Cablegate: Emigration Tightens Poland's Labor Markets: "Will the Last

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TAGS: CVIS ELAB SOCI PREL SMIG PL XG XH
SUBJECT: Emigration Tightens Poland's Labor Markets: "Will the Last
Person to Leave Poland Please Turn out the Lights?"

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Summary and Introduction
------------------------

1. That Poles are leaving Poland in search of jobs and higher wages
in other countries is nothing new. For Poland this is merely dj
vu, yet another wave of emigration, another generation of young
Poles leaving the country in search of better opportunities
elsewhere. Past migrations of Poles have largely been to the United
States and Canada and to a lesser extent to Germany, the UK and
other European nations. In May 2004 Ireland, Great Britain and
Sweden opened their borders to workers from the new Eastern European
EU members and since then, hundreds of thousands of workers have
migrated to those countries, the majority coming from Poland. The
United Kingdom in particular grew in popularity as a destination for
Polish job-seekers. The recent Polish migration, however, has been
a cause of contention at home as citizens question the potential
consequences of such a mass exodus. Companies fear losing the best
and the brightest to foreign firms. Government officials along with
intellectuals cite the possibility of a national "brain drain."
These issues have been the subject of many newspaper articles and
even prompted one British journalist to write, "Will the last person
to leave Poland please turn out the lights?"

2. Western firms today increasingly believe wage differentials
between Poland and Western Europe will narrow more rapidly than
previously expected due to the competition for labor from Western
European markets. Furthermore, the collapse of Polish birth rates
after 1989 means the number of new entrants to the labor force will
shrink dramatically in the next ten years, further tightening
Poland's labor market. This bodes well for Poland's workers who
could find themselves in a sellers' market after decades of high
unemployment.

----------------------------------
Emigration of the Third Generation
----------------------------------

3. This newest wave of migration is considered to be different from
previous ones and has been dubbed "emigration of the third
generation" by the Polish newspaper Gazeta Wyborcza. One of the
reasons that this emigration is seen as different is because
Poland's economic and political situation is vastly improved over
what it was during past migrations. Since Poland is no longer under
communist rule and has formally been accepted as a member of Europe,
in theory there is nothing for Poles to run away from. The current
emigration is seen as an opportunity for Poles to learn about
technology and best practices from other European nations and bring
their experiences from abroad back to Poland. While it is unclear
if, in the long run, Poles will decide to return to Poland or if
they will be able to apply the skills they learn, that is the hope.

4. Living in the information age means that emigrants no longer
have to break off all contact with Poland once they leave.
Inexpensive international calling plans and the internet make it
easy for emigrants to stay in touch with family, friends and Polish
culture. Also, bargain airlines such as Wizzair, Central Wings and
Sky Europe have appeared over the past couple of years and offer
cheap flights connecting Eastern European cities, including 10
Polish cities, with the rest of Europe. These airlines have
facilitated Polish emigration because they have made it easier than
ever to travel back and forth between Poland and places of
employment. Moreover, budget airlines have made it economically
viable for Poles to take jobs abroad as temporary or seasonal
workers, while still giving them a quick and affordable means of
returning home.

5. The exact numbers of how many people have left is unknown
because the borders are open and anyone who wants to leave or return
can do so freely. In April 2006, the Irish Personal Public Service
officially reported that there were 140,000 Poles in Ireland, but
unofficial estimates place the number at about 200,000. These
figures would make Poles the largest minority in Ireland,
representing at least 3 percent of its population. Between May 2004
and March 2006, Great Britain reported that approximately 230,000
Poles applied and were accepted under its worker registration
scheme. This number, however, is an underestimate of how many Poles
actually live and work in Britain, because dependants and workers
who are self-employed do not need to register. Some Poles guess
more than 500,000 people may have left the country since May 2004,
and more are joining them each month.

