NBP: Labor demand weakens, slight increase in 12-month outlook

Quarterly employment forecasts worsened in all analyzed groups of companies, while survey data suggest that businesses do not expect the situation to worsen in the further horizon - the index of annual employment forecasts increased slightly, the National Bank of Poland (NBP) said on the basis of surveys among businesses conducted in March this year.

The slight intensification of the problem of vacancies, however, did not translate into an improvement in employment prospects. The value of the index of quarterly forecasts fell for the fifth time (to 15.2 percentage points from 17.5 percentage points, s.a.), and the deterioration of employment prospects took place in all analyzed groups of companies. However, the survey data suggest that companies do not anticipate a deterioration in the further horizon, with a slight increase in the annual employment outlook index (to 21.3 p.p. from 20.9 p.p., s.a.), according to the report, "NBP Quick Monitoring - analysis of the situation of the business sector.

The share of companies forecasting wage increases in the next quarter fell to 44% from 48% ( s.a.), and this change was widespread across all analyzed cross-sections. The share remained significantly higher than the multi-year average, it was also reported.

The high value of the indicator, compared to historical data, has persisted since the end of 2021. On the other hand, the percentage of companies anticipating an increase in salaries over the next year increased slightly (to 71.6% from 70.7%, s.a.), without deviating markedly from the values recorded in the previous few quarters, according to the report..

The average amount of planned wage increases declined to 7.9% from 8.2% ( s.a.), still remaining at a historically high level. The median of declared raises also decreased to 7% from 9%. In contrast, the value of the lower and upper quartiles of the distribution has remained stable since the beginning of 2022, it was also reported.

As a result, the share of companies forecasting wage increases in the next quarter declined and the average dynamics of planned wage increases decreased - while remaining high by historical standards. At the same time, the sharp increase in wages in Q1 2023 occurring in an environment of weakening economic activity translated, according to the companies surveyed, into a slight deterioration in the relationship between wage growth and labor productivity growth, the central bank concluded.

Source: NBP and ISBnews