“We see more Poles looking at their bosses, asking for a raise, and if they don’t get it, they start looking around,” said Gacek, CEO of Grupa Pracuj, which runs Poland’s largest online job posting platform. advertisements. Poland is one of the most extreme examples of the rise of workers’ bargaining power after the pandemic. In the US, workers have quit in record numbers to take better offers elsewhere. In the UK, employers provide a cost of living bonus. In the eurozone, slower union negotiations are likely to lead to delayed wage growth. For monetary policymakers, however, this labor market strength is complicating efforts to control inflation, which has soared due to a surge in global food and energy prices. They worry that price pressures – now at their highest level in decades – will be entrenched if workers demand pay rises to match the rising cost of living, prompting employers to raise prices to reflect rising wages. In Warsaw, fears of such a wage-price spiral have already come true. With companies across all industries struggling to hire, average wages rose 13.5 percent in the year to May, almost matching inflation’s galloping 15.6 percent in the year to June – its highest level here and a quarter of a century. The central bank quickly raised interest rates in response and on Thursday raised its benchmark interest rate by 50 basis points to 6.5 percent — from near zero in the fall. The central bank expects inflation to remain in double digits until 2023. Rafal Benecki, an economist at ING, pointed to “the risk of persistent and self-reinforcing price increases, which may be difficult to stop.”
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Liam Peach, economist at consultancy Capital Economics, believes that Central and Eastern European countries are highly exposed to the risk of a wage-price spiral. Even before the pandemic, strong economic growth and a long-term decline in the working-age population had driven unemployment to extremely low levels. Hungary and the Czech Republic face similar pressures, Peach said, but Poland’s labor market was now “in a league of its own.” With consumer spending remaining strong, companies have room to pass on higher costs to their customers. Softylabs, a Polish software company, recently raised wages by 20 percent—double the rate of previous years—and is passing on more than half the cost of its rising wages to customers. “I see salary expectations rising very, very quickly,” said Rafal Kijonka, CEO of Softylabs. “Unless we accept a higher salary, unfortunately a software developer will leave for another company.” The twin shocks of Russia’s invasion of Ukraine and monetary tightening look set to wipe out economic growth in the coming quarters. The central bank predicted on Thursday that the economy will soon fall into recession. However, economists expect the labor market to remain bullish. “Indices are not cooling, even as energy prices hit output and interest rates hit the housing market,” said Agnieszka Zielińska, director of the Polish HR Forum. Economic uncertainty also made companies less willing to invest in automation, he added. Morgan Stanley also predicts “minimal effects on the labor market and unemployment” if Poland’s economy slips into a technical recession. Competition for staff has been fiercest in tech, where demand has soared during the pandemic. While Brexit initially helped companies by pushing Poles to leave Britain, the pandemic has allowed IT workers not only to stay at home, but to work directly for companies in countries such as Germany and Sweden, paying more than their neighbors in eastern Europe. Salaries for some IT roles have risen by more than 40%, according to Manuel Segador Arrebola, who heads the Polish operations of recruitment agency GI Group. Staff shortages could mean that, sometimes to fill a single job, “we were approaching 800 people”. In blue-collar sectors, employers are not only raising wages, he added, but also offering overtime and moving from temporary to permanent contracts. Some also require workers to stay on past retirement age. Ever since Russia’s widespread offensive in February forced a mass exodus of Ukrainians, Polish employers have scrambled to hire Ukrainian refugees. Andrzej Kubisiak, deputy director of the Polish Economic Institute, estimates that of 1.1 million registered refugees, about 600,000 are of working age and 200,000 have found work. Recruitment agencies are working with companies to help Ukrainian women — combining job offers with housing and on-site childcare, as well as training some women to operate forklifts. But many prefer to work informally in cleaning, childcare or hospitality, in the hope that they will soon be able to return home, according to Kubisiak. Meanwhile, employers in manufacturing, transport and construction who used to hire Ukrainian men say it is difficult to offer the same jobs to women because of health and safety rules and the physical demands of their production lines. “Historically, the Poles went west and took people from the east,” Gacek said. “But now there is no supply (of men) from Ukraine, nor from Belarus and Russia.”
