Polish GDP would be much lower if not for workers from abroad. The challenge is to keep these people in Poland

My father and his sapper group need a car, two mine detectors, a drone and good binoculars”, reads a post on the Facebook group ‘Aid for Ukraine’. It stands out from other posts. Most concern requests from refugees looking for apartments, clothing, or work in Poland. Ever since the start of the Russian invasion, more than 3 million people have crossed the Polish-Ukrainian border. Most have stayed.
The war that broke out on 24 February accelerated the demographic processes that have been taking place in Poland for a few years now. “In the world history of migrations of the twentieth and the twenty-first centuries, Poland changed its status from an emigrating to a host country for immigrants the fastest. In the entire EU, Poland issues the highest number of permits for seasonal work to foreigners,” says Professor Maciej Duszczyk of Warsaw University.
On the official website of the European Union, we can read: “Compared to other European countries, Poland is very homogeneous in terms of nationality. It is estimated that no more than 3% of the total population is made up of national minorities.” These estimates are no longer valid. As shown by research ordered by the Union of Polish Metropolises, based on so-called geotrapping (a method of identifying the users of mobile phones staying at a given place at a given time), there are currently more than 3 million Ukrainians living in Poland. Those who fled the war joined people who had arrived in Poland earlier. There are also a few hundred thousand foreigners from other countries living in Poland. Based on these data, it can be concluded that foreigners make up approximately 10% of Polish society. Therefore, the image of Poland as a largely ethnically uniform country has changed rapidly for many reasons, not only because of the recent war.

The EU gambit

There were three major turning points in the process. The fundamental caesura was Poland’s accession to the European Union. On the one hand, it intensified the earlier economic emigration trend. Initially, Poles travelled for work to Great Britain and Ireland and later to other countries, as more labour markets opened their doors to newcomers – a total of more than 2 million people emigrated at the time. However, Poland’s accession meant an inflow of funds and triggered economic growth which translated into a quicker pace of catching up with the more affluent EU Member States. Owing to this, Poland became an attractive labour market for citizens of countries situated east of the EU.
The next essential turning point was 2014, when the first Russian invasion of Ukraine took place, namely the occupation of Crimea and the establishment of the Moscow-controlled separatist Luhansk and Donetsk republics. “After 2014, we witnessed a massive inflow of economic immigrants. Refugees did not arrive in Poland at the time, as they mostly relocated to other regions of Ukraine. The people who came to Poland were looking for work so that they could send income to their families back in Ukraine,” explains Andrzej Kubisiak of the Polish Economic Institute. It was possible to hire Ukrainians in Poland owing to a special procedure that was put in place. Apart from work permits, which required a lot of red tape, the option for foreigners to work on the basis of so-called declarations was implemented. This fast-track procedure allowed employers to offer six-month employment to citizens of the six countries comprising the Eastern Partnership of the EU, namely: Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova, and Ukraine. The largest number of people came to Poland from the latter country. Since then, the number of foreigners living in Poland has been on the rise. Based on statistics obtained from the Social Insurance Institution (ZUS), more and more foreign employees are hired under official employment contracts covering social security contributions. Between 2008 and March of this year, the number of foreigners who were subject to pension and disability allowance insurance registered with ZUS went up from 65,000 to 932,100, i.e., over 14 times. The share of Ukrainians in the overall number of ZUS-insured foreigners grew from 25% in December 2008 to 71.5% in March 2022.

Swelling GDP

These data show that up to 5% of the active workforce in Poland is made up of legally employed foreigners. According to the OECD, in 2018 Poland was already the largest labour market among the Member States that offered work to temporary workers from other countries. According to OECD estimates, there were 1.1 million temporary economic migrants from beyond the EU working in Poland at that time. This placed Poland first, followed by the USA (724,000 people) and Germany (458,000 people). “Legally employed foreigners have contributed to a 3% growth in Polish GDP, and this is a very cautious estimate that does not take into account those people working unofficially. Therefore, the contribution of foreigners to the development of the Polish economy is even greater,” says Credit Agricole Head Economist Jakub Borowski.
How many foreigners are working illegally in Poland? It is hard to say. The results of research ordered by the Union of Polish Metropolises demonstrate that in January 2022, before the war in Ukraine broke out, there were 1.5 million Ukrainians over the age of 15 living in Poland. Since the calculation is based on smartphone activity, one may assume that most of these people are working adults. At the same time, according to ZUS data, only 622,000 Ukrainians were legally employed during this period. As such, one could make the conservative assumption that there were at minimum just as many Ukrainians working in Poland, although they were not covered by ZUS statistics.
The growing number of foreigners is a lifeline for the Polish labour market and demographics, especially given the growing costs of a rapid ageing Polish society. Even before the pandemic, the number of deaths became permanently higher than the number of births, and the pandemic intensified this process. This is why there is a shortage of workers, and the number of older citizens keeps growing. The low unemployment rate is a consequence of this; there were more than 130,000 job openings on the Polish labour market in late 2021. Without foreigners, the Polish economy would be struggling somewhat rather than growing at a rate of over 5%.
Newcomers to Poland are also essential in terms of public finance and national budget receipts. “Given the assumption that employees covered by ZUS statistics earn the national average salary, the annual receipts under social insurance and taxes on their remuneration amount to PLN 30 billion, or more than 1% of GDP,” says Borowski. These figures should be adjusted by VAT receipts and excise taxes paid on products purchased by foreigners living in Poland.
At the beginning of the previous decade, when foreign workers were becoming acquainted with the Polish labour market, they would often find employment in menial jobs such as housekeeping, farming, gardening, or the construction sector. Frequently, they were not officially employed. Today, more and more foreigners find jobs in industry, the IT sector, and other more specialised fields. “We are now dealing with a case of dependence of some market sectors on Ukrainian employees, and the situation abroad is impacting the situation of different market sectors since some of the Ukrainians living in Poland have decided to return home,” Professor Duszczyk explains. The sectors in question include the construction and logistics industries. It is hard to establish how many Ukrainians left Poland to fight in the war, as many Polish employers granted their staff leave, so they are still accounted for in statistics.

Wartime Prosperity

The war marked another turning point for the Polish labour market. “After 24 February, in contrast to earlier migration waves, we are dealing with refugees who are primarily looking for safety rather than jobs. 93% of refugees are women and children in need of social services and education. They are, first and foremost, consumers and not workers,” says Andrzej Kubisiak of the Polish Economic Institute. However, the situation is rapidly changing. Poland is granting personal identification (PESEL) numbers to foreigners, which is not equivalent to granting citizenship, but it does enable foreigners to avail themselves of educational services, social allowances, and jobs. More than one million people have already taken advantage of the available opportunities.
“Over 100,000 of the 400,000 people of working age who obtained PESEL numbers have taken up employment, and that number is growing as we speak,” says Deputy Minister of Internal Affairs and Administration Paweł Szefernaker. The Polish central government, in collaboration with local government authorities and entrepreneurs, is working on yet another package of opportunities aimed at streamlining the employment of a higher number of foreigners.
The question is how many of those who arrived in Poland intend to stay here permanently. Much depends on when and on what terms the war ends. There is more to the problem, though. “What we lack is a strategic document concerning migration policy. The provisions in place today are scattered across different statutes and primarily address the needs of the labour market. Without a comprehensive strategy, one cannot begin to strategically consider integration, which is the real challenge,” Professor Duszczyk concludes. ©℗