looking investments in skills in order to scale up further. Action could also be taken through public procurement and other policies which stimulate steady domestic demand and promote clean tech growth while assisting the transition of other sectors such as heating and transport. At the same time, Poland would strongly benefit from a policy framework to advance the transformation of conventional energy-intensive industries to bolster their competitiveness. Its primary focus should be on lowering energy prices through faster decarbonisation of the power system (see Annex 8) and facilitating public and private investment in cleaner modes of production that help industries reduce their carbon footprint while cutting pollution and strengthening the circular economy. Poland would also benefit from drawing on existing instruments to increase demand for EU-made products, e.g. by incorporating sustainability, resilience, and made-in-Europe criteria into public and private procurement.

Poland could also take action to accelerate the clean transition of the district heating sector. In Poland, 69% of district heating still runs on coal. Poland’s anticipated Heating Strategy is an opportunity to prioritise investments in energy efficiency and electrification to advance the decarbonisation of the district heating sector while contributing to sector coupling. Investment plans for the sector should therefore promote the diversification of sector business models, including through the development of power system services such as demand side response or energy storage and energy efficiency improvements for end customers. This has significant potential for stimulating the development of ancillary sectors such as bio-methane production, facilitating renewables integration, while ensuring the long-term economic viability of the district heating sector. The district heating sector in Poland could play a part in lowering energy prices due to its size and potential for diversification. However, tapping into this invaluable potential will require a coherent set of policies and coordinated, strategically-oriented investment plans. At the same time, it would be beneficial for public investments in the energy efficiency of buildings to continue, with a better programme design where necessary, in order to reduce energy consumption and shield households from volatile and rising energy prices (see Annex 7). In this context, Poland has benefited significantly from EU-funded programmes for improving energy efficiency, receiving some EUR 6 billion in cohesion policy funding for the period 2021-27 and EUR 9.4 billion under the recovery and resilience plan.

Poland would also benefit from reversing the upward trend in transport emissions. To this end, additional investment in railway infrastructure could promote a modal shift away from road transport, while making the economy more competitive. Poland has received EU funding to invest in its railways, including EUR 2.4 billion for railway modernisation under the recovery and resilience plan. Nevertheless, road transport emissions are continuing to rise (registering an increase of 95% between 2005 and 2023), reducing the likelihood of Poland meeting the 2030 emission reduction targets under the Effort Sharing Regulation. With electric cars accounting for a low share (5%) of new car registrations, high road transport emissions look set to continue in the coming years (see Annex 7). It would be useful to accelerate the modal shift towards more sustainable transport modes, in particular rail transport. Wider use of rail freight transport, which reduces the carbon footprint of end products, is crucial to maintaining the competitiveness of Polish industry. As regards passenger rail transport, better suburban and regional connections could address labour market shortages by facilitating commuter travel.

Reducing energy prices and phasing-out fossil fuel subsidies

Affordable renewable energy is essential to ensuring that Polish industry, especially energy intensive users, remains competitive. Major reforms and investments have already been and continue to be made by Poland that contribute to this objective, including through the recovery and resilience plan. However, more could be done to bring larger volumes of clean and affordable energy to the market quickly (see Annex 7). In this context it is crucial to accelerate the roll-out of renewables and grid permitting processes and to bring the benefits of renewable energy to end users as quickly as possible, including through the implementation of relevant EU legislation ( 23 ). Specific policies that could contribute to those objectives include encouraging faster take-up of corporate power purchase agreements and implementing renewables acceleration areas.

Taxation could be used to reduce Poland’s relatively high electricity prices by shifting the tax burden from electricity to fossil fuels. In Poland, wholesale electricity prices in 2024 were among the highest in the EU, at EUR 96 per MWh, which had a major impact on industry competitiveness and on households. The tax burden on electricity is a contributing factor to high electricity prices. In Poland, taxes and levies on electricity account for nearly 50% of the total price paid by households and 32% of the price paid by energy intensive industries, compared to the EU averages of 24% and 7-12% respectively. By contrast, taxes and levies on gas account for only 19% of the total price paid by households and around 1% of the price paid by energy intensive industries (see Annex 7). By rebalancing its energy taxation, Poland could lower electricity prices for consumers and increase the competitiveness of industry while creating a stimulus for faster fossil fuel phase-out and electrification. It would also curb the need for the household electricity price cap, introduced in 2022 and extended until September 2025, which is not targeted and distorts the price signal for saving energy.

