Labour costs three times lower in Poland than eurozone average and gap widening

Workers in Poland cost companies €11 per hour on average, which is roughly a third of the average cost of €32.3 in the eurozone, according to new data from Eurostat. While pay has been steadily rising in Poland, the difference in labour costs with the eurozone continues to grow.

For comparison, the EU’s average hourly cost of labour stood at €28.5 in 2020. The member states with the highest labour costs were Denmark (€45.8), Luxembourg (€42.1) and Belgium (€41.1), while the lowest rates were found in Bulgaria (€6.5), Romania (€8.1) and Hungary (€9.9).

The average cost of workers includes all taxes, social security payments and benefits, but excludes figures from those working in agriculture and public administration.

Average hourly labour costs for companies employing at least 10 people increased by 30 euro cents per hour in Poland year-on-year since 2019, and by €3.1 over the past eight years, reports Business Insider Polska.

In that same period, however, labour costs went up by €4 across the eurozone and by €6.1 in Germany. As a result, the gap between the average cost of workers in Poland and that in the eurozone has widened from €20.4 in 2012 to €21.3 in 2020.

Despite lower wages in eastern member states, the measure does not account for the higher purchasing power of each euro there, as costs of living are lower. Poland also currently has one of Europe’s lowest unemployment rates, at 6.6% at the end of February, according to Poland’s official statistics office.

Low labour costs have attracted increasing numbers of companies to set up factories and back offices in Poland. In the manufacturing sector, the average costs of a worker’s hour in Poland stood at €9.9 last year, according to Eurostat, compared with €41.6 in Germany and €34.5 in the eurozone, reports Business Insider.

The smallest difference with Germany was in the hospitality sector, where the average cost of labour in hotels and restaurants in Poland is €7.1 compared with €19.8 in Germany. The largest gap was in finance, where bankers and insurance workers cost roughly €56.8 in Germany and €16 in Poland.

Moreover, employers in Poland were found to spend less on benefits than average. These made up 18.4% of salaries in Poland, at a similar level to Hungary and Norway, but below the eurozone average of 25%, notes Business Insider.

Main image credit: jotoler/Pixabay (under Pixabay License)

Maria Wilczek

Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.