The Polish Ministry of Labor and Social Policy is proposing to raise pensions by 4.02 percent next year. This would cost the budget zł.6 billion according to the ministry's calculation.

This represents a one percentage-point increase on the sum initially set aside in the budget and comes at an extra cost of zł.1.5-2 billion.

Ministry officials have based their decision on a predicted inflation rate of 3.5 percent, as well as real wage increases. However, unions argue that since inflation has already reached 5 percent year-on-year in May, this should be reflected in an even higher rise in pensions.

“If the rise doesn’t equate to a 50 percent increase in average wage in the national economy, then anything could happen,” Henryk Nakonieczny from the National Commisison of Solidarity was quoted by Parkiet as saying.

According to Maciej Rapkiewicz, an expert on public finance at the Sobieski Institute, a think-tank, even the ministry's proposed 4 percent increase will put a massive strain on the budget.

“We have to look at the situation in the context of Poland’s aging population, which makes raising pensions unsustainable. If anything, the pension policy should go in the other direction,” he said.

The workers already benefit from more favorable calculations than in the past, he added.

“The government now uses the real increase in wages as an indicator for setting pension levels, in contrast to the past when it was only marked against inflation. I hope that the ministry stands its ground and does not give in to the unions just to curry favor before the election,”added Mr Rapkiewicz.

An estimated 9.6 million pensioners will benefit from the government's proposed increase.

Tara Taylor