Poland’s slowing economy

Set the eagle free

A star performer in Europe that should be doing even better

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A government that did little if anything to reform the country in its first 4 year stint is now attempting to do what it should have done at the very least from the summer of 2010. The reforms process is half hearted with massive resistance from the various lobbies, be they peasant farmers, trade unions or public bureaucrats. With respect to the latter, local government works reasonably well in Poland, with a 100% take up of available EU funding.

Its the central government administration and State owned companies eg the PKP railways, which maintain internal barriers to efficiency and prevent reform. PKP's take up of available EU funds is barely 4%!

Its enough to look at what happens when an infrastructure construction project needs to be built and accepted for useage by the public: one small pedestrian bridge over a dual carriage way in Warsaw took 2 years to build and a further 6 months to get all the approval permits, from multiple local and central government agencies! Poland's motorway construction is notorious for its chaotic delays where the contracting party is the GDDKiA, the State roads and motorways agency. Its only where private corporations (contracted by the Ministry of Transport) are responsible for the planning, contruction, delivery and revenue collection of a given toll-motorway that projects have been on time and to budget. A clear lesson to be learnt?

Privatisation of over 5000 State owned companies should help, but its the streamlining of the bureacracy which is likely to help the most. Poland reminds me all too often of the definition that "the bureacracy has the engine of a lawn mower and the brakes of a Rolls Royce", a thousand reasons to say NO!

Forlana in reply to mikeinwarsaw

Hi Mike, it is very well said and loved the definition of bureaucracy. As to the misfortunate pedestrian bridge over ulica Wawelska (which I do observe closely due to sentimental reasons: I attended the nearby high school, well, some time ago), it is really hard to understand, since in case of the last segments of A2 highway approaching Warsaw from the west, the same set of approval permits was obtained in one (1) week. Or maybe I am wrong, it is easy to understand: the government wants A2 ready in toto prior to soccer Euro to use from public relations reasons, while the pedestrain bridge used mainly by pupils and mothers and grandmas with prams and childen going to Pole Mokotowskie park does not carry that PR potential ;)


Is that truth that Poland grows because of EU money invested in infrastructure projects and construction and following growth in consum and industrial outpu (all this is not sustainable) and NOT because of especially competetive and growing exports (i.e sustainable growth). Can somebody provide us with data that shows how much growth is from exports and how much from EU financed construction-consume-locally sold industries and services?

Rixs in reply to TONI 209

Of course Poland is exporting something, but it is still one of the poorest countries in Europe, so either things they export are cheap or they don`t export enough. Question was - why is it growing?

TONI 209 in reply to Rixs

This "something is driving on the streets of Berlin (buses) or is vital part of the different machineries exported then from Germany to the world. The problem is: the label "Made in Poland" does not increase the value of the product, contrary to "Made in Germany".
Did you think about the simplest explanation of the problem, why Poland is growing?. The answer is: they are clever, hard-working and ambitious. Isn't it enough?

Rixs in reply to TONI 209

Numbers (statistics, indicators) please, that show by how much the things you mentioned contribute to Polands growth right now :) And actually I would like to see numbers that prove thath your mentioned things cause the growth.

Forlana in reply to Rixs

Yes Rixs, I am curious too. In Poland it is usually said - but I haven't seen the data, that all the funding we get from the EU translates into approx. 1 % of GDP growth. If you decide to check on your own 'how much growth is from exports and how much from EU financed construction-consume-locally sold industries and services?', please do share your numbers with us here.
Finally - I am not an economist but only a psychologist working with the former, so I may be of course wrong, nonetheless I don't think the growing exports is the only way of securing sustainable economical growth. At least not in a country which, as you correctly state, is still one of the poorest in EU.


Good to see an article from TE which does not smell of anti-Germanism. But that is probably only due to the fact that Poland was an ally of the UK during WW2.
Indeed, German-polish cooperation can be seen in every little German village where Polish workers do many of the agricultural jobs. And earn good money from that.
Many, many people from Poland work in German businesses and then bring the knowledge gained back to Poland. Many Germans are already working in Poland. So, excellent for everybody, except those harbouring the old complaints.
This is really win-win for Germany and Poland !

Jasiek w japonii

A constrained eagle may be slower than a free eagle (I don’t know, because the Soviet Union was much faster than the United States in the 1930s), but a free eagle is definitely slower than a ‘managed’ eagle.


