Problems in labour market in spite of record low unemployment rate

25.05.2017 11:01|Conotoxia.com

Over the past few months we have been receiving news about significant declines in Poland’s unemployment rate. According to initial estimates from the Ministry of Labour, this index would go down to 7.7% in April, which would be its lowest level since 1991. Nevertheless, this data is quite inconsistent with the fact that Poland has one of the least attractive labour markets in the European Union.

Praca

The unemployment rate data for March (8.1%), provided by the Polish Central Statistical Office (GUS), was cited and commented on by every significant economic information agency. Such a low result has not been quoted in more than twenty-five years. Poland’s unemployment rate usually was at the level of approximately 15% and sometimes it even went above 20%. Therefore, the estimates for April (7.7%) must really be positive news. Moreover, experts have announced that these declines would continue. “The unemployment rate is estimated to remain in the depreciation trend and it may reach 7% by the end of this year,” said Bartosz Grejner, Cinkciarz.pl Analyst.

Record after record

This year’s records are a result of a trend, which has been held since the second quarter of 2013. At that time, the unemployment rate was at the level of 14% and has been systematically decreasing since. Polish companies have been offering significantly more jobs than one year ago and the general condition of the Polish economy has improved. Statistics show that there has been a very dynamic increase in industrial production, as well as in retail sales. A similar tendency has been observed in other European countries.

“Both the consumer and entrepreneur sentiment indexes have indicated that the economic situation of the eurozone’s largest economies has been increasingly positive. The same goes for Poland. Moreover, the lack of improvement in the Polish labour market would have been bizarre in such conditions. After all, Poland has been striving to reach the level of Europe’s most developed economies,” comments the Cinkciarz.pl analyst.

Matter of salary

The time of the year is also crucial when it comes to a reduction in the amount of unemployed. The beginning of spring (March and April) opens opportunities for seasonal labour. The data from the past few years indicates a decrease in the unemployment rate every March. This tendency has been sustained this year, which was mainly caused by a low unemployment rate for January and February (8.6% and 8.5% respectively).

Another element that strengthens the Polish labour market are increasing salaries. The average wage within the company sector for March was at the level of PLN 4,785 gross. This was 5.2% more than the previous year.

“The more job offers there are, the higher the wages. This is a natural way to encourage people to look for a job. The pace of salary growth has been significantly larger than inflation growth. Therefore, the purchase power has increased as well,” explained the Cinkciarz.pl analyst.

However, it’s worth being reserved about the average wage data, because it’s overvalued by the highest salaries. Therefore, the amount of approximately PLN 4,500 gross seems exaggerated, as well as unachievable for some people.

This is because the average wage rate only includes salaries of those employed in companies of more than nine people, whereas millions of Poles work in smaller companies (fewer than nine employees), which usually don’t offer high salaries. The average wage rate for 2016, which includes small companies, was at the level of PLN 4047 gross. “The average wage rate in Germany was at the level of approximately 3,700 euros, which is four times higher than in Poland. Therefore, even though an increase in Polish wages may seem impressive, it’s still a far cry from the developed European economies,” said the Cinkciarz.pl analyst.

Low unemployment rate doesn’t say all

According to Eurostat, which uses a different method to the Polish Central Statistical Office, Poland’s unemployment rate is at the level of 5.3%. This gives Poland a place in the EU forefront and is by approximately 3 percentage points lower than the EU average.

However, the is not the best index presenting the labour market’s condition. Eurostat data also shows that Poland has one of the worst employment rates in the EU.

“For example, the percentage of employed people with the lowest education, within the age range of 20-64, is at the level of 5%. This is three times less than the EU average and four times less than the eurozone’s average. The majority of flaws in the Polish labour market are a result of a low job vacancy rate and a fairly large disproportion in both wages and workplaces in particular regions. You can find the most job offers in the largest cities. However, some regions may still experience a larger unemployment rate because of the relatively low mobility of employees. Moreover, salaries in western regions are higher than those in eastern regions. The only exception is the Mazowieckie voivodeship. This is because the average salary in its capital city Warsaw is higher than 5,500 PLN,” explained Bartosz Grejner.

Attractive for Ukrainians

Sometimes Poles find both increasing wages and new job offers unattractive. This is because they are less tempting than those from Germany, Scandinavia or France. However, the Polish labour market is becoming increasingly inviting for Ukrainians.

“The inflow of Ukrainian emigrants doesn’t have a significant impact on Poland’s labour market. They usually take the jobs that are less popular with Poles. Moreover, there’s not enough foreign workers to level the shortage of those who work abroad,” concluded the Cinkciarz.pl analyst.

 


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