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The Republic of Poland is considered to have one of the healthiest economies of the post-communist countries, with GDP growing by 6.1% in 2006. In the first half of 2009, the Polish economy appears to be one of the least affected by the current global recession. In the first quarter of 2009, Polish GDP rose by 0.8%, which was one of the best results in the European Union.

 

As in the previous years, in 2006 a visible high level of professional inactivity led to a decrease in difference between professionally active and inactive populations. The increase in professional inactivity results, on the one hand, from the delayed entry of young people (who instead pursue education) onto the labour market and, on the other hand, from the retirement or pre-retirement of an increasing number of persons who acquire rights to such benefits.

 

In 2006, the population of professionally inactive people amounted to 14,427 thousand and increased by 331 thousand (2.3%) as compared with the previous year. This means that in 2006 the difference between professionally active and inactive populations aged 15 and above decreased to 2,511 thousand while in 2005 it was still 3,064 thousand. Thus, the economic activity rate for the population aged 15 and above reached 54%, that is 0.9% less than the year before.

The most important reasons for professional inactivity include retirement, mentioned by over 38% of professionally inactive people, education and skill improvement mentioned by approx. 24% of professionally inactive people.

 

The economic activity rate is the highest among the persons aged 35–55 – in 2006 it was 87% (a decrease by 1.4% as compared with 2005). The activity of young people remains relatively low. In 2006, the economic activity rate among persons aged 15–24 reached 34.2% and was higher by 1.5% as compared to 2005. In the second quarter of 2007, the population of professionally active people amounted to 16,754 thousand and was lower by 71 thousand as compared to the second quarter of 2006. At the same time, the number of professionally inactive people amounted to 145,84 thousand, i.e. 47 thousand more than the year before. In consequence, the number of professionally active people exceeded the that of professionally inactive population by 2,170 thousand.

 

In the second quarter of 2007, the economic activity rate amounted to 53.5% and was 0.1% higher as compared to the previous year; for persons aged 15–64 the rate was 62.9% and remained at the level from the previous year. Irrespective of age or education level, lower professional activity occurs among women (45.9% as compared to 61.9% for men aged 15 and above) and city dwellers (53.3% as compared to 53.8% for rural citizens aged 15 and above).

 

In spite of the increase in the number of professionally inactive people accompanied by a higher increase in the number of working people, the number of unemployed people per 1,000 working people amounted to 1,151 and was lower by 64 persons as compared with the their number in 2005. In the second quarter of 2007, the rate decreased by 101 persons as compared to the same period of 2006 and amounted 1,068 people. The number of unemployed men amounted to 779 per 1000 employed while the number of unemployed women per 1,000 working women amounted to 1,424.

 

According to the results of population economic activity survey (BAEL), the number of working people aged 15 and above amounted to 14,594 thousand in 2006 and was higher by 478 thousand as compared with 2005 (increase by 3.4%). At the same time, the number of the unemployed decreased by 701 thousand as compared with the previous year (decrease by 23%), reaching 2,344 thousand.

 

In the second quarter of 2007, the number of employed amounted to 15,152 thousand (increase by 4.8% as compared with the same period of 2006) and, according to the BAEL results, 1,602 thousand people aged 15 and above remained unemployed (decrease by 32.3%).

 

In the recent years there have been favourable changes in the employment structure in particular economic and property sectors. First of all, the proportion of people employed in agriculture has decreased: from 15.9% in the second quarter of 2006 to 15.2% in the second quarter of 2007. This is accompanied by a significant increase in the number of people employed in industry – up tp 30.6% (increase by 0.6% as compared with the second quarter pf 2006) and in services – up to 54.2% (increase by 0.1 %).

 

Due to a dynamic employment growth and even more dynamic fall in unemployment, the employment and unemployment rates are improving. The employment rate, which had been falling dynamically since 1999, has shown an upward trend. At the same time, the unemployment rate has been falling. In 2006, the employment rate for people aged 15 and above increased to 46.5% (by 1.3%). The share of the unemployed in the number of professionally active people aged 15 and above (unemployment rate) amounted to 13.8% in 2006 and was higher by 3.9% as compared with 2005.

 

The employment rate in Poland has been at the same level for years and this applies generally to young people as well as people aged 50 and above. In 2006, the employment rate for people at the economically productive age (15–64) in Poland reached 54.5% and was the lowest in the European Union, although it did increase by 1.7% while in the EU 27 the rate rose by 1% reaching 64.4%. In case of older people, a low employment rate is due to a great extent to the possibility of earlier retirement or pre-retirement benefit due to the the age and work career. This is why the average age of people leaving the labour market in Poland is one of the lowest in Europe and has a negative impact on the employment rate level.

