Poland: The slowdown eased the labor shortage problem

2 October 2023

The Labor Market Index (LMI), which provides advance information on future changes in the size of unemployment in September, once again showed no significant change from its value a month ago. This has been the trend for the past five months. Despite the significant slowdown in the economy, the unemployment rate, both registered (5%) and according to the LFS (2.6%), remains at record lows and also has not changed significantly in recent months. This is mainly determined by demographic factors and the increase in labor force participation of people of retirement age and the economically inactive.

The slowdown in the economy has resulted in a reduced inflow of job offers, which has been observed since last spring. District Labor Offices this year received an average of 93,000 job offers per month, compared to more than 108,000 offers in the same period a year ago.

A similar reduced interest in employees is reported by data from the Job Offer Barometer, which records job ads appearing on online portals.

Decreased demand for labor is also signaled by the CSO’s economic surveys. They indicate an advantage for companies planning to reduce employment in the near future over the percentage of companies intending to increase the number of employees. There is optimism that the advantage of declarations of layoffs has been steadily decreasing in recent months. A year ago, it reached nearly 14 percentage points, while in the latest survey it dropped to less than 6 percentage points. Thus, it can be thought that entrepreneurs’ declarations reflect their pessimistic mood resulting from rapidly rising labor costs, with falling labor productivity, rather than their actual intentions. Employers are also deterred from cutting jobs by difficulties in finding workers, especially skilled ones.

Restraint in downsizing is also evidenced by the stable number of employer-caused layoffs. In recent months, the number of registered unemployed who have been laid off for company reasons has remained stable at around 33,000 people, with no significant fluctuations or upward trend.

The current situation has a stabilizing effect on the inflow of new unemployed. It is true that their number increased by a total of about 11 thousand new unemployed in July and August, but it is lower than a year ago and is rather due to the periodic expiration of seasonal work.

For nearly two years we have seen a decline in the number of de-registrations from unemployment due to employment. This trend is partly related to the reduced inflow of job offers, and partly due to the permanent loss of qualifications by the longer unemployed. Nearly 40% of the unemployed have been out of work for more than a year, while about 32% of the unemployed registered at labor offices have no qualifications. The stock of unemployed people is therefore not a good reservoir of labor for employers. Instead, they can be the economically inactive and relatively young retirees. The labor force participation of these two groups has been increasing recently. The number of economically inactive has fallen by 18% over the past 2.5 years (Q1 2021 to Q2 2023). Social Security data show a steady increase in the number of working pensioners. Their share in the total number of pension recipients has increased over the past 10 years from 11% to 13.5% at the end of last year. The labor activation of these two groups can partially satisfy the labor shortage, and make the shortage of hands less acute for employers, especially in an economic downturn. With the onset of recovery, the old problems will return.

Author: BIEC

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