Poland’s rapid economic growth over the past 20–30 years has been driven by a well-educated yet relatively inexpensive workforce. This advantage allowed Polish products and services to compete with Western counterparts based on price while maintaining, and sometimes even surpassing, their quality. However, this era is coming to an end. As Polish workers earn more, they must provide greater added value to sustain economic progress, while companies must compete with global brands for consumers.
The Challenge of a Changing Labor Market
“For years, Polish companies were accustomed to having cheap and easily available labor. That is no longer the case,” says Professor Witold Orłowski, Chief Economic Advisor at PwC and lecturer at the Vistula Academy of Finance and Business and the Warsaw University of Technology, in an interview with the Newseria news agency. “Demographic trends and labor market conditions, including near-zero unemployment, have made it necessary to actively seek qualified workers.”
He points out that while global companies have long emphasized the importance of skilled talent for business growth, many Polish firms have placed talent acquisition lower in their priority rankings. “This mindset must change,” he emphasizes. “Companies in Poland are beginning to understand that labor is no longer cheap, so it must generate maximum added value for Poland to remain competitive.”
The labor market today looks entirely different than when Poland joined the European Union 21 years ago—not to mention the early days of economic transformation. According to the Ministry of Family, Labor, and Social Policy, Poland’s unemployment rate in February 2024 stood at 5.5%, the highest in two years and slightly above economists’ expectations of 5.4%. However, this is still a significant improvement compared to February 2003, when the registered unemployment rate was 20.7%. Compared to other EU countries, Poland continues to enjoy one of the lowest unemployment rates, at 2.6% in January 2024, according to Eurostat—matched only by the Czech Republic.
Despite this, employment levels are declining. The last recorded annual employment growth was in July 2023. On the other hand, real wages continue to rise. In January 2024, salaries in companies increased by an average of 9.2% compared to a 5.3% inflation rate. This creates pressure on businesses: to charge more for their products and increase profit margins, they must offer more advanced products.
The Need for Global Expansion
“Companies must start becoming global players,” says Professor Orłowski. “For years, Polish firms took advantage of their role as subcontractors, largely waiting for orders from Western European clients. Many foreign company branches in Poland were established as suppliers for headquarters located elsewhere. That development model is now reaching its limits.”
According to Orłowski, globally competitive companies are those that can attract customers under their own brand, sell directly to end consumers, and continually innovate. “Polish companies must move beyond their subcontractor status and compete directly in global markets. More Polish firms are starting to do so, but many still have a long way to go.”
Deregulation: A Step, but Not Enough
For years, business owners have urged the government to reduce regulations and oversight to give them greater operational freedom. The current administration has responded by establishing a deregulation task force led by entrepreneur Rafał Brzoska, founder of InPost. On March 11, 2024, the government approved a deregulation bill aimed at reducing administrative burdens on businesses. The legislation proposes shortening the duration of planned inspections, replacing traditional paper leasing agreements with electronic equivalents, and introducing tax changes and clearer deadlines for administrative fines.
However, according to Professor Orłowski, deregulation alone is not enough to help businesses reach higher levels of innovation. “Most entrepreneurs in Poland primarily ask the government not to interfere. While deregulation is important, I believe we must also seek intelligent government support tailored to business needs.”
He highlights the need for a multi-stage transformation across enterprises, the labor market, and knowledge utilization. “Smart government support is essential—not through subsidies, but by creating efficient mechanisms such as fostering collaboration between academia and industry to drive innovation, supporting startups in securing funding, and helping them turn brilliant ideas into business successes.”
As Poland moves beyond its reliance on low labor costs, its economic future depends on innovation, global competitiveness, and smarter policy support. The challenge now is for businesses and policymakers to work together to build a high-value, knowledge-based economy that can thrive on the world stage.