 

In 2005, also the employment rate for people aged 50–64 in Poland reached 40% and was the lowest in the European Union. In 2006, it increased by 1.5% reaching 41.5%. Thus, the increase in the employment rate in Poland was higher than in the EU 27, where the rate for this age group rose by 1.2% reaching 54.4%. Malta (40.6%) is the country where the employment rate for people aged 50-64 is lower by 0.9% as compared to Poland, i.e. Poland is no longer a country with the lowest employment rate. The employment rate for young people also increased to 24% (increase by 1.5% in relation to 2005) but in spite of that Poland is still among the countries where this rate is the lowest.

 

In the second quarter of 2007, the employment rate for people aged 15 and above reached 48.4% and rose by 2.3% in relation to the previous year while the said rate for people aged 15–64 amounted to 56.8% and was thus 2.9% higher than last year. On the other hand, according to the BAEL survey, the unemployment rate was 9.6% in the second quarter of 2007 and was 4.5% lower than in the same period the year before. The employment rate also shows diversification due to certain features such as sex (the rate is higher for women), age (it is falling with increasing age), education level (the higher education level, the lower unemployment rate).

 

The persisting employment in the hidden economy sectors is an important problem of the Polish labour market. The CSO survey showed that in the course of nine months in 2004 as much as 1,317 thousand people worked in grey market, and that this number fell by 100 thousand as compared with 1998. Therefore, the interest in taking up undeclared work did not rise in the period of economic slump. Among those employed in the hidden economy sectors the people with vocational secondary education prevail. A vast majority of them are men. The employment in the hidden economy sectors includes mainly such sectors as construction, minor repairs, agriculture, hotel industry and catering, babysitting or retail trade.

 

Bureaucratic procedures and high costs of starting a business activity are a significant barrier to the creation of legal jobs. In spite of numerous simplifications, the start-up of economic activity and official employment of workers still takes too much time and involves high costs. Moreover, the tendency to bear public burden depends on the quality of public services. Quality improvement of these services will probably increase willingness to pay taxes and decrease the size of the black economy in consequence.

 

In 2006 an increased mobility, especially the geographical mobility, of Polish workers was explicitly confirmed. Poles go to work in the EU member states which open their labour markets more and more widely, and there is a growing domestic shortage of workers in many trades. Due to the cyclical and periodical nature of economic migration of individuals the reliable data on the number of Poles which stay abroad for economic reasons do not exist. The estimated number of such persons ranges between 1.2 million and 1.5 million.

 

The main reasons for going to work abroad include difficult situation on the domestic labour market and differences in wages and living conditions. The emigration is fuelled by the opening of labour markets by the EU Member States and their migration policy which aims at acquiring specialists and educated migrants. Polish work migration policy should take into account both the gains and the costs associated with it. The most important gains include:
− Increased household incomes ensured by inflow of money from abroad;
− -Improved situation on the labour market;
− New skills and qualifications gained by the emigrants;
− Money earned abroad invested in Poland.

 

The most important costs of emigration include:
− Destabilisation of the demographic structure - accelerated aging process of the society;
− Risks to the old age pension system solvency;
− Loss of well-educated and mobile workforce;
− Costs spent on emigrants education;
− Difficulties in finding specialists;
− Risk of inflation growth due to the money transfers from the receiving countries.

 

Because of the recent changes in the situation on the labour market, the most important task of labour offices, i.e. employment agency, becomes completely different from than in the previous years. The labour offices, where until recently the unemployed and job seekers have been the most frequent visitors, are more and more often inquired by the employers who look for potential workers. This new situation leads to the necessity of intensifying activities aimed at the stimulation of those groups of the unemployed who have been outside the labour market for years and still remain registered in local labour offices (persons unemployed for a long time, above 50 years of age, with limited ability to work, etc.). The importance of an increased availability of assistance, such as career guidance and all forms of the unemployed stimulation, is growing. Unfortunately, labour office staff shortages do not allow to satisfy the needs of all persons who need to be helped individually. For example, in 2006 one professional counselor in a poviat labour office had to take care of 3328 unemployed persons on the average (this number fell by 28% as compared to 2005, when it was 4614). Though the new legislation laid down the standards for basic labour services, which came into effect in 2007, should improve conditions in this respect, a marked improvement will be achieved not earlier then in the second half of 2008.

