Poland's Labour Market Adjustment in Times of Economic Slowdown – WDN3 Survey Results

This paper presents the results of a survey carried out in Poland in 2014 among nearly 1500 firms, within the framework of the ECB's Wage Dynamics Network (WDN). It aims at assessing the impact of the global economic and financial crisis on firms' business activity, as well as analysing the way the labour market adjusted to the slowdown and the role institutional reforms played at that time. According to our analysis, the absence of real recession, together with a rapid response of wages at the beginning of the slowdown translated into a relatively mild reduction of employment and a moderate unemployment increase. The shocks in 2009 and 2012 were comparable in terms of their scale. In both cases a drop in demand gradually spilled over to lower customers' ability to pay and to higher uncertainty. However, the shocks hit completely different parts of the economy. While the first shock was observed mainly in export-driven enterprises (industry), the second one was observed mostly in domestic market oriented companies (construction). Moreover, firms in Poland did not experience any additional, major credit constraints during the global financial crisis. The results confirm a relatively high real and nominal wage flexibility and a limited impact of labour market reforms in the period 2009-2013