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Salaries, inflation, GDP in 2023. Comments by Elżbieta Mączyńska

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In 2023, the average wage growth will still not keep pace with inflation, said economist Elżbieta Mączyńska. She added that if households become poorer, it will have a negative impact on the condition of other sectors, which in turn will delay the entry of the economy to the path of rapid growth.

In the opinion of the economist, 2023 will still be marked inflation, which will not be followed by wage growth, which means that the real power of wages and savings will continue to decline. – It cannot be ruled out that at the beginning of 2023 inflation will increase further from the current level of 17.5 percent, and only at the end of 2023 the price growth rate will decrease to 8-10 percent – she recalled the latest forecasts. She added that the reason for increasing inflation in the first quarter will be, among others, restoring 23 percent. tax on fuel.

Minimum wage up

Mączyńska referred to forecasts which show that 2023 will bring a significant decrease in the growth rate GDP to about 1 percent (currently it is approx. 4%). – The economic slowdown and inflation will contribute to reducing the wealth of households, although to some extent help for the lowest earners will be an increase in minimum wage – she said. She reminded that from January 1, 2023, minimum wage increased from PLN 3,010 to PLN 3,490, and from July 1 it will amount to PLN 3,600 gross.

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The economist made a reservation that the protection of households is extremely important, because if they become poorer, various sectors will lose out. – Such signals are already coming from the housing sector, where developers are reducing the number of completed and planned flats – she pointed out. And housing – as she explained – creates demand for various products of other industries, including home furnishings and household appliances.

She pointed out that the construction industry is one of the first to fall into crisis and usually recovers from it later than others. “Especially in conditions of scarcity of public investment,” she added.

Minimum wage in PolandPAP/Maciej Zielinski

“People with low qualifications are at a particular disadvantage”

Assessing the impact of the slowdown in GDP growth on households, the professor said that “they are highly differentiated in terms of sensitivity to the crisis”. , and many of them can still count on generous raises. – On the other hand, people with low qualifications are in a particularly unfavorable situation – she assessed.

When asked whether the increase in the minimum wage would not contribute to the price spiral, Mączyńska said that the thesis that the increase in the rate of 14 percent. year-on-year wages have driven inflation is questionable. – Firstly data of the Central Statistical Office o wage increases apply only to companies employing more than 9 people, which means that smaller enterprises and the budget sector, where there was no such increase in wages, were not included – she explained.

She emphasized that the impact of wage growth on inflation is sometimes overestimated. – This is all the more important because the increase in nominal wages is lower than the level of inflation, which means that real wages are actually falling – she said. According to her, a significant part of the increases was a consequence of the decisions of producers who raised prices “because there is inflation”, exaggeratedly. “This fueled inflation more than nominal wage increases,” she pointed out.

Prices and lower demand

Mączyńska pointed out that in November 2022, for the first time in a year, the prices of sold production of industry fell by 0.5 percent. compared to the previous month (in October, y/y, industrial production prices increased by 23.1%, while in November, y/y – by 20.8%). – This means that the possibilities of shifting the increase in production costs to the final product, i.e. the consumer, are running out precisely due to the economic slowdown – she noted. She added that producers must adjust their prices to the decreasing demand, which should help to reduce the level of inflation. “It’s just that it usually comes with some delay,” she said.

In her opinion, both the pandemic crisis and the war “create the basis for moving away from the thoughtless consumerism characteristic of rich countries and environments.” The professor recalled the sentence of this year’s Nobel Prize winner in French literature, Annie Ernaux, that “the multitude of things masks the deficit of thought”. – The current crisis multiplication forces a more reflective approach to spending and lifestyle patterns, encourages savings and pro-ecological behavior – she concluded. “This is one of the reasons why inflation is expected to start declining around the end of the first quarter of 2023,” she added.

Inflation and wage growth

In her opinion, disproportions between inflation and wage growth will slowly decrease, and there should be no large layoffs. Although – as she pointed out – much will depend on the policy of employers. – Employers, taught by the experience brought by the pandemic, when first, in the lockdown situation, they fired employees, and then, when the economy rebounded, had problems recruiting them, they try to maintain the level of employment as far as possible – she pointed out.

She also pointed out that hiring a new person is usually time-consuming and cost-intensive, “and besides, usually a new employee does not immediately achieve the same level of productivity as the one with a longer seniority in the company.”

When asked what could be the greatest threat to the Polish economy in 2023, she said that it was an “uncertainty factor”. – Currently, no one is able to accurately predict how the geopolitical situation will develop, whether and to what extent it will change. exacerbate or weaken military conflicts occurring in many regions of the world, and it is difficult to predict how this will affect the economy and the situation of households, she said.

She stressed that it is of fundamental importance now war in Ukraine and “it is no coincidence that the leaders of many countries emphasize that today the whole world is paying for the Russian attack on Ukraine.”

Main photo source: Halfpoint – stock.adobe.com

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