The economic struggle between Warsaw and Berlin. Warsaw wins!

Feb 16, 2018 2:04 PM|Marcin Lipka

“We compared the GDP, unemployment and salaries of European capitals. The summary shows that Warsaw has been leaving many European metropolises behind, and soon, it may catch up with Berlin, even in the salary sector,” writes Marcin Lipka, Conotoxia Senior Analyst.

In the individual EU areas wealth statistics, Warsaw is the leader. According to Eurostat data, the GDP purchasing power parity of Warsaw is higher, not only from Bratislava, Budapest or Prague, but also Rome, Madrid and Berlin. Interestingly, the largest Polish city also defeats the capital of Germany in other economic rankings.

GDP: One-nil to Warsaw

GDP, like in national summaries, may also be analyzed at a local level. The development measure of a given area is the annual value of produced goods and services per capita. It is also often presented in purchasing power parity (PPS EUR) so that price differences within the EU do not disturb the overall result.

GDP per capita of Warsaw, according to the latest Eurostat data (for 2014), was 54.6 thousand PPS EUR. For Berlin, in the same period, it was 32.8 thousand PPS EUR. Even the level of nominal GDP per person (without price equalization) was very similar in Berlin (34.3 thousand EUR) and in Warsaw (31.3 thousand EUR). Considering the ever faster development of the Polish capital, the nominal results should be at least equal.

Labor market: already 2:0 for Warsaw

According to the Polish Central Statistical Office (GUS), unemployment in Warsaw in December 2017 was 2%. In turn, according to official statistical publications for Berlin (Statistischen Ämtern des Bundes und der Länder) unemployment for the capital of Germany for the same period amounted to as much as 8.4%.

Although the unemployment rate is not an ideal labor market measure, it is worth noting that at the end of 2015, according to Eurostat estimates for metropolitan areas, the employment rate in the region of Warsaw for the population aged between 20-64 was 78%, while in the case of Berlin it was 75.1%.

Salaries: One point for Berlin, but the chase continues

The latest Polish Central Statistical Office publication for Warsaw shows that in December last year, the average gross salary for employees in capital companies (over one million people) amounted to 6,233 PLN, which is almost 8% more than the year before. The December data slightly disrupted the payment of annual bonuses, yet in terms of the whole of 2018, the barrier of 6,000 PLN will be easily exceeded, taking the rate of wage growth in recent months into account.

The average gross salary in Berlin in September 2017 (latest available data) was 3,708 EUR. Converting it into PLN will, of course, be much more than the 6,233 PLN in Warsaw. However, it is worth remembering that prices in the German capital, especially for services, are much higher than in the capital of Poland.

According to Eurostat data, the cost of living in Berlin is on average about 80% higher than in Warsaw and by 5% higher than the EU average. Comparing, therefore, salaries in PPS EUR for the capital of Germany and Poland, we receive respectively 3,530 and 2,650 PPS EUR. In this competition, Berliners still win, but taking relatively small differences into account, soon employees in some industries will benefit more from coming to Warsaw than to the German capital.

Feb 16, 2018 2:04 PM|Marcin Lipka

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