Poland not cheap enough? Mass layoffs sweep the nation as companies shift production abroad

By Grzegorz Adamczyk
3 Min Read

Across Poland, a disturbing trend of mass layoffs is intensifying, with global corporations that have operated in the country for decades either reducing their workforce or shutting down production entirely. This situation is leaving thousands unemployed. Industry experts cite the recent increase in minimum wage as a primary factor driving these layoffs.

Levi Strauss, a prominent denim manufacturer, recently announced it will cease production in its Płock facility, which has been operational for 31 years, resulting in nearly 800 job losses. This is part of a broader pattern of painful employment cuts across various sectors including furniture, automotive, apparel, IT, banking, and services. The trend of mass layoffs began in 2022 and is gaining momentum.

Nokia is also joining the list of companies reducing their Polish workforce, planning to lay off about 800 employees. Similarly, PepsiCo might cut up to 200 jobs at its Kraków branch.

Many of the firms leaving Poland are relocating to non-European locations, particularly India. Infosys, an IT giant, decided to close its Poznań office, dismissing 192 employees, and will shift these operations to India.

Mateusz Żydek, a spokesperson for Randstat, acknowledges that many firms are moving their production out of Poland due to rising labor costs, including significant increases in the minimum wage. From January 2024, the minimum wage was set at 4,242 zlotys (€991), with a scheduled rise to 4,300 złotys (€1,005) by July.

Kamil Sobolewski, chief economist of Employers of Poland, argues that the increase in the minimum wage has significantly distorted the labor market, creating a situation where a large portion of the workforce earns the minimum wage, regardless of their efforts or qualifications. This has led to a leveling of wages across different educational and skill levels without a corresponding increase in productivity, reminiscent of issues previously seen in Spain.

Experts suggest that the latest wave of layoffs should be viewed within a broader context, as Poland was once an attractive destination for foreign investment due to its educated workforce. Western European countries often shifted their production to Poland to capture the benefits of its cheap and skilled labor force. However, demographic challenges and high energy prices are becoming significant deterrents to new investments.

These economic pressures are compounded by difficulties in recruiting workers, with many vacancies adding significant costs for companies and hindering their ability to fulfill orders. The transition to automation and the shift towards electric vehicle production pose additional challenges, particularly in the automotive sector, where the technological processes differ greatly.

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