The concerns of the ageing of Polish society
Katarzyna Bałandynowicz-Panfil,
Ph.D., Assistant Professor,
Department of Sustainable Market Processes,
University of Gdańsk,
Poland
With an attractive sales market in the centre of Europe, a well-educated and relatively in-expensive workforce, Poland is one of the most dynamic economies in the European Union (EU). Stable growth, not shaken by the recent crisis, highlights the economic potential of Poland and its further participation in the socio-economic development of the EU.
Similar to other Central and Eastern European transition economies, Poland is going through social changes that have their roots in the last decade of the twentieth century. Low fertility rates, a higher age of women giving birth and growing divorce and migration rates can be seen as the negative consequences of the pursuit of prosperity, individual autonomy and independence. The opportunities arising from a market economy, globalization and membership of the EU have intensified demographic changes, which are observed across all developed economies.
According to the Polish Bureau of Statistics, the average lifespan of a newborn in Poland is increasing significantly. Over the past five years, this indicator has been at 13 months for males, while for females it has been about eight months longer. Moreover, Polish society is experiencing a dynamic ageing process. Currently, every fifth Pole is aged 60 or over, and this old-age ratio is predicted to exceed 40% by 2050. The elderly in Poland are predominately female. For every 100 men aged 60 or over, there are 142 women (compared to 107 in the total population). In addition, the feminisation rate is increasing with the transition to older groups (among persons age 85 or over, there are 267 women per 100 men).
The consequences of ageing for the Polish economy are expected to be considerable and compounded by low productivity rates and innovation expenses that are below the EU average. Indeed, the Polish economy needs significant labour resources for further development. However, the ageing of Poland’s human capital and the lack of new employees will likely impede economic development.
The decline in the workforce can be altered by a pre-employment policy, which could engage additional workers in the following decades. Based on the McKinsey report “Poland 2025…” the problem can be generally addressed in three ways. First, by increasing participation rates in the labour market of women, youth and seniors. Currently, those measures for Poland are behind the EU average. Second, by reducing the unemployment rate, which in Poland’s case is already at its lowest historical levels. Third, policymakers can foster immigration and re-emigration of Poles, which is still relatively low.
The demographic changes, specifically the ageing process, raise additional questions on how to meet the needs of a growing number of people at retirement age. Despite the heterogeneity in needs, generally, as people get older, they require more financial support (e.g., pensions, benefits) and costly medical care. It should be noted that the growing age dependency ratio corresponds with a lack of infrastructure for the living and caring of seniors. Both of these in turn will put public finances under pressure.
The latest World Bank report “Lessons from Poland, Insights for Poland…” indicates that Poland’s ageing society should be treated as one of the key challenges in building prosperity in Poland. Economic development in Poland is based primarily on private consumption, which is supported by raising wages and generous social transfers supplied from the state budget. The so-called thirteenth retirement pay out, additional benefits for children and significant support from EU funds has helped in achieving satisfactory growth rates. This policy is to be continued by the PiS (Law and Justice party) after winning the elections in October 2019. In the long run, this type of growth will not be possible without a significant burden on public finances – inevitable because of very low levels of private investment in the Polish economy.
Poland’s economic and social situation will inevitably change, while the prospects of further dynamic economic development, compared to the EU average, are less obvious. From the perspective of an ageing society, policymakers should implement intensive actions that focus on the social and economic inclusion of older people and the promotion of innovative sectors in response to the growing needs of an ageing society. Without them, Poland will not be an engine driving the European economy but could significantly inhibit it.
Email: k.balandynowicz@ug.edu.pl
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