Wages have increased again in Poland. When will Poles catch up with the Germans?

17.10.2017 14:37|Andrzej Tomasik

“4473 PLN - that's September's data published on Tuesday by the Polish Central Statistical Office (GUS) in Poland. The average salary per year increased by over 6%. That is not the end of good news. Further salary increases are ahead of us,” says Bartosz Grejner Conotoxia Analyst.

Wynagrodzenia

Many Polish employees are angry at the disproportion between the national average GUS data and the amount that flows into their accounts every month. It is because the earnings data published by GUS firstly concerns enterprises that employ at least 9 employees and generally pay better than small businesses. Secondly, gross wages exceed by approx. one-third of what an employee receives, colloquially speaking, in their pocket.

In addition, the monthly published average salary in Poland is not a median. This is heavily surpassed by those on top and with the best-paid jobs. Nevertheless, changing amounts reflect market trends which show that the Polish labour market is getting better and better. In September 2007, the Polish Central Statistical Office (GUS) informed about the average gross salary in the enterprise sector which amounted to 2859 PLN, five years later it reached 3771 PLN, and a year ago 4218 PLN. Therefore, wages increased regularly until September's data published today which pointed to 4473 PLN.

Positive perspectives for coming years?

"Wages increase results from the improving situation in the Polish labour market. Unemployment is decreasing while employment is increasing. More and more jobs are being created at a pace faster than the growth of skilled workers. As a result, employers offer higher salaries to find proper employees," explains Bartosz Grejner, Conotoxia Analyst.

According to the Conotoxia Analyst, the economic situation is in favour to the continued salaries growth in Poland. How long will it last? "We are currently experiencing an economic recovery, not only in Poland but also in almost the entire eurozone and most of Europe. It can be said that the Polish economy has been in a good place, at the right time and the probability of its deterioration is currently limited," says Bartosz Grejner.

Romania, Czech Republic, Germany, Poland - different pace but the same direction

The economic recovery typical of many European countries means that average wages are growing not only in Poland. The dynamics in general growth rate differs quite significantly from country to country. Lower applies to, for example, wealthy Germany, higher to Romania, which is in the tail of the EU average wage ranking but is already at the forefront in the case of growth pace. "In the following months of this year, the scale of changes in Romania has systematically exceeded 10% in comparison to the data from 12 months before," the Conotoxia Analyst claims.

Salaries also increase e.g. in the Czech Republic, where the situation on the labour market has been even better than in Poland. Czech wages have been growing in recent years at a similar pace to that of Poles, although labour costs in the Czech Republic are higher than in Poland. "The unemployment rate of our southern neighbours is also the lowest in the entire European Union. All with an economic growth of 4.5% in Q2 this year, also higher than is observed in Poland, which is 3.9%," says Bartosz Grejner.

Will we ever earn like Germans?

The German labour market attracts many workers from Poland. It is not surprising since the average wage is around 3.7k EUR. Will the salaries in the countries on both sides of the Odra River ever be equal?

Over the last decade (2007 - 2016), German wages increased on average by 2.05%, while the growth pace of earnings in Poland was twice as high and amounted to 4.17%. Nevertheless, there is still a gap - a German employee can count on an average salary almost four times higher than the one earned in Poland.

Let us assume that the aforementioned wage growth pace in both Poland and Germany will be maintained and similar inflation rates will remain. In practice, it is limited, but in theory, it is possible. If Poland and Germany were to continue to have a growth pace of 4.17% and 2.05% respectively, when would salaries in both countries be equal? By our calculations: this could happen in just over 83 years.

Wealthy country has more difficulties in achieving impressive growth

However, it should be explained why this is a rather optimistic scenario for Poland. "As the economic development and the emerging market approach a well-developed country's level, such as Germany, the growth pace is starting to fall," explains the analyst at Conotoxia. "It is logical because the "chasing" country becomes more developed and richer with time, and then loses the dynamic of the progression from the initial years. Then an issue, so-called average income trap, may occur. It is the situation where a country loses some of its competitive power when it reaches a certain level of income, e.g. low cost of the highly qualified workforce" - explains the Conotoxia Analyst.

If we were to stick to the version of "a little more than 83 years", then the earnings of Poles and Germans could equate in 2101. Unfortunately... " The fast growth pace of wages in Poland may slow down, so it will be very difficult for us to catch up with the salaries of Germans before the beginning of the 22nd century", according to the Conotoxia Analyst.

 


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