 

In 2006 trainings for the unemployed and those looking for work organised by labour offices were completed by 142,060 participants (as compared to 148,482 in 2005). The efficiency of the trainings is not very high, yet it is improving as the economic situation is getting better: in 2006 43% of unemployed persons found jobs within three months of completing this kind of stimulation (as compared to 35.3% in 2005). Trainings selected by unemployed persons on their own (probability of finding a job) were particularly effective – the effectiveness of individual trainings amounted to 55.3%.

 

However, the share of training costs in the overall costs generated by active forms of unemployment control is still very low and has not exceeded 10% for years. In 2006, this it was 8.4% and was lower by 1 percent point from that recorded in 2005. This results in low participation of unemployed persons in trainings – in 2006 only 5.5% of all registered unemployed persons and job seekers benefited from this form of stimulation (as compared to 4.8% in 2005). Elderly and low-educated people as well as persons unemployed for a long time seldom participate in trainings provided by labour offices. Only 3.1% of unemployed persons above 45 years of age participated in the trainings (as compared to 2.8% in 2005) while the participation index for people whose education ended at the primary or secondary school level amounted to 2.8% (as compared to 2.4% in 2005) and for persons unemployed for a long time it was 3.7% (as compared to 4.4% in 2005, so in this case it was even less).

 

Besides, participation of women in the trainings has been decreasing since 2003: 4.6% of unemployed women participated in the trainings in 2006 (while in 2002 the share of men and women was equal).

 

As for the training topics, those most popular in 2006 were connected with transport services (including driving license lessons), IT and computer operation, sales, marketing, public relations and real estates trade. The most effective trainings organised by labour offices on a mass scale are those on the transport services, management and administration, construction and technical trades. Short trainings, not exceeding 3 months, prevail (participants are granted a certificate on completion, issued by the training institution).

 

Two other forms of vocational activation, namely traineeships and on-the-job trainings, facilitate acquiring and updating professional skills and are addressed to the groups which are handicapped on the labour market. In 2006, traineeships were completed by 154,733 persons while on-the-job trainings were completed by 59,129 persons (as compared to 135,417 and 48,576 persons, respectively, in 2005). Both forms of stimulation, i.e. traineeships and on-the-job-trainings, are a little more effective in terms of employment rate than trainings. In 2006 proportions of persons employed within 3 months of the stimulation programme’s completion reached 46% and 47% respectively (as compared to 43% and 42% in 2005).

 

However, while traineeship has become a popular form – in 2006 28% of young unemployed persons entitled to participate in traineeships actually did so, only 2% of persons participated in on-the-job training (long term unemployed, persons without qualifications, lone parents with a child not older than 7 years, disabled and persons above 50 years of age).

 

It is extremely important that trainings and other forms of stimulation facilitating skill improvement organised for unemployed persons lead to development of qualifications which will be confirmed by a certificate “counting” on the labour market. Therefore, it is important to accelerate work on national frameworks for qualifications, including provisions concerning recognition of qualifications on the basis of formal, informal and non-formal educational activities.

 

In 2006, occupational guidance services were provided to 316.3 thousand persons, including 296.0 thousand of unemployed, 4.8 thousand of job seekers and 15.5 thousand of other persons. The total number of people who benefited from occupational guidance services exceeded by 2.9 thousand that recorded in 2005.

 

In 2006, 163.0 unemployed took subsidised jobs (i.e. 23.7 thousand more than the year before – decrease by 12.7%). This number includes 69.1 thousand persons who participated in intervention works (decrease by 1.8 thousand) and 32.7 thousand persons who were stimulated due to the public works (decrease by 36.5 thousand). At the same time, it is noted that the number of unemployed interested in taking up economic activity has increased significantly, and the employers knowledge on refunds of costs associated with outfitting or additional equipping of a workplace assigned for a unemployed is rising. In 2006, 34.9 thousand unemployed took up economic activity. On the other hand, refunding the costs incurred by the employers for outfitting or additional equipping of a workplace for an assigned unemployed resulted in reduction of the number of unemployed by 20.9 thousand (an increase by 6.5 thousand as compared to 2005). Between January and February 2007, 14.5 thousand unemployed took up economic activity, i.e. 15 per cent more than in the same period of the previous year, whereas the number of unemployed persons deleted from the register due to refunds of the costs incurred by the employers for outfitting or additional equipping of the workplace (9.7 thousand persons) increased by over 50%.

 

In 2006, various active labour market programmes covered 607.8 thousand unemployed, i.e. 19.3% of the unemployed in that period. As compared to 2005, the number of activated unemployed persons increased by over 40 thousand, i.e. by 7.1%.