Poles are open-minded and unbiased people who grabbed their chance.
Therefore Poland has been successful and Poland will be successful because they were accepting the help from Germany and not without reason most Poles speak German while in the rest of Europe the Germans and the German language have been discriminated.
I have no fear for Poland because Poland has with Germany an extremely reliable partner and ally.
The Polish-German relationship is a story of success and will stay a story of success.
Poland has immense ressources, excellent educated and above all unbiased young people:)

shaun39 in reply to Germanambassador

Quit the anti-German rhetoric.

Got something interesting to say? Like further discussion on one of the points raised? Or like links to interesting data on the pace of German investment, Polish trade integration, the effects of excessive regulation, etc?

Your tiresome and vulgar anti-German and anti-Europe trolling never seems to stop.

Germanambassador in reply to shaun39

Being regarded as born enemies by British , each Dutch and the whole of France, Germany has no chance for ever getting a respected nation on the same level as others Europeans.
Hatemongering is the most basic principle in each British family and school as well as in the Netherlands children since ever have been trained hating the the Germans the same way as it has been usual in Britain since ever.
In America a small group of the major hatemongers (mostly abusing German sounding names like the hatemongers of Murdoch) see their only destination in enforcing hatred and hostility against Germans.
It is a system wich is extremely with extreme money of their governments.
It has been easy blaming the Germans for anything and it is a pleasure for sick nations accusing Germany for anything.
So there is nothing new.
Same procedure as Germans are dealing over centuries.
I support the education of hatred and discrimination of Germans in Western Europe because only this way Germans will find out how much they are hated condescended.
So please enforce your campaigns of hatred:)

Afrikaner211 in reply to Germanambassador

Having in mind the tragic history of the Polish-German relations,
I´m impressed with the radical change in the attitude of Poles, in particular younger generations, toward Germany.
I travel to Poland at least once a year and my impression is that
the traditional hosility of Poles toward Germans has practically disapeared and the economic, political and even social relations between two countries are booming.
On the other hand the latest macroeconomic statistical data in Poland are quite impressive; in particular public deficit and debt ratio.

Afrikaner211 in reply to Germanambassador

Nowadays, surprisingly enough, the anti-german feelings are growing in countries like Spain where I live.
It´s surprising because Spain traditionally has been close ally
and important partner for Germany.
However, the current rise of anti-german feelings is mainly due
to economic reasons.
Spaniards tend to blame Germany for all the austerity measures
imposed by Merkel government and they feel Germany should do more to help them to overcome the mess they are in.
I don´t agree with those Spaniards who refuse to recognize that they are in trouble due to their own irresponsability spending
much more during years they could afford.

Indeed Poland is a successful and open-minded country.
And Poland is an excellent example how people can overcome bias, stereotypes and hostility.
And it is true that social relations are booming very well.
The very same you will find in Russia , the Czchech Republic and in all countries in the East of Germany.
But you should not forget that most people there speak German and it is a matter of fact that people get by learning a foreign language a deep insight ad understanding of foreign people and their culture.
May be in Spain and other countries it is quite easy putting the blame for their situation on theGermans who should pay their debts.


i have listened to the online version of this article and new things drew my attention that i have missed when reading this rather superficial article.
1. bond rates are only slightly lower than Italy's or Spain's, but much higher than those of the very close neighbor, is there a carry trade going on?
2. legal and accounting services are expensive, so there's room for the new entrants to move in as professions open up
3. land privatization is too slow to some, but real estate (agricultural) law is there to protect not only investors and middlemen, but also current tenants that may not want to be neighbors to absentee or revolving door owners that so often has lead to bubbles the world over, Poles will be smart to look to Germany and Russia for examples of land reform/privatization rather than infamous 6+% bond issuers in the Euro area


Terrible article...

According to eurostat the unemployment rate is 10%...

The stadium was built by Alpine bau together with PBG... so Austrians and Poles, not German and Poles...

Regarding the sick claims please put google in use cause average hours worked per year are much higher in Poland than in most EU countries...

I totally agree that further reforms are needed but this article is a joke and fails to really point what is necessary...

wszycho in reply to greatmongo

Work efficiency greatly increased in recent years in Poland, similarly average working hours. If you are seeking job in Poland the very first thing you hear during the interview with you prospective employer is the precondition that you must agree to work fifty, sixty or even more hours a week and that you will declare never to object to such breach of labour code. The situation described in the article was true about Poland many years ago, now it things are diametrically different.


