10/25/2006

How underemployed is Poland?

Official unemployment fell by zero point two percent in September. But that stiil leaves 15.2 percent of the workforce officially twiddling their thumbs.

Paradoxically, Polish and foreign investors report problems finding certain types of workers – particularly university-educated and highly skilled workers, as well as labourers in the construction sector. Many of those have left the country and are now working in either the UK, Ireland, Spain, etc…. Consequently, the government has eased restriction on seasonal workers coming from the East, especially Belarus, Ukraine and Russia to fill the gaps.

Is the skills gap because so many young Poles have gone abroad to look for work, or because of structural factors within the Polish economy itself?

In the bad old days of communism everyone had a job, didn’t they? Well, not really. There was unrecorded unemployment, and there were many more people in jobs that weren’t really jobs at all.

And then the changes came to Poland at the end of the 1980’s which brought a massive shock to the economy and to the many who lost out.

Unemployment grew rapidly after 1989. In 1990 around 6 percent were recorded out of work. By 1994 that figure had risen to 16 percent. The rate dipped down again to under 10 percent in 1998, only to rise steadily again thereafter. In 2003 this reached over 1 in 5 not working – or 20.3 percent – the highest figure recorded since the end of communism.

This year and last has seen a gradual – a very gradual – decrease, but still, the figures look alarming.

Youth unemployment, for instance, is not that much under forty percent.

Poland has a relatively high growth economy – currently just under five percent. And jobs are being created, although some of the slack is being taken up by higher productivity per worker.

But it also could be that many of the unemployed either do not want jobs that are offered to them or that employers can’t find the right type of staff with the appropriate skills.

Officially, about 660,000 Poles have left for Western countries in the past two years looking for better-paying jobs than they can get at home. With a population of 38 million, Poland has 2.3 million unemployed people. The Polish Ministry for Labor estimates about 1.5 million people are illegally employed, with their employers evading paying state taxes.

But what of the employers who can’t find the right person to fill the job?

For instance, in the city of Slupsk, northern Poland, the unemployment rate is approximately 30%. A car repair shop needs to employ eight workers. It offers a monthly pay of 2000 zloty – or five hundred Euros; small by western European standards but not bad in Slupsk. The mechanics workshop there has been unable to fulfill the positions for some time. It is reported that they believe that people have registered as unemployed [in the town] but are working illegally and are not interested in taking on another job.

Some employers are wary of employing younger workers as most only stay in the position for half a year and then leave for larger cities or go abroad to London or Dublin and get work there.

And Poles are notoriously geographically immobile. Or, either they stay pretty much where they are in the country, or they go abroad.

So although unemployment figures are high, there are the jobs available. It’s just that the right sort of workers are not in the right places to fill them.

The government made a pledge during last year’s election that solving the unemployment problem would be a priority. This means that they have to maintain high growth and increase the amount of skills in the workforce to meet the changing nature of the economy.

But they also have to grasp the nettle and change the labor code, which, at the moment, discourages employers taking on new staff. It is very hard to sack someone. They also need to make it cheaper for employers to take on new workers.

The tricky part for the government is that much of their electoral base is made up of the unemployed, or those on low fixed incomes such as pensions. So finding the political will to open up the labour market and make it more flexible – which would result in more unemployment in some areas and less in others – is a tricky one for the administration.

Unemployment is one of Poland’s biggest problems. If they don’t solve it soon then more and more young people will just pack their bags and head for the UK, Ireland, Spain...even Finland. And when they do that they will add to Poland’s other great problem – a yawning skills gap resulting in many job vacancies remaining on the market.
Source: By Peter Gentle,



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