Furniture industry warns of consequences of raising minimum wage – letter to the Prime Minister

The furniture industry is concerned about plans to raise the minimum wage. The National Chamber of Commerce of Furniture Manufacturers has written to Prime Minister Donald Tusk on this matter.

According to the latest government plans, the minimum wage is set to rise to 4666 PLN from the beginning of next year. Entrepreneurs from the furniture sector warn that another significant increase in the minimum wage will ultimately result in further loss of competitiveness of the furniture industry on international markets. It is worth noting that this sector is one of the driving forces of Polish exports. Until recently, Poland ranked first in Europe and second in the world on the list of largest furniture exporters. At the same time, our country occupied the sixth place in the ranking of furniture manufacturers worldwide. Unfortunately, last year’s results suggest that the ongoing loss of competitiveness will push Poland down in these rankings.

The contribution of the furniture industry to the Polish economy is evidenced by last year’s data. Despite not being the best period (the sector is still dealing with the crisis), in 2023 Polish entrepreneurs exported their products for a value exceeding 62 billion PLN, which allowed for a positive balance of foreign exchange in the furniture industry at a level of +47.5 billion PLN. The export activities of the furniture industry significantly improved the balance of payments of the Polish economy. It is also worth emphasizing that the value sold in relation to Polish GDP amounts to about 2.5%, which also allows for the leading position in the national industrial processing in terms of the balance of international exchange.

In recent years, an unstable geopolitical situation has resulted in a dramatic increase in the costs associated with the raw materials used in the production of furniture, electricity, and fuel, as well as with loans and leases. At the same time, the increase in the minimum wage over the past few years (the minimum wage has increased by 40 percent over the last two years) has made personnel costs the dominant cost component in furniture companies. The next increase in the minimum wage in such a short time will therefore have a very negative impact on the situation of companies in the furniture industry.

The Chamber draws attention to the fact that the current economic situation in the country, as well as abroad, is constantly undergoing significant transformations. Regulations in many areas are inadequate to the challenges facing the furniture industry. It emphasizes the importance of continuing actions that ensure the international competitiveness of the furniture sector, the financial liquidity of enterprises, and job protection. Over the past two years, furniture companies have been forced to reduce approximately 20,000 jobs, and this trend is continuing in 2024. 2023 was the first year in many where the number of companies involved in furniture production decreased. Approximately 800 entities disappeared from the market. The negative impact on the industry – where we are dealing with a large share of labor costs – was also influenced by the increase in minimum wage (an almost 50% increase in the last 3 years).

“One of the elements that allows us counteract the negative changes in the furniture industry is maintaining current regulations regarding the amount of the minimum wage. The furniture industry is currently struggling with a shortage of orders, which affects the entire economic situation of the entire industry, which will further deteriorate in view of the planned increase in minimum wages, both in terms of employment level and the entire business activity. The rules for operating companies on international markets are essentially independent of the type of industrial sector. Hence, my position is very likely in line with the positions of other private and public economic entities” – Piotr Wójcik, the Vice President of the National Chamber of Commerce of Furniture Manufacturers, argues in a letter to the Prime Minister.