Security sector suffering from credibility crisis
By : Greg Goodale
Dough boys: Low wages and cut-rate services are giving the security industry bad name.
Low entry costs and high demand have led to a huge increase in the number of private security firms in Poland. But the industry's rapid growth has come at a price with workers' wages at rock bottom and disreputable companies muscling in on the act. To combat this, many firms hope that newly implemented laws will improve conditions in the sector.
Jacek Ziolkowski, managing director of Falck Ochrona, said low overheads have made security an attractive industry for small entrepreneurs. "Competition is incredibly strong," he said. "In some areas the barrier to entering the market is very small. In on-site security there is practically no barrier at all." Ziolkowski said the 1997 Law on Security and the introduction last year of new licensing requirements for companies radically reduced the number of firms in the sector.
However, Wieslaw Bednarz, president of Konsalnet Group, said the market urgently needs more consolidation. "While in Western countries the largest companies tend to hold about 50% of the market, in Poland the largest companies have 2% at most," Bednarz said. "The 10 largest companies own a maximum of 20-25% of the market."
The unrealistic profit expectations that drove entrepreneurs to the industry are leading many companies to maximize revenues through tax evasion or poor employment terms, said Michal Jezewski, country president of Securitas Polska. "It isn't true that our industry generates profits of 10%," Jezewski said. "Of course, there are companies that make profits at this level, but they don't declare all their costs, use one-off contracts or don't pay taxes on their employees. Good profitability in our industry is 5-6%."
The overcrowding of the market combinedwith a constant pressure from customers for cheaper services has created a culture of low wages among the smaller players. "There was an Internet auction for services for Telekomunikacja Polska (TPSA)," Ziolkowski said. "In some cities the companies that won offered a pre-tax price of zl. 5.50 per employee per hour. If you work out the employee's wages after taxes and costs, their pay would be below minimum wage I don't know how this can go on."
The credibility of the industry was further tested this year after two branches of Kredyt Bank in Warsaw had incidents involving security guards acting as criminal accomplices. In June, an attempted robbery at the ulica Jasna branch was foiled by a police tip-off, but another robbery at a branch on ulica Zelazna resulted in the deaths of four bank employees and the theft of zl. 100,000. According to Tomasz Banaszewicz, vice president of Konsalnet Group, low wages offered by companies inevitably fail to attract quality staff.
"Regarding both cases at Kredyt Bank, you can discuss technical or organizational inadequacies, since these barriers could have been created, but if you want to know why security guards were involved, this (low wages) is it," he said. "In this case it was an internal decision by the owner of the capital group to spend a given amount on security."
As a result of the bank killings, the industry's image has been considerably tarnished, which is unfair to the quality companies, said Pawel Rafalski, country president of cash-handling services at Securitas Polska. "These were the black sheep of the family," he said. "There are some 100,000 people in security in Poland and their day-to-day work is hard and not well paid, sometimes they're putting their lives on the line." Rafalski said the industry's success stories generate relatively little publicity. "On April 20 we had an attack on a convoy by an armed gang using Kalashnikovs," he said. "This happened on the Poznan exit road on a Friday evening in heavy traffic. Our guards defended the vehicle, which was overturned. They acted professionally despite the great risk."
Some security companies are now avoiding industries that are considered more high risk than others. According to Securitas Polska's Jezewski, the company steers clear of contracts that involve organized crime because of the company's cash-handling contracts with the banking industry. "Because there is contact between criminal organizations and restaurants, and we are aware of this, we do not get involved in security for restaurants," Jezewski said. "We don't want to have any areas in our business where things can get sticky."
Jezewski said the security industry will only improve when wages start to increase to Western levels. "In Scandinavia wages for on-site security are 10 times those in Poland, which is the equivalent of a skilled laborer," he said. "Translated into Polish conditions they should earn about zl. 2,000 after tax. That in my opinion would be OK."
For Banaszkiewicz, the key element in the maturing of the industry will be an improvement in the professional reputation of security guards. "We would like this to be a profession with a higher social standing, with trained people, respected by clients so that it isn't on the list of the lowest paid," Banaszkiewicz said.
