Poland needs even more Ukrainian migrants
As Bloomberg writes, the unprecedented numbers have already helped keep wage growth in check and stabilize an economy that faltered last year. Politicians are considering borrowing costs, and such a number of migrants has also been a boon for the central bank, which has received high marks for interest rate stability. After a pause since March 2015, the 10-member Monetary Policy Council will again leave the rate at a historic low of 1.5% on Wednesday, according to 30 analysts surveyed by Bloomberg.
"The arrival of one million Ukrainians means that demography is not a death sentence," said Tomasz Wieladek, an economist at Barclays, in his report. "Disinflationary pressure on the labor market is likely to contribute to lower core CPI inflation and thus allow for lower interest rates for a longer period. The reduction in population aging due to migration is likely to contribute to longer-term growth."
The annexation of Crimea in 2014, followed by a separatist conflict and a two-year recession, drove even more Ukrainians to seek a better life in neighboring Poland. Close cultural and linguistic ties, as well as convenient bus rides across the border, made Poland an obvious choice.
While the European Union is largely seeing an influx of those fleeing armed conflicts in Syria and North Africa, Ukrainians come to Poland for higher wages and relative ease of access to the labor market. According to official estimates, the number of Ukrainians taken in by Poland is comparable to the total number of migrants who arrived in Germany — a country twice as large — in 2015-2016.
"It is clear that the scale of immigration in Ukraine has become extremely large not only for economic but also for political reasons," says Jakub Binkowski, an immigration expert at the Polish Union of Entrepreneurs and Employers.
Although the number of Ukrainian workers in Poland already exceeded a record 1.3 million last year, nearly half of employers were looking for Ukrainians because there were no unemployed locals, according to a survey of 300 companies in January. Almost 40% of firms in sales and services rely on Ukrainians, says Work Service SA, a recruitment and staffing company in Warsaw that conducted the study.
According to PKO Bank Polski SA, the wave of immigration from Ukraine has actually delayed Poland's population aging by five years. This is a significant achievement for one of the fastest-aging countries with the lowest birth rates in Europe.
National Bank of Poland Governor Adam Glapiński has already warned that the country faces a labor shortage, saying the unemployment rate is well below the "normal level." Rate-setting council members expressed concern that wage growth could "significantly" accelerate in coming quarters as unemployment falls, according to minutes of the central bank's February meeting.
Some measures proposed by the government, such as a plan to lower the retirement age, could only exacerbate Poland's problems with a shrinking labor force. Poland's unemployment rate remained at its lowest since data collection began in 1992. In the last quarter, it stood at 5.5%, compared with 5.9% in the previous three months.
Average gross wage growth accelerated to 4.3% year-on-year in January, the fastest in five months after an average of 4% in 2016. Without easing labor market tensions, higher wages could put even more pressure on inflation, which in January already reached the central bank's target range for the first time in four years.
Interest rate futures, derivatives used for interest rates, show that Poland's next move will be to increase borrowing costs in 2018.
According to the Polish Union of Entrepreneurs and Employers, Poland needs an additional 5 million people over the next 20 years to sustain economic growth. Over the next five years, the country is set to receive about 100 billion euros ($106 billion) from EU development funds, and it risks missing out if the labor force shrinks.
"Poland is about to launch major investment projects and needs to accelerate work to complete them," said Maciej Witucki, head of Work Service. "Without workers from Ukraine, the risk that companies will miss their plans is becoming more and more realistic."