A Report on the Polish Labor Market: An Insider-Outsider System

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Abstract

In the last decade, Poland has seen a dramatic increase in unemployment. Even though, mainly due to mass emigration, it has fallen, of late, the joblessness rate is still highest in the EU. It is pointed out that the strictness of employment protection legislation and high nonwage labor costs are behind this disappointing performance. The present article argues, in light of the insider-outsider theory that, due to the power of Poland's trade unions, a two-tier system has emerged, favoring employees on open-ended contracts and discriminating against job seekers. Unions, as classic insiders, thwart attempts to ease stringent fire-and-hire regulations to modify early-retirement schemes and to reform the public sector, which risks affecting the country's socioeconomic development.

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