Thomas White Global Investing
Poland
Poland Stamp
April 1, 2010
A Postcard from Europe
Poland: Unemployed Germans Turn to Thriving Poland

Warsaw

Poland’s capital, Warsaw, has also been a part of the country’s economic boom, with the city’s services sector, in particular, flourishing in the past few years.

It seems improbable. The latest unemployment data surfacing from Poland shows a jobless rate that crawled up to 13% in February from 12.7% in January, with nearly 2.1 million people waiting for a job. It appears that the country is short on job openings. And yet, here’s the rub. The Telegraph reports that for thousands of Germans, mainly from former East Germany, Poland is the new boom town.

So, appearances can be deceiving. While it appears that Poland may not have enough jobs to offer its own people, what attracts the unemployment-blighted Germans is Poland’s glittering and thriving economy. The Polish economy grew at 1.7% last year, the only nation in the European Union to register such growth. This year, it gets even better. The Polish government anticipates economic growth to accelerate to 3%, in lockstep with a recovering global economy. That is particularly attractive to Germans who are still laboring with seasonally adjusted unemployment rates of 7.5% in January this year. And that is a figure that has remained unchanged since October 2009. Adding to Germany’s woes, its export-reliant economy suffered the ignominy of a massive 5% contraction last year.

What explains Poland’s lure? It’s not that Poland offers higher wages. To many Germans, the salaries in Poland are at least 30% to 40% less than what they might have obtained back home, especially considering that Germany’s workers are among the highest paid in the world. But such workers might reason, at least any job is better than no job at all.

For Poland, this marks a distinct change from those long years of emigration, beginning from World War II, through the 1980s, and until the fall of communism in 1989. Poles have traveled the world over, driven by change and seeking the sort of job and freedom that was hard to find in their own country. Now though, the wheels of fortune are slowly turning. And how! Poland’s economic growth is on the upswing, with nearly $26 billion in heavy infrastructure spending in the cards as the country prepares to host the immensely popular 2012 European soccer championship. Barring a major blip, Poland is well on the way to becoming one of the EU’s top performing economies.

Years before, Germans in Loecknitz used to drive across the Polish border in order to buy cheap alcohol and cigarettes. That was all they needed Poland for. Now Germans are grasping the idea that Poland can be more that. As they drive across the Polish border, they recognize that they are buying more than cigarettes now, they are perhaps appreciating what the world has begun to realize—that the industrious and thrifty Poles are moving into a whole new place on the world stage.

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