Increased grid flexibility and cross-border interconnections could also contribute to a reduction in electricity prices. Significant investments in non-fossil grid flexibility, including storage and demand-side response, would be beneficial, in addition to addressing market access barriers. This would help stabilise electricity prices while increasing the penetration of renewable energy sources through storage of excess energy during peak generation periods. Poland’s electricity grid connections are underdeveloped, with only 5% cross-border interconnections (EU target: 15% by 2030). Moreover, there are no significant projects in the pipeline to increase transfer capacity on the western border. Increased interconnections would help to improve electricity prices, system flexibility, renewable energy penetration and supply security. National allocation constraints still limit the cross-border availability of electricity capacity. Finally, broader uptake of dynamic pricing for electricity would encourage consumers to adapt their energy usage, reducing strain on the grid and allowing utilities to offer lower prices during off-peak hours.

Poland records sizeable relevant fossil fuel subsidies without a planned phase-out before 2030, representing 0.92% of Poland’s GDP. Scaling down and phasing out these subsidies is in line with EU commitments and would give the government greater flexibility for its spending choices. Priority could be given to phasing out fossil fuel subsidies which do not address energy poverty in a targeted way, do not respond to genuine energy security concerns, are not crucial to industrial competitiveness and hinder electrification. Examples include ongoing subsidies to the coal mining industry, tax exemptions for coal and fuel oil, and excise duty refunds on diesel used in agriculture (see also Annex 8).

Strengthening climate preparedness and water resilience

Climate change poses a growing threat to Poland’s economic security and, in particular, its water resilience. Extreme weather events are putting infrastructure at risk, heatwaves are posing an ever-greater threat to public health and there is a growing risk of water scarcity undermining the sustainability of sectors which rely on water. Poland is increasingly falling victim to an alternating cycle of drought and floods, which is threatening household water supply security and exposing key economic sectors to losses (see Annex 9). Agriculture and food production, the biomass industry, manufacturing industries, the energy sector and tourism all face the prospect of new challenges to their competitiveness due to a growing risk of water scarcity.

Poland has made progress in building up its water resilience through investments in water retention in rural areas under the recovery and resilience plan and the allocation of over EUR 2 billion to water resilience under the European Regional Development Fund and cohesion funds, however there is scope for further progress. River valleys, forests, peatlands and farmland currently have untapped potential for retaining water in the landscape and mitigating floods and drought through nature-based solutions. This potential should be acknowledged, exploited and preserved under river basin management and forest management policies and in the way agricultural subsidies and farm advisory services are designed (see Annex 9). Poland should rebuild the knowledge and evidence base necessary for policies to deliver resilient water management. Investments in the coming years should exploit the full potential of nature-based solutions and shift the focus from present-day uses to long-term water resilience. At the same time Poland could develop a policy framework for flood and drought preparedness that integrates investment in early warning systems and rescue services on the one hand, with nature-based disaster prevention on the other.

Addressing the high costs of pollution and boosting the circular economy

Poland still faces major environmental challenges, including air and water pollution, while its circular economy is less developed than the EU average. Simultaneously, these are also areas in which the clean industrial transition presents opportunities for reducing industry’s environmental impact while bolstering its competitiveness.

In 2023, Poland’s circular material use rate was 7.5%, up slightly on the previous year having steadily declined since 2014. This puts Poland’s rate below the EU average of 11.8%. Poland is also lagging behind the EU average in terms of its resource productivity, although it has been steadily improving in this area for the past decade.

Air pollution remains a serious problem in Poland despite positive trends. Poland has the second-worst industrial air pollution in the EU, with the energy sector being the primary emitter, followed by the chemical industry. Polish industry still releases large amounts of water pollutants. Over the past decade, Poland has seen the largest decrease of any EU Member State in the number of water bodies considered to be in good ecological status, driven by pollutants from the mining and quarrying industries, agriculture and municipal and industrial waste and wastewater treatment (see Annex 9).

