Labor market loses momentum in September: employment falls and wage growth slows
The labor market is gradually losing momentum, but it’s hard to call it a slowdown—it’s more akin to a car coasting in neutral, where friction between the tires and the road does the work. In September, wages rose by 0.8% compared to August, seasonally adjusted, roughly the same rate as in the past four months. Meanwhile, employment declined by another 8,000 positions.
Labor market loses momentum in September: employment falls and wage growth slows
Annualized wage growth came in at 10.3% yoy, falling short of both consensus forecasts (11.1% yoy) and the August reading (11.3% yoy). Analysts had expected a stronger reading due to September's working-day pattern and scheduled mining bonus payments, which added about 0.3 percentage points to wage growth.
Despite this lower-than-expected result, the data doesn’t indicate a sharp deceleration in wages. Looking at seasonally adjusted figures, wage growth in the corporate sector has remained steady since May at slightly above 10% year-over-year. This double-digit growth is partially driven by significant minimum wage increases and lingering effects from the 2022-2023 inflationary period. While wages are gradually moderating, sustained single-digit growth isn’t expected until next year—too late to curb core inflation in Poland.
Wage growth momentum after seasonal adjustment, % yoy
* This statistic illustrates how much the annual wage growth would have been if the current monthly wage growth after seasonal adjustment had continued for a full year
Source: Pekao Research based on StatOffice via Macrobond
In September, employment in the enterprise sector declined by 8,000 FTEs, marking a 0.5% decrease compared to the same period last year. While this drop was expected, it underscores the ongoing weakness in the labor market. Since January, the business sector has shed 54,000 full-time jobs, largely due to Poland's sluggish recovery from last year's stagnation.
An excessive increase in the minimum wage may also have contributed to this decline, though we haven't yet seen a significant spike in layoffs or unemployment. Employment stabilization will likely depend on improved economic conditions in the Eurozone, which would, in turn, benefit Poland’s export industries. We anticipate this improvement to take place by mid-next year.
Employment in the enterprise sector, beginning of each year = 100
Source: Pekao Research based on StatOffice via Macrobond
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