 

Between January and May 2007 there were 277.0 thousand unemployed stimulated. This represents an increase by 30 thousand persons as compared to the same period of 2006. Employment rate of active labour market programmes increased in 2006 by 15.8 percentage points as compared to 2005. Most people (100%) found a job due to the funds granted for taking up economic activity and to the refunds of workplace equipment costs incurred by the employers, as well as a result of intervention works (72.2%).

 

The first of the above mentioned programmes was the most expensive (PLN 9,980 from the Labour Fund for each person who found a job after participating in the programme), while the programme of community service was the the least expensive in 2006 (PLN 1,285).

 

In order to mitigate the effects of unemployment, the following passive labour market programmes are currently run in Poland: unemployment benefits, pre-retirement benefits and pre-retirement allowances. Unemployment benefits are financed under the Labour Fund, while pre-retirement benefits and allowances were financed under the Labour Fund until 31 July 2004, and has been financed from the state budget since 1 August 2004.

 

At the end of 2006, 310.8 thousand unemployed persons were entitled to unemployment benefits, i.e. 63.5 thousand less than one year earlier (a decrease by 1.7%). At the end of June 2007 the number of people entitled to receive benefits decreased by 255.7 thousand, i.e by 13.5% of all unemployed. This means that only every seventh unemployed receives this benefit. In 2006, the average monthly unemployed benefit amounted to PLN 524 and was by PLN 17 higher as compared to the previous year.

 

Since 1 August 2004 pre-retirement benefits and allowances have been granted to the persons mentioned in the Act of 30 April 2004 on pre-retirement allowance (Dz. U. No 120, item 1252). In 2006, the average number of pre-retirement benefits and allowances paid amounted to 213.3 thousand and 243.0 thousand, respectively, while their average amount reached PLN 717 and PLN 1010, respectively. At the same time a downward tendency was noted in regard to payment of these allowances. In 2006, the average number of both pre-retirement benefits and pre-retirement allowances paid decreased by 37.8 thousand and 44.7 thousand, respectively. It should be noted that pre-retirement benefits are expiring – they were granted until the end of 2001, and currently they are only paid out.

 

The year 2007 saw an economic upturn in Poland, which translated into the reinforcement of positive trends in the labour market which have been developing since 2003. The increase in employment and decrease in unemployment gained pace in 2006 and both trends continued with added vigour throughout the next year. Consequently, in the first two quarters of 2007,1 employment averaged 14996 thousand, 5 per cent more than in the same period of 2006 and 8.8 per cent more than in 2002, when the employment rate reached the lowest level in the last fifteen years. At the same time, the number of the unemployed was on a steady decrease. As a result of this, in the second quarter of 2007 there were almost a million less unemployed people than at the beginning of 2006 (adjusted for seasonal fluctuations) and almost 1.5 million less than in the first quarter of 2005.2 This means that the number of the unemployed was lower by 50 per cent in 2007 than in 2003, which was a landmark year for the labour market, and moreover, this number reached the lowest level since the beginning of the transition. Obviously, the above translated into a decrease in the unemployment rate, which, in the second quarter of 2007, was slightly above 10 per cent in the working age population. Hence, the rapid increase in unemployment from 1998 on to exceed 20 per cent in 2002, was completely mitigated in the last four years.

 

The evolution of unemployment in 2003-2007 should be perceived as the accommodation on the labour market of the negative disturbances of the end of the last decade and the beginning of the present one. The number of employed in 2007 reached levels comparable to those observed prior to these turbulences, whereas the employment rate for the age group 15-64 was 4 points higher than that in 2003, when it reached the lowest level in the last fifteen years. Notwithstanding the above, the said rate is still 2 percentage points below that of 1998, because the working age population is currently bigger by several percent than in the second half of the 1990s.

 

However, processes affecting participation introduce some dark colours into the generally positive outlook of Polish labour market after 2002, epitomized by trends in employment and unemployment. As opposed to these two labour market aggregates, the reversal of downward trend in labour supply in 2005 turned out to be only transitory. The increase of working age population, resulting from demographic changes, was accompanied by a decrease in the number of the economically active people, and, as a consequence, the declining trend in participation – visible ever since the beginning of the transition, persisted. This means that irrespective of strengthening labour demand, employment and rising wages, the inclination of Poles to withdraw early from the labour market continues. As argued in the previous editions of this Report (Ministry of Economy and Labour 2005, Ministry of Labour and Social Policy 2006), this phenomenon can be largely attributed to institutional factors which have not been subject to significant changes after 2005.