At the same time, the costs of pollution continue to exceed the amount invested in pollution prevention and control. As a result of coal reliance in the heating sector and energy production, Poland has one of the highest exposures to fine particulate matters in the EU. The latest available annual estimates (for 2022) from the European Environment Agency attribute 34 700 annual deaths (or 391 000 years of life lost) to fine particulate matter (PM2.5) alone. Poland’s investment needs for pollution prevention and control are estimated at EUR6.3 billion per year in 2021–2027. Current investments, e.g. supporting the replacement of coal-based heating systems and investments into clean technologies, reach an estimated EUR 4.8 billion per year, leaving a gap of approximately EUR 1.5 billion per year( 24 ) . Poland needs to rapidly advance the green transition in this sector. Investments to bolster its competitiveness should work hand-in-hand with boosting the circular economy and reducing emissions.

Facilitating learning in science, technology, engineering, and mathematics, and boosting basic skills to support competitiveness

A decline in basic skills among young people, in particular in vocational programmes, and rising inequality in school education risk affecting Poland’s competitiveness in the long term. Poland has witnessed a decline in basic skills (reading, mathematics, science) among 15-year-olds since 2018 in excess of the EU average ( 25 ). Levels of underachievement have increased significantly, moving Poland further away from the EU’s 2030 target (see Annex 12). This risks limiting the scope for learning and upskilling of Polish students and subsequently reducing the talent pool. Increased inequalities between different types of secondary schools (see Annex 12) and between urban and rural schools (see Annex 11) are leaving students attending sectoral vocational schools (szkoły branżowe) and rural schools at an educational disadvantage (OECD, 2023). Overall, low attainment of basic skills is far more acute among disadvantaged students, with 39% lacking the minimum competence level in mathematics, hindering their educational and professional development later in life (OECD, 2023). Better focusing on basic skills at primary level and urgently boosting literacy and numeracy skills in sectoral vocational schools would facilitate subsequent upskilling and improve the supply of relevant skills to the labour market.

To improve the quality of school education, Poland would benefit from efficiently implementing its curriculum reform, while ensuring sufficient preparation and support for teachers. The share of students who are top performers in basic skills has fallen, indicating quality challenges in general education, including in teaching. To address its currently ineffective knowledge-based curriculum and the recent shortening of its general education cycle, Poland is preparing a curriculum reform at pre-primary and primary levels to improve the teaching of competences. A comprehensive approach to this reform, stakeholder involvement, substantial teacher training and support, and monitoring and evaluation from an early stage, will be critical to achieving the required results. Improving the quality and relevance of initial teacher education, also in the context of inclusive education, the attractiveness of the teaching profession and the selection criteria for accessing the teaching profession could contribute to a better quality of teaching and ensure the reform has a long-lasting effect.

Persistently low enrolment in science, technology, engineering and mathematics study programmes (STEM) is limiting the talent pool, including digital and green skills and competences, and restricting innovation capacity in Poland. The proportion of higher education students in STEM study programmes has decreased over recent years, with Poland sliding further below the EU average (21.1% vs EU 27.1%). The enrolment rate in natural sciences remains particularly low (see Annex 12). Although the economy needs more innovation and high-skilled specialists (scientists, teachers, ICT specialists and engineers), skills and labour shortages persist especially in STEM fields and in sectors relevant for the green and digital transition. The proportion of companies which reported a labour shortage as a significant limiting factor for production was very high, reaching 63% in manufacturing in Q4-2024 (EU average of 18%), 57.4% in services (EU average of 26.8%) and 72.2% in construction (EU average of 26%) ( 26 ). 65% of employers indicate skills shortages as the main barrier to transformation and expect talent availability to worsen in the next five years ( 27 ). Furthermore, 82% of small to medium-sized enterprises report facing skills shortages, and 88% have struggled to retain skilled workers ( 28 ). The macroeconomic skills mismatch in Poland rose to 22.3 in 2023, against a decreasing trend in the EU (from 20.2 in 2022 to 19.6 in 2023) ( 29 ). On upskilling and reskilling needs for the green transition, there are shortages in occupations such as building structure cleaners, insulation workers and roofers ( 30 ) (see Annexes 10 and 12). Improving teaching quality in science, technology, engineering and mathematics in schools is needed, while promoting their learning as from early childhood education and care would encourage interest from an early age. Such efforts could be further supported by raising awareness across the whole of society about the importance of science, technology, engineering and mathematics learning.