----------------
Model Immigrants
----------------
6. Poles and other recent Eastern European migrants are
overwhelmingly considered to be "model immigrants" by their new
employers and governments. Many British and Irish companies target
and recruit Polish workers through newspapers ads and internet
websites. In the UK, Polish workers are known for their ambition,
focus and strong work ethic. Polish carpenters and other manual
laborers and known be well qualified and to do their jobs well at
relatively low cost. Even though Poles in the UK are entitled to
social benefits as EU citizens, they very rarely claim any. The
Irish feel they have a lot in common with Poles, sharing a common
religion and a history of economic and political hardship. Polish
immigrants - Christian and ethnically European -- tend to blend
quickly into Western European cities.

7. The courting of Polish workers is not over yet. This past June,
Scottish Minister of Finance and Public Service Reform Tom McCabe
came to Warsaw to encourage workers to go to Scotland as part of its
'Fresh Talent Initiative.' During his visit he introduced a new
information guide for Poles about living in Scotland. Posters in
Warsaw's Metro also advertise szkocja.net, a website in Polish with
informational articles, job announcements and a discussion forum
geared toward Poles already in Scotland or those thinking about
moving there. On May 1, 2006, Spain, Portugal and Finland also
opened up their borders to the new Eastern European EU nations.
Everyone, it seems, wants a piece of the Polish pie.

---------------------------------------
From Polish Plumbers to Polish Dentists
---------------------------------------

8. Most Polish emigrants find unskilled jobs abroad, working in
hospitality, manufacturing, construction or agriculture and make
little more than minimum wage. Some of the emigrants who take these
types of jobs are in fact, unskilled and lack a college degree.
Others possess university degrees, but still choose to take
unskilled jobs because they can earn more working as a waiter or
security guard abroad than working in their profession in Poland.
This group of emigrants is one that hopes to eventually move up the
economic ladder, find a higher paying job with more responsibility,
start their own business, find a job in their field or just earn
some money and return to Poland. Many Poles also go to work abroad
on a seasonal basis such as students working summer jobs and
agricultural workers. Beginnings for emigrants are often difficult
and horror stories of emigrants being taken advantage of by their
employers are not unheard of. However, there is a general sense
that Polish workers have been well treated in Ireland, the UK, and
Scandinavia

9. Poles believe that one reason that Britain, Ireland and Sweden
agreed to open their borders to workers from new EU members in 2004
was because they had low levels of unemployment and numerous job
vacancies in their labor markets. Many job openings were in the
service sector and Poles were seen as taking jobs that were hard to
fill and ones that others were not willing to take. However,
teachers, police officers, nurses, doctors, dentists and other jobs
that required higher education and English language skills were also
in short supply. Thus, while the majority of Poles that leave fit
the "Polish plumber" stereotype, there is also a substantial Polish
minority who go abroad to work well-paid, skilled jobs in their
chosen profession.

----------------------------
Symptoms of a Larger Problem
----------------------------

10. Doctors, dentists and nurses have been particularly sought
after in the UK, which is experiencing a shortage of healthcare
professionals. Polish doctors and nurses are a good fit because
Poland's healthcare system is similar to Britain's and Polish
doctors receive comparable training. All things considered, Polish
healthcare workers have considerable incentives to work abroad and
hundreds if not thousands have done just that.

11. Reports show that a doctor's average monthly salary in Poland
ranges from about 1500 to 2300 Zloty ($500- $750) and a young doctor
who is doing his or her residency may earn about half that. Nurses
can make as little as 1000 Zloty ($325) a month, before taxes.
Doctors and nurses in other EU countries can earn up to ten times
these amounts. Even though the cost of living in Poland is lower,
Polish doctors are often forced to work second or even third jobs,
working 100 hour weeks to support their families. Even single
doctors and nurses find it difficult if not impossible to live off
of their wages alone, a situation that has many doctors to accept
bribes for providing quality or expedited service in the public
Polish healthcare system.

12. Recent strikes and protests by healthcare workers throughout
Poland have only reminded the Polish government of the desperate
need for healthcare reform. Poland currently spends slightly less
than 4% of its GDP on its public health system, less than any other
EU country. This past June healthcare workers demanded an immediate
30% pay raise followed by a 100% pay raise in 2007. The government
answered by promising that improvements to the health care system
would be made, including higher salaries for workers. In the
meantime, many Polish healthcare workers have decided to vote with
their feet; As of January 2006, approximately 600 Polish dentists
and at least that many doctors have registered to work in Great
Britain.

