Poland joblessness belies boast about `galloping steed' economy
Monday, 17 September 2007
Dorota Bartyzel
Jarek Trela has been unemployed for seven years in the southern Polish region of Szydlowiec, which has the highest jobless rate in the European Union. He lacks the skills to work in a wealthier region or neighboring country, and refuses to take jobs that pay only 1.0 euro an hour.
Trela, a 31-year-old handyman, is among almost 2.0 million unemployed Poles who get no benefit from soaring investment and an economy that is expanding at the fastest pace in a decade.
In the 18 years since Poland abandoned communism, successive governments have failed to halt chronic joblessness and poverty, tarnishing hopes raised by European Union entry three years ago and mocking boasts about an economic ``galloping steed'' by Finance Minister Zyta Gilowska.
``The tunnel is long and dark for anyone who stays in Poland,'' said Teresa Cieslak, director of the Szydlowiec labor office. People come, look at posted jobs and leave, ``but the feeling of disappointment stays,'' she says. Only about half of the 27 million Poles of working age have on-the-record jobs. The rest live on pensions, welfare and unemployment benefits or off-the-books work, according to data from the Polish Central Statistics Office and Eurostat, the EU's statistical office.
Prime Minister Jaroslaw Kaczynski's Law & Justice party took office in November 2005 -- with his twin brother, Lech, as president -- promising to clamp down on corruption, protect jobs by stopping sales of state assets and boost national pride by bringing economic resurgence to blighted areas such as Szydlowiec.
The coalition collapsed last month after Law & Justice sparred with its two partners about spending cuts needed to adopt the euro. Self Defense and the Polish Families League have favored more social spending for the poor and jobless.
Citizens' Platform, the country's largest opposition party, is pushing for even more spending cuts than Law & Justice to allow faster euro adoption. The two parties are virtually tied in polls ahead of parliamentary elections that will be held Oct. 21, two years early.
Poland's national unemployment rate is the highest in the EU, even though it has fallen to 12.2 percent in July from 19.5 percent in May 2004, when Poland joined with more out-of-work citizens than all the other 2004 entrants combined.
One reason for the decline is the growth of high-tech jobs in Warsaw and other major cities, where unemployment rates are as low as 6 percent. Another reason is that one-third of the unemployed aren't included in the total anymore because they're no longer looking for work.
Eighty percent of the jobless aren't entitled to financial aid. The remaining 20 percent receive 100 euros ($134) a month in welfare benefits, a fraction of Poland's average monthly gross wage of $920.
That is one-fifth the average EU monthly salary, which helps account for the stream of emigrants to nations such as the U.K. and Ireland.
The exodus has left some construction companies and food producers desperate to hire 300,000 workers. Many await the paperwork needed to take on Ukrainians, Chinese or Indians, who will accept lower pay than Poles.
``My expectations are really basic, and I still cannot find anyone,'' said Zbigniew Stepien, a meat packer from Szydlowiec.
Four of his 17 employees quit last month to go abroad, and ``not a single apprentice candidate has showed up this year to learn the job,'' he says.
Meanwhile the official jobless rate in Szydlowiec, known for its Roman and Gothic monuments, is 35 percent, and the actual figure may be higher. Many workers have fallen off the jobless roll and now scrape by selling fruit to passing motorists or taking shift work in cafes and bars.
Szydlowiec was a source of sandstone for centuries and became an industrial center during communism. Prosperity collapsed with the coming of the free-market economy.
The picture is different in areas that are powering economic growth. In cities such as Warsaw, Wroclaw and Krakow, foreign investors including LG Electronics Inc., Sharp Corp. and Hewlett-Packard Co. have added 100,000 people to the national workforce in the first six months of the year.
Gross domestic product per capita in the Warsaw region alone, the richest in Poland, exceeds 75 percent of the EU's per-capita GDP, making it richer than Portugal, the Polish Regional Development Ministry said on Aug. 7.
Poland's $350 billion economy expanded at an annual rate of 6.7 percent in the second quarter, compared with 2.5 percent for the euro region. Growth in the past few years has been fueled by $35 billion of foreign direct investments between 2004 and 2006 and $9.8 billion in EU funds through the first 37 months of membership.
High unemployment will erode this performance unless the expansion is supported more by consumer demand. The Economy Ministry warned earlier this year that gross domestic product may shrink by about 400 billion zloty ($141 billion) through 2025 because of joblessness and emigration.
``The Polish economy looks very good, but I don't see how growth could be sustained in the longer term,'' said Jerzy Hausner, a Krakow University economics professor and former economy minister.
