Poland Labor Market Strength Signals Solid Recovery Ahead: ING

The strong labor market in Poland suggests that the economic recovery is set to gain speed in the second half of the year, ING said.

Official data released on Friday showed that employment in the corporate sector grew 0.3 percent month-on-month in May, in line with expectations. Average wages rose 10 percent year-on-year.

The numbers mainly reflect 2020 base effects, ING economist Karol Pogorzelski said. In 2020, companies reduced working hours and wages as activity was severely hurt by the coronavirus pandemic and related restrictions.

As of July, we expect wage dynamics to slow to about 7 percent year-on-year, a moderate level given annual inflation at 5 percent, Pogorzelski said.

The economist expects new jobs to appear primarily in retail trade, and mainly the reopened malls.

Hiring is set to also increase in catering services. That said, most of those companies usually employ less than 10 people and so are not included in the latest data, the economist added.

"The strong hiring in May suggests solid activity ahead, which is why we expect around 5.5 percent GDP growth in 2021," Pogorzelski said.

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