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POLAND: Wage Growth Slows Below +10% Y/Y For First Time Since Dec '23

POLAND
PolandCEEMEAEM BulletBulletEmerging Market News

Statistics Poland released the first batch of monthly economic activity indicators for December, which were generally weaker than projected, with nominal wage growth cooling to single digits for the first time in a year.

  • ING think that wage growth will remain in single digits this year. The main reasons are (1) a smaller minimum wage hike, (2) smaller wage demands amid lower inflation, (3) lower profit margins of firms and hence their diminished tolerance for higher costs. Meanwhile, they note that the recovery in industry seen at the beginning of 4Q2024 paused, but calendar effects may have played a role.
  • According to mBank, wages should continue to slow going forward, which is indicated by all of the key bellwethers that had earlier successfully predicted wage increases. However, in their view, due to the delay in the transmission of wage growth to services inflation, the "last mile" problem will become non-existent in 2026.
  • Pekao write that there is "almost no trace left" after the October jump in industrial output, amid (1) a deterioration in sentiment, (2) longer holidays during the festive season, and (3) continued stagnation in Western Europe. They call jobs market data "a big surprise," with wage growth slowing due to less generous Christmas bonuses and Miners' Day pay-outs. They expect wage growth to only slow to ~9% Y/Y this year, however.
  • The Polish Economic Institute expect wage growth to slow further amid lower inflation and a more modest minimum wage hike, which rose by 10% this year (vs. 21.5% in 2024). They note that the impact of minimum wage on average wage is significant, as it affects a growing number of workers. In terms of employment, the situation should improve in the coming quarters amid an acceleration of GDP growth and investments. PEI analysts note that activity in industry slowed after adjusting for seasonal effects, but the coming months should bring about modest recovery amid the expected acceleration in consumer goods production and sectors related to construction. Meanwhile, external demand is the key problem of domestic industry and it may continue to linger amid the ongoing restructuring of key German enterprises.

 

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Statistics Poland released the first batch of monthly economic activity indicators for December, which were generally weaker than projected, with nominal wage growth cooling to single digits for the first time in a year.

  • ING think that wage growth will remain in single digits this year. The main reasons are (1) a smaller minimum wage hike, (2) smaller wage demands amid lower inflation, (3) lower profit margins of firms and hence their diminished tolerance for higher costs. Meanwhile, they note that the recovery in industry seen at the beginning of 4Q2024 paused, but calendar effects may have played a role.
  • According to mBank, wages should continue to slow going forward, which is indicated by all of the key bellwethers that had earlier successfully predicted wage increases. However, in their view, due to the delay in the transmission of wage growth to services inflation, the "last mile" problem will become non-existent in 2026.
  • Pekao write that there is "almost no trace left" after the October jump in industrial output, amid (1) a deterioration in sentiment, (2) longer holidays during the festive season, and (3) continued stagnation in Western Europe. They call jobs market data "a big surprise," with wage growth slowing due to less generous Christmas bonuses and Miners' Day pay-outs. They expect wage growth to only slow to ~9% Y/Y this year, however.
  • The Polish Economic Institute expect wage growth to slow further amid lower inflation and a more modest minimum wage hike, which rose by 10% this year (vs. 21.5% in 2024). They note that the impact of minimum wage on average wage is significant, as it affects a growing number of workers. In terms of employment, the situation should improve in the coming quarters amid an acceleration of GDP growth and investments. PEI analysts note that activity in industry slowed after adjusting for seasonal effects, but the coming months should bring about modest recovery amid the expected acceleration in consumer goods production and sectors related to construction. Meanwhile, external demand is the key problem of domestic industry and it may continue to linger amid the ongoing restructuring of key German enterprises.

 

Keep reading...Show less