Polish labor market in difficult year 2012: its current situation and prospects in European and regional contextPublished: 05.10.2012
Situation on Polish labor deteriorates, affected by European slowdown
The situation on the Polish labor market gradually worsens, reflecting the decreasing pace of Poland’s economic growth. Even though the summer months brought a seasonal unemployment rate decline, it was more shallow and brief than in 2010 and 2011.
Poland’s unemployment rate lowered to 12.3% in July from 12.4% in June, at the same time growing 0.5 pp y/y, according to the Polish statistics office GUS. In August, in turn, the rate of unemployment likely increased both y/y and m/m and amounted to 12.4%, according to the newest estimates by the Labor and Social Policy Ministry (MPiPS).
“The number of unemployed at the end of August 2012 amounted to 1,965.8k persons (…) and increased by 12.6k persons compared with the end of July 2012 (i.e. 0.6%). In the same month last year the number of unemployed decreased by 7.8k (i.e. by 0.4%) [m/m]” – the ministry wrote in a press release.
Average unemployment rate in euro zone at its historic high
A difficult situation on the labor market is not only Poland’s problem these days – it is shared by many European Union member states, predominantly the countries of the euro zone. Poland’s unemployment rate calculated according to Eurostat’s methodology remained in July at the level of 10% for the fourth month in a row, whereas the same average indicator for the eurozone countries stayed for the second month in a row at the level of 11.3%, which is the highest value since 1995, when the EU started to publish the data. The average unemployment rate for all 27 EU countries in July was also higher than the one recorded in Poland, by 0.4 pp.
The differences amid EU countries in terms of labor market situation are very pronounced: whereas the July unemployment rate in Austria (the EU’s lowest) amounted to mere 4.5%, the one recorded at the same time in Spain was higher by over 20 pps, amounting to 25.1%, according to Eurostat’s data. The list of countries with single-digit unemployment rates includes, alongside Austria, also Germany (5.5%), the Netherlands (5.2%) and Belgium (7.4%), and in the Central and Eastern Europe – the Czech Republic (8.0%), Romania (6.3%) and Slovenia (8.5%). Worryingly high unemployment rates, in turn, are seen in the eurozone peripheries: in the already mentioned Spain, Portugal (15.5%) and Greece (the July data is not available yet, but the country’s June unemployment rate was 28.1%), but also in some of the CEE countries, such as Slovakia (14.8%).
Poland’s unemployment rate expected to grow to end-year, but not above 13% – with hopes tied to PLN 500 mln allocation for combating unemployment
The coming months will likely bring an increase of Poland’s unemployment rate, economists and government representatives agree, arguing merely about the scale.
The increase of unemployment rate should be moderate, with the rate not exceeding the level of 13% by the end of the present year, the Labor and Social Policy Ministry (MPiPS) officials believe. “If there are no extraordinary events in the [Polish] economy, the end-year unemployment rate should not be higher than 13%,” deputy labor minister Jacek Męcina told PAP. Męcina counts on the positive effects of this year’s Labor Ministry intervention on the job market: in July MPiPS convinced the Finance Ministry to agree to allocate PLN 500 mln from the Polish Labor Fund for tackling unemployment. In August the money started to flow to Poland’s counties (powiaty) with the highest unemployment rates, meant to finance measures to activate those groups of unemployed that required most urgent support, according to MPiPS’ statement and comments from Labor Minister Władysław Kosiniak-Kamysz. The effects of the measures are to be visible already in labor market data for September. “[In September] it will become clear whether our intervention consisting in unblocking financing from the Labor Fund has been effective. Certainly I would not expect the unemployment rate to decrease in the month. The possible scenarios are …. stabilization or a slight [unemployment rate] increase,” Męcina told PAP.
Net employment forecasts for Poland for subsequent quarters between Q2 2008 and Q4 2012 according to the survey conducted by Manpower (percentage)
source: Manpower, Employment Outlook Survey Poland. Q4 2012
The unemployment rate should also not exceed the 13% level in the next year, the government assumes. The Finance Ministry’s unemployment rate forecast of 13% at the end of 2013 was recently defended in the lower chamber of parliament by the Finance Ministry’s financial policy, statistics and analyses department deputy head Tomasz Szałwiński. “I do not think that we underestimated the next year’s unemployment rate,” he said, underscoring that the forecast takes into account all the necessary premises: a decline of productive-age population, the fading effect of new restrictions to early retirements and the lowering of Poland’s 2013 GDP growth forecast from 2.9% to 2.3% y/y.
Economists are slightly more pessimistic in their assessments of labor market prospects than the government representatives. Danske Bank analysts expect Poland’s unemployment rate to increase to 12.9% this year and 13.8% in 2013, they wrote in their report dated September 10. BOŚ Bank economists go even further in their forecasts, anticipating an unemployment rate increase to 13.2% at end-2012 and 14% at the end of 2013.
Polish labor market outlook by sectors: best situation seen in transport and services, worst – in construction and energy
The strongest slowdown in hiring and increase in unemployment rate is to be expected in construction, the sector straggling with “a rapid weakening of orders and production and a rapid increase of financial losses recorded by the sector’s companies,” the justification to unemployment rate forecast by BOŚ Bank reads.
“A relatively milder scale of adjustment [is to be anticipated] in industry and services, the sectors whose companies started to adjust their employment [to the economic situation] already in the middle of the last year,” the bank’s experts write, quoting GUS data on y/y rate of corporate employment growth.
Similar conclusions can be drawn from the Polish labor market research Employment Outlook Survey Q4 2012 by global HR firm Manpower. The net employment forecast for the last three months of the year is positive (meaning there are more employers expecting an employment increase than employers anticipating the opposite) in five out of ten researched sectors if the Polish economy. The “good” sectors include transportation/ storage/ communication (+12%) and finance/ insurance/ real estate/ business services (+9%), the weakest sectors are energy/ gas & water supply (-13%), mining & quarrying (-6%) and construction (-4%).
Source - Polish Press Agency, Economic Service