 

Because of the persistence of decrease in participation, in the last couple of quarters, declining labour supply has had a visible impact on the reduction of unemployment. Admittedly, the importance of the growing number of jobs was clearly greater as the increase in employment was almost entirely responsible for the drop in the number of unemployed people until mid-2005 and in the subsequent period – for approximately 80 percent thereof. However, the contribution of declining labour supply is also worth noting. As argued later in this chapter, the above processes constitute partly a continuation of certain features, which had been visible in the Polish labour market in the last fifteen years, whereas to some degree they also form a new phenomenon that concerns people in their prime-age.

In all age groups, a profound increase of employment was the key factor behind falling unemployment, although with some differences inintensity and scale of the process between age groups. As the cyclical economic upturn strengthened and labour demand grew, the employment rate for young people picked up strongly – the number of employed aged 15-24 was in mid-2007 25 percent higher than three years earlier and almost 10 percent higher than at the beginning of 2006 (see Chart I.4). At the same time, the cohorts of young people born in the mid-1980s, who are currently entering the labour market, are clearly less populous than these that come from the demographic boom of the beginning of this decade. Hence, such a significant rise in the number of young working people translated into an even more visible increase in the employment rate for this group – by one third between the beginning of 2004 and mid-2007. As for people aged 25-44, i.e. the prime-age population, who are typically characterised by highest participation and employment levels, the dynamics of employment growth was naturally less prominent. Nevertheless, it is worth noting that the employment rate for this age group picked up earlier than for other groups, i.e. in early 2003, and in mid-2007 as many as 78 percent of people aged 25-44 were working, which was the highest rate in the last fifteen years.

 

The most dynamic slump in unemployment took place for the age groups for which the employment rate had grown fastest, namely for the under-45-year-olds. Hence, for the youngest age group, the rate of unemployment declined from 42 percent at the beginning of 2004 to 24 percent in mid-2007, whereas for the prime-age group – from 18 percent to 8.5 percent. These developments were of similar, stable dynamics (see Chart I.5), although the decline of the number of young unemployed has been slowing down throughout the last year and so had the dynamics of employment growth in this age group. At the same time, it is worth noting that the above age group is the only one where the demographic factor has been contributing to the decrease of unemployment, as the less populous cohorts enter the labour market. On the other hand, from the beginning of 2005 on, in the age group 25-44 the impact of rising employment on the reduction of unemployment was escalating in every quarter, although, at the same time, decreasing participation has also constituted a visible and continuing contribution.

 

The improvement in the labour market situation of the over-45-year-olds, whose occupational mobility is on average lower than that of prime-aged workers, has not been as dynamic and the transmission of positive macroeconomic factors to employment growth has not been as fluent as in the age groups 15-24 and 25-44. As a result, at the beginning of 2007, the unemployment rate for people aged 45-54 was, for the first time in last fifteen years, higher than that for the age group 25-44. However, as from 2006, the dynamics of employment growth and its contribution to falling unemployment among people aged 45-54 have been very similar to the developments that concerned the age group 25-44. What is more, the 5 percent increase in employment since the first quarter 2004 made up for half of the employment slump in 1998-2003. Hence, it can be presumed that as the labour supply reserves of prime-age workers were running out gradually, employers started opting to take slightly older employees, which improved the situation of over 45-year old. Compared to the favourable labour market developments described above, the evolution of participation of people in pre-retirement age clearly stands out. The increase in labour supply of older people in 2003-2004, which we attributed in the previous edition of this Report (Ministry of Labour and Social Policy, 2006) to the restricted access to pre-retirement benefits, turned out to be minor and shortlived. Then, the participation rate for this age group plunged to a very low level of 31 percent in mid-2007. As a result, disproportions between labour supply and employment among the over-55-year-olds in Poland and both the EU15 and other countries in our region, which are largely responsible for the Poland’s employment gap , have not been mitigated even during the period of dynamic growth of labour demand and employment in Poland. Although the number of employed in pre-retirement aged has risen, this increase has been smaller than in all other age groups and it has mainly been due to increase of population aged 55-64 rather than higher employment rate. Hence, the window of opportunity for improving the labour supply of older people have largely been wasted in the last two/three years.

