Ukraine’s economic growth may spell trouble for Poland

Could the two million Ukrainian migrants powering Poland’s economy head home or to Germany?

A tram rides through the centre of Warsaw
A tram rides through the centre of Warsaw, Poland, a country where nearly two million Ukrainian migrants arrived since 2014 [File: Kacper Pempel/Reuters]

Warsaw, Poland – In recent years Poland has overseen one of the largest waves of migration in Europe. In 2018 it took in more workers from outside the European Union than any other country – mostly from Ukraine. The worry now is that they could turn back, or move on to Germany.

Nearly two million Ukrainian migrants have arrived in Poland since 2014. Many escaped their fledgeling economy and the war in Ukraine’s east.

Since then they have created 11 percent of Poland’s gross domestic product or GDP growth, according to the National Bank of Poland. Ukrainians have been crucial to plugging the labour gap as Poland faced its lowest unemployment in almost 30 years last year.

Yet now some fear that the tide could turn.

On March 1, Germany loosened its immigration rules to attract skilled workers from outside the EU. Yet while interest in Germany is growing, significant barriers for Ukrainian workers could slow the outflow.

More worryingly for Polish firms, Ukraine’s economy is bouncing back, with real growth at 3 percent in 2019, according to International Monetary Fund (IMF) forecasts. With falling unemployment, now at 9.3 percent, Ukrainian firms are seeking workers.

“They are beginning to feel as though their labour market has been drained,” according to Andrzej Kubisiak, a labour market expert at the Polish Economic Institute, a think tank.

Wages have been rising by 16 percent year on year, while inflation has slowed to 4.1 percent. As the Ukrainian hryvnia appreciates, earnings in Polish zloty are worth less.

As a result, interest in Poland, the Czech Republic and Russia has weakened, according to the National Bank of Ukraine’s January report.

Yet experts reassure that the changes will not be sweeping. The “guest worker” model in Poland is evolving, as many Ukrainians move into higher-paid sectors and stay for longer.

Germans cast their nets wider

As of 1 March 2020, Germany has introduced the new Skilled Immigration Act for qualified workers from outside of the EU, raising concerns in Poland that Ukrainian migrants may want to go further westward.

With a shrinking pool of workers and a greying population, Germany is facing a shortfall of more than a million skilled labourers. To remedy this, the new rules waive the previous requirement of having a university or college degree and extend permission to a wider number of sectors.

Polish employers worry that German jobs could prove more lucrative for Ukrainian workers – in a recent survey 70 percent of Ukrainians said that higher pay would be the main draw, according to the Polish-Ukrainian Chamber of Commerce.

A poll by EWL recruitment agency finds that a third of Ukrainians living in Poland are considering moving to Germany. Moreover, in an earlier report, Poland’s central bank estimated that the number of Ukrainian workers leaving Poland for Germany could reach 25 percent by 2024.

Yet such fears are likely to be overblown. The migrant scheme in Germany earmarks workers who have vocational qualifications and speak good German – criteria which only 2.6 percent of Ukrainians working in Poland would meet, found a new study.

According to Krzysztof Inglot, head of Personnel Service, a Polish recruitment agency, the German labour market opening could only become worrisome if it expanded to the low-skill construction and industrial sectors. “We could then be looking at some 200,000 [non-EU] workers who will choose Germany over Poland.”

Is it enough to bring them home?

Just outside Warsaw, the new Delphi Technologies electronics plant churns out car parts for producers across Europe. Since opening in September last year the company has been looking to fill at least 1,000 positions. Many workers came from Ukraine.

Vasyl Prysiazhnyk works twelve-hour shifts as a machine operator. “Three years ago there was no work in Ukraine,” he told Al Jazeera. He will return when conditions improve. For now, his friends back home warn him that “the situation is not yet stable enough.”

