In February, average wage in the business sector grew by 3.2 percent compared to the analogous period of last year, while employment grew by 1.2 percent year to year – show most recent GUS figures. – Although the nominal wage dynamics are slowing down somewhat, this process is compensated by a still deepening deflation. Constant improvement of the situation on the labour market may be a sign of an increase in wage growth dynamics in the coming quarters – comments Łukasz Kozłowski, expert of Employers of Poland.
It is increasingly clear that the nominal age growth dynamics are starting to slow down, which is most likely a delayed reaction to deflation processes. In a situation when prices start to drop, maintaining the current wage growth is increasingly costly. However, taking the continuously deepening consumer price drop into consideration, the real purchasing power of Polish employees is growing at a much faster rate than during the economic upturn of 2010-2011 – close to the dynamics of the latter half of 2008. Thus Poland positively distinguishes itself among the growing group of countries which have recently started to experience problems related to long-term wage stagnation.
Another factor contributing to real wage growth, apart from deflation, is the improving condition of the labour market. There are many indication that the unemployment rate may fall under 10 percent in the summer. What is more, there is a possibility that the BAEL unemployment index will fall to ca. 7 percent, thus approaching the all-time low. These positive tendencies are also confirmed by most recent figures regarding employment in business which is still increasing at the fastest rate since 2011 (year to year).
Wage and employment growth should result in increased consumption demand among households. As of now. It only has a rather restricted scope – the main GDP growth factor in the fourth quarter of last year was investment, rather than individual consumption. This shows that consumers more often make their decision based on nominal, rather than real values. As nominal wages grow at a similar rate to eg. in 2012, in their subjective view Poles’ financial capacities have increased significantly. More and more household are willing to place their surpluses in banks – annual deposit dynamics is closing In on the 10 percent mark. However, this tendency could be halted somewhat by the recent decision of the Monetary Policy Council to cut interest rates.
Łukasz Kozłowski, expert of Employers of Poland