Increasingly affluent Poland is a European success story

The economic upturn in Poland has led to growing prosperity among large parts of the population. Germany’s once-poor neighbor is doing a lot of things right.

Slaving away in a textile factory is a thing of the past. The population of the Polish city of Lodz is enjoying the fruits of today’s prosperity.

Goran Basic / NZZ

It is still more common for passengers from Poland to change planes in Zurich than for Swiss travelers to transfer in Warsaw. Two young Swiss women on the Swiss Airlines flight from Zurich to Warsaw, however, are on their way to Seoul. The connection via Poland was the cheapest, they say.

New major airport for Warsaw

There is good reason for the small number of transfer passengers in Warsaw: The Polish capital’s airport, named after Frédéric Chopin, is too small to accommodate more of them.

However, Poland is expecting a boom in aviation in the near future. A completely new major airport in Baranow, 42 kilometers southwest of Warsaw, is slated to start operations in 2032. The project exemplifies Poland’s new self-assurance, showing that the country clearly has the confidence to take on big challenges.

At the end of June, Prime Minister Donald Tusk, who heads the centrist Civic Platform party, confirmed that he would pursue the project even though it been initiated by the previous government, which was led by the national-conservative Law and Justice party. At a news conference, Tusk and political allies enthused that Poland would soon have «Europe’s most modern airport.»

It remains to be seen whether Poland will in fact be able to complete the mammoth project, with its newly calculated budget of almost 29 billion Swiss francs (more than $34 billion) – and, above all, whether it can be finished on time. The years of delays in the construction of the Berlin Brandenburg Airport, which is only around 500 kilometers away, offer a cautionary example of what can go wrong in the implementation of complex infrastructure projects. However, Poland is a country where the ability to improvise is cultivated at all levels of society. For this reason, it can be trusted not to fall into the same sluggishness as bureaucratic Germany.

Gaining self-confidence in road construction

When it comes to the construction of the new airport, the country will likely benefit from the extensive experience it has gained with other major infrastructure projects in recent years. Poland’s road and rail networks have already been significantly modernized, with funding coming largely from the EU.

Until a few years ago, transit traffic still largely meandered through country roads and the middle of villages and towns. Today, the country boasts a state-of-the-art highway network whose gaps are constantly shrinking. Efforts to update the rail network have also made major progress. Unlike in Germany, Polish intercity trains generally run on time and are well maintained.

These improvements in the transportation infrastructure have proved a boon for Poland’s economy. Attracted in advance by Poland’s EU membership, central location and highly skilled workforce, many foreign companies have established offices and production facilities in the country. Their new, mostly highly automated factories depend on products being transported quickly by truck, rail, air or sea to customers all over the world.

Hungry Polish entrepreneurs

While Germany is deindustrializing, its once-poor neighbor is doing