The spectacular increase in minimum wage in Poland, which was to be a triumph of social policy, brings unexpected and worrying consequences. Although the lowest earners have experienced real improvement, data and expert analyses paint the image of the labour market, where experience and qualifications are losing value at an alarming rate. all 5th individual in the country earns a minimum today, and the pay gap between a rookie and a veteran with a 20-year stint has drastically shrunk. Experts from leading universities are beating the alarm, indicating that Poland has fallen into the trap of flattening wages, which can have disastrous consequences for the future of the full economy and the motivation of millions of Poles to make their careers.
Poland leader of increases. What is the price of this success?
Since 2015, the minimum wage in Poland has increased nominally by awesome 170 percent. Given inflation, the real increase in purchasing power of the lowest wage was 61 percent. These figures place our country at the absolute top of the European Union in terms of the rate of increases, which undoubtedly improved the material situation of millions of poorest Poles and became an crucial driver of home consumption. The increase in spending on the poorest social groups gave the economy an additional boost.
However, behind this success lies the second, much more disturbing side of the medal. Professors Aleksandra Majchrowska from the University of Lodz and Paweł Strawiński from the University of Warsaw, in their analysis for the website money.pl, pay attention to the dangerous phenomenon. In their opinion, specified a fast and disproportionate increase in the lowest wage led to dangerous flattening of the full wage structure in Poland. This means that the pay gap between workers with different levels of competence and experience has begun to blur, undermining the fundamental principles of a healthy labour market.
Every 5th Pole with a minimum salary. End of the professional era?
The most alarming signal is the hard data of the Central Statistical Office. According to them, now every 5th individual in Poland receives a wage not exceeding 103 percent of the minimum wage. Moreover, half of all employees in the country gain a maximum of 1 and a half times that rate. These statistic show that minimum wage is no longer just a safety net for those entering the labour marketplace or performing the simplest tasks without qualifications.
Today, the lowest national has de facto become a mention point for a immense part of the market, affecting earnings besides for those workers who have specialist cognition and many years of experience. As a result, more and more people receive very akin salaries, whether they are just starting their career or having decades of experience. It's a fundamental change that devalues the importance of competence and loyalty to the employer, and in the long word could lead to serious economical distortions.
Professional experience is little and little worthwhile. How much do they lose?
The flattening of the wage structure is the easiest to visualize on a concrete example. In 2014, an office individual with a 20-year stint could anticipate a wage of 36 percent higher than a individual who just started working in a akin position. That was the alleged experience bonus. However, in 2022 this difference shrunk to just 21 percent. This means that the marketplace value of years of practice and acquired skills has decreased dramatically.
This trend is not an isolated case – it concerns virtually all sectors and sectors of the economy. The systematically decreasing wage premium for experience sends a dangerous signal to employees: investing in long-term career development, acquiring fresh qualifications and improving skills is no longer viable from a purely financial point of view. The younger workers, although enjoying better start conditions, at the same time lose their motivation to further develop, since their efforts are not reflected in importantly higher earnings in the future.
Pay-price and mediate class blow
The sharp increase in the minimum wage triggered a mechanics that we all felt in our wallets. Companies, forced to bear higher labour costs, mostly passed these burdens on to consumers, raising the prices of their goods and services. Thanks to the good economical situation, this did not lead to massive redundancies, but shot a pay-price spiral, becoming 1 of the drivers of advanced inflation.
Eurostat data is merciless on this issue. In 2014-2022 purchasing power of the poorest Poles (the least earners) increased by awesome 50 percent. This is an undeniable success in combating poverty. But at the same time the median wage, i.e. the wage of a typical Polish employee, has actually risen by only 32 percent. This means that the mediate class, despite nominal increases, has truly lost its distance and purchasing power to those with the lowest incomes. Poland has become 1 of the EU countries where inequalities in the lower part of the wage net have decreased most, but at the expense of the purchasing power of the measure.
What are the dangers of the future? Experts have no illusions
Professors Majchrowska and Strawiński inform that the continuation of policies of sharp increases in minimum wage without looking at the remainder of the economy could further distort the labour market. If the experience and qualifications premium continues to decrease, Poland may fall into low productivity trap. Companies will have expanding problems uncovering and maintaining qualified professionals if the wage strategy does not reward their competences properly.
In the long term, this could lead to slowing the innovation of the Polish economy and weakening its competitiveness internationally. Equally important, the deficiency of a clear financial reward for cognition and experience may weaken the motivation of young people to invest in education. It is crucial to find a golden means – a policy that protects the poorest, but at the same time preserves healthy marketplace mechanisms and motivates development. Otherwise, while intentions are good, the effects can be harmful to all.
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Record minimum wage increases. Experts are alerting: experience is no longer worth it!
