“We need economic growth that is sustainable and job-rich rather than just statistically impressive.” The words of Guy Ryder, the current director-general of the International Labour Organisation. And, he’s right. As technology advances, the challenge will be to find useful employment for those whose jobs disappear. Of course, ‘twas ever thus, particularly since the late eighteenth century when the handloom weavers were displaced by the machine powered looms in factories as the Industrial Revolution began. Sustainable economic growth, in the sense of continuing, is always welcome, although since nobody has yet succeeded in abolishing the economic cycle, it seems that peaks and troughs will still occur. But otherwise, the use of sustainable seems to have acquired some sort of totemic power – like putting the letter ibefore the name of products – because it seems fashionable rather than for any deeper meaning.
Whatever sustainable may actually mean, according to Poland’s prime minister, the path of growth of Poland’s economy has it, and is being increasingly driven by investment. Mateusz Morawiecki said, in an interview with the PAP news agency on Friday, that the economy was doing “increasingly well,” and that, “importantly and optimistically,” it was growing “in a sustainable manner.”GDP growth was “finally beginning to be” based on three pillars: investment, exports and consumption.
Poland’s Central Statistical Office (GUS) said in a flash estimate two weeks ago that the economy grew 5.1 per cent in the second quarter of this year. Last week GUS reported that capital expenditure by Polish companies in the first half of the year was PLN 54.4 billion (EUR 12.7 billion, USD 14.7 billion) some 10.3 percent higher than in the same period last year. There has been more investment in buildings, machinery, equipment and vehicles leading to the largest year-on-year rise in business investment being the highest since Poland’s ruling Law and Justice (PiS) party came to power in late 2015, the prime minister said.
This good news is reflected in Poland’s unemployment rate which GUS said on Friday was 5.9 per cent in July, unchanged from the June figure, the lowest in 28 years. There were 961,800 people registered as jobless at employment offices nationwide in July, down from 967,900 in June, according to the Central Statistical Office.
Public finances are also benefitting, with the budget deficit next year being forecast to be the lowest since 2009, Poland’s finance minister, Teresa Czerwińska said on Thursday. The government is working steadily to reduce the deficit, taking advantage of the positive economic trends. The budget deficit is forecast not to exceed PLN 28.5 billion (EUR 6.6 billion, USD 7.6 billion) in 2019, with a target for the general government deficit of 1.8 per cent of GDP. The preliminary draft budget assumes 3.8 per cent growth and inflation at 2.3 per cent.
All of which might help to explain, if one sets any store by opinion polls, why, according to a poll by CBOS, conducted between August 16 and 23 on a sample of 1,115 adult respondents, PiS is supported by 44 per cent of voters, with opposition Civic Platform (PO) trailing at 19 per cent. The Kukiz’15 grouping is third on 7 per cent, and the rural-based Polish People’s Party (PSL) is fourth on 5 percent. Other parties would fail to reach the 5 per cent threshold needed to gain seats in parliament under Poland’s electoral system.
Whatever one’s view of their politics, so far at least, the government has managed the economy well. Whether this is sustainable remains to be seen. The continuing concerns over the judicial changes – reform seems not quite the right word – might yet have an impact. Being right on the economics but wrong on the sentiment is to sail close to the wind when so many investment decisions are influenced by emotion as well as cold facts. And there are some particular problems facing Poland, not least the deteriorating demographic picture.
For the time being this is being ameliorated by the availability of labour from Ukraine with 21 per cent of Polish employers now saying they engage Ukrainians. This is up from 11 per cent only six months ago, according to research by recruitment company Personnel Service, the Polish employers’ organisation and the state employment service of Ukraine. According to the study, some one million Ukrainians are expected to travel to Poland for work over the next two years, and Belarusians will comprise the second largest group.
But is it sustainable? That depends on many factors, not least on how many see Poland as a stepping stone on their westward journey, rather than as a final destination.