Poland: Rising wages not keeping pace with inflation 

Polish economic data for May shows rising wages have failed to keep pace with inflation for the first time in two years

editor: Grzegorz Adamczyk
author: Grzegorz Siemionczyk

Although wages rose by 13.5 percent in May compared to May of last year, inflation in the same month rose 13.9 percent, effectively canceling out the pay increase, according Statistics Poland (GUS).

The data underlines the difficult position many Poles find themselves in as inflation eats into their budgets. Despite the increase in wages, growth actually fell from a 14.1 percent increase in April

The data also surprised economists who had projected that salaries would rise by 14.7 percent on a year-on-year basis in May. The reduction in the pace of pay increases was also reflected in a slight reduction in the demand for labor. The level of increase in the number of jobs on the market fell from 2.8 percent in April to 2.4 percent in May. 

However, the most striking finding is the fact that pay rises are no longer keeping up with inflation. This represents the first real fall in incomes since the pandemic month of May 2020. Discounting that pandemic anomaly, this is the first time since the turn of 2012-2013 that pay rises have fallen behind the rate of inflation. 

Despite the bad news for wage earners, economists see a silver lining. A slowdown in the rate of wage increases is seen as essential in order to get inflation under control without causing mass unemployment. Experts indicate the data may be a sign that the labor market may begin to normalize, but they acknowledge that the inflationary spiral in both pay and prices is still a threat and that future months may produce different results. 

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