Improving the quality and relevance of higher education is a significant challenge. Poland’s system for evaluating the scientific output of higher education institutions is not entirely reliable or transparent ( 31 ). The proportion of Polish graduates with a PhD is low, which is limiting the innovation talent pool. Moreover, careers in academia are generally unattractive, contributing to a rise in the average age of academic staff ( 32 ). Improving the evaluation system and the quality assurance within the higher education sector alongside more attractive careers in academia would help ensure that the necessary talent pool is created, and optimise investment in a context of declining student numbers.

Encouraging adult learning and improving the effectiveness of vocational education and training

Low levels of adult learning participation are contributing to skills mismatches hampering the digital and green transition, which in turn is limiting Poland’s competitiveness. In contrast to the EU trend, rates of adult learning participation in Poland are falling. In 2022, some one in five adults pursued adult learning over the course of the previous 12 months, compared to an EU average of almost 40% (see Annex 12). Poland’s national target for adult learning of 51.7% by 2030 seems currently out of reach. Increasing the level of adult learning is important for closing skills gaps and mismatches. A shrinking labour force and growing skills shortages are exacerbating the situation, while businesses have indicated a lack of skilled workers as a barrier to investment (see Annex 12). Shortages are particularly acute in science, technology, engineering and mathematics, digital skills, and skills needed for the green transition. Poland’s vocational education and training system is lacking in effectiveness, significantly undermining the supply of skills which are in demand, reducing the employability of graduates and putting them at greater risk of unemployment and social exclusion.

Important policy measures to enhance lifelong learning are being financed under cohesion policy and the Recovery and Resilience Facility. Poland aims to increase adult learning through reinforced cooperation and coordination across ministries and local governments. To improve the supply of green skills, Poland is creating sectoral qualification frameworks. Poland is also developing a strategic framework for digital skills. Using investments financed under the Recovery and Resilience Facility, Poland is in the process of setting up 120 Sectoral Skills Centres aimed at encouraging the development of green and digital skills. Regional coordination teams for vocational education and training and lifelong learning have been established with support from the Recovery and Resilience Facility with a view to improving the coordination of skills policies at regional level. However, there is no clear ownership of adult learning policies at government level. Despite action taken to promote adult learning, mostly financed by the EU, Poland is still no closer to achieving its 2030 national skills target.

Better coordination, monitoring and evaluation, as well as better facilitation by employers, can help increase the rate of adult learning participation. Poland’s working group on skills development could be a starting point for establishing a well-coordinated and effective governance structure for adult learning. Ultimately, the structure should arrive at clearly defined and complementary roles and responsibilities for all parties involved, with cooperation between the ministries with responsibilities for labour and education, implementing organisations and social partners. By evaluating measures, evidence-based policymaking can be supported and the efficiency and effectiveness of planned/existing measures can be improved. The 2023 amendment to the Labour Code also offers the potential to bolster adult learning as it specifies the circumstances in which employers must inform employees of their right to training, cover the cost of employees’ training and provide such training during working hours.

An individual learning accounts scheme is currently being piloted with support from the European Social Fund Plus. The pilot project covers all adults between 18-69 years of age regardless of their employment status and is being rolled out in selected regions. Individuals receive training entitlements and are able to choose which training they take part in according to their needs from a range of courses published in an easily accessible portal, the Development Services Database (BUR). However, to create an effective individual learning accounts (ILA) scheme, it is important to embed the ILAs in an enabling framework and to underpin the scheme with adequate funding to ensure its sustainability in the longer term. To drive the scheme further, training entitlements could be accompanied by other enabling measures such as paid training leave. Paid training leave could offer adults an incentive to take up training by letting them keep their salary or by providing income replacement during periods of training. To ensure consistency, the ILA scheme could be integrated with existing schemes, such as training vouchers for lifelong learning offered to unemployed persons and jobseekers. It would also be useful to develop a comprehensive monitoring framework enabling, for example, the tracking of long-term outcomes of ILAs, and quality and performance assessments of training courses. Engagement of social partners and relevant stakeholders is critical to ensuring adequate and sustainable funding for ILAs beyond the pilot phase through a combination of public and private financing.

