In the past year alone, a trifle of about 600,000 companies have disappeared from the Polish economic map. We are talking about liquidated and suspended businesses. Theoretically, the effects of this economic paralysis should be leveled by the indicator of companies that have just appeared on the domestic market. Unfortunately, year by year, Poland is widening the gap between new companies and those that either disappear completely, disappear temporarily, or feed the grey zone, losing the unequal battle with constantly growing burdens.
The little ones are bleeding
It is the rising costs of doing business that are the final nail in the coffin for a number of companies – especially the smallest ones. In 2023 alone, CEIDG received 200,000 applications to close sole proprietorships. The vast majority of the remaining group of entities that have ended their lives are only slightly larger micro-enterprises and small companies. It is bad.
Last year, we also noted a double-digit increase in the percentage of corporate insolvencies, the number of which has now exceeded 4,500. Here, too, the problem concerns mostly small entities, which suffer not so much from delays in settling receivables, but from low profitability, which does not provide the necessary safety buffer in difficult and unstable times.
Importantly, the low profitability of market “tiny” companies may affect the situation of medium and large entities, which are often dependent on cooperation with small, but often narrowly specialized, suppliers of goods or services. However, it may be even worse. Record low unemployment outlines trends towards the concentration of employees in larger entities. Often these are self-employed people or owners of the smallest enterprises, who benefit from the effects of increased demand for labor, the effect of which is, for example, an increase in salaries. This option far outweighs the economic benefits of running, for example, a sole proprietorship, which is increasingly losing the race to stable employment conditions “on a full-time basis.”
In 2023, CEIDG also received 2.7 percent fewer applications for starting a business – 302 thousand in 2023 compared to 310.3 thousand in 2022. It is hardly surprising, since at the start, young business adepts have to face a record increase in the minimum wage, the consequences of inflation, or the still lingering effects of the Polish Deal. And entrepreneurs are actually looking at the market. The closer to January 2024, the date of entry into force of the minimum wage increases, the lower the number of businesses started. At one point, experts were delighted with the 16 percent year-on-year increase in businesses resumed in 2023, but unfortunately it resulted from the growing number of suspended businesses for several years.
There is hope?
The situation may be saved to some extent by unblocking funds from the KPO, which will most likely partially boost the economy. Some steps in the right direction are indeed being taken – such as, for example, the directionally adopted contribution holidays – but we are still far from a satisfactory situation. Today we need decisive actions that will be a kind of gamechanger.
The priority must certainly be to civilize the law-making process, to give a human face to the vacatio legis period, so as to give businesses – both existing and new – a sense of regulatory stability. It is essential to relieve entrepreneurs of the need to pay completely unnecessary taxes, such as those for the Solidarity Fund or the Labor Fund, to reduce the pension contribution for the self-employed and micro-entrepreneurs, to change the rules for paying sickness benefits, or to deal with the disastrous construction of the health insurance contribution, which – after the changes introduced by the Polish Deal – simply looks like a caricature. There are announcements of certain actions, but business needs a big breath of air to get back on its feet.
A certain openness of decision-makers towards talks about potential changes can be pleasing, the right direction is the deregulatory attempts of the Ministry of Development and Technology, but the plan must include a greater number of legislative activities. This will pay off for all of us.