Warsaw, September 24, 2024 – A new World Bank Report says that productivity growth linked to faster technological adoption, labor market reforms, and a smart industrial strategy that complements green ambitions are key to the competitiveness of the Polish economy going forward, and must be accompanied by increased social inclusion. This is especially important as the country navigates challenges such as a more challenging global environment, an ageing population and the cost of delayed decarbonization.
According to the Systematic Country Diagnostic Update – Reaching the Last Mile of Convergence, productivity growth is a necessary condition for upholding Poland’s unprecedented economic success post-1989. Higher efficiency of manufacturing, labor, and domestic financial markets are needed to help Poland integrate into new regional and global value chains and to offset the transition away from coal and the end of the educational dividend, as well as the anticipated shrinking of the workforce.
At the same time, achieving a durable productivity growth will not be possible without focusing on social inclusion, be it through increasing labor market participation, improving the efficiency of the social safety net, or ensuring a just transition for coal mining areas.
Boosting productivity growth while maintaining inclusion requires advancements in six key areas: innovation, education, market efficiency, infrastructure, social protection, and institutions, the World Bank report indicates.
“Increasing productivity is necessary for Poland to navigate the demographic headwinds and upcoming transitions for the benefit of its people,” said Ary NaÏm, World Bank Group Country Manager for Poland. “Achieving this will require more flexible regulations, innovation from firms, faster technological adoption, and substantial R&D investments. Deeper capital markets and more public-private partnerships can help, but higher productivity will not be possible without equal opportunities and efficient social safety nets Poland has the opportunity to enter a next phase of productivity growth and convergence, while leaving no one behind”.
Investments in the Polish education and labor market systems are essential for productivity growth and strengthen the population’s resilience to an increasingly dynamic labor market. Employees’ skills must keep pace with technological changes, which requires policies that foster adult education and training to better guide workers and new graduates through the shifting demand for skills. Policies that boost labor market participation, including of women and vulnerable groups, and extend working lives could ease demographic pressures on labor markets while supporting inclusion and reducing elderly poverty. Improving the quality of basic education, which has visibly declined since 2016, would equip Poland’s children with the foundational skills needed for the labor market of tomorrow, contributing both to social mobility and long-term growth. Addressing housing gaps, especially in the affordable rental segment, can remove barriers to geographic mobility and open up dynamic urban areas and labor markets.
The Systematic Country Diagnostic (SCD) reviews Poland’s progress since 2017, the previous edition of the report, noting continued convergence with the EU, supported by regional integration, human capital accumulation, and productivity growth driven by a dynamic private sector, which helped advance Poland’s position in key global value chains such as e-mobility. The report also indicates areas with scope for improvement, such as the quality of institutions, the continued high carbon intensity of the economy, and gaps in the social protection system.
The SCD highlights opportunities for helping Poland to complete its convergence with EU average incomes while maintaining inclusion and ensuring environmental, fiscal, and social sustainability.
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