Monday, October 30, 2006

Can Poland solve its labor problems?

With unemployment in Poland at about 15.2%, there is a shortage of labour. Foreign companies are investing in Poland expecting to find cheaper, talented Polish labor and are coming up short on their expectations because this labor has emigrated West. Will Poland be able to supply the laborers expected by foreign investors?

The labor picture is interesting.

Emigration of the talented and skilled work force to Western European Union countries is estimated to have removed anywhere between 1 and 2 million talented Poles from the available work force. But there are still about 2.3 million registered unemployed in Poland.

Even though there are 2.3 million unemployed left in the country, companies in Poland are reporting difficulties with finding qualified workers.

It is estimated that one to one-and-a-half million of this unemployed labor pool are not interested in work for one reason or another. Many of these people are illegally employed and are simply registered as unemployed in order to get state benefits.

Other companies report that once that train young workers, a large percentage of them emigrate West.

The Polish government proudly reports that the unemployment rate has been decreasing. The Polish Government Central Statistics office reported that over the past year the unemployment rate in Poland as decreased approximately 3.5% and the Polish government attributes this, in part, due to increased job opportunities.

But is also estimated that about 5% of the Polish work force has emigrated West. If that is the case, it would appear that in fact had these people stayed in Poland the unemployment rate would have actually increased. The reduction in unemployemnt is actually very much the result of emmigration.

Seeing the problem that Polish companies are having finding labor, The Polish government has taken some steps to open its borders to foreign workers in an attempt to fill the requirements for laborers in Poland.

But Poland's attractiveness to foreign investors is based largely on having access to a low cost of well-educated work force. Will the foreign workers that come to Poland include enough talented, well educated people that are necessary to help satisfy the needs of the high-tech companies coming to Poland? Or will opening the borders bring in the low-cost labor that is qualified to work on the farms and in menial positions?

Anecdotal evidence says that some Poles are returning to the country. It is reported that Polish expatriates from the city of Lodz are buying real estate there because they see possibilities for the growing economy in Lodz. According to the report people are returning to Lodz.

People may simply be investing in real estate. Maybe they will invest in real estate in Poland and continu to commute to high paying jobs in the West?

But the information from Lodz is anectotal and anecdotes don't make data. How attractive is it to people working at high wages in Western Europe to come back to Lodz to work once again for low wages? Not very.

It is going to take higher wages to attract talent. But according to some analysts, that will take 20 years.

Thee current government is pursuing a policy of destroying the old system under which Poland has operated. It has not shown a policy of building labor conditions conducive to keeping Polish labor in Poland. It seems very interested in attracting foreign investment to create new jobs in Poland. But on the other side of coin it has not demonstrated any active interest in assuring these companies the required workers.

To increase the wages for Polish workers, the cost of the employment to companies operating in Poland has to drop significantly. That takes the political will to change the labor code in order to make it affordable for companies in Poland to hire new workers no less hire new workers at higher wages.

Does the current government's have the will of or the ability to at least start to solve the labor problem by changing the labor code.?