 

In contrast to the decreasing participation of individuals in pre-retirement age, decreasing, as from mid-2004, participation among the prime-age population is not a typical characteristic of the Polish labour market and constitutes a novelty. A drop in labour supply during a period of strongly rising wages and falling unemployment is difficult to explain without a reference to institutional factors. Such situation should entail stable or possibly increasing labour supply due to the so-called substitution effect, which means that working becomes more attractive than leisure because of higher wages. The opposite effect, i.e. the income effect, which means that as wages rise households can limit labour supply and still be able to maintain a satisfactory level of consumption, is usually weaker. Hence, in general, total labour supply is relatively higher during those phases of business cycle when output growth and real wages are relatively higher (Blundell, MaCurdy, 1999, Bukowski et al., 2006). It might also be possible that households increase total labour supply when the risk of job loss is perceived as greater, thus protecting themselves against income loss, whereas when the economic situation is favourable, they do the opposite, i.e. when the perception of job stability of one household member is positive, other household members may limit or even give up their labour supply. An alternative explanation for declining labour supply among prime-aged people could be associated with temporary economic migration – it may be expected that it is people who are economically active rather than idle in the domestic labour market that migrate. Moreover, in labour force surveys, especially in BAEL, people who are temporarily absent from households covered by a given survey tend to be classified as inactive because other household members do not declare them as migrants.

 

The first two of the above hypotheses, which refer to income effects as well as to the diversification of job loss risk, imply that the participation rate of women, who are characterised by higher elasticity of labour supply (Killingsworth, Heckman, 1999), should fall relatively stronger than that of men. Moreover, labour supply should also decline in the case of people whose households are able to generate a sufficient level of income even if only one household member is working. The explanation that makes a reference to migration does not allow for such clear-cut implications (see Ministry of Economy and Labour, 2005).

 

As from the beginning of 2005, participation rates of women and men have been declining to a more or less similar degree in both age groups 25-34 and 35-44. Hence, neither the income effect nor the “diversification” effect seem to have been the key to the decrease in participation among prime-age individuals, whereas emigration could explain some of it. In fact, according to Budnik (2007), based on labour market flows estimations for Poland, which also account for migration, following Poland’s accession to the EU, the share of employed among emigrants increased (from 36 to 42 percent), whereas the shares of unemployed and inactive people decreased, from 33 to 30 percent and from 31 to 29 percent respectively. As estimated by Budnik (2007), emigration intensities for working, unemployed and inactive people amounted to 0.5, 0.1 and 0.1 percent respectively. Hence, the escalation of migration translated over-proportionally into the number of economically active people who migrate. Considering that in accordance with the National Census, more than 60 percent of emigrants in 2002 were aged 25-34, it can be stated that migration contributed significantly to lower participation in the domestic labour market. The fact that the participation rate for men aged 25-34 has been declining consistently since 2001 suggests that extended participation in education may also have been of importance.

 

In the period from early 2004 to mid-2007, employment grew in all areas of the economy except for agriculture and electricity, gas and water supply. The employment rate in agriculture, which has been going down since 2001, continued to fall – almost 150,000 less people worked in agriculture in 2006 than in 2005, whereas in the first half of 2007 – employment in agriculture was roughly identical as in the same period of 2006. Based on the above, it is however impossible to assess whether the economic upturn and the increase in food exports have contained the reduction of employment in agriculture or whether this is only a result of a slightly different scale of seasonal variations. Nevertheless, as from the beginning of 2004, the employment in agriculture decreased by more than 3 percent,which meant that the share of this sector in total employment went down to 13 percent.

 

This process, although related to specific structure of Polish agriculture, has been a part of the recent reallocation of production factors in favour of more productive sectors. The relative increase in employment was higher in sections which, in 2004, were characterised by above-average added value per worker. This applies in particular to financial intermediation, real estate management and so-called other services, as well as to industry, though to a slightly lesser degree. On the other hand, branches with below-average productivity in 2004, such as education, health care, administration, which are generally dominated by the public sector, saw an increase in employment but this increase was clearly lower than in the economy as a whole. The above rule did not apply, however, to construction, trade, hotel and restaurants, which are typically characterised by medium or below-average productivity but which also experienced a clear increase in employment. Indeed, in the last three years, construction recorded the relatively highest employment growth, by more than 40 percent. It was exactly in construction and trade, i.e. sectors where level of activity is closely linked to economic fluctuations, and in industry, where employment picked up as early as in 2003 in reaction to growing exports, that the employment grew most – these three sectors accounted for approx. 65 percent of the total employment increase in the period from early 2004 to mid-2007.

