When Poland joined the European Union on 1 May 2004, it was the country with the highest unemployment rate in the community, standing at 20 per cent. Nowadays, according to a methodology based on labour office registrations, it is 5 per cent. The number of people out of work fell from more than 3 million to below 800,000 in the period since. The latest figures from Eurostat, the European Statistical Office, show that in August Poland had the third lowest unemployment rate in the European Union, as measured by the Labour Force Survey, with 2.8 per cent, behind Malta (2.7 per cent) and Czechia (2.5 per cent). The EU average was 5.9 per cent and the euro area average was 6.4 per cent.
New Jobs
According to Eurostat, in the first quarter of 2023, the number of people working in Poland exceeded 17 million for the first time in history. EU statistics released at the end of September also show that we are in the lead in terms of growth in the employment rate, which includes people aged 20–64. Between the fourth quarter of 2019, i.e. just before the pandemic broke out, and the second quarter of 2023, it increased in our country by as much as 5 percentage points, from 72.6 to 77.6 per cent, against an EU average of 75.4 per cent, which went up by 2.5 percentage points during that time.
Why the Polish success? This is a result of rapid economic growth, which has resulted in the creation of new jobs. Recently, their number has been growing even despite natural causes that can limit business activity. “In addition to the ongoing war across Poland’s eastern border, there has been increased inflation and rising costs of raw materials, doing business, and living. It seems, however, that the organizations have somehow waited out this time. And while hiring decisions were made very cautiously in the previous quarter, the coming period looks promising for the labour market. I firmly believe that, despite the difficulties, this current optimism will stay with us”, states Tomasz Walenczak, CEO of ManpowerGroup in Poland.
Analysts point out that the number of economically active persons according to the LFS increased by about 920,000 between 2010 and 2022. This consists of a 2.2 million increase in the number of employed people with a 1.3 million decrease in the number of unemployed people. Thus, the labour force participation rate among people aged 15–89 (58.4 per cent) and the employment rate (56.7 per cent) were the highest on record in the first quarter of 2023. Compared to the first quarter of 2010, these numbers increased by 5.3 percentage points and 9.4 percentage points, respectively.
In last year’s report by the Social Insurance Institution titled “Demographic Changes and the Labour Market and Social Insurance”, Jarosław Oczki points out that the unemployment rate in Poland has a ten-year cycle, determined by the level of cumulative growth in gross domestic product. The peaks in the unemployment rate in 1993, 2003 and 2013 were accompanied by a period of economic slowdown, while the years in which the unemployment rate reached local minimums: 1998, 2008 and 2019 were immediately preceded by periods of high economic growth of more than 5 per cent.
Not Many of Us
An important factor affecting the labour market is demographics. As a result of the ageing population, the number of people retiring is not equal to the number of those beginning their careers. This phenomenon is getting worse. For example, in 2019, about 400,000 people entered the labour market, while about 550,000 exited it. Thus, in one year alone, the market has shrunk by about 150,000 potential workers. This is also one of the reasons why, for several years, the Polish labour market has been referred to as the employee market, and the complaints of employers about the lack of hands to work have become louder and louder.
As labour market analysts point out, the number of people of working age (15–64 years old) continued to grow throughout the first decade of the 21st century and peaked in 2009 (27.2 million people). From 2009 to 2022, there was a decline of about 10 per cent. At the same time, since 2009 the number of people over 65 has increased by around 2.1 million, while the number of people under the age of 15 has remained unchanged.
Oxford Economics forecasts show that the working-age population in Poland will be in gradual decline until the end of 2040. This pace will accelerate especially after 2035. The working-age population is expected to decline by 8.4 per cent in less than 17 years.
Foreigners Boost the Economy
After 2014, when the conflict in Ukraine heated up and turned into a full-scale war in February 2022, hundreds of thousands, and at times millions of people from across the eastern border flowed into Poland. As a result, according to the Central Statistical Office (CSO), there were 1,004,400 foreign workers in Poland at the end of December 2022, 27.3 per cent more than at the end of January last year. Of this number, 432,600 were foreigners performing civil law contracts. The share of foreigners in the total number of people performing work in Poland increased from 5.2 per cent at the beginning to 6.5 per cent at the end of 2022. The Social Insurance Institution’s data on foreigners enrolled in social security show that there were 1,063,000 workers, of whom 745,980 were citizens of Ukraine.
Such a massive influx has not caused social tensions resulting from “newcomers taking jobs away from our own”. This happened because, simply put, the supply of hands to work could not keep up with the rapidly growing economy, and foreign workers eased tensions in the labour market.
According to the analysts of PKO BP, their presence has even had a salutary effect on the Polish economy. They emphasize that the availability of new workers made it possible to meet the ever-growing foreign demand and generate new jobs. Without this inflow of additional labour, businesses would suffer more from labour shortages and economic growth would be weaker.
Market Resilient to Shocks
Most interestingly, however, the Polish labour market has proved almost completely insensitive to the massive crises that the global and Polish economies have undergone in recent years. During the COVID-19 pandemic, when the economy practically came to a standstill, unemployment rose only slightly. Indeed, the number of registered unemployed people exceeded one million (1,099,500 at its peak in February 2021), but it fell quite quickly to current levels, i.e. below 800,000.
The shallow recession of the Polish economy in the first half of 2023 caused by the war hardly affected the labour market. Both the unemployment rate and the number of the unemployed have steadily declined. And it can stay that way.
The relatively low vulnerability to the COVID-19 crisis is due to the coordinated actions of the government and the central bank, for which preserving jobs has become a priority in times of danger. Hence the powerful support for entrepreneurs under the subsequent “COVID shields”. On the one hand, government subsidies, on the other hand, the monetary policy of Narodowy Bank Polski provided such conditions for companies that there were no mass lay-offs, although, obviously, it was a very hard time for very many companies, especially in the service sector.
The current slowdown (arguably, Poland’s GDP growth in 2023 will only be slightly positive, below 1 per cent) is also unlikely to result in lay-offs. Labour market shortages have caused employers to be much more restrained in recent years in their decision to cut jobs than in previous decades.
In addition, very rapid economic growth has resulted in a significant increase in wages (due also to increases in the minimum wage, which have raised the entire wage scale in many companies). That means employers can adjust to the slowdown through the wage channel, i.e. by raising wages less than what would be implied by an increase in inflation, avoiding much more painful job cuts for workers.
There Are Challenges
Just because our market has developed and matured does not mean it will not face new challenges in the coming years. “Changes until 2030 will happen dynamically. The biggest commotion will be created by artificial intelligence, which is a revolution comparable to, if not greater than, past industrial revolutions. We are talking about deleting entire professions that will become unnecessary. Others will be created in their place, of course, but the question is how quickly will the desired competencies be developed among employees? On top of that, we are constantly facing other phenomena, such as the ageing population, labour migration, wage inequality and the challenges of the green transition. All this will happen, and it is worth being aware of these changes and trying to prepare for them now”, says Krzysztof Inglot, labour market expert and founder of Personnel Service.
