August 1, 2007 / 12:29 AM / in 11 years

Finding a Polish plumber is no joke in Warsaw

WARSAW (Reuters) - In western Europe, the Polish plumber has become the cliche of a low-paid immigrant who has profited from the European Union’s eastward expansion.

In Poland, it is no joke.

The former communist country is short of everything from plumbers to pilots and that is pushing up wages dramatically and encouraging inflation, which threaten to choke off Poland’s own economic boom.

Adrian Wisniewski runs a small building repair firm in Warsaw, when he can find the workers.

“Wait, I have to check whether he is still in Poland,” Wisniewski responds to a request for a plumber.

Poland, which has central Europe’s biggest economy, estimates that as many as 1.5 million workers have emigrated since the country of 38 million became an EU member in 2004. Most have gone to Britain and Ireland.

“This is a huge threat to economic growth, one that could ruin it all,” says Krystyna Iglicka, a labor market expert at the Foreign Affairs Studies Centre think-tank.

Officially, Poland still has one of the highest jobless rates in Europe -- 12 percent according to Polish figures -- but that hides the true picture for businesses in need of workers.

A large number of the registered unemployed also work illegally. Many of those in the countryside live a basic existence and are not actively seeking employment. The number of unemployed is the lowest since the late 1990s.

BUILDERS WORRIED

The construction industry is especially concerned given a building boom and growing demand expected ahead of the Euro 2012 soccer championship, which Poland is co-hosting with Ukraine.

“Employment is now the main worry for construction companies, and threatens the pace of their future growth,” said Krzysztof Radojewski, an analyst at BRE Bank which estimates the sector is short of 150,000-200,000 workers.

Developers sometimes raid other construction sites and drive off with workers willing to switch jobs for more money. Companies know that they have no choice but to keep paying more.

Nurses take part in a protest in Warsaw June 20, 2007. Poland, a former communist country, is short of everything from plumbers to pilots and that is pushing up wages dramatically and encouraging inflation, which threaten to choke off Poland's own economic boom. REUTERS/Kacper Pempel

“We increased salaries by 15-20 percent on average this year, but we had started from quite a high level after increasing them by some 11 percent last year,” said Andrzej Wyszynski, general director at road builder Eurovia Polska SA.

While many western European countries are worried about jobs moving to the east, Poland fears its current advantage could quickly be eaten up with wages growing on average at well over 9 percent a year.

“Should the situation continue, which is possible, the Polish economy and Polish businesses will lose their competitiveness,” said Jeremi Mordasewicz of the Lewiatan employers’ group.

Rapid private-sector pay rises are also bringing demands for higher wages from the state sector. The government would be hard pressed to agree to them, particularly if Poland is to meet conditions for joining the euro currency zone.

Nurses take part in a protest in Warsaw July 2, 2007. Poland, a former communist country, is short of everything from plumbers to pilots and that is pushing up wages dramatically and encouraging inflation, which threaten to choke off Poland's own economic boom. REUTERS/Kacper Pempel

STRIKES

The most visible sign of wages discontent came from striking nurses who at one point took over the street outside Prime Minister Jaroslaw Kaczynski’s office to set up a protest camp. So far, the conservative government has refused their demands.

Meanwhile, central bank policymakers are worried that wages are rising faster than productivity. Interest rates have risen twice this year to 4.5 percent and economists expect at least one more quarter point rise before the end of 2007.

The labor shortage is pushing companies to look abroad, but workers from neighboring Ukraine and Belarus prefer to go to booming Russia, where wages are similar. That means looking to Turkey, central Asia or even further afield.

“We want to bring in workers from Mexico. They have a lot of experience from the U.S. market and are said to be very effective,” said Jerzy Zdrzalka, chief executive of Poland’s leading developer JW Construction.

But Zdrzalka said that in the past, it had been forced to send back many workers brought from abroad because their skills were not up to expectations. The paperwork for bringing in foreign workers is another problem.

Poland’s government still hopes many of the Poles who left for western Europe will return once they have built up some savings and see that they can also get much better paid at home than was once the case.

But a recent opinion poll suggested the hope may be misplaced.

A little over half of those going to Britain and Ireland said they planned to bring families to join them rather than to return home. Many of the remainder did not say they wanted to come back, only that they have yet to make up their minds.

“The next four or five years will be key,” said Iglicka. “We will see if all goes well or we face a bust.”

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