Global Economics

Poland's Economy Grows, but Its Young Still Flee


The pristine metal-and-glass laboratories and landscaped lawns of the Olsztyn Science and Technology Park are emblematic of Poland’s transition from communist state to member of the European Union. Paid for with EU aid, the €16.6 million ($23 million) development 200 kilometers (124 miles) north of Warsaw opened in November and was built to attract startups. Yet with two smaller science parks nearby, half the space remains empty. The Olsztyn region has one of the highest poverty rates in Europe, and more people are leaving than arriving.

€229b

EU aid pledged to Poland through 2022

“The EU certainly helps fulfill Polish dreams—even completely idealistic and costly ones,” says Sylwia Tymicka, who set up an accounting and small-business consulting firm in Olsztyn when Poland joined the EU in 2004. “That often means spending for spending’s sake. It doesn’t correspond to basic needs.”

As Poles marked 10 years of EU membership on May 1, the country has emerged as the star of eastern Europe, though EU funds haven’t come close to bridging the gap between Poland and its neighbors to the west. Pay and benefits in Poland average €10.4 an hour compared with €42.6 in Germany, according to the Central Statistical Office in Warsaw. Despite two decades of uninterrupted growth, Poland is home to five of the continent’s 20-poorest regions. Unemployment nationwide is 13.5 percent. Among those working, more than 1 million earn less than 5 zloty ($1.66) an hour.

At least 2.5 million young Poles have left during the past decade, with 300,000 returning, according to the statistics office. About a half-million Poles left the country last year, the most since the exodus after Poles became EU citizens and were free to move and work in member states.

Despite a boom in education and an influx of private investment and EU aid, the country hasn’t been able to come up with innovative businesses that create good jobs. “Really modernizing Poland doesn’t mean building a few hundred kilometers of roads. It depends on changing mindsets so people trust each other more and fear risk less,” says Janusz Czapinski, a sociology professor at Warsaw University who’s tracked 12,000 Polish households since 1990.

The EU has pledged to send a total of €229 billion in aid to Poland through 2022. That’s more than the Marshall Plan for postwar Europe when adjusted for inflation. So far, EU money has kept the Polish economy growing while recession hit most of the continent. The aid contributed as much as a percentage point of growth each year, according to the Polish Ministry of Infrastructure and Development. New business parks, highways, soccer stadiums, and airport terminals were built with EU money. Yet the aid hasn’t done much to lift the 17 percent of families of four living on less than $400 a month.

“The only way to alleviate the misery is by drafting projects that directly concern this social group,” says Marcin Krol, a sociology professor at Warsaw University who served on the Solidarity committee that negotiated the end of communist rule. “Many governments have come and gone without affecting their situation whatsoever. Then came the EU programs, which failed to improve it either.”

Zortrax, a 3D printer startup not far from the Olsztyn science park, is the kind of company the park was meant to attract. Karolina Boladz and two partners raised $200,000 for their business through a crowdfunding program and has no interest in the EU’s largesse, which is only available through a complicated application process that takes months or years to complete. “We couldn’t risk wasting time and energy,” she says. “We don’t need to wait for the EU to tell us what’s good for us. Our plan is simple and efficient. It seemed beyond the EU’s funds framework.” Poland’s Supreme Audit Chamber, an independent public office that monitors national and local government spending, challenged the need for 8 out of 60 EU-sponsored science parks over the past two years. The warning was ignored in Olsztyn, where the EU financed 11,000 square meters of lab space, equal to one and a half soccer fields.

“The EU is vigilantly monitoring spending, evaluating the purpose and use of the money,” Janusz Lewandowski, the European Commission’s Budget Commissioner, said in February. In Poland, companies have received 85.5 billion zloty in EU financing for 62,600 projects, while 683 sewage plants were constructed, 13 airports were built from scratch or modernized, and 700 renewable energy projects were funded, according to an April 29 report by the Polish Ministry of Foreign Affairs. Almost 1,500km of new or upgraded highways link Warsaw with the rest of Europe. “Even with the turmoil in the world economy, the last decade was fruitful for Poland,” says Marek Buczak, portfolio manager at fund company Quercus TFI in Warsaw.

The emigration of young Poles continues. Their continued movement “is no surprise,” says business adviser Tymicka, whose son, Zorian, plans to leave as soon as he finishes high school. “Emigration has become sort of a no-brainer for young Poles.” More than 600,000 have gone to Britain, where Polish census figures showed Polish women twice as likely to have children than in their native country.

In Skajboty, a village 15km from Olsztyn in the heart of the Mazrian lake district, Ewa Legierzynska is resigned to losing another child to emigration. Four of her five daughters have quit the village, with two leaving the country: The fifth will most likely follow her sisters. “The surroundings may be beautiful, but there’s no future here,” says Legierzynska. One daughter resides in Brussels and another in Berlin. Two live in Gdansk in northern Poland.

Few Poles understand the urge to emigrate more than the inhabitants of the Olsztyn region, where gross domestic product per capita is 46 percent of the EU average and the jobless rate is 21.5 percent. Says Tymicka, “If you tell me that some foreign investors or some markets view Poland as a success story, then I’m just stunned.”

The bottom line: The EU has transformed Poland, but low wages, poverty, and mass emigration show much remains to be done.

With David McQuaid
Bartyzel is a reporter for Bloomberg News in Warsaw.

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