The whole truth about Poles’ salaries. “After lean years, better times are coming” [OPINIA]

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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 increase by double digits.

Even with the fix for inflation the growth will be impressive. Of course, not everyone will notice this increase right away. The good news, however, is this: if we do not face further shocks, the coming times look more bright than dark for many of us.

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2022 was marked by a decline in salaries

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

According to data from the Central Statistical Office in 2022 we earned 2.1%. less than in 2021. This means that inflation has “overtaken” our salaries. To put it very simply – this is how much less we could buy goods and services compared to the previous year.

Of course, this is an average value, and as statisticians say, the hardest thing in society is to find an average person. There was a small fraction of us who could enjoy salary increases that outpaced prices. But there was also a large group of employees who did not receive raises at all and only watched as increasingly higher prices on the shelves drained their wallets and savings.

The decline in incomes hit especially the poorest people

Needless to say, in such situations it is the poorest people who have it the worst. And this is for two reasons that we are not always aware of. First of all, it is the poorest who have the least savings. And these, contrary to what some people believe, are primarily a function of income, not economic education. If you earn very little, then courses on managing your own finances and saving guides will not help you much, because you simply have nothing to save.

High inflation for people without savings means, first of all, giving up some expenses, and secondly – long. Moreover, during the last price increase, we saw a disproportionate increase in food prices. This again hit the least paid people, and this is because spending on “food” takes up more space in the so-called inflation basket of the poorer than the wealthier.

However, already in 2023 the situation began to improve. Also for the lowest paid workers. Due to high inflation last year we had to deal with 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 amounted to PLN 3,490 gross (almost 16% increase compared to the previous year). In July, it reached PLN 3,600 gross, i.e. it increased by almost 20%. compared to the previous year.

Well, you may say, but doesn’t this contradict what I wrote earlier? But it’s the poorest who get the most out of pocket? First of all, as has been said, the minimum wage, provided we are dealing with slight inflation, increases once a year. “Double” increases occur during a period of increased inflation. In 2022, the national minimum increased once – in January.

Wages raced with inflation

However, prices rose throughout the year, and the closer to the end of the year, the faster they rose. Averaging in 2022, the prices of goods and services increased by 14.4%. compared to the previous year. And it is these over 14 percent. the lowest-paid workers in 2022 felt the decline in purchasing power in their wallets.

But 2023, on average (again, that statistical Kowalski) meant increases in the entire economy by 1.1%. And it was a real increase, adjusted for inflation. It is worth paying attention to one thing here: if in 2022 we earned more than 2%. less than in 2021, and in 2023 by just over 1%. more than in 2022, this means that we were still slightly poorer last year than in 2021!

This is an optimal level, almost imperceptible to people, but at the same time “lubricates” the economy. No price growth or deflation (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 drop even further.

In 2024, we will finally become rich

Current inflation readings are likely to increase somewhat in the near term. This will be related, firstly, to an increase in VAT on food, and secondly, to increases (but insignificant 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 the average annual inflation will be 3.6%. The same center estimates that nominal salaries will increase by 12.3% this year.

Realistically, the “statistical Kowalski” will receive a raise of almost 9%. We will finally be richer in 2024 than in 2021.

The outlook for 2025 is slightly less optimistic, but also encouraging. On average, our salaries are expected to increase realistically by about 3%.

Who is the “statistical Kowalski” and who gets raises?

Now let’s start deconstructing this “statistical Kowalski”. The data provided by the Central Statistical Office are, of course, the result of a certain mathematical operation. “Real wage growth in the economy at 9 percent.” absolutely does not mean that every employee will receive such a raise.

Some can count on a double-digit salary increase, others will not see a single zloty more in their accounts than what 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.

Oh, that’s right! And here’s an interesting question: how many of us actually get raises? Randstat periodically asks a representative group of employees whether they received a raise in the last year. The latest data comes from the end of 2023.

What do they mean? That last year almost 60 percent employees’ salaries increased. This was the highest rate in three years. This is, of course, little consolation for the 40 percent who received nominally the same amount of money in their accounts.

In real terms, of course, they earned less, and this is because last year we were dealing with really high inflation. It should not be surprising that managers were the most likely to receive raises – almost 70 percent. included higher salaries.

What were the prospects like? About 60 percent working at the end of last year (when the survey was conducted) expected that it would be financially “appreciated” in 2024. This would confirm the optimistic forecasts of the Polish Economic Institute.

So let’s hope that after a few, to put it mildly, not the best years, there finally comes a time to catch our breath and return to familiar tracks. These well-known paths are the increase in real wages. Let’s emphasize it once again, because few people remember it – 2022, with its real decline in salaries, was an exception in the 30-year history of Poland. Let’s hope this exception won’t happen again for a long time.

Kamil Fejferjournalist, labor market and social inequality analyst

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