The youngest generation will have to foot the bill for the rocketing costs of their parents' pensions Shutterstock

If a country’s human capital is the key to its long-term economic potential, then Poland is in trouble. The country’s total fertility rate is one of the lowest in the world, which – unless drastic changes occur – will one day severely deplete Poland’s workforce and put enormous pressure on its pension system.

The average number of children born to a Polish woman is a paltry 1.3, placing Poland in 209th position out of the 223 countries ranked in the US Central Intelligence Agency’s World Factbook. Poland even ranks behind China, which itself has a state-enforced one-child policy.

And according to economists at the Civil Development Forum (FOR), as early as next year the number of people of working age in Poland will start falling, and within the next 30 years it will have dropped by 4.5 million. The effects of this demographic imbalance are already being felt, as Poland has already dipped into its Demographic Reserve Fund, taking some zł.7.5 billion out of it this year to cover ballooning pension payments. A further zł.4 billion will likely be withdrawn next year.

Source: Eurostat

“Our child bearing index is one of the lowest in the EU. It’s high time we used the opportunity provided by the last generation of baby boomers from the 1980s who are currently starting families and entering the job market,” said Jolanta Fedak, minister of labor and social policy, speaking on TVN about a new bill on childcare proposed by her ministry.

Currently, there are 1.2 million children under the age of three in Poland. Only two percent of them receive childcare from outside the family. Moreover, only 16 percent of local authorities offer childcare places for children under three, and only one in 20 of those places is privately run. Most children are looked after by their parents or grandparents – many of whom are of working age, and could otherwise participate in the labor market.
“Grandparents are often forced to leave the workforce in order to look after their grandchildren,” confirmed Piotr Sarnecki, expert at the Confederation of Private Employers (PKPP) Lewiatan.

Billing for change

The Ministry of Labor’s new bill aims to make childcare for under-threes more accessible and affordable, thus helping to bring more people of working age into the job market.

Under the new framework, early childcare policy, which is currently controlled by the Ministry of Health, will be transferred to the Ministry of Labor.

Source: GUS

While Ms Fedak agreed that the new bill would involve significant government spending, she was adamant that this should be seen as an investment.

“Local authorities will find that it pays off as the bill means additional taxes, fewer benefit [payments] and investment in people, which is the best type of investment.”

The minister said that while she did not expect to see a huge increase in the number of nurseries opening within a year, she did eventually hope that 30 percent of children under three would be in day-time childcare.

“This is a very good bill and contains all the elements we lobbied for,” said Mr Sarnecki. “Nurseries and kindergartens are essential if we want to see more people in the job market.”

He pointed out that according to Eurostat, the EU’s statistical agency, the proportion of women aged between 24-49 in employment goes down to 66 percent when those with children are counted. The figure for men and women before they start a family is 71 and 72 percent, respectively.

“Without proper childcare solutions we won’t be able to reach a large proportion of the population in the productive age groups who are not employed and don’t contribute to the national pension scheme,” Mr Sarnecki concluded.