Jobless figures rise to highest in six years
By : Jeffrey Sparshott
Unemployment in January rose to its highest level since 1995 and analysts expect it to worsen as corporate restructuring continues and manufacturers announce layoffs amid signs of an economic slowdown.
"We will now have 12 months or maybe more when employment will be falling," said Krzysztof Bledowski, a chief strategist with Wood & Co. "It's a result of very low job creation, and low job creation has been caused by low investment spending over (the) past five or six quarters."
The 15.6% unemployment rate is slightly higher than December's 15% and significantly higher than the same time last year, when the rate was 13.7%, according to statistics released last week by the Central Statistical Office (GUS). Wages are also falling, with January's average at its lowest level since August 2000, according to GUS.
"There has been a steady loosening in labor markets as a result of the economy slowing down and companies are trying to become more productive," said James Owen, a senior economist with France's Societe Generale. "In that respect, the unemployment rate is in line with market expectations.
"From a social view, it is much more worrying. The figures are in line with 1995 and all the signs are ... that unemployment is going to continue to move upwards. It is going to be a big social problem."
Societe Generale projects that unemployment could climb to more than 16% by 2002. Other projections are worse. Bank Handlowy, for example, projects 18% unemployment by the year-end.
"The fundamental problem is that the labor market in Poland does not work well, so growth has to be fast for employers to think about creating new jobs," Owen said. "To some extent it's the labor code, to some extent perception. There is the perception that it is very expensive to get rid of an employee once you take them on."
About 5% growth is necessary before companies start hiring, he said. Various projections show the gross domestic product expanding 2.5-4.5% this year.
Bledowski blamed structural and cyclical problems with the economy. He said these could create excess labor while investment fails to generate sufficient growth or enough jobs to absorb that excess. Part of the structural problem is due to Poland's delayed privatization program or at least a reasoned adjustment of state-controlled companies, he said.
Also worrying are recently announced layoffs at manufacturers Daewoo and Fiat, stemming from sagging consumer demand for new cars, and more people coming onto the job market as a result of demographic changes.
Other macroeconomic figures announced by GUS last week drew a mixed portrait of the economy, with the producer price index (PPI) declining 0.2% from December to January, lowering the PPI to 4.8% for the year, the lowest level since early 1999. Industrial output fell 8.9% from December to January, but was 10.1% higher than last year, according to GUS.
