Poland is still cheap for investors

According to the data from Eurostat, in 2016 a working hour in Poland cost EUR8.6 on average. The EU average was nearly three times higher.

In PLN, labor costs in Poland increased by 4.1 per cent in comparison to 2015, but from investors’ perspective we are still a country of low wages. The highest labor costs among the EU Member States were recorded in Denmark – in 2016 a working hour there cost EUR42 on average – and they continue to rise at a remarkably fast pace (there was an increase of 1.9 per cent when denominated in Danish crowns, and of 2.1 per cnet when denominated in EUR). In terms of high labor costs, Denmark distances the neighboring Sweden (the cost of a working hour in that country amounts to EUR38), but is still a far cry from the richer Norway, where the average cost of one working hour in 2016 stood at EUR50.2. In Norway, labor costs have been gradually decreasing for several years. As recently as in 2012, working hour cost EUR56.4 on average.

We have to remember that these data do not apply to the whole economy because they do not include people employed in agriculture and public administration.

Throughout the EU, the average cost of one working hour in 2016 was EUR25.4, an increase of 1.6 per cent in comparison to 2015. In the Eurozone countries this cost stood at EUR29.8, an increase of 1.4 per cent in comparison with 2015.

Juxtaposing the results with record figures is impressive, but for investors who are thinking of a new location for their investments there is more sense in making comparisons with direct neighbors and countries at a similar level of the economic growth.

From the point of view of entrepreneurs who compete on international markets, Poland is more expensive than Hungary, Latvia, Lithuania, Romania, and especially Bulgaria, where the working hour cost on average EUR4.4 in 2016.

Among the countries which are geographically close to Poland, the highest labor costs are recorded in Slovenia, where they have already reached EUR16.2 per hour. By now Slovenia has become a more expensive country from the point of view of investors than Greece and Portugal. In 2016, there were other more expensive countries than Poland in its proximity, i.e. Croatia, Czech Republic, Slovakia and Estonia.

It is worth noting, however, that the difference in EUR between labor costs in Poland and other EU Member States has increased last year. In Poland labor costs, after the conversion into EUR, have decreased by 0.2 per cent since 2015, and for example, in the Czech Republic they increased by 3.8 per cent while in Croatia by 4.8 per cent. In this respect, the European record holder is Romania, where labor costs in EUR have increased by 11.6 per cent from 2015 to 2016.

For entrepreneurs who operate primarily on local markets, changes in labor costs calculated in national currencies are also important. This issue of course involves those EU countries which have not joined the Eurozone. The country with the highest increase in labor costs (similarly as in the case of costs in EUR) is Romania, an increase of 12.7 per cent was recorded in the local currency, RON. In Poland, the Eurostat calculated an increase in costs of 4.1 per cent. Labor costs rose faster in Bulgaria (7.8 per cent in BGN) and in Hungary (5.1 per cent in HUF).

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