The beginning of the recession? Almost 1 in 5 companies in Poland plan to reduce employment

According to CSO data, in late March 159 companies in Poland announced plans to release 17 1000 employees. Business surveys show that affirmative sentiments prevail among entrepreneurs, but far more of them plan to reduce employment than its growth.

– This is not yet the announcement of the armageddon, but it is worth considering what this is. To a large extent, it is the consequence of rising business costs and economical slowdown – Assessed by Dr Jacek Męcina, Prof. UW and Advisor to the Board of the Confederation of Leviathan.

– The announcements of a simplification in employment at the level of respective or even respective 1000 are not yet threatening, they will negatively affect local labour markets. So if we say that these are exemptions in the Kuyavian-Pomeranian Voivodeship or Wielkopolska Province, then there will be a negative effect on these local markets. But of course, this will not translate into any increase in unemployment. Poland is simply a country that is getting very old, we do not have a steady supply of new, young workers to the labour market, so we do not even gotta fear the increase in unemployment – emphasizes in an interview with Newseria Business agency Prof. Jacek Męcina.

As early as the end of 2023, information about planned group redundancies was published. Scania in Słupsk announced the release of 700 people, ABB in Kłodzek – 600 people. In April, Levi’s mill besides announced that it was closing its operations in Płock and firing 800 people. According to CSO data, at the end of March 159 companies declared collective redundancies of 17,000 employees, including 300 people from the public sector.

Marcin Klunik, economical analyst of the Polish economical Institute, who compared March CSO data on planned group exemptions with data for the same period since 2004, points out that this is the sixth lowest score in the period considered, and in terms of the number of people who lose their jobs – 10. In addition, company announcements do not always gotta go hand in hand with the number of actual redundancies. As the head of MPPiPS Agnieszka Dziemianowicz-Bąk late recalled, in 2023 employers reported their intention to release 30,000 employees, and in fact only a small over half of them lost their jobs (17 thousand). This year, the household ministry has already announced that it will preventively transfer PLN 50 million to districts where group exemptions are planned.

– This is, of course, a good action, but it will only mitigate the social consequences. It will supply more resources for those labour offices that will have a higher number of possibly unemployed persons registered in labour offices in statistic – notes the advisor to the board of the Leviathan Confederation.

Group exemptions should not affect the overall unemployment rate, which is inactive low. In March this year it amounted to 5.3 percent. On the another hand, 88.1 1000 fresh jobs were created in March, i.e. by 9.1 percent little than a year ago. Furthermore, the CSO's economical survey confirms that by far more companies plan to reduce employment than its growth. The intention of cutting declared 20–25 percent of entrepreneurs depending on the industry, and only 5–6% want to employment fresh employees.

– This is surely the consequence of the economical slowdown that we are seeing, in addition to the fall in orders, especially from Western Europe, from our western partners, which contributes to changing the plans for employment potential. But I am afraid that these are besides negative structural factors linked to rising costs of operating business in Poland, besides advanced increases in minimum wage and this year to year – measure the expert.

The minimum wage for work from 1 January 2024 is PLN 4242 and from July will increase to PLN 4300. This means an increase of PLN 700 (by 19.4%) compared to the amount from 1 July 2023. According to the expert, further decisions on the minimum wage in the future will be crucial.

"The mechanics that is in force present shows that the increase in minimum wage must correspond to the half-GDP ratio plus inflation. So they should be single-digit growths – Dr hab. Jacek Martyn.

Rising salaries are 1 of the biggest barriers to business activity – 67% of companies surveyed by pastry in the April Monthly Koniunktura Index (MIK) indicated. The expanding labour costs caused problems mainly for construction companies (73%). another obstacles to operating included economical uncertainty (55%) and rising energy prices (53%).

– All these elements make up the best situation and not the best moods in business. This should besides prompt us to reflect and look for methods, but to alleviate this wage pressure, to think 4 times before deciding on excessive minimum wage increases. The increasing wave of negative factors may besides origin that from a country that has enjoyed immense investments in fresh years, we will become a country that will worry that any of the business will get out of Poland. We can't afford that – convinces the board advisor to the Leviathan Confederation.

The MIK in April amounted to 100,3 points and despite a slight decrease over the period inactive remains above the neutral level (100 points). This means an advantage of affirmative sentiments among entrepreneurs. In the April reading, the number of fresh orders increased (to 93,6 points), which is simply a good forecast for expanding sales value in companies in the future. It may be worrying to read the investment component, whose value fell by 9,2 points, to 69,4 points. This is the lowest reading since November 2022 (66.8 points). This reflects the company's consequence to the uncertainty of economical events and the increased hazard of investment.

– I believe that negative readings and decisions on group redundancies are indeed the consequence of the evaluation of the full 2023 and early 2024, due to the fact that we know that the Polish economy will make faster, we know that the euro area will besides grow better this year and the following year, so the prospects are affirmative – judged by prof. Jacek Męcin.