 

At the same time, there has been a continuing though gradual transformation of the labour supply structure in terms of education. Populous cohorts which had benefited from the education boom entered the labour market so the share of people with higher education in the working age population increased, whereas older cohorts comprised to great extent of workers with primary or vocational education started retiring, which jointly intensified the growth of average nominal quality of human capital in Poland. However, in terms of education, the improvement on labour market was two-dimensional – firstly, the number of people with higher education increased strongly, and secondly, the employment rate among people with vocational education has grown considerably. Therefore, the almost 900,000 increase in the number of employed with higher education between the first half of 2007 and the same period three years earlier, was in more than 4/5 attributable to the rise in the population with higher education level attained, whereas in the group with vocational education level attained an almost equally large employment growth was in 2/3 due to the rising employment rate.

 

The above phenomena can be directly linked with changes in employment structure within sectors – the systematically developing, high-productivity services and to some extent industry, absorbed the fast-growing labour supply of master’s degree holders, whereas the dynamic increase in labour demand in such branches as construction and trade bolstered the probability of finding a job by people with certain – though low – qualifications, thus visibly increasing the share of employed among those with vocational education.

 

The improvement on labour market in Poland, which started in 2003, is only one of many examples or symptoms of the economic upturn in Europe. In 2003-2004, the number of employed grew in all European countries and so did the employment rate, though with some exceptions. In the fifteen ”old” EU countries this formed a continuation of an upward trend in employment. The average employment rate in the EU15 has been growing every consecutive year for the past decade, to reached in mid-2007 the level of 67 percent in the working age population. At the same time, labour supply has also been on the rise and in mid-2007 the participation rate in the EU15 reached 72 percent for the age group 15-64. The differences, especially concerning the labour supply, in how the situation evolved in Poland should be attributed to different character of structural and institutional changes implemented in a number of EU15 countries. However, the falling unemployment, which has been a common occurrence in all EU member states since 2004, seems to be of the same nature as in Poland, namely it has been due to the strengthening economic growth which led to increasing labour demand. From this perspective, the situation in the countries which joined the European Union together with Poland in 2004 (NMS9) was similar. As demonstrated in the previous edition of Employment in Poland (MPiPS, 2006), as from 2001, the situation in the Polish labour market has been worse than in other countries of the region – in Chapter 2 we assess the importance of particular macroeconomic factors for distinctive evolutions of labour markets in CEE countries. Consequently, these countries entered the phase of cyclical upturn in the world economy with higher participation and employment as well as with lower unemployment than Poland. Moreover, in 2003-2006, it was exactly these countries – the Baltic states and Bulgaria – that saw a higher relative drop in the number of unemployed than Poland and a comparable reduction of the unemployment rate (by approx. 5 percentage points). At the same time, these countries (apart from Lithuania), together with Slovenia, Spain and Ireland, recorded a greater increase in employment than Poland.

 

The scope of improvement, which has been taking place in the Polish labour market in the last couple of years, has been considerable and it allowed to achieve employment and unemployment rates that belong to the best ever since the beginning of the transition. However, compared with other European countries, they have elevated the outlook of Polish labour market only marginally. In mid-2007, Poland was no longer the country with the lowest employment rate in Europe but it was only ahead of Malta and Turkey and its employment rate was 10.1 and 6.3 percentage points below the average rates for the EU15 and the NMS9 respectively. The participation rate in the age group 15-64 in Poland was higher only than that in Malta, Turkey, Hungary and Italy, however, the gap between Poland and the EU15 and the NMS9 averages in this respect was 9 and 5 percentage points respectively. Because of a considerable drop in unemployment, which took place in Poland in the last couple of years, in mid-2007, for the first time since 2001, Poland did not rank as the country with the highest unemployment rate among the EU27. However, unemployment was still higher only in Slovakia, where concurrently the rates of employment and participation were better than those observed in Poland. Moreover, average unemployment rates in the NMS9 and the EU15 were practically identical, amounting to less than 7 percent, which is by more than 3 percentage points lower than in Poland. It was exactly the reduction of unemployment in the new member states that contributed most to the decrease in unemployment in the EU as a whole, especially among young people (Martins Ferreira, 2007).

 

The last three years of increase in employment and decrease in unemployment have partly closed the gap between the Polish labour market and those in the EU15 and the NMS9 – in fact, in the period between mid-2004 and mid-2007, the employment rate in the working age population in Poland grew stronger by respectively 3 and 4 percentage points and the unemployment rate drop was greater by respectively 8.3 and 6.6 percentage points than the average decrease in the NMS9 and the EU15. At the same time, however, all “old” EU member states achieved an increase in participation, a trend that on the average has also been observed – though to a lesser degree, in NMS9, although some of the new member states have experienced falling labour supply. From this perspective, the decrease in participation in Poland highlights the impact of labour supply – low and with a tendency to decrease – on a relatively poor labour market performance, lower employment, output per capita and welfare in Poland, in comparison not only to the economies of EU15, but also of the countries which joined the EU together with Poland in 2004.

