Poland’s people emigrate as its population flatlines - time for new policies?

Poland has some enviable numbers to support its claim of being Europe's economic success story of the past decade. It has doubled its gross domestic product to $526 billion, it is the only EU member state to avoid a recession after the financial crisis and its growth for the rest of the decade should be better than the euro zone and the OECD group of rich countries.

But one statistic adds a chill to prospects for the country that sees its future as a central European power: its population has flatlined and is starting to decline.

Young people are expanding their horizons, heading to Dublin, London and Brussels and, for now, are not coming home. As such, the country that has been exporting labour at an brisk rate since joining the EU in 2004 faces the threat of decades of falling worker numbers amid urgent calls for it to lower barriers to new migrants entering the country. At the same time, immigrants from neighbouring countries - Ukraine provides the most predictable stream of newcomers - are not offsetting the drain.

“Poles are settling abroad [but] others are not settling here,” says Paulina Babis, head of integration at the Ministry of Labour and Social Policy. “[Poland] needs people to settle, to build families and careers and livelihoods.”

Since 1989, when communism disintegrated across eastern Europe, Poland’s population has fluctuated between 38 million and 38.5 million. But by its own projections, its population is forecast to fall to 33.9 million by 2050. By then, a third of the country will be over 65 years old, and the median age will be 51, from 38 today.

Poland is not alone in this predicament. Many of its fellow EU states face similar problems. But while countries such as the UK, Italy and Germany are forecast by the EU to increase their number of foreign migrants over the coming decades, Poland is not. And while other countries such as Japan have similar population dilemmas, Poland’s is made more acute by the economic gap it still must jump to match other EU countries.

Despite a decade of booming growth, its GDP per capita is a third of neighbouring Germany and half that of Spain. Warsaw is banking on decades of higher growth to bring its wealth in line with its ambition to be considered a central European power.

Worker shortages

Employers such as Amazon and Faurecia, an auto parts manufacturer, have complained of struggling to find workers to fill positions. And while unemployment is high at 11 per cent, experts warn that a failure to tackle Poland's looming demographic crisis puts at risk the decades of growth it forecasts lie ahead.

“We have to think very sensibly about the depopulation of this country in the short to medium term,” says Miroslaw Bieniecki, director of Poland’s Institute for Migration Studies. “The government realises the problem of demographics but does not understand how bad it is.”

Poland’s government has pledged to simplify immigration procedures and work to attract foreigners to offset the outflow but results are slow.

Poles have traditionally been migrants. Large numbers settled in the US after the second world war, fleeing Soviet rule. But since joining the EU in 2004, hundreds of thousands have flocked to countries such as Britain and Ireland, and the overwhelming majority are taxpayers of working age.

The birth rate is also falling, with the average number of children per women of child-bearing age dropping from 1.99 in 1990 to 1.26 in 2013. It is the second-lowest in Europe and means that every year fewer Poles are born to supplement the future workforce. The EU average is 1.58. To compound the problem, Poland’s borders seem to only have one-way turnstiles. The last year more people settled in Poland than left the country to live elsewhere was 1959.

Unlike other European countries that have expanded their working-age population and offset negative demographics with immigration, the EU’s sixth-largest economy has kept its entrances broadly closed, preferring to encourage short-term labour rather than permanent migration.

Poland's immigration policy is "reactive, not proactive", says Marcin Piatkowski, chief economist at the World Bank in Warsaw.

“It is focused on defending Poland from immigrants, rather than attracting them . . . It is not in line with the aspirations and challenges Poland has and will face . . . We need people to come here, pay taxes, pay our pensions, become citizens and contribute to the growth in the country,” says Mr Piatkowski.

According to official data, Poland has 1.74 people of working age for every person too young or too old to work. By 2030 that figure will have fallen to 1.34 people and, by the middle of the century, Poland will have fewer workers than dependants.

“The demographics show no signs of improvement and a shrinking tax base will probably be accompanied by increased demand for social and health services on the part of the elderly,” according to a recent McKinsey report on Poland’s economy. “These trends will pose a considerable strain on public funds unless remedial actions are implemented.”

The government is a strong advocate of protecting freedom of movement within the EU and will not change its position. And despite incentives, tax breaks and government initiatives to encourage Poles to have more children, the fertility rate has continued to drop.

