At CXC, our global footprint spans five continents, and we provide our services from over 30 offices around the world. As a global organisation, we’re always interested in changes to local labour markets that could affect our clients and partners.
This week, we wanted to zoom in on Poland, a country that’s currently seeing a significant amount of change. For example, as we discussed a few weeks ago, the Polish government plans to make two significant increases to the national minimum wage in 2023.
We wanted to find out more about this and some other changes that are around the corner — so we caught up with Michal Czernek, CXC’s Business Development Director for the Central and Eastern Europe region (CEE).
6 big changes to the Polish labour market that we’ll see in 2023
Here are some of the biggest factors that will impact employment in Poland over the next 12 months.
1. The minimum salary will rise twice, increasing by almost 20% in a year
As we mentioned above, one of the biggest changes to the Polish labour market this year will be two increases to minimum wage. On 1st January 2023, the minimum monthly salary will rise from PLN 3,100 (around 660€) to PLN 3,490 (around 740€). And, on 1st July 2023, it will increase again, reaching PLN 3,600 (about 770€). All in all, this represents a total increase of PLN 590 — or almost 20% — in one year.
Of course, this will have the most profound impact on those working in minimum-wage jobs. But there will also probably be at least some sort of “trickle up” effect, wherein people on mid-level salaries will demand more pay as well.
However, according to Michal, it’s important to look at this in the context of the huge inflation that Poland is currently seeing.
“Inflation in Poland is currently astronomical,” Michal says. “For consumer goods, it’s about 23%.”
This means that many people in Poland won’t necessarily feel the effect of the pay increase — at least of the first one — because the cost of living is so high.
2. Regulations around remote worker sobriety checks will change
Another change that’s coming this year is the result of an amendment to the Polish Labour Code and some other bills (2335, 2618 and 2618-A), which is currently with the Senate for consideration.
The amendments relate to how companies manage their remote workers, which is set to change in several ways. For example, if the amendments are passed, employers will be able to administer drug or alcohol testing to their remote employees if they suspect them of working under the influence.
“Right now, it’s unregulated for remote workers,” Michal says. “If a worker comes into a factory or an office and there’s some kind of suspicion that he’s not sober, his sobriety can be checked – by police at a last resort. But if the person is working remotely, it cannot be done”.
Of course, this raises several questions relating to employers who hire workers through temporary work agencies. Will paying for and administering the tests be the responsibility of the agency, or the employer?
And who will be held responsible if a worker is not sober, and potentially putting others in danger? The answers to these and other questions will probably only become clear once the draft amendments are approved.
3. Employers will need to pay employees for the cost of remote work
An aspect of remote work that we don’t often talk about is the increased cost that it represents to an employee. And that’s something that the proposed amendments to the Labour Code aim to remedy.
Under the new rules, employers will be required to provide remote workers with the materials and equipment they need to work. They’ll also have to cover the cost of things like electricity and telecommunications, which until now have been paid for by the employees themselves. It’s also likely that employers will have to pay out a lump sum to cover the costs that employees have already incurred.
According to Michal, this will have two possible effects on the workplace. First, employers might reduce headcount to make up for the rising cost of each remote employee. Second, they might force their employees to work at least partially in the office so that they can lower their costs.
“This will have a negative effect for employers, because employees are looking for remote work,” Michal says.
Polish companies will have to think carefully about whether mandating in-person work will be worth the potential effects on employee retention.
4. Students might have to start making social security payments
A hot topic under discussion at the moment is the possibility that students may have to start paying social security payments on their salaries.
As it currently stands, students under 26 don’t have these payments deducted from their wages. This makes them an attractive candidate pool for retail and low-level admin jobs, for example, because they’re typically willing to accept lower wages.
However, if this change does happen, it could have a significant impact on the market. As Michal explains, “If students are burdened with social security, this will have two outcomes. First, students will not be as desirable for these positions. And second, this may open the door to the over-50s.”
These older employees might be more attractive to employers, because they have experience, and tend to be hard-working. According to Michal, experience could become a more important factor than cost when it comes to hiring employees for entry-level roles.
5. The rules around terminating fixed-term contracts will become stricter
Currently, there are two types of employment contracts in Poland. There’s a fixed-term contract (umowa o pracę na czas określony) and a permanent contract (umowa o pracę na czas nieokreślony).
The way things currently stand, employees on fixed-term contracts have more security than those on permanent contracts. This is because their employers can terminate their contract without having to give a reason.
However, this is set to change, and soon employers will have to provide justification for terminating any contract, even a fixed-term one. While this provides some protection for employees, it could also cause problems on the employer’s side. For example, in roles like sales, employers may want to terminate contracts when employees repeatedly fail to meet their quotas. But whether or not this would be a legitimate reason is debatable, and employers would risk legal action.
Another possible consequence of this change is that temporary work contracts (umowa o pracę tymczasową) might become more prevalent, and be employed for a wider range of roles.
On temporary work, Michael says, “We think of it as something for physical work, warehousing, plants, factories, etc. Or for administrative positions like receptionists or office support. But companies may now turn to temporary contracts for salespeople, for example. IT people, also. That might change the Polish market in that different types of work will fall under temporary work, which wasn’t previously perceived as possible.”
6. A new opportunity will open for recruitment, HR, and labour outsourcing providers
Currently, only a small percentage of small and medium enterprises in Poland use external recruitment or HR services. This means that there’s a huge opportunity for recruitment agencies, outsourcing companies and external HR services to enter the market — especially considering that SMEs generate almost 75% of the country’s GDP.
Why is this news now? Because all of the factors described above will contribute to rising costs for companies — and many will look to streamline operations and become more efficient.
“The sobriety tests and the payments for working from home will impact almost every company,” Michal says. “So small and medium enterprises may look to outsource some services more enthusiastically than before to increase cost efficiency.”
Compliantly hire employees in Poland with CXC
Labour laws, rules and regulations change constantly. And if you’re an international organisation with workers in several countries, it can be hard to keep up with them all. That’s why having an expert employment partner to handle the legal side of things for you is crucial in 2023.
At CXC, we’re experts in helping ambitious companies to expand their reach by simplifying hiring across five continents. Through our network of international tax lawyers and local HR experts, and our web of legal entities around the world, we can help you to understand local laws and hire workers compliantly and confidently, wherever you need to.
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Get in touch with one of our experts to find out more.