PiS on track for majority in Polish parliament after historic win

PiS on track for majority in Polish parliament after historic win
By Wojciech Kosc in Warsaw October 25, 2015

Poland’s conservative and eurosceptic Law and Justice party (PiS) looked to have secured just enough seats to form a majority government on its own, after a late poll showed it won 37.7% of the votes in the Polish parliamentary election on October 25. The result would translate into 232 seats in the 460-seat lower house of the parliament, the Sejm.

Prior to the election, analysts argued that a single-party PiS government would be more favourable than a potentially unstable coalition with anti-establishment Kukiz’15 or Korwin – the parties tipped most likely to team up with PiS should it not win a majority. 

PiS’ chairman Jaroslaw Kaczynski said on the election night on October 25 he would seek to "extend our hand to all those who want a good change, who want to change in Poland". Kukiz’15 was likely target of the offer.

Polish media speculate, however, that in case PiS' minority ultimately proves slim, the winners would opt for culling MPs from Kukiz'15 rather than engage in potentially problematic coalition talks with the unpredictable newcomers.

Kukiz’15 and Korwin won 8.7% and 4.9% of the votes, respectively. For the Korwin party, this would mean they have not passed the 5% threshold needed for a party to win any seats, although the gap is small enough to be closed after votes are counted.

Despite concerns that a PiS-only government would lead Poland off track, analysts do not appear to be particularly concerned, at least when it comes to near-term outlook for CEE's biggest economy.

Some analysts suggest the party has learnt from its short tenure in 2005-07 and will moderate its policies.

"We think the impact from the change in government on the near-term outlook is limited. Some sectors of the economy will lose out – Law and Justice has pledged to impose taxes on large retailers and banks. But, overall, fiscal policy is likely to become more supportive. If anything, this could boost GDP growth over the next few years," noted William Jackson of Capital Economics.

A medium-term outlook is, however, a different story altogether, Jackson adds. 

"Civic Platform [PO] pushed through structural reforms, leading to a marked improvement in Polish institutional quality and standards of governance. In contrast, [PiS] has little appetite for such measures. Ultimately, this may lead to weaker investment and productivity growth, slowing down the process income convergence with European peers. This is something to worry about over the next 5-10 years," he wrote.

Unlike in the case of a coalition with hardly predictable Kukiz’15 or Korwin, the stability of a PiS-led government could be a plus, suggest others, but may come at a cost.

"Gaining a majority by PiS increases the risks of implementing non-standard policy-making - excessive fiscal loosening, non-standard monetary policy - that may keep the zloty weak for longer. Equity markets will be shaped by communicating the concrete steps to be taken and may remain volatile," Erste wrote in post-election analysis on October 26. 

The direction PiS will take in its economic policies is made opaque somehow by the fact the the undisputed leader Kaczynski does not seem to want to play any official role in the government. The prime minister designate is Beata Szydlo, one of Kaczynski's closest aides. Kaczynski tried to not make an impression PiS now has the mandate to anything and everything. He would rather strike a conciliatory note during his speech on the election night, right after exit polls were announced. 

“I would like to emphasise: there will be no revenge, no personal games, no kicking those who fell,” he added in a hardly convoluted reference to the losing Civic Platform, which has given up power after an eight-year rule.

Civic Platform (PO) came in at second position with 23.6%, well behind PiS, and will now be the biggest opposition party. PiS succeeded in painting its rule as a failure, despite macroeconomic factors having improved considerably.

Apart from PiS’ winning majority, the other big change in the parliament will be that it will be the first parliament in democratic Poland not to feature a leftist party. A coalition of Social Democratic Left Alliance (SLD), Your Movement (TR) and the Green Party only managed to win 7.5% of the vote, below the 8% threshold required for coalitions. On the other hand, a young leftist party Razem (Together) surprisingly won 3.9%, giving it access to budget financing and making it potentially a new leftist force on the rise, at the expense of the fading old-timers from SLD.

PO’s coalition partner during the last eight years, the agrarian party PSL, won 5.2% and will not be certain of winning seats in the Sejm until official results are released.