Poland: Negative symptoms in the labor market are intensifying

The Labor Market Index (Wskaźnik Rynku Pracy-WRP), which provides advance information on future changes in the size of unemployment, rose by 0.3 points in October. Excluding the slight correction recorded in June this year, the value of the index has been rising since the beginning of this year, albeit at different rates. It has increased by 4 points since December 2023. Nonetheless, there is no change in the registered unemployment rate, while the BAEL unemployment rate reached a record low of 2.7% at the end of June 2024. However, negative phenomena have been noticeable in the labor market over the past year, such as the low supply of new jobs, low employment opportunities for the unemployed and the significant depreciation of their qualifications, as well as the growing phenomenon of layoffs for reasons attributable to workplaces.

Despite these negative phenomena, it is difficult to expect an increase in the unemployment rate, mainly due to demographic reasons and a shrinking labor pool.

Currently, as was the case a month ago, only two components of the index are acting in the direction of decreasing its value, and thus foreshadowing a decline in the registered unemployment rate. In contrast, five components predict an increase in the value of the index and thus a worsening of the market situation.

In the direction of a decrease in the value of the index, the most influential are changes in the values of variables depicting the basic streams in the labor market: the number of people registering as unemployed and de-registration from the labor office due to taking up employment. In the first case, there was a nearly 8% decline on a monthly basis. In the second case, there was a nearly 8% increase in September compared to August. Interestingly, the increase in the outflow from unemployment to employment occurred despite a downward revision in the number of newly published job offers at labor offices (by about 3%). There are consistently more job offers published than unemployed people who deregister from the office due to taking up employment. In turn, a lower inflow into unemployment should translate into a lower unemployment rate, but if we take into account the relatively low level of employability of unemployed people registered at labor offices on average, the likelihood of matching job offers is relatively low.

More disturbing information comes from a comparison of data on the number of people registered as having been laid off for company reasons. This is a value that is a signal indication of the difficulties of business operations. Although the changes are even creeping, and the total number of such registered unemployed is small (just over 30,000 people), it increased by more than 11% from April to September.

Similarly negative signals are coming from data on the amount of unemployment benefits paid out. Initially, the increases were small and coincided with the valorization of the benefit amount, but they continue to take on a fairly high level. In September, compared to August, a total of 4% more benefits were paid (the total amount of benefits paid), and since April this increase has been more than 25%.

A rather cautious outlook for employment is consistently indicated by the results of the GUS's economic survey. The negative balance of responses to the question about changes in the number of employees still prevails. Managers of industrial enterprises are more likely to announce plans to reduce the number of employees than new hires. The overall financial assessment of industrial enterprises remains unchanged, negative.

Source: BIEC