Incredible Shrinking Workforce Adds Strain to Polish Labor Pinch

(Bloomberg) -- Poland’s jobs conundrum is worse than it looks.

A labor shortage has increasingly emerged as one of the biggest hurdles for the European Union’s biggest eastern economy. Now the remaining pool of available workers is drying up fast.

Data on Friday showed Poland’s registered jobless rate unchanged in July at a record low, with the number of newly unemployed down by 10 percent from a year ago. What’s more, the share of long-term unemployed, including people deemed lacking in qualifications, exceeded 81 percent of those recently without a job.

The labor crunch is a worry because the central bank already forecasts economic growth will slow in the second half of the year by about a percentage point after it accelerated above 5 percent in three of the past four quarters. With so many Poles discouraged and at risk of soon dropping out of the labor force, the challenges faced by employers will only escalate, according to Monika Kurtek, chief economist at Bank Pocztowy SA in Warsaw.

“In the coming months, it will be increasingly difficult to reduce the number of unemployed, as more and more people among those registered are long-term unemployed who are very difficult” to bring back to the labor market, she said. “If demand for employees were met, the Polish economy could develop even faster.”

Incredible Shrinking Workforce Adds Strain to Polish Labor Pinch

Employment in July expanded at the slowest pace since late 2016. Under Eurostat methodology, Polish joblessness has declined for nine straight quarters to a record-low 3.6 percent, almost half the EU’s average.

Meanwhile, Poland’s participation rate, or share of working-age people in the labor force, is on the rise but remains below last year’s high and lags far behind the average in the EU. The number of economically inactive Poles of working age is shrinking at the fastest pace ever, reaching just over 5 million in July, or about 13 percent of the population.

“Almost half of companies complain about their inability to find workers,” said Andrzej Kubisiak, a director at Work Service SA, citing its latest survey among employers. “The labor force shortage has become a permanent problem in Poland, and it’s increasingly weighing on the future performance of the Polish economy.”

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