December 11, 2015 / 7:39 AM / in 2 years

Poland should not cut retirement age: EU's Dombrovskis

WARSAW (Reuters) - Poland should not lower its retirement age as this would negatively affect the pension system and the labor market, European Commission Vice President Valdis Dombrovskis was quoted as saying on Friday.

European Commission Vice-President Valdis Dombrovskis addresses a news conference at the EU Commission headquarters in Brussels, Belgium, July 15, 2015. REUTERS/Francois Lenoir

Poland’s new government, the socially conservative and economically populist Law and Justice party (PiS), wants to lower the retirement age to 60 for women and 65 for men. The previous economically liberal government had decided in 2012 to gradually raise it to 67 for both men and women.

“We will insist that the government does not backtrack from a previous decision to increase it (the retirement age),” Dombrovskis told Rzeczpospolita newspaper.

“If it does, this will negatively affect the stability of the pension system, the level of pensions and the supply of labor on the market,” he said.

Poland has one of the lowest fertility rates in the 28-nation European Union, which means that, barring a change in the number of children being born, it will face a sharp decline in population and increasing costs to look after the elderly.

Dombrovskis also said Poland was among the EU nations with the highest number of allowances and reduced rates of value added tax, so it should consider reducing them in order to improve tax collection, one of the government’s targets.

Poland should take action to reduce the share of temporary employment contracts, which now account for about a third of all job contracts, the highest share in the EU, Dombrovskis said.

Earlier this month Dombrovskis urged Poland to stick to a responsible fiscal policy and keep its deficit below an EU ceiling of 3 percent of national output despite Warsaw’s plan to exceed it.

Reporting by Marcin Goettig; Editing by Gareth Jones

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