Early Signs Of Business In Poland Shifting Away From Warsaw
As the Polish capital is outpaced by cities such as Kraków and Gdańsk for earnings, the question is posed of what the future holds for the Polish job market and Warsaw.
WARSAW — Poland's capital is no longer the highest-earning city in the country, and has fallen behind Kraków and Gdańsk in terms of workers’ earnings. Is a revolution in the Polish job market taking place?
“This might be the first sign that we will stop being a Warsaw-centric country,” said Dr. Piotr Maszczyk, head of the Department of Macroeconomics and Public Sector Economics at the Warsaw School of Economics.
His comments come after the latest release of data by the Central Statistical Office on the average salary in the business sector, which looks at companies with more than nine employees.
The recent data appears to show a revolution: two Polish cities have overtaken Warsaw in terms of average earnings. This was also the first time in the country’s history that average monthly income in one of its cities (in this case, Kraków) exceeded 10,000 PLN (about €2,200). This was an increase of more than 13% from March of last year.
In second place is Gdańsk, which had average salary increases of over 17% from last year. Białystok — found in the northeast, near the Belarussian border — was the lowest-earning of the major Polish cities. The average monthly income in Poland overall also increased by 12% since last year, amounting to 7,500 PLN (about €1,650). Though this may sound promising, this growth still does not account for the rise in inflation over the past year.
You can see it by walking through any shopping mall in the city, or by looking at the listings on job sites.
Have Poles living in Warsaw genuinely earned less in the past year than those in Kraków and Gdańsk? If so, what are the causes?
For Dr. Maszczyk, this is a “difficult question," but, he says, “These results are definitely not the result of only one major investment, or one specific enterprise in either of the two cities.”
“My intuition is that in Warsaw, a larger presence of lower-paying jobs significantly lowered average incomes,” says Maszczyk. "You can see this just by walking through any shopping mall in the city, or by looking at the listings on job sites.” He says that highly qualified specialists in Warsaw are still earning more than in any other part of the country, but the size of the city — and the overwhelming presence of lower-paid positions, brought averages now.
For now, the long-term results are still uncertain, but Maszczyk admits, “If this is, in fact, a trend, it can have significant results for local educational institutions ... Why would students feel the need to leave for Warsaw if they can find well-paying jobs locally after finishing their studies in Kraków or Gdańsk?” he asked.
Salaries are equalizing, experts say
Boats on the Motlawa river in the Old Town of Gdańsk, Poland.
Dr. Kazimierz Sedlak, a labor market expert and director of HR agency Sedlak & Sedlak, is skeptical of the promise that the new statistics show.
“Industry is still present in Warsaw, and salaries in this sector are well below the average," he said. "Recently-established business centers in Kraków and Gdańsk mainly employ qualified specialists, and outsource services for international corporations," he added.
“These are both cities with much smaller populations than Warsaw,” he said. "The employees of their business centers have the potential to inflate the averages.” Several CEOs have their companies’ headquarters listed in Kraków — as opposed to Warsaw— as well, which may have prompted additional inflation.
Sedlak advised looking towards the median and mode salaries, rather than the statistical averages. “If one worker earns 40,000 PLN per month, and the second 3.5 thousand. PLN per month, on average they earn over 20,000,” he said.
“According to statisticians, as many as two-thirds of Cracovians earn below the average given by the Central Statistical Office,” he added.
However, he does admit that, in recent years, the earnings gap between Warsaw and other large Polish cities — such as Kraków and Gdańsk— has been narrowing. "This results from the fact that new business centers were built outside Warsaw, at a lower cost than those found within the capital," he suggests.
“International companies were looking for other regions saturated with university graduates with lower financial expectations,” he said.
“Deglomeration” is a positive trend
We asked a Warsaw-based entrepreneur from the new technologies industry to comment on the Central Statistical Office data. He wasn't surprised by the results. His own firm employs several dozen employees not only in Warsaw, but also in other Polish cities. In his company, wages are equal — regardless of where you live.
“People make a choice,” he says. "Why live in Warsaw, where the cost of living is so much higher, when you can earn the same and enjoy a cheaper, more comfortable life in a smaller city?”
He agrees that the average is a poor metric to use, but admits it does show a trend: salaries are converging. "And that's good," he adds. “Deglomeration is a positive trend. The strength of the German economy is that it is not monolithic, but polycentric: economically strong in Bavaria, the Ruhr area, Brandenburg and the Hamburg region."
“Why should everything be concentrated in Warsaw? Why should all central institutions be here?” he asks. “If the only prospect for a talented person is to make a career in Warsaw, it is the result of the state's failure. Success would look like someone talented, no matter where they were born, finding professional fulfillment in their immediate surroundings.”