The whole truth about Poles' salaries. “After the lean years, better times come.” [OPINIA]

The text was created as part of the WP Opinie project. We present the diverse views of commentators and public opinion leaders on key social and political issues.

It seems that after several lean years, there are, if not fat years, at least much better times for our wallets on the horizon. This year, our nominal wages are expected to rise by double digits.

Even with inflation corrected, growth will be impressive. Of course, not everyone will notice this increase immediately. But the good news is this: If we face no more shocks, the times ahead look brighter than dark for many of us.

The rest of the article is below the video

Let's start with this 2022 was the first time since the early 1990s that real wages fell. Real, i.e. inflation rate.

According to data from the Central Bureau of Statistics, in 2022 we got 2.1%. Lower than in 2021. This means that inflation has “exceeded” our salaries. Quite simply – this is how much we can buy goods and services compared to the previous year.

Of course, this is an average value, and as statisticians say, the most difficult thing in society is to find an average person. There was a small portion of us that could enjoy salary increases that outpaced prices. But there was also a large group of employees who never received a raise, and only watched the rising prices on the shelves increasingly drain their wallets and savings.

It goes without saying that in such cases it is the poorest people who suffer the worst. This is for two reasons that we do not always realize. First of all, it is the poor who have the least savings. This, contrary to what some believe, is primarily a function of income, not economic education. If you earn too little, then… Courses on managing your finances and savings guides won't help you much, because you simply have nothing to save.

High inflation for people who do not have savings means, first of all, giving up some expenses and secondly – debts. Furthermore, during the recent price increase, we have seen a disproportionate increase in food prices. This has once again hit the lowest-paid people, because spending on “food” takes up more room in the so-called inflation basket for the poor than for the rich.

However, already in 2023, the situation began to improve. And also for lower-paid workers. Due to high inflation, last year we saw a double increase in the minimum wage: in January and July.

In January 2023, the minimum wage increased by PLN 480 compared to 2022 and totaled PLN 3,490 (almost 16% increase compared to the previous year). In July, the total amount reached PLN 3,600, i.e. it rose by almost 20%. Compared to the previous year.

Well, you might say, but doesn't this contradict what I wrote earlier? But are the poorest the ones getting the most out of their pockets? First of all, as we said, the minimum wage, provided we deal with slight inflation, increases once a year. The “double-double” increases occur during a period of rising inflation. In 2022, the national minimum rose once – in January.

However, prices have risen throughout the year, and the closer we get to the end of the year, the faster they will rise. Average In 2022, the prices of goods and services increased by 14.4%. Compared to the previous year. This percentage is more than 14 percent. In 2022, lower-paid workers felt a decline in purchasing power in their wallets.

But 2023, on average (again, Kowalski's statistic) means increases for the entire economy of 1.1%. This was a real increase, adjusted for inflation. It is worth paying attention to one thing here: if we gain more than 2% in 2022. less than in 2021, and in 2023 by just over 1%. More than in 2022, meaning we were still a little poorer last year than we were in 2021!

This is the optimal level, almost imperceptible to people, but at the same time “lubricating” the economy. No growth or contraction in prices (i.e. their decline) is not good for the economy at all. Why? because When prices fall, people refrain from buying certain goods. They are waiting for prices to fall further.

Current inflation readings are likely to rise somewhat in the near term. This will be linked, firstly, to an increase in the value-added tax on foodstuffs, and secondly, to increases (but minor compared to recent years) in raw material prices on global markets and an increase in energy prices in the second half of the year. The Polish Economic Institute estimates that in 2024 annual inflation will average 3.6%. The same center estimates that nominal salaries will rise by 12.3% this year.

Realistically, “statistical Kowalski” would receive a raise of approximately 9%. We will finally be richer in 2024 than we were in 2021.

The forecast for 2025 is a little less optimistic, but also encouraging. On average, our salaries are realistically expected to rise by about 3%.

Now let's start breaking down this “Kowalski statistic.” The data provided by the Central Statistical Office are, of course, the result of a certain calculation process. “Real wage growth in the economy is 9 percent.” This does not mean at all that every employee will receive such an increase.

Some can count on a double-digit salary increase, others will not see a single zloty more in their accounts than they have seen in recent months. Some people reading information about wages may react this way – what salary increase are they talking about? It's not like I got any raise.

This is correct! Here's an interesting question: How many of us actually get a pay raise? Randstat periodically asks a representative group of employees whether they received a raise in the past year. The latest data comes from the end of 2023.

what do they mean? Which Last year nearly 60 percent employee salaries were increased. This was the highest rate in three years. This, of course, is not much consolation to the 40 percent who nominally had the same amount of money in their accounts.

In real terms, of course, they earned less, because last year we were dealing with really high inflation. It should come as no surprise that managers are the most likely to receive raises — nearly 70 percent. Higher salaries included.

What were the expectations? About 60 percent of workers at the end of last year (when the survey was conducted) expected to be financially “undervalued” in 2024. This would confirm the optimistic forecasts of the Polish Economic Institute.

So let's hope that after a few years, to put it mildly, not the best years, there will finally come a time to catch our breath and return to familiar paths. These well-known paths are real wages increase. Let's stress that again, because few people remember it – The year 2022, with its real drop in salaries, was an exception in Poland's 30-year history. Let's hope this exception will not be repeated for a long time.

Kamel Fajfar, journalist and labor market and social gap analyst