“You cannot stop people leaving. And it is very hard to make people have more children,” says Mr Bieniecki. “We need to increase migration . . . Unless we open up to countries that will want to come here, then we are in trouble.”

Ethnic diversity

For much of its history, Poland was one of the most ethnically diverse states in Europe. Before the second world war, roughly a quarter of its population was made up of Jewish, Ukrainian and German communities. But wrenching changes to the state's borders and forced resettlements of communities created in effect a wholly homogeneous society. According to 2013 data from Eurostat, 0.2 per cent of Poland's population are citizens of another state, the lowest proportion in the EU. The respective figure for the UK is 7.7 per cent and the EU average is 4.1 per cent.

Foreign visitors to Warsaw, a bustling prosperous European financial centre, cannot help but notice the lack of diversity on the streets. A CBOS survey conducted last year found that 48.9 per cent of Poles thought it was a good thing to have foreigners as neighbours.

“There’s a definite feeling among some that ‘the foreigners are coming’,” says Angelika Popyk, a 25-year-old Ukrainian living in Warsaw. “People stick to the stereotypes: ‘They take our jobs; they take our men’,” she laughs.

“English people, for example, are used to foreigners,” says Ms Popyk, a teacher who arrived in Warsaw three years ago. “Poles are not. Look at their history. They have spent centuries fighting for freedom and independence from outsiders.”

Warsaw’s immigration policy over the past decade has been relatively simple. Migrants looking to settle in the country, mainly from eastern countries such as Ukraine, Belarus or Russia, must fight reams of red tape to become a legal resident in the country. Many don’t try. Many more fail.

Poland has instead liberalised its regime for short-term employment visas, often valid for six months, allowing migrants to work in its agriculture, manufacturing and construction sectors that rely heavily on low-cost, casual workers.

This gives the economy a boost, but it will have serious ramifications as the population shrinks, experts say.

“Poland has to start letting people come permanently,” says Piotr Kazmierkiewicz of the Institute of Public Affairs in Warsaw. “When you start seeing real demographic fallout, say by 2030, then it could be too late.”

Since 2006, when the government liberalised the short-term labour migration policy, hundreds of thousands of migrants have made the journey.

“For simple jobs, it is easy. Poland needs people to come and fill these simple jobs from a cheaper workforce,” says Maksymova Antonina, a Ukrainian immigrant who runs Interstaff, an employment agency that specialises in hiring Ukrainians for jobs in Poland.

According to Eurostat, 170,000 Ukrainians came to Poland for fewer than 12 months in 2013 while government records show that 630 settled permanently.

“The majority come here, they work six months, then they go home,” says Ms Antonina. “Then they come back again. It’s seasonal people for seasonal work. If you want to stay for a longer time, you need lots of documents. And the government makes that very difficult.”

Ukrainian taxpayers

Ms Antonina estimates that roughly 80 per cent of Ukrainian labour migrants to Poland do not pay taxes, meaning that their contribution to long-term growth, government pension schemes and to state coffers is limited. Further, a large percentage of migrant earnings goes back across the border.

“We have a shuttle migration flow that isn’t staying,” says Mr Kaz- mierkiewicz. “We need to stop pretending that issuing short-term visas will solve the wider issue.”

Valerie Kochyna, a 20-year-old student in Warsaw, was born and brought up in eastern Ukraine. She says that more people would follow her and her family if the government made them feel welcome.

“The Polish government make it very complicated. I am legal here. I work. I pay taxes. But I still have to wait months and send so many documents to get a Karta Pobytu,” she says, referring to the government’s identification card for immigrants. “It is stupid.”

The conflict in Ukraine over the past 12 months has increased the volume of Polish voices that feel they should assist its neighbour, possibly by providing easier migration channels. And the economic fallout is starting to dawn on others. Bronislaw Komorowski, Poland’s president, last month hosted an event at his residence where economists and sociologists laid out the looming depopulation issue.

Those Ukrainians who have managed to make a permanent move to Poland say that the solution is simple. Warsaw needs to promote itself as a welcoming place for immigrants to encourage hundreds of thousands eager to make the journey.

“We have to advertise,” says Mr Kazmierkiewicz. “We need 500,000 more working age people before 2020 . . . We have less than 10 years to make the trickle into a stream.”

Copyright The Financial Times Limited 2015