Why are Polish wages low?

Polish wages are lower than the EU

Polish wages are not on par with EU average wages. Why is this so? Poland has been free from communism for over 20 years and part of the EU for over 7. Why does someone only a few hundred miles away in Austria, Germany or Sweden get paid many times more than workers with comparable skills in Poland?

It is changing but I know many educated Poles with low wages. On one hand, if you want to start a business it is a good place as wage levels are low. Start a business in Poland and you can be rich and employ cheap labor with good skills.  However, but on the other hand for the average Pole it is harder to live.

I am a capitalist and economist and in a free market, which the EU is, this should not exist unless there is some market distortion. There could be an argument that the lack of capital that causes this but in my view it is more a distortion of the market lets look at why.

Why wages are low in Poland

Here are the three reasons why Poles earn less.

  1. excess government drains resources of the people
  2. lack of capital to generate enough labor demand
  3. bosses have an Eastern European business acumen.

Poland’s government is still not free

The main reason is the government controls too much, the system is weighted down by laws, ZUS, lack of transparency, corruption, high pension for government workers that they could never get in the private sector, early retirement for government workers etc. The country is socialist country. There is a huge tax on the productive. The government wants to change but it is still a long way from transparency. Bribes must still occur in government because the things I see just do not make sense.

  • I would pass a law like Norway did that if you are caught in a lie or a bride, you lose your future pension for life. In one day it stopped corruption.
  • I would privatize everything and model it on a libertarian system of government. Let the markets work and reduce the weight of government offices.
  • Increase taxes on tobacco, drinking etc 2000%.  Save money on health care, while generating money for things like hosptials. Greece use to be one of the unhealthiest countries and they did this and over night statistics changed and it became one of the healthiest. There are a lot of people living off the system and drinking and smoking their life a way. It is unfair for the productive.
  • I have many other progressive ideas for Poland that is the beyond the scope of this post.

Government controls and offices still have too much power. Government sector workers seems to be richer in many ways than private sector workers.  Some how things to do not add up.

Lack of capital and developed money markets

The Polish economy had no crisis and is hot. It is exporting to Germany and the world and there is a world of opportunity for business. Capital is coming in from everywhere. I do not think there is a capital shortage in Poland. It is a golden opportunity for those who see it.

Polish business owners

I personally think it is because many Polish owners are greedy and do not play by the same rules as in the west. A great example is Polish real estate prices are distorted to the point it is twice that of Berlin for example. Markets are not competitive and business owners know this. They manipulate the system and keep wages low.

I see a large difference between rich and poor.  Bosses have much more and flaunt it as new rich do.  I see those who have power able to work the government system, legally and maybe even illegally to their own advantage. On the surface the old ways of socialism has been removed. But the reality is there is a lot of red tape and bureaucracy still that needs to be overcome in Poland.

Tea party movement in Poland

Poland needs to wake up and even a tea party movement to liberate it from the burden of government.  When markets are free middle class wages rise. When a country is socialistic, everyone is poorer except those in control.

I have personally had many roadblock in government. I tried to do the honest good thing.  Fat cat bureaucrats are too entrenched.  I would say at the top and in Poland in general people are responsive and very aware of these things. I did get a response when I pushed an issue high enough, but low down it was hard.

Hence, why are Polish wages so low? Excess government. It drains the economic life out of people. But the good news is I love living in Poland and things are nice here. If I sound like I am complaining I am not. I do the same about the USA government and its excesses because I am more of a libertarian Adam Smith free market economist.

 

11 Replies to “Why are Polish wages low?”

  1. I guess it comes down to this, if the price of a shoe is the same in the UK and Poland in the shop but the worker gets paid 1/3 less in Poland, who is making more money?

  2. Yesterday, I bought a pair of Hi-Tech (Australian brand made in Indonesia) hiking boots from a large store in Częstochowa.

    I chose this brand because I have purchased them in Australia twice before.

    What amazed me is that I paid PLN299.00 for the pair whereas the identical pair in Australia is currently AU$260.00 off the shelf in a department store.

    Today’s PLN/AU exchange is 3.6 to 1. So, in equivalent terms, the shoes should have been more than PLN1000-. WTF!

    It is clearly a case of manufacturers charging what a given market will bear.

    1. I have found the same thing. Somethings are cheaper based on supply and demand. Poles can not afford as much plus every cost going into bringing a product to market is hire in a developed coountry as sales associates and managers etc get paid more.
      However, Poland does have 22% VAT which hikes the price. Plus markets are not as well developed and therefore, supply might not be as competitive.
      Generally I think now prices are normalizing between Poland and other countries. It is comming to be about the same cost of living.
      After living in Poland for almost ten years, I am living in Florida for about the same price. I could argue Poland is cheaper or the USA is cheaper depending on how I feel.

      This is similar to the job market. I mean in Krakow, there are more jobs than Florida, yet on the other hand you get paid in dollars here. I think Poland is like living in Maine. Cold weather, nice life, economy doing OK but it is not what you will make in NYC. Yes on the other hand Poland is a special place in many othter ways.

      1. It is common practice in Poland to quote prices ‘netto’ instead of ‘brutto’, including wages!

        For example, if you see a job advertised with a monthly salary of PLN2500- and discover later that it actually subject to tax, then you will find that it rapidly dwindles to PLN1800, which would be kind of difficult to live on in Karakow for instance.

        It gets a tiresome to see something quoted as PLN1000- when it is actually PLN1230- because of the 23% Polish VAT that basically everyone must pay.

        If you are coming to Poland, watch out for this trap on big purchases like a car. For example, the PLN102.000- advertised car that I bought ended up costing PLN127.000- because of VAT.

        Moral: Always get the BRUTTO price when buying and selling! 🙂

        1. Good advice again, it is netto or in your hand. For people from the west it is confusing. I like the quote net as it is actual take home pay you get in the bank each month.

  3. You have created an excelent website for the subject matter Mark, thank you very much for all the information you provide, wish you all the best.

    Regards, Bob.

  4. Hi,
    I am an expat.Pole living in Australia.

    Visiting Poland I stay in modest Hotels,I find them dearer than In Germany,yet the wages are so low.I piety the average worker and elderly retired people,how can they live on such low income?
    Best wishes,Juliusz

    1. Again, if you are talking a retired person or unskilled worker wages are low. But the same is in the USA. But if you are a skilled worker, you can get as rich or more, than the west.

  5. I am really surprised why the EU has not introduced a minimum wage for the EU countries? The migration would have ended and all prejudice would have stopped. Polish people are still living in pretty poor conditions. The minimum wage in Poland is around 3€ per hour. Shocking

  6. I can really see how privatizing everything is going to help the poles with little money in the first place.

    1. Puts the incentive back into the people who own and want to own rather than government payouts and ineffciency. I teach economics and I would like you to try to convince me taxes and government is the way to property.

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