Labour market participation among disadvantaged groups is increasing, however gaps remain

Poland’s labour market performance is strong but will face challenges in the future. Poland’s employment rate (persons aged 20-64) hit 78.4% in 2024, surpassing its 2030 target of 78.3%, while unemployment was at 2.9%, making Poland one of the EU’s strongest performers. Nevertheless, with an ageing society and increasing labour shortages, labour market integration of underrepresented groups will be important in the future. Between 2022 and 2070, Poland’s population is expected to decline by 16%, four times the EU average, leading to a 9.8 percentage point decrease in the working-age labour force –even with increased labour market participation and migration – significantly impacting the labour supply and underscoring the need to bring more people into the labour market. The primary causes of Poland’s ageing society are its historically low fertility rate (1.29 compared to an EU average of 1.46 in 2022) and changes in its population structure (see Annex 10).

Obstacles to increasing the labour market participation of women remain, although progress has been made. Low labour market participation of women is hampering economic growth and highlights the existence of gender disparities caused by insufficient childcare and long-term care services, especially in rural areas (see Annexes 10 and 11). Despite investments under the European Social Fund Plus and the Recovery and Resilience Facility, the percentage of children under 3 years of age in formal childcare has fallen in recent years and is far below the EU average (see Annex 10). Poland is also well below the EU average in terms of the provision of public long-term care services (3.4% compared to an EU average of 5.8% in 2019), with responsibility for care mainly assumed by families (see Annex 11). To increase the number of women in work, it is important to invest in expanding the female workforce, enhancing their qualifications and improving working conditions. Additionally, efforts should focus on ensuring that the most disadvantaged children and parents have access to high-quality childcare. Poland recently adopted several measures which are now being rolled out. It has reformed carer’s leave with the aim of more evenly distributing the care burden. It has also reformed parental leave and paternity leave and is rolling out the Active Toddler programme with support from the European Social Fund Plus and the Recovery and Resilience Facility which will significantly increase the number of places available in early childhood education and care. Reform priorities in the area of long-term care include increasing access to high-quality, affordable and accessible community-based long-term care services, and improving working conditions and work-life balance for carers (see Annex 11).

The disability employment gap has widened further in recent years to 35.6% and is now one of the largest in the EU. This is partly due to the absence of a legal basis for supported employment and a lack of knowledge and skills among employers on how to integrate persons with disabilities in the workplace. Although Poland has set itself a target to increase the number of persons with disabilities in employment, no concrete and measurable actions have been so far implemented for employers and other stakeholders. The newly launched project to develop a model of supported employment and prepare for its introduction as a labour market instrument, is a positive step. To further support persons with disabilities, measures for helping them find employment could be strengthened, for example by tapping into the full potential of the social economy to create economic opportunities and promote social inclusion and integration of disadvantaged groups. Furthermore, the education gap between persons with disabilities and persons without, in particular in higher education, is wide (21.4 pps compared to an EU average of 11.3 pps). To address the challenges faced by young persons with disabilities in acquiring competitive skills and transitioning to the labour market, Poland’s current policy priority, reform measures and investments in inclusive education would benefit from an inclusive education and training strategy.

Social dialogue

Meaningful involvement of Polish social partners in designing and implementing policies could increase competitiveness and reduce labour market inequalities. In Poland, there are still regular violations of internationally recognised labour rights ( 33 ). Meanwhile collective bargaining coverage has been on a downward trend since the 2000s, with Poland now registering one of the lowest levels of coverage in the EU (see Annex 10). Laws on collective labour agreements and the minimum wage, presented in June 2024 are still under review and have not yet been submitted to Parliament. According to Polish social partners, the proposed legislation on collective agreements fails to offer real incentives to encourage collective bargaining. However, the Polish government is also planning to adopt legislation amending the Social Dialogue Council (RDS) in the second quarter of 2025 which may be a step in the right direction. To make social dialogue more inclusive and enable more effective public consultations, it would be helpful to broaden the scope of the Social Dialogue Council, increase social partners’ legislative rights and extend the parties represented in the Council. Collective bargaining on important issues such as technological innovation, new forms of work organisation and lifelong learning could be enhanced by measures such as incentives to encourage collective bargaining. Other possible measures include extending the types of collective agreements available and reducing the number of areas not covered by collective agreements.

