Labour Market Poland: Employees needed urgently

Author / Editor: Barbara Blaczkowska / Franziska Breunig

In June 2017 Poland’s unemployment rate was the lowest in 26 years. According to the government’s data, the unemployment rate was only 7.1%, i.e. about 0.3 percentage points lower than in the previous month and 1.6 percentage points lower than a year ago.

The falling unemployment rate in Poland is good for employees, but for employers it means real trouble
The falling unemployment rate in Poland is good for employees, but for employers it means real trouble
(Source: Pixabay)

According to the data concerning the registered unemployment in Poland, the number of the unemployed in Poland at the end of June 2017, as compared to May 2017, fell by 49.3 thousand (a decrease by 4.1%) and amounted to 1.15 million. And, as compared to the same period last year, the number of the unemployed fell by 239.7 thousand, i.e. by as many as 17.2%. Importantly the trend is noticeable in all voivodeships including those which traditionally record the highest unemployment rates.

Also employers submit huge numbers of job offers and report multiple employment development locations to employment offices (only in June, there were 146.1 thousand submissions/reports). Experts claim that so-called ‘employee market’ in Poland is now a fact.

The industry hires employees and pays them (more and more)

The authors of the report of the National Bank of Poland (NBP) on the labour market, published in July 2017 and concerning the first quarter of 2017, link the noticeable growth of labour demand to, among other things, faster economic growth in Poland at the beginning of 2017 as well as to a much slower decline in employment in individual farming. However, as the report claims, the rate of the decline in unemployment in the coming months should be slower than so far.

At the same time, one can expect further, albeit slow, wages and salaries growth in Poland, as indicated by the data from the enterprises sector for the first two months of the second quarter. Experts claim that the growth rate of wages and salaries in the economy in the first quarter of 2017 increased to 4.1% y/y (against 3.7% y/y in the fourth quarter of the previous year). The wages and salaries growth in Poland is still linked to an increase in productivity, which is evidenced by the stabilisation of the growth rate of unit labour costs.

As indicated by the Polish Central Statistical Office (GUS) in its communication on the socio-economic situation in Poland in the first half of 2017, during this period the average employment in the enterprises sector increased by 4.3% p.a. and the increase was higher than the year before. A substantial increase in the share of contract workers is an essential and very important structural change resulting from the current growth rate of the labour market. In an attempt to prevent employees from leaving companies, more and more often employers conclude with them contracts for an indefinite period.

From administration to automotive

According to GUS communication, average employment in the enterprises sector in the first half of 2017 was 5,978.6 thousand employees. The employment rose the most in the case of administrative and support service activities (9.4%), accommodation and food service activities (9.1%) and transportation and storage services (7.0%). An increase in the employment by 2.4–6.6% was recorded, among other areas, in the area of scientific activities, information and communication and in trade as well as in the sectors of repairs of motor vehicles, real estate activities, industrial processing, water and sewage management.

From January to June 2017, the sectors of the Polish economy which employ large numbers of workers recorded employment growth on an annual basis, e.g. in companies operating in the sector of land transport and transport via pipelines (8.8%), manufacture of motor vehicles, trailers and semi-trailers (8.0%) or manufacture of rubber and plastic products (6.5%).

On the other hand, lower employment rate, as compared to the first half of 2016, was recorded in the mining and quarrying sector (a decrease by 5.5%), in the electricity, gas, steam and hot water supply sector (-1.6%) and in the construction sector (-0.3%).

A challenge for the economy

Although employees in Poland are certainly happy with the situation on the labour market, for entrepreneurs, however, it poses a real challenge. Monika Kurtek, Chief Economist at Bank Pocztowy, says that a significant fall in unemployment means that tensions are being created on the Polish labour market which in the future, and not so distant future, may inhibit the growth of the economy. The more so in that, according to the European Commission’s projections, a slow upward trend in the case of the employment in EU countries, including Poland, will continue until the end of 2018. As expected, the unemployment rate in Poland will reach its historical minimum in 2018 and will be at the level of 4.4%.

Time will tell whether the economy—including the industry which already now is in great need for skilled workers—will be able to cope with it.

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