Poland's labour market got chilly in February
In February, we saw an unexpectedly strong slowdown in wage growth to 7.9% yoy from 9.2% a month earlier. This is a very important sign for the prospects of Poland's economy, although one swallow does not make a summer. In addition, we learned about, as it turned out, the predictable employment reading, which fell by 0.9% yoy in February, similarly to January.
The average wage in the enterprise sector increased by 7.9% yoy in February, compared to an increase of 9.2% yoy in January. The reading a disappointment to the market consensus and our forecast (both 8.9%). Why such a strong surprise? It seems that the downward trend in wage growth is (finally) accelerating, so that it would converge towards inflation levels. The slowdown in February's wage growth was widely spread across many sections of the economy, but it was most visible in manufactuing and construction. Thus, in February we saw something we had not seen for a long time, namely the dynamics of wages very clearly reflecting the situation in a given economic section. Such an intuitive relationship has been quite disturbed in recent years by difficulties in finding well-qualified employees (which, by the way, is also the reason for the record scale of job hoarding in recent years). It seems that February was a breakthrough month in this respect: despite the persistently strong wage pressure and difficulties in finding new employees, entrepreneurs could not afford generous pay rises.
Today's reading puts our wages forecast for the current year in question - neither the forecast consensus nor we expected such a significant decline in wages in any month of this year. If such strong downward trends in wage growth continue, an 8 percent rate of wage growth in 2025 seems more likely than the 9 percent we currently forecast. Nevertheless, we are not revising our forecasts downwards yet, because one swallow does not make a summer, so one reading is not a sufficient basis for correcting the full-year forecast. However, a surprise of a similar scale next month would be a fully satisfactory argument for making such a move.
Decomposition of February change in wage growth compared to January (ppts SA)
Source: StatOffice, Pekao Research
Average employment in the enterprise sector fell by 0.9% yoy in February, compared to a 0.9% drop in January. This was no surprise to the consensus nor us. According to the StatOffice, the number of full-time positions fell by 3k compared to the previous month. Thus, we are starting 2025 as weakly as the previous two years. It should be expected that in the coming months the employment trajectory will be almost analogous to 2023-2024. Only the second half of the year and the investment recovery we forecast may change anything in this regard. Nevertheless, we believe that the chances of seeing positive employment growth rate in 2025 are close to zero.
Cumulative change in employment since January of a given year (thous. full-time positions)
Source: StatOffice, Pekao Research
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