An affordable and efficient housing market

Poland’s housing shortage is causing house prices and rent to rise. Poland is faced with an acute housing shortage, which has resulted in spiralling house price and rental inflation. Since 2015, house prices and rent have increased by 107% and 66% respectively, far exceeding the EU average and slightly exceeding household income growth ( 34 ). This increase has been particularly marked in Poland’s larger cities and metropolitan areas. Economic uncertainties have further contributed to price increases. With the second highest real mortgage interest rates in Q3-2024 in the EU ( 35 ), Poland’s housing situation is especially challenging for first-time buyers and renters – primarily young people – decreasing their mobility and making planning for the future more difficult.

More investment in housing and new policy measures could help to address Poland’s insufficient housing supply. In Poland, investment in housing is the lowest in the EU (2.2% of GDP compared to an EU average of 5.8% in 2023), while the rate of overcrowded households is one of the highest. Between 2020 and 2024 housing market shocks were observed (such as the COVID-19 pandemic, Russian war in Ukraine, energy crisis), while affordable mortgage programme (“Bezpieczny Kredyt 2%”) fuelled additional demand in face of supply bottlenecks, which altogether contributed to rapid housing price rises. Since 2022, Poland has seen a slowdown in the housing supply which may have contributed to higher nominal house prices and warrants closer monitoring. Between 2021- 2023 construction producer prices for new residential buildings increased by 25%, exceeding the EU average of 20%, while the number of building permits for new dwellings decreased by 30% (compared to an EU average decrease of 23%). Housing measures already in place, such as subsidies for municipalities to build social housing and a preferential loans programme for social housing cooperatives, could be expanded to increase investment in housing, create a larger stock of affordable housing and increase competition with the private housing stock and private rental properties (see Annex 11).

To boost competitiveness, sustainability and social fairness, Poland would benefit from:

    accelerating the implementation of the recovery and resilience plan, including the REPowerEU chapter; swiftly implementing cohesion policy, taking advantage of the opportunities under the mid-term review and making optimal use of EU instruments, including InvestEU and STEP, to improve competitiveness; 

    increasing the efficiency of public spending by focusing social programmes on lower-income and at-risk groups and strengthening the efficiency of public investment through more coordinated and transparent planning and systematic evaluations;

    addressing the challenges of an ageing population by increasing the effective retirement age and equalising the retirement age for men and women to ensure the sustainability and adequacy of pensions, reforming preferential pension schemes, and strengthening the healthcare system;

    ensuring an effective institutional and regulatory framework by simplifying legislation and reducing unnecessary bureaucracy, simplifying the tax framework, and strengthening social dialogue;

    increasing the digital intensity of businesses by accelerating the adoption of digital technologies, including those with a high impact on productivity, particularly among small to medium-sized enterprises, and improving digitalisation of the public sector;

    enhancing innovation through stronger science-business collaboration and an attractive research career system by carrying out a comprehensive review of existing instruments, boosting R&D investment, increasing incentives for researchers to cooperate with industry and tapping into regional innovation ecosystems;

    reducing reliance on fossil fuels by improving energy efficiency, phasing out fossil fuel subsidies, advancing the transition of the district heating sector, and taking further measures to decarbonise the transport sector;

    addressing the impact of energy prices on households and competitiveness by accelerating further grid investments, improving grid flexibility through the promotion of demand side response, increased energy storage capacities and enhanced cross border electricity trading, promoting the deployment of renewables, and reducing the tax burden on clean energy;

    addressing the growing risk of drought and floods by improving the coordination of policies that affect water resources, making better use and protecting the capacity of river valleys, forests, peatlands and farmland to retain water in the landscape;