Development of country's economy is a result of collective human development in a society in question. So it is not about competing economies, it is about competing societies and which one of them can create the best, balanced environment for scientific, human and in consequence economic development in broader sense. So it is not simply about copying western patterns. It is about people working together and trusting each other in other to create better living conditions for themselves. The only problem is, that it's quite subjective and hence not measurable as easily as economic growth.


The Economist wrote: "Polands unemployment rate is 13%"

Yes, but lets not forget that unemployment is measured differently in Poland than it is in the EU. According to the Polish calculation method our unemployment is just above 13% BUT ACCORDING TO EUROSTAT, THE EU STATISTICAL AGENCY OUR UNEMPLOYMENT RATE FOR MARCH 2012 IS 10.1% - not 13%. 10.1% means we have lower unemployment than the eu-27 and lower unemployment than the euro-17. It boils down to a different method of calculation.

In Poland anybody who walks into a job centre and signs up as unemployed is considered unemployed for the purposes of measuring unemployment. The trouble is that many of these people are registering only because they get free health insurance whilst being unemployed. This makes our unemployment rate appear higher than it actually is because:
* single mothers with children who hence cannot work are part of the unemployment rate - in most countries they would not count as they would simply live off state benefits which in Poland dont exist;
* people who do not want to work at all register so that they get free health insurance;
* people who work for "cash in hand" register to get unemployment insurance even though they already work;
* people with various light disabilities register because in Poland a disability does not entitle you to benefits, you can qualify only if you are unable to do any job whatsoever in any field;
* people who work in cicles, for examples builders who cannot work during the winter because of the cold weather register to get temporary benefits during the winter period even though they will be back at work once the winter passes;
* this list can go on and on.

Since the eu measures unemployment differently, and then adjusts it sesonally, the rates are completely different.

The economist wrote: "public debt may fall to 55% of GDP"

Public debt never crossed the 55% mark. It was below 55% in 2011 and will fall to around 53% in 2012. Again this boils down to a different method of calculating public debt. The eu statistical bodies reported our debt at about 56% for 2011 whilst our statistical body, GUS, reported it below 55%. This difference is caused by the fact that the road building fund is not considered as debt for the purposes of calculating debt by GUS and for the very good reason that many roads are toll roads which will paythemselves back.

I do find it really really strange that The Economist uses the "Polish method" of calculating "unemployment," which makes it appear very high compared to european rates, BUT THEN JUMPS to the "European method" of calculating "debt," which again makes it unusually high. You should know that two quantities can only be compared only if they are expressed in the same units.

No matter how slow our economy may grow, it will still grow much faster than most other European countries, this has been so for the last 20 years, and will be so for some time to come.

hard-bitten in reply to ChrisFrance

Polish economy is still growing faster than in other European countries because is very backward and uncompetitive.So, there is no reason to rejoice.We are still trying to catch up with the more developed countries and as a result we are still in almost every area at the end of the pack.

marc5 in reply to ChrisFrance

Is your name Jacek Rostowski or maybe you are one of the former Greece’s financial ministers. I can see you have a great knowledge about creative accounting. How can one say that if you are unemployed for a winter time you are really employed? I mean this is absurd. Also, do you imply that working for “cash in hand” is normal and as such should be excluded from unemployment rate? This is pathology, while always exists in any economy, in Poland is on a mass scale because every government since 1990 failed to reform the public finances and reduce the employment costs. Employers prefer hire for “cash in hand” because it turns out much cheaper for them. As a result taxes are not being paid, retirement contributions are not being paid and medical insurance is not being paid. Now please tell me how much government lose on this and how much it will really cost in the long term? It almost looks like all polish economical pathologies you want to sweep under carpet.
What about 1-1.5 million of young people who left Poland to seek employment opportunities in UK, Ireland or Scandinavian countries? Vast majority of them still send money home which stimulates a lot of domestic spending. Somehow many politicians forget about it. If those people come back what unemployment rate would than be? Poland lost a lot of young and creative people not to mention huge impact it has in, now existing also in Poland, ageing population problem.
Also you say that those who do not want to work should not account into the unemployment figure – only comment which comes to my head right now is wow……
In regards to roads do you really think that that road building fund should be excluded from the debt calculation in hope for future pay flows? That is crazy! It is like saying that I buy investment property but loan I have taken I do not include into my liabilities side because I will charge rent for it which eventually will pay my mortgage off. Good luck in getting loan with such an attitude.

