Almost all Polish municipalities are expected to see lower personal income tax revenues by 2060, while nearly half of local governments may have fewer than 5,000 residents, according to a report by Bank Gospodarstwa Krajowego (BGK), Demography and the Future of Local Government Finance in Poland. Demographic change will force municipalities to rethink investment, transport and public-service planning.
The share of Poland’s population above working age is projected to rise from 23.8% today to 35.5% by 2060. At the same time, the number of working-age residents is expected to decline across all types of local government units, putting pressure on local tax bases and budgets.
“Poland’s population will decline. According to every available forecast, the change will not be evenly distributed,” Mateusz Walewski, chief economist at BGK, told Newseria. “It will be much more severe in smaller towns and municipalities, and much less pronounced in medium-sized and larger cities. This may have a serious impact on the future structure of local government in Poland.”
The BGK report notes that demographic forecasts differ in scale but point in the same direction. Eurostat expects Poland’s population to fall to 31.2 million by 2060, while the United Nations projects 30.3 million and Statistics Poland’s baseline scenario forecasts 30.9 million residents.
The actual decline is already progressing faster than previously assumed. According to the report, Poland’s population in 2025 was nearly 80,000 lower than projections prepared by Statistics Poland only a few years earlier.
“In most Polish municipalities, the number of residents will decline for various reasons,” said Marcin Wojdat, Director of Research and Analysis at the Union of Polish Metropolises. “First, there will simply be fewer births. There will also be internal migration between municipalities, particularly from smaller municipalities to larger cities. The demographic structure will change, with more people above working age, both in small and large municipalities.”
According to Statistics Poland projections, the proportion of municipalities with fewer than 5,000 residents will rise from 29.2% in 2024 to 46.7% in 2060. Some municipalities may have fewer than 1,000 inhabitants.
At the same time, more than 95% of municipalities are expected to experience lower PIT revenues as the number of working residents declines. The smallest local governments are projected to lose the largest share of their working-age populations, further weakening their revenue and investment capacity.
“Many cities and municipalities, perhaps even all of them in Poland, will gradually have to adapt to managing population decline in a sensible way,” Walewski said. “That does not mean lower living standards, reduced production or impoverishment. It means that we need to adjust intelligently to demographic change.”
A declining population does not automatically mean proportionately lower public spending. BGK estimates that 23.8% of local governments’ current expenditure consists of costs that are difficult to adjust to demographic shifts, such as the maintenance of roads and other infrastructure.
The pressure is expected to be strongest in the smallest municipalities, where infrastructure and public-service costs will be spread across a shrinking population. In some of the smallest local governments, so-called fixed expenditure already accounts for more than 60% of current budgets.
The report expects the largest increase in per-capita current expenditure to affect the smallest rural and urban-rural municipalities, which are already struggling with population outflows and ageing communities.
“One of the tasks of local government today is to prepare for what a city or municipality will look like in 20 or 30 years,” Wojdat said. “When we build facilities that provide services for the youngest residents, such as nurseries or kindergartens, they should be designed in a way that allows them to serve, for example, as care homes for older people in 20 years.”
Demographic change is also likely to reshape the way cities and public infrastructure are designed. Demand for some education-related services may fall, while healthcare, elderly care and senior-focused services will become increasingly important.
Maintaining dispersed infrastructure and public transport will also become more difficult as the number of residents declines. By 2060, the populations of provincial capitals are projected to fall by 11.5%, while municipalities surrounding the largest cities are expected to lose an average of 3.1% of their residents. This suggests that suburbanisation will continue despite nationwide depopulation.
“A second thing we can do is consider spatial planning in a way that prevents cities from spreading too widely,” Wojdat said. “Cities should be planned around the idea of more compact space. When there are fewer of us in 20 years, delivering public services such as public transport within a smaller area will be simpler and cheaper. Older people should have those services closer to where they live, not farther away.”
The biggest losses are expected in the smallest municipalities. Local governments with up to 5,000 residents today are projected to lose the largest proportion of their populations and working-age residents. In some cases, the projected population decline exceeds 20%, potentially requiring the reorganisation of public services and local infrastructure.
Walewski argues that demographic change does not have to mean economic decline.
“Demographic change can be a development opportunity if we understand development as rising prosperity and improving living conditions,” he said. “From one perspective, we could even say that a stable or shrinking population may make it easier to meet people’s needs.”
Despite depopulation, the report says that Poland’s network of medium-sized and large urban centres will remain critical to the country’s social and economic development. Poland currently has 78 urban centres covering 103 cities, creating a polycentric development network rather than one centred on a single dominant metropolis.
However, maintaining the economic potential of smaller cities and municipalities, especially those located far from the largest agglomerations, will become increasingly difficult.
By 2060, 21.1% of Poland’s total wage bill is expected to be generated by residents of the largest cities, up by two percentage points from today. The growing concentration of jobs and income in major urban areas could further weaken smaller municipalities.
“Over the past 20 years, we have been focused on growth. We needed more schools and kindergartens,” Wojdat said. “We had access to EU funds that allowed us to catch up with Western cities. Now it will be very difficult to move to the second model of management that local governments need most today: managing the process of urban shrinkage and adapting municipal functions and public services to a declining population.”
Experts stress that demographic change will require not only adjustments to public services and infrastructure, but also changes in how local governments finance investments and current expenditure.
“Demographic challenges will change the way local governments finance their investments and spending, although it is difficult to say what the final model will look like,” Walewski said. “Our report is primarily analytical. We show the trends and risks, but we avoid highly specific recommendations because they are, to some extent, a political choice: whether we counter demographic change or adapt to it, and how.”
