Polish labor market more attractive to foreigners

Over the past 30 years, the Polish labor market has changed dramatically. Over that time, unemployment fell, wages increased, and work in the budget sector ceased to be the model professional goal of Poles. In the 1980s, there was no unemployment in the communist regime. It was discovered after the economic transformation in 1989. In January 1990, only 56,000 people were without work and unemployment started to grow dynamically until 2004. The worst situation on the Polish labor market was in February 2003, when the rate recorded was 20.7 percent. In the 1990s, the state was still the most attractive employer. Although Poles saw more opportunities in the private market, they were afraid of it. Since Poland's accession to the EU in 2004, the belief that finding a job is not a problem has also been growing. Recent years have been the best in history when it comes to the labor market.

LOW UNEMPLOYMENT

Even before the pandemic, many employers noted problems with recruiting due to the insufficient number of people willing to work. When Covid-19 struck, it was said to create a mess in the job market, but ultimately it didn't have that much of an impact. At the beginning of 2021, Poland recorded the lowest unemployment in the EU, according to its official statistics agency, Eurostat: 3.1m percent for March and April, while unemployment in the entire EU was 7.3 percent. Low unemployment benefits, acceptance of the spirit of entrepreneurship, and positive incentives created between 1990-2020 made Poles diligent and successful employees. The support that the government provided for entrepreneurs during the pandemic also achieved the desired effect, as we didn’t observe an increase in unemployment. Although, it must be taken into consideration that governmental money increased the public debt, which we will have to pay off sooner or later. Polish enterprises, especially those producing for export, tried to operate dynamically even during the pandemic, which meant that many companies had to look for additional employees to fill the vacancies. If there are not enough Poles, the idea is pretty simple, why not immigrants? Especially those coming to Poland from across its eastern border?

Currently, Poland is an absolute record holder when it comes to working migrants. In the last 10 years, the largest number of immigrants coming to the EU came to Poland. In 2020, according to Eurostat data, Poland had the third-highest employment rate for non-EU citizens. Only the Czech Republic and Lithuania had more foreign-born workers. Migrants have been instrumental in contributing to the growth of Poland's GDP in recent years. Now Polish labor market is slowly saturating with manual workers from the eastern border. These people feel more and more at home here. More and more foreigners also work non-physically. They have decided to stay longer, while many of them decided to legalize their stay. An increase in legal employment among foreigners has also been observed in the last five years.

In 2020, according to Poland’s Social Insurance Institution (ZUS) data, as many as 725,000 foreigners were registered for pension insurance. The latest data from the labor market indicate that almost 800,000 foreigners were registered with ZUS as of May 31. The majority, over 500,000, of all economic migrants come from Ukraine. Surprisingly, the total number of foreigners is 127,000 more than before the pandemic. This leads to conclusions that, first, entrepreneurs could get help during the pandemic from the government to "maintain jobs," no matter if it’s for Poles or not, and secondly, on the eastern side of the border, the pandemic only popularized the mass exodus, which was huge anyway in the past years.

LIES, DAMNED LIES?

Obviously, we can also say that there are lies, damned lies and statistics, as unofficially three times more Ukrainians work in Poland. Some of them are studying. How many of them are in Poland now, during the pandemic, no one knows. Nevertheless, during the pandemic, new regulations were introduced in Poland to simplify the procedure for legalizing the stay and foster employment of foreigners from outside the EU and the EEA. These regulations, adopted in the period March-May 2020 in Poland, automatically extended the validity of work and residence permits for foreigners, up to 30 days after the end of the epidemic threat is announced. The supposed end of the pandemic in Poland will mean that some foreigners will have to extend the validity of work permits and legalize their stay.

At the moment, “Poland under the Plan for Labor and Economic Development” (Krajowy Plan Odbudowy/the National Reconstruction Plan/KPO) aims to reform the labor market. This will be happening under the European Reconstruction Fund and Poland will receive approximately €58.1 billion in grants and loans, of which €23.9 billion are non-returnable grants and €34.2 billion is what has been described as a "possible loan." KPO is nothing more than a formal framework for managing European funds. First and foremost, the money will be spent on modernizing public institutions. The aim of the new package of regulations will be to better adjust the labor market to the requirements of the modern economy. At present, it is not the unemployment rate, which is the lowest in the entire EU, that is the challenge, but increasing the labor force participation rate, which is still lower than in the Western countries.

Ambitious plans include separating the unemployed status from health insurance, changing the job-seekers labor offices into employment support centers, simplifying the conditions for acquiring the status of the unemployed, reducing bureaucracy and increasing the unemployment benefit to PLN 1,400. Also, simplification of procedures for employing foreigners is planned, with a faster time of issuing permits, limiting short-term and circular migrations in favor of medium-term and continuous migrations. The current year has already brought some other changes. It is, for example, the obligation to have health insurance for people coming to Poland, either for a shorter period or longer. If they start working, of course, this requirement will disappear. In addition, the finance ministry would like every foreigner to have a PESEL (Universal Electronic System for Registration of the Population) or NIP (Tax Identification Number) soon, which is important when completing the tax declaration.

Although it is expected that the labor market will again start to fully flourish in the third quarter of 2021, there is concern that the following fall may be associated with another lockdown due to the recurring Covid-19 pandemic. Regardless of whether this happens, due to the aging of the Polish society and the ongoing demographic crisis, immigrants have become the key to the current system. The participation of foreigners in the Polish labor market — with a low retirement age in Poland, a high labor supply and a low unemployment rate — constitutes a significant contribution to Polish GDP and a "source of funds" for the Polish pension system. 

KEY DATA  — migration and unemployment:

• In the 1980s, there was no unemployment in the communist regime.

• In January 1990, only 56,000 people were without work and unemployment started to grow dynamically until 2004.

• The worst situation in the Polish labor market was in February 2003, when the rate recorded was 20.7%.

• Since Poland's accession to the EU in 2004, the belief that finding a job is not a problem has also been growing.

• At the beginning of 2021, Poland recorded the lowest unemployment in the EU, according to its official statistics agency, Eurostat: 3.1% for March and April, while unemployment in the entire EU was 7.3%.

• Currently, Poland is an absolute record holder when it comes to working migrants.

• In the last 10 years, the largest number of immigrants coming to the EU came to Poland.

• In 2020, according to Eurostat data, Poland had the third-highest employment rate for non-EU citizens. Only the Czech Republic and Lithuania had more foreign-born workers.

• In 2020, according to Poland’s Social Insurance Institution (ZUS) data, as many as 725,000 foreigners were registered for pension insurance.

• The latest data from the labor market indicate that almost 800,000 foreigners were registered with ZUS as of May 31. The majority, over 500,000, of all economic migrants come from Ukraine. Surprisingly, the total number of foreigners is 127,000 more than before the pandemic.