    reversing the decline in basic skills and reducing inequalities in school education by ensuring the efficient implementation of the curriculum reform, enhancing literacy and numeracy in vocational programmes, and improving the quality of teacher training;

    increasing participation in science, technology, engineering and mathematics in higher education by improving the quality of teaching in these disciplines in schools, enhancing career guidance and promoting science, technology, engineering and mathematics learning from an early age;

    addressing skills shortages, particularly digital skills and basic skills among adults, increasing participation in adult learning through providing more support by employers and a strengthened VET system;

    increasing labour market participation of persons with disabilities and women by better targeting measures to support disadvantaged groups, continuing to improve the quality of and access to formal home- and community-based long-term care and early childhood education and care.

Fiscal    

A1.Fiscal surveillance and debt sustainability

A2.Taxation

Productivity    

A3.Innovation to business

A4.Making business easier

A5.Capital markets, financial stability and access to finance

A6.Effective institutional framework

Sustainability    

A7.Clean industry and climate mitigation

A8.Affordable energy transition

A9.Climate adaptation, preparedness and environment

Fairness    

A10.Labour market

A11.Social policies

A12.Education and skills

A13.Social Scoreboard

A14.Health and health systems

Horizontal    

A15.Sustainable development goals

A16.CSR progress and EU funds implementation

A17.Competitive regions

LIST OF Tables

A1.1.General government balance and debt

A1.2.Net expenditure growth

A1.3.Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the recommendation

A1.4.Defence expenditure and the national escape clause

A1.5.Macroeconomic developments and forecasts

A1.6.General government budgetary position

A1.7.Debt developments

A1.8.RRF – Grants

A1.9.RRF - Loans

A1.10.Projected change in age-related expenditure in 2024-2040 and 2024-2070

A1.11.Fiscal Governance Database Indicators

A2.1.Taxation indicators

A3.1.Key innovation indicators (*)

A4.1.Making Business Easier: indicators.

A5.1.Financial indicators

A6.1.Poland. Selected indicators on administrative burden reduction and simplification

A6.2.Digital Decade targets monitored through the Digital Economy and Society Index

A7.1.Key clean industry and climate mitigation indicators: Poland

A8.1.Key Energy Indicators

A9.1.Key indicators for progress on climate adaptation, preparedness and environment

A13.1.Social Scoreboard for Poland

A14.1.Key health indicators

A16.1.Selected EU funds with adopted allocations - summary data (million EUR)

A16.2.Summary table on 2019-2024 CSRs

A17.1.Selection of indicators at regional level in Poland

LIST OF Graphs

A2.1.Tax revenue shares in 2023

A2.2.Tax wedge for single and second earners, % of total labour costs, 2024

A3.1.Patent applications filed under the PCT per billion GDP (in PPS €) in relation to business enterprise expenditure on R&D (BERD) as a percentage of GDP, 2021

A3.2.Public-private scientific co-publications as a percentage of the total number of publications, 2023

A4.1.Making Business Easier: selected indicators.

A5.1.Net savings-investment balance

A5.2.International investment position

A5.3.Capital markets and financial intermediaries

A5.4.Composition of NFC funding as % of GDP

A5.5.Composition of household financial assets per capita and as % of GDP

A6.1.Trust in justice, regional / local authorities and in government

A6.2.Indicators of Regulatory Policy and Governance (iREG)

A7.1.GHG emission intensity of manu-facturing and energy-intensive sectors, 2022

A7.2.Manufacturing industry output production: total and selected sectors, index (2021 = 100), 2017-2023

A7.3.Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023

A8.1.Retail energy price components for household and non-household consumers, 2024

A8.2.Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF)

A8.3.Poland’s installed renewable capacity (left) and electricity generation mix (right)

A9.1.Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022

A9.2.Investment needs and gaps in EUR million, in 2022 constant prices

A10.1.Key labour market indicators

A10.2.Employment by age group and sex

A11.1.Components of AROPE, 2015-2023

A11.2.In-work AROP rate for contract type

A12.1.Trends in underachievement in mathematics by students’ socio-economic background, PISA 2012-2022 (%)

A14.1.Life expectancy at birth, years

A14.2.Treatable mortality

A15.1.Progress towards the SDGs in Poland

A16.1.Distribution of RRF funding in Poland by policy field

A16.2.Distribution of cohesion policy funding across policy objectives in Poland

A17.1.Labour productivity per hour

LIST OF Boxes

No table of contents entries found.

