The demographic challenge facing Poland's employers

Wrocław, Katowice, Rzeszów, Tarnobrzeg - wherever I go around Poland to meet with local employers, the number one subject for discussion is the difficulty in recruiting and retaining employees. Let me explain this with one graph (below)

The largest age cohort of Poles today is 34 years old; people born in 1983 (in the dark days of Martial Law). There is nearly 700,000 of them. Then there is a sharp and consistent downturn, with fewer births in each successive year for the next 20 years, with a demographic low of 14 year-olds, born in 2003. This low is followed by a small 'echo boom', weakly mirroring the demographic upturn experienced by Poland between 1967 and 1983. The 'echo boom' high-point is made up of eight year-olds born in 2009, after which a decline, which the 500+ universal child benefit scheme seems to have halted at least. Question now (and a nation will anxiously await the statistical office's population figures for 2017) is whether 500+ will actually do what it is intended to do, namely to cause a long-term increase in fertility rates.

Those 34 year-olds, born in the darkest days of Poland's recent history, grew up as children at the tail-end of communism, remembering (just) when confectionery was rationed. They left school in the mid-1990s, when the free market was asserting itself. They went to university to study management and marketing - skills sorely needed at that time. And when they graduated, unemployment was beginning to fall from the record 20.4% it reached just before Poland's EU accession. This age cohort moved Poland's economy along, driving growth right through the global crisis. Today's 34 year-olds are now economically stable; many are home-owners and mortgage-payers with small children - and a large stake in Poland's future prosperity.

But let's look at the other side of the coin. If employers are worried that things are bad now, with unemployment at a record low of 7.1% (GUS's claimant count)/4.8% (Eurostat's economically inactive count), recruitment and retention will get even harder over the next seven or so years. Between now and 2024, the number of school- and university graduates entering the labour market will continue to fall by around 17,500 a year. After that - a short respite of six years of rising labour supply before the next dip.

Now - is this really a problem, given that several reputable think-tanks are forecasting that some 30%-45% of all jobs on the labour market will disappear between now and 2030 because of robotics and artificial intelligence. New technologies such as machine learning, internet of things and distributed ledger (blockchain) will automate whole swathes of routine white-collar work involving accountancy, supply-chain and maintaining all manner of registers. Machine learning will automate many of the more mundane tasks carried out by lawyers.

So is it a bad thing that fewer young people are entering the labour market?

It is very much about matching skills of jobs.

With nearly half of school-leavers in Poland (and indeed in the UK) going on to some form of tertiary education, the question is whether 50% of the jobs remaining in the labour market will be graduate-level jobs.

Looking at today's school leavers who are going on to take a degree course, the question is whether they have an idea for what they want to do at the end of it - or not. Those who want to end up as engineers, doctors, or IT guys will go on to study relevant courses. But what of those who don't really know what career path is right for them at the age of 18 or 19? Is there any sense on taking a five-years master's course in some -ology or -istyka? Are they doomed to a service-sector job at a call centre at the end of it?

Today we stand at the cusp of a major technological revolution as profound as the advent of IT in the early 1980s, the introduction of the assembly line and electricity at the turn of the 19th and 20th Centuries, and indeed the very beginnings of the Industrial Revolution in the late 18th Century.

Young people - and their parents who guide them - who do not feel which way technology and the economy is evolving - may end up in dead-end jobs.

The worst-case scenario is a labour market crying out for people with skills, while huge swathes of young people remain out of work because they have the wrong skills. It is up to the government, looking soberly at demographic projections and assessing the direction of technological advance, to come up with the right policy response that will create a education system capable of turning out the work force tomorrow's labour market will need.

In the meanwhile, Polish employers are filling gaps as they can - mainly with workers from Ukraine (of whom there are over 1.2 million working legally in Poland). This is a short-term measure - literally - as their work visas are for three to six months. Numbers of Poles returning from the UK are still low, though employers and recruitment agencies are reporting a rising trend in this direction. While salaries in Wrocław, Krakow, Poznań or Gdańsk might be three or four times lower than in London, house prices are seven to ten times lower and public transport is up to 13 times cheaper.

This time four years ago:
The rich, the poor, the entrepreneur

This time five years ago:
Food: where's the best place to shop in Poland? 

This time six years ago:
Bittersweet

This time seven years ago:
Commuting made easy

This time eight years ago:
Work starts on the S79/S2 'Elka'

This time nine years ago:
Warsaw's accident-filled streets

This time ten years ago:
ul. Poloneza's pot holes rip off my car's exhaust (This bit of Poloneza has since been renamed ul. Kujawiaka)