 

Although in the last two years the gap in terms of employment and unemployment rates among people aged 45-54 has been partly closed, at the same time, the differences in terms of participation have become more acute, because Poland is characterised by an exceptionally early age of withdrawal from the labour force. A considerable drop in labour supply can be observed as early as at the age of 50, whereas in most developed countries people tend to withdraw only after the age of 55 or 60 and in some countries even later. Moreover, this phenomenon concerns men and women alike. In the first half of 2007, participation rates for men aged 45-49 and 50-54 in Poland were only higher than those in Hungary. As for women, their participation in the labour force before the age of 50 is relatively high and more wide-spread than in a number of other EU countries, mainly South European. Nonetheless, a relative fall in the participation of women after the age of 50 in Poland is incomparably greater than that in the EU15. It is also much stronger than in the NMS9. The participation rate for women aged 50-54 in Poland (in mid-2007) was lower by almost 17 percentage points than the corresponding rate for women aged five years less. Among all the EU countries, a similarly sharp fall in labour supply among women reaching the age of 50 can be observed only in Romania and Slovenia. As a result, the participation rate for women aged 50-54 in Poland is only higher than that in such countries as Malta, Greece, Italy, Spain and Romania, which are countries with a completely different household model as well as social and family policies than Poland. Moreover, because of such a significant increase in withdrawals of women from the labour force after the age of 55, it is only in Poland and Malta that less than one in five women aged 55-64 are economically active.

 

Hence, Poland is a country where relatively many women participate in the labour market at their prime-age but on the other hand, where women withdraw from the labour market earliest (among all European countries) and they clearly do so long before the statutory retirement age, which translates into very low labour supply and employment among people at pre-retirement age. Longer average period of participation in labour market is commonly accompanied by higher labour supply among older people and thus by a greater effective labour force. In view of increasing participation of older people in all EU27 apart from Poland, falling participation more and more evidently proves that it is the factor, that distinguishes the Polish labour market from most developed countries. The above phenomenon can be directly related to a range of social policy decisions taken in the period 2005-2007 which extended the period of acquiring entitlements to early retirement in accordance with the rules adopted under the so-called old retirement system.

 

Moreover, the years 2000-2006 brought some changes in the labour market structure in terms of employment forms. The said changes also made Poland stand out from the other European countries. The net employment growth by 7.5 percent in the EU15 and by 6.1 percent in the NMS9 was to large extent attributable to increasing open-ended contracts, which made a contribution of 80 percent.

 

The difference was that in the NMS9 more new jobs have been filled by men (working under fixed-term and open-ended agreements alike) than by women, and the opposite was the case in the EU15. As for Poland, a much smaller relative increase in employment in the period 2000-2006,8 was accompanied by a net fall in the number of employed under open-ended contracts and an increase in the number of employed under fixed-term agreements. However, in the period 2004-2006, the proportion of contributions made by permanent and fixed-term employment to net employment growth was identical to the above-mentioned proportions in the EU15 and the NMS9.9 Hence, during the period of rising employment, the Polish labour market behaved similar in terms of the dynamics of creating “permanent” and “temporary” jobs to other European labour markets. Notwithstanding the above, the dynamics with which fixed-term agreements became widespread during the earlier period of poor labour market performance constitutes one of Poland’s characteristics. Therefore, in the next Chapter, we analyse the macroeconomic processes which were responsible for the observed evolution of labour markets in our region and in the next Part we provide a detailed account of how fixed-term agreements are used in Poland.

 

At the same time, in Poland, similarly to other NMS, part-time work has played a much smaller role than in the EU15. In the EU15, increasing part-time employment of women has made the largest contribution to the total net employment increase in 2000-2006. Taking into consideration the number of men engaging in this form of employment, more than a half of the net number of jobs created in the EU15 in the above period could be attributed to part-time employment. By contrast, in the NMS, parttime jobs made a contribution of only 10 percent to the total net employment growth, and in Poland, the number of people working under such employment form went down marginally.

 

Having a comprehensive understanding of working in Poland will help you understand employment trends in Poland a lot better, for which you can then plan your career path more effectively.

Source: Mps

EU Jobs

 

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