LIST OF Maps

A17.1.GDP per head (in purchasing power standard PPS), 2023

A17.2.Average speed for fixed internet, 2023

This Annex contains a series of tables relevant for the assessment of the fiscal situation in Poland, including how Poland is responding to Council recommendations issued under the reformed Economic Governance Framework.

The reformed framework, which entered into force on 30 April 2024( 36 ), aims to strengthen debt sustainability and promote sustainable and inclusive growth through growth-enhancing reforms and priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the cornerstone of the framework, setting the budgetary commitment of Member States over the medium term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for fiscal surveillance.

Poland submitted its plan on 9 October 2024. The plan covers the period until 2028, presenting a fiscal adjustment over four years. On 21 January 2025, the Council adopted the Recommendation endorsing Poland’s plan( 37 ). On 21 January 2025, the Council also adopted a Recommendation under Article 126(7) TFEU ( 38 ) to correct the excessive deficit in Poland. The corrective net expenditure path recommended by the Council under the excessive deficit procedure is consistent with the path set out in the plan.

The assessment of the implementation of the Council Recommendation endorsing Poland’s plan is carried out on the basis of outturn data from Eurostat and the Commission’s Spring 2025 Forecast and taking into account the Annual Progress Report (APR) that Poland submitted on 30 April 2025. Furthermore, given Poland’s request to activate the National Escape Clause ( 39 ) in accordance with the Commission Communication of 19 March 2025 ( 40 ), the assessment also considers, as appropriate, the projected increase in defence expenditure based on the Commission Spring 2025 Forecast.

The Annex is organised as follows. First, developments in government deficit and debt are presented based on the figures reported in table A1.1. Then, the assessment of the implementation of the Council Recommendation to correct the excessive deficit and of the Council Recommendation endorsing the plan follows, based on the relevant figures presented in Tables A1.2 to A1.9, including data on defence expenditure.

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal sustainability risks are discussed in the Debt Sustainability Monitor 2024( 41 ).

Developments in government deficit and debt

Poland’s government deficit amounted to 6.6% of GDP in 2024. Based on the Commission’s Spring 2025 Forecast, it is projected to decrease to 6.4% in 2025. The government debt-to-GDP ratio amounted to 55.3% at the end of 2024 and, according to the Commission, it is projected to increase to 58.0% by the end of 2025.

Table A1.1:    General government balance and debt

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR).

Developments in net expenditure

The net expenditure( 42 ) growth of Poland in 2025 is forecast by the Commission( 43 ) to be below the recommended maximum. Considering 2024 and 2025 together, the cumulative growth rate of net expenditure is projected to be above the recommended maximum cumulative growth rate, corresponding to a deviation of less than 0.1% of GDP. 

Table A1.2:    Net expenditure growth

* The cumulative growth rates are calculated by reference to the base year of 2023. Source: Council Recommendation to correct the excessive deficit in Poland, Annual Progress Report (APR), and Commission Spring 2025 Forecast (COM).

The assessment of the net expenditure growth and, in particular, the comparison with the recommended net expenditure path considers that Poland has requested the activation of the national escape clause to facilitate transitioning to a higher level of defence expenditure. General government defence expenditure in Poland amounted to 1.6% of GDP in 2021, 1.6% of GDP in 2022 and 2.0% of GDP in 2023 ( 44 ). According to the Commission 2025 Spring Forecast, expenditure on defence is projected to amount to 2.7% of GDP in 2024 and 2.8% of GDP in 2025. Based on current projections for defence spending, the deviation that is projected for Poland is within the flexibility provided by the national escape clause.

Table A1.3:    Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the recommendation

* The growth rate for 2024 is not a recommendation but serves to anchor the base, as the latest year with outturn data when setting the net expenditure path is year 2023. Source: Commission Spring 2025 Forecast and Commission's calculation.

Table A1.4:    Defence expenditure and the national escape clause

Source: Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation.

Table A1.5:    Macroeconomic developments and forecasts