WARSAW - Poland's ruling coalition agreed on March 29 to press ahead with raising the retirement age to 67 years after months of political wrangling over Prime Minister Donald Tusk's flagship austerity reform.
Tusk has promised Brussels to lower Poland’s general government deficit to below 3 percent of GDP this year from an expected 5.6 percent in 2011 and the pension reform is at the heart of his drive designed to achieve that.
"Today we are presenting a compromise that will become the basis of a government bill proposal we expect to be discussed at a government sitting in three weeks," Tusk told a joint news conference with the head of his junior coalition partner, Waldemar Pawlak of the Peasants’ Party (PSL).
Tusk, who heads the Civic Platform party (PO), was forced to offer concessions to win backing from PSL, which sought to water down the reform that is opposed by about 85 percent of Poles, according to surveys.
Under the agreement reached on March 29, women would be able to choose partial retirement calculated from half of their pension savings at 62 years and men at 65 years – after a minimum of 35 and 40 years at work, respectively.
Tusk said this change would not create additional burdens for the state budget as the partial retirement would be calculated from a worker’s own savings in the public pension system only.
"It seems that the price for reaching a deal with PSL wasn’t too high, it doesn’t affect the original plan much. However, we must remember that the original proposal of the PO wasn’t exactly ambitious either," said Piotr Bujak, chief economist at Nordea bank in Warsaw.
Analysts also said Warsaw should curb costly pension privileges for farmers, miners and other social groups to ensure a positive impact on Poland’s borrowing costs.
"Such small steps are unlikely to significantly improve Poland’s image in the eyes of rating agencies. If every other reform is to cost concessions for the coalition partner, then it doesn’t seem this government will be able to carry out reforms ensuring long-term improvement of public finances stability," said Janusz Dancewicz, chief economist at DZ Bank.
REFERENDUM?
The centrist coalition holds only a three-strong majority in Poland’s 460-seat lower chamber of parliament. It will need the support of all its lawmakers to defeat a vote on March 30 on calling a national referendum on raising the retirement age.
Analysts say most Poles would vote against working longer than the current retirement level of 60 years for women and 65 years for men if such a referendum were held.
The country’s prominent Solidarity trade union, often at loggerheads with Tusk’s cabinet, gathered about 1.5 million signatures among Poles in favour of holding a national vote, but Tusk has repeatedly ruled out such a possibility.
