Polish salaries to catch up with the EU sooner: analysis

Photo: Marcin Bielecki/ PAP

The Grant Thornton report on “catch up’ has some important points to make on the relation between economic growth and salary growth but suggesting 59 years is needed before Poland can ‘catch up’ with EU in terms of wages is, however, over-pessimistic.

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Salary rises have lagged behind growth in the economy as a whole. Much has been made of this gap of late. Mateusz Morawiecki said at the beginning of his term as premier that Poland could not envisage joining the euro, when the gap between Polish and German average wages is so large.

The study should come with some major health warnings, however.

Firstly, it deals with data that stops at the end of 2017, without taking into consideration the rapid annual wage inflation witnessed in Poland in 2018, which topped eight percent in March and which PKO Bank Polski predicts to settle at 6.2 percent for the year. In certain sectors such as construction, wage inflation was at one point as high as 15 percent.

Secondly, and most importantly, the report takes an average of wage growth for the years 2014-2016 and extrapolates those rates for the purpose of predicting wage inflation for the next 60 years.

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Every study has to make certain assumptions, but this particular set of data was measured at a time when Poland was experiencing deflation- between 2014 and 2016. At that time consumer prices, a major motor for wage growth, dropped by around 1-2 percent per annum.

At the same time, the minimum wage has been raised by almost a quarter since 2014, rising a further 7.4 percent in 2019. Meanwhile, Poland has one of the lowest cost of living in the EU, so while the country’s wages are low, the cost of living is also lower.

Poland won’t be attracting workers from Switzerland and Luxembourg seeking better wages. However, most conservative estimates suggest Poland may overtake Portugal and Italy over the next ten years, but that Germany will remain out of reach for perhaps thirty.

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