Jasiek w japonii

Not everything should be deregulated or privatised. What could be considered as lifelines in a broad sense must be well ‘socialised’. (That doesn’t mean socialist economy). It is mainly red tape that the economy should tackle to make its business environment friendly and unrestrained to small- and medium-sized enterprises at home while restrained to large-scale private corporations at home and all businesses abroad at the same time. Large-scale private corporations (including banks) and imported goods suppliers tend to help increase savings faster than household consumption at home due to their higher labour productivities, i.e. lower labour’s relative shares, than SMEs’. When savings outrun household consumption, the economy has either to suffer high structural unemployment or to take to what you call beggar-thy-neighbour policy either by increasing net export or by low-interest rate policy, neither of which materialises a sustainable growth in national income. Among large-scale private corporations and imported goods suppliers, those which could remain profitable with the restrictive business environment should be entitled to survive.

The above framework would be relatively easy to carry out if Poland were a closed system. Now that Poland is an open system incorporated into the Pan-European free trade system and the global free financial system with the floating exchange rate system, the above framework is extremely difficult without a Pan-European system of income transfer. As Poland is in the floating exchange rate system, the problem arises in the form of heavy exchange-rate fluctuations. If Poland were in the euro area right now, the lack of the above framework would result in a sudden increase in borrowing costs as currently observed in what you call PIIGS states.

It is the idea of Pan-European system of income transfer, in the form of international clearing union as the first step and fiscal union as the second, that the Germans should accept to secure Europe's balanced income growth. I am happy that the Merkozy axis, axis of austerity, failed.

jwojcie in reply to greatmongo

Well, it seems to me that "Jasiek w japonii" don't know the golden rule of any useless forum made for ads money in this universe of internet: NO ONE (almost) reads long posts... even less people care. Btw. probably that is the reason Twitter was so great success.
I must say though that "Jasiek w japonii" sometimes writes something interesting, but I really have to be bored to read it to the end... I wonder, "Jasiek w japonii" means "Johny in Japan"? Well, some haiku about Polish economy would be a nice change ;)
Hm... those are one of my first really..:
The Eagle saw an envelope
What should I do he thought
TI is gone no one is loking!
[commercial brake]
Zloty floats
Eagle flies
PIIGS... [not very funny rhythm indeed...]
err... yes I'm drunk... sorry :-)


Half a year ago Transparency International ended its mission in Poland, there's no such thing as "TI" in Poland, this worldwide organization which fights against corroption (even in such countries as Ukraine and Belorussia) had to flee Poland in November 2011. No wonder that Polish economy is slowing when those forces which prefer to act clandestinely in Polish economy succeeded in getting rid of Transparency International from Poland.

greg_not_so in reply to wszycho


maybe, TI is as German as it is Polish, having its HQ some 60km from the "border"?
low "costs at its doorstep" sums it all up for me as you can hardly lower your logistic costs below that.

wszycho in reply to greg_not_so

... the only problem being that Germany is one of the best organized countries in the world, Germany's problems with corruption are COMPLETELY different from those in Poland! Things which are still commonplace in the post-communist Poland are simply unthinkable in Germany as far as the problems of corruption are concerned. German officers working in TI might simply be unaware of the bulk and scope of corruption in Poland, they may well exclude things actually taking place in Poland because it will be incompatible with their standads and even imagination (there would even be more sense to counteract corruption in Poland via TI's branch in the Czech Republic or Ukraine, since these countries are at the similar level of economic developement, broadly speaking - sic!). Another thing is the translators and bureaucracy which delay procedures and raise the costs of the process of investigation of corruption cases. Distance is another problem; I wonder why you counted the distance from the border? Shouldn't the distance be counted from Warsaw, i.e. the capital of Poland? Do you mean to undermine the whole notion of the Polish Statehood? I checked all the countries neighbouring Poland and they all have their own national headquarters of TI! Poland is the only country in this region which is devoid of the presence of Transparency International on its territory! Why? Because it is so minute a country that only Spain, France, Germany, Italy and UK are bigger? Or maybe bacause Poland is a corruption-free state? (sorry for the sad joke here). Even all the Scandinavian states have their TI branches on their territories. Here are parts of the addresses of TI's agencies in Central Europe (only the names of the streets, the rest you can easily find in the Internet): Chech Republic - Sokolovska 260/143 (the Czechs are so far away from Germany, aren't they?), Slovakia - Bajkalska 25, Ukraine - Egorova 17 (Kirovograd), Belarus - Levkova Str. 15-113, Lithuania - Didzioji str. 15-311, Russia - Nikoloyamskaya ul.6, Poland - ????????! I'm afraid logistic costs have nothing to do with the Polish elite's evident unwillingness to allow TI to resume its operation in Poland.

