Will unemployment fall below 2022% in 5?

Our GDP is already at a higher level than it was before the pandemic, and unemployment is only just starting to process its growth during the pandemic. Currently, it is 5,8%, but is it likely to fall below 5% next year?

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

The unemployment rate in Poland

Registered unemployment in Poland remains at a higher level than before the pandemic. According to the data of the Ministry of Family and Social Policy, in August the unemployment rate was 5,8 percent, while in August 2019 it was 5,2 percent. In October 2019, it reached a record low of 5 percent. and in the following months it grew. Due to seasonality, unemployment in Poland usually decreases from March to October and increases from November to February. It therefore seems that if the next lockdown does not happen, unemployment should decrease for another two months.

It is also possible that due to the record economic growth (CBA for the second quarter of 2021, it increased by 11,1 percent. year on year at constant prices), the increase in unemployment in winter will be lower than usual. As a result, one of the possible scenarios is a drop in unemployment in 2022 to the level of 5%. or even breaking through that barrier. This scenario is supported by the improving situation on the labor market, which is reflected in the very high number of job offers reported by employment agencies and advertising portals.

Employment growth

Industrial companies are slowly recovering to pre-pandemic employment levels, and high cumulative industrial demand is driving investment, which is associated with increasing employment. The situation is worse in services, where the demand is lower. However, this is not visible in the employment statistics of the Central Statistical Office (GUS) (BAEL survey), according to which in the first quarter of 2021 we were dealing with a record level of employment in the service sector - 9,74 million people. It can therefore be seen that, despite the more negative impact of the pandemic on the services sector, it did not stop the general trend of a steady increase in the percentage share of services in the employment structure.

It should be mentioned that the economic dependencies between economic growth and the level of unemployment are more complicated and depend on the moment of the economic cycle at which they occur. However, in the aftermath of a pandemic with high economic growth, there is no doubt that unemployment will decline.

What do the Central Statistical Office data say?

We should remember that GUS data on unemployment are well suited for analyzing national trends in unemployment, and for the analysis between individual countries, we need to use uniform Eurostat indicators. According to these data, at the end of July, unemployment in Poland was 3,4 percent. and we were the fourth country with the lowest unemployment in the EU (average 6,9%). It is worth noting that two months ago the methodology of this survey was revised (the flow of about 35 people from the economically inactive to the unemployed), which caused the reported number of unemployed in Poland to increase and we ceased to be the country with the lowest unemployment in the EU.

Whether unemployment will drop below the record 5 percent next year, according to the GUS methodology, remains an open question. Its decline will certainly be influenced by a very good economic situation, especially in industry. The situation on the labor market in the coming months may also translate into the level of inflation. Because problems with finding employees, resulting from low unemployment, may additionally increase the pressure on wage growth.