--------------------------
Brain Drain or Brain Gain?
--------------------------

13. No government likes to see its citizens, especially highly
educated individuals, leave in such large numbers as the Poles have.
Much of the discussion surrounding the recent emigration has
centered on whether or not Poland is experiencing a "brain drain,"
in which its brightest, most innovative and most ambitious citizens
are the ones leaving. Many economists believe it is in Poland's
best interest to keep these people in the country, because they are
a source national wealth, often willing to take risks and to
challenge the system. Emigrants mostly leave for economic reasons
but money is surely not everything. Many cite the wider range of
opportunities available to them in other countries and greater
possibilities for advancement as motivating factors.

14. The fact is that the vast majority of Poles who leave are
young; many of them are also college educated. So a "brain drain"
does occur when they leave, because Poland's economy and society
lose the benefits of their intellect and ambition. However, if
these individuals return, Poland undergoes a "brain gain" because
emigrants come back with new experiences and knowledge in a number
of different fields. Poles learn industry best practices while they
are abroad and can apply their new skills when they return. In
addition, Poles who return from more developed democracies tend to
demand more from their government in the areas of accountability and
transparency. Thus the "brain drain" may eventually result in a
"brain gain" if Polish emigrants return to Poland. Nonetheless, how
many Poles will choose to come back and how many will stay away is
yet to be seen.

15. Rafal Dutkiewicz, the president of Wroclaw, a city in
southwestern Poland that has recently been experiencing high levels
of growth, decided to take the emigration issue into his own hands.
Dutkiewicz believes that creating opportunities and the possibility
of a bright future for young Poles in Poland is vital for the
county's continued development. Earlier this year he initiated a
campaign to entice emigrants to return to Poland, posting an
advertisement in Polish saying, "Wroclaw also has jobs. We need
you!" on a billboard in London.

-------
Comment
-------

16. Undoubtedly, one of the reasons that so many Poles are leaving
is the high unemployment rate and lack of opportunities for college
graduates in Poland. Even though the Polish unemployment rate has
dropped to 15.7% from its high of nearly 20% just a few years ago,
it is still the highest in the EU. What Poles themselves will
attest to is that not only is there unemployment in Poland, but
there is also underemployment and badly paid employment. A person
who truly wants a job can most likely find one, but it may not be in
his or her profession, may require a lower level of education, and
may not pay a living wage. Part of the employment problem in Poland
seems to be that the jobs available do not match the skills that
Poles possess and that proper economic incentives are not in place.
This situation has been one of the causes of the considerable black
market and informal economy in Poland. People go overseas to make
money and many of them are frustrated because they feel that they
have no other option.

17. Private sector firms report that more and more young Poles are
willing to accept long-term employment in Western Europe. Rapidly
expanding Polish family and social networks in Western European
cities like Dublin and London makes it ever easier for newcomers to
find a place to live and that key first job. As a result, private
sector firms now report growing shortages of skilled labor in
Poland. Polish building firms, in particular, are now chronically
short of skilled workmen, while shipyards lack welders. Plumbers,
welders, masonry workers, roofers, and electricians can easily find
work at relatively high wages in Western Europe. The result has
been growing wage pressure in the building trades and increased
lobbying by local firms to be allowed to bring in workers from the
Ukraine. One shipyard welding subcontractor responded to the
skilled labor shortage by bringing in welders from North Korea, an
action which generated considerable controversy due to the
apparently miserable living conditions and low wages received by
North Korean guest workers in Poland.

18. Western firms today increasingly believe wage differentials
between Poland and Western Europe will narrow more rapidly than
previously expected due to the competition for labor from Western
European markets. Furthermore, the collapse of Polish birth rates
after 1989 means the number of new entrants to the labor force will
shrink dramatically in the next ten years, further tightening
Poland's labor market. This bodes well for Poland's workers who
could find themselves in a sellers' market after decades of high
unemployment.

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