jwojcie in reply to wszycho

Maybe TI closed its branch in Poland because its previous head get involved into politics and instead of doing what she supposed all she did was talking talking and more talking? Maybe it just turn out that TI is organization for talkers not doers with great PR? I mean, did TI really influenced anything anywhere except making shows with some useless statistics? Maybe it is a little bit unfair opinion, but it seems to me that in some point of time TI in Poland became trampoline for personal careers for some people not a NPO organization which it suppose to be. Maybe they just need some fresh start in Poland.

wszycho in reply to jwojcie

I don't know much about this organization nor about the ways/procedures to fight against corruption. I get angry, however, each time I hear Polish politicians criticizing Russia, Belarus, Ukraine for corruption whereas things are even worse in Poland itself. Even if TI can do nothing but talk, talk, talk, still what they talk about is important and good as they invariably talk about the same corruption and this is something which is greatly desired in today's Poland. Poland desperately needs a different climate as far as corruption is concerned, Poles need to end thinking corruption-wise, which they still do, at least the highest political elites. It would be much more difficult to set up another corruption scandal in Poland if the media were full of talkings about the fight with corruption, even discussing it might become easier. In reality, TI did prove to be merely a springboard for one woman to start her political career - that is entirely thrue.

Flying Oko in reply to wszycho

Wszycho - "Corruption in Poland is even worse than in Russia, Belarus or Ukraine"? You are either unobservant, naive, or you are politically motivated. Pop across the border into any of those countries and you will clearly see an entirely different league of corruption.

Silly talk like this undermines Poland's performance as an economy attractive to foreign direct investment.

Corruption in Poland reached a high-water mark (according to Transparency International) in 2005 (the survey covered the last year of Leszek Miller's watch). Since then, with a nod towards the Kaczynski twins who turned the situation around and pointed it in the right direction, each year Poland's position in the global Corruption Perception Index has improved.

wszycho in reply to Flying Oko

Please show me where I wrote "Corruption in Poland is even worse than in Russia, Belarus or Ukraine", where? True, I wrote that "things are even worse in Poland itself" in this sense that Poland got rid of 'TI' on its territory and all those countries cared at least about the appearances and maintained this organization. Judging things from this perspective that Poland is hostile to "Transparency Intl" you can even say the words you imputed me (I can't find where from you are citing me, I don't remember shaving said something like this anywhere). I may be naive and unobservant (?), but not politically motivated. What I mean all the time is only this: let the Tusk government resume this organization in Poland, Sweden has it, Greece has it, Ukraine has it, why Poland can't, why? Corruption is something on which in the long run everybody will lose, and what we have in Poland now may be just some murky world of fishy business contracts, why not shed more trasparency on these suspicious operations? Don't try to convince me that Transparency International will contribute to the growth of corruption in Poland.

wszycho in reply to greatmongo

Oh yeah! Especially since they got rid of Transparency International from Poland it is both less corruption in Poland and also it must certainly be easier to compare these things with those countries which allowed TI to continue its operation on their territories, only now when Poland decided that TI was useless can one compare Poland with other countries. It would be equally logical to break a thermometer when you realize that you might have a fever. Now that the thermometer is broken and you can't measure the body temperature you can't have a fever, can you?

jwojcie in reply to wszycho

man... you are just getting ridiculous... In one sentence you are saying you are not know much about TI in PL and in the second you say Poland somehow get rid of them... get you story straight bro..
No one get rid of them, there was TI own decision to close the bussiness here.. find out why first before you start to make it a marker of Polish corruption

wszycho in reply to jwojcie

Sir, what I say in one sentence is this: there was TI in Poland and now there isn't TI in Poland, there were TI agencies in Sweden, Ukraine, Greece (my choice of these three countries is representative of different kind and degree of corruption in each of them) and there still ARE Transparency International agencies in Sweden, Ukraine and Greece.



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