Bloomberg
Jarek Trela has been unemployed for seven years in the southern Polish region of Szydlowiec, which has the highest jobless rate in the European Union. He lacks the skills to work in a wealthier region or neighboring country, and refuses to take jobs that pay only 1.0 euro an hour.
Trela, a 31-year-old handyman, is among almost 2.0 million unemployed Poles who get no benefit from soaring investment and an economy that is expanding at the fastest pace in a decade.
In the 18 years since Poland abandoned communism, successive governments have failed to halt chronic joblessness and poverty, tarnishing hopes raised by European Union entry three years ago and mocking boasts about an economic ``galloping steed'' by Finance Minister Zyta Gilowska.
``The tunnel is long and dark for anyone who stays in Poland,'' said Teresa Cieslak, director of the Szydlowiec labor office. People come, look at posted jobs and leave, ``but the feeling of disappointment stays,'' she says. Only about half of the 27 million Poles of working age have on-the-record jobs. The rest live on pensions, welfare and unemployment benefits or off-the-books work, according to data from the Polish Central Statistics Office and Eurostat, the EU's statistical office.
Prime Minister Jaroslaw Kaczynski's Law & Justice party took office in November 2005 -- with his twin brother, Lech, as president -- promising to clamp down on corruption, protect jobs by stopping sales of state assets and boost national pride by bringing economic resurgence to blighted areas such as Szydlowiec.
The coalition collapsed last month after Law & Justice sparred with its two partners about spending cuts needed to adopt the euro. Self Defense and the Polish Families League have favored more social spending for the poor and jobless.
Citizens' Platform, the country's largest opposition party, is pushing for even more spending cuts than Law & Justice to allow faster euro adoption. The two parties are virtually tied in polls ahead of parliamentary elections that will be held Oct. 21, two years early.
Poland's national unemployment rate is the highest in the EU, even though it has fallen to 12.2 percent in July from 19.5 percent in May 2004, when Poland joined with more out-of-work citizens than all the other 2004 entrants combined.
One reason for the decline is the growth of high-tech jobs in Warsaw and other major cities, where unemployment rates are as low as 6 percent. Another reason is that one-third of the unemployed aren't included in the total anymore because they're no longer looking for work.
Eighty percent of the jobless aren't entitled to financial aid. The remaining 20 percent receive 100 euros ($134) a month in welfare benefits, a fraction of Poland's average monthly gross wage of $920.
That is one-fifth the average EU monthly salary, which helps account for the stream of emigrants to nations such as the U.K. and Ireland.
The exodus has left some construction companies and food producers desperate to hire 300,000 workers. Many await the paperwork needed to take on Ukrainians, Chinese or Indians, who will accept lower pay than Poles.
``My expectations are really basic, and I still cannot find anyone,'' said Zbigniew Stepien, a meat packer from Szydlowiec.
Four of his 17 employees quit last month to go abroad, and ``not a single apprentice candidate has showed up this year to learn the job,'' he says.
Meanwhile the official jobless rate in Szydlowiec, known for its Roman and Gothic monuments, is 35 percent, and the actual figure may be higher. Many workers have fallen off the jobless roll and now scrape by selling fruit to passing motorists or taking shift work in cafes and bars.
Szydlowiec was a source of sandstone for centuries and became an industrial center during communism. Prosperity collapsed with the coming of the free-market economy.
The picture is different in areas that are powering economic growth. In cities such as Warsaw, Wroclaw and Krakow, foreign investors including LG Electronics Inc., Sharp Corp. and Hewlett-Packard Co. have added 100,000 people to the national workforce in the first six months of the year.
Gross domestic product per capita in the Warsaw region alone, the richest in Poland, exceeds 75 percent of the EU's per-capita GDP, making it richer than Portugal, the Polish Regional Development Ministry said on Aug. 7.
Poland's $350 billion economy expanded at an annual rate of 6.7 percent in the second quarter, compared with 2.5 percent for the euro region. Growth in the past few years has been fueled by $35 billion of foreign direct investments between 2004 and 2006 and $9.8 billion in EU funds through the first 37 months of membership.
High unemployment will erode this performance unless the expansion is supported more by consumer demand. The Economy Ministry warned earlier this year that gross domestic product may shrink by about 400 billion zloty ($141 billion) through 2025 because of joblessness and emigration.
``The Polish economy looks very good, but I don't see how growth could be sustained in the longer term,'' said Jerzy Hausner, a Krakow University economics professor and former economy minister.
Bloomberg