A general view of Warsaw city
Ukranian migrant Vasyl Prysiazhnyk works twelve-hour shifts as a machine operator in Poland [Courtesy: Vasyl Prysiazhnyk]

Down the line, Lesia Korotchenko focuses on soldering bits to steering panels for hybrid electric cars. She also came to Poland three years ago, initially to work at a meat-processing plant, but switched to packaging, and finally to a better-paid electronics production job.

Korotchenko is not eager to leave. “Compared to Ukraine, everything is better here,” she says, musing about how she would soon bring her son to Poland.

Meanwhile, Natalia Baidyk, a 35-year old from Poltava in Ukraine manages fuel-pump production. A number of factors keep her from returning home: “First, wages need to grow further”. Next, she would like social services to improve, and third, for the political situation to stabilise.

A general view of Warsaw city
Ukrainian migrant Natalia Baidyk came to work in Poland for a second time and is now waiting for her residence card [Courtesy: Natalia Baidyk]

“We call it economic migration, because economic rewards are the main motivations for workers to leave their country,” explained Andrzej Korkus who heads EWL, an agency recruiting Eastern European workers.

According to the EWL’s report, higher earnings are a key condition for returning home for three-quarters of Ukrainians working in Poland. A majority also list political and economic stability, followed by fighting corruption (41 percent). Just 10 percent of respondents say nothing could persuade them to go back to Ukraine.

Sentiments differ between sectors. “It doesn’t make sense for many programmers to leave [Ukraine], since they pay 5 percent tax”, said Oleh from Lviv, who works at a technological consulting company in Warsaw. “I tried to bring some of my Ukrainian friends here, but it did not make financial sense for them.”

Oleh came to Poland in 2011 to study and stayed to work.  “Welfare levels are incomparably better here,” he told Al Jazeera.

Yet the discussion of whether to return to Ukraine is a continuing topic in his family. Asked if he would return, Oleh replied: “I have a number of well-defined parameters.”

The first is medical care. “I was recently in hospital for a couple of weeks. I received all the services needed, including tests and medication, without need to pay for any of them. At this time, that would still be unthinkable in Ukraine.”

Second, Oleh would like a comparable standard of life, and third, he would also like the consumer ecosystem to be more developed. For example, “No one takes out loans for a house in Ukraine, there is no mortgage market.”

From fields to factories

According to the recruitment agency Personnel Service, more than one-fifth of Polish companies now hire Ukrainian workers, but their model of employment is changing.

“Workers from Ukraine are increasingly hired in the service industry and more often in specialised positions,” Personnel Service’s Inglot, told Al Jazeera.

In 2014, almost half of Ukrainians in Poland worked in agriculture. The number dropped to 8 percent in 2018, as many newcomers moved into industrial production (from 12 to 39 percent), services (from 28 to 33 percent) and construction (from 14 to 21 percent).

Low-wage sectors are most exposed to labour outflow. “Workers come with higher expectations in terms of wages, working conditions and company benefits,” Korkus told Al Jazeera. For example, the meat-production sector “has seen a notable increase in Asian workers, replacing those from Ukraine,” he added.

But the guest worker model is changing, as many Ukrainians stay longer. “A few years ago, the core of our immigration was short-term”, said Kubisiak, under which citizens of former Soviet countries can work in Poland for six months without a visa.

While simpler and faster, in the long-term “this benefitted neither the company nor the worker. Companies had to train newcomers, while even the most ambitious workers were sent back home after six months. Companies also had to also do a lot of formal work to track worker permits”, Kubisiak told Al Jazeera.

Last year 330,000 Ukrainians received work permits, which allow employees to stay for 1-3 years, marking a rise of 92,000 since 2018. More permits were also given to Belarusians (7,900 more) and Georgians (4,600 more), according to new data from Poland’s Labour Ministry.

This has “allowed for rotation between companies and made it feasible to up-skill [through vocational training] and learn the local language,” causing more Ukrainians to stay for longer, added Kubisiak.

Moreover, last year a record number of companies in Poland were registered by foreigners, mainly Ukrainians and Belarusians – another sign that many link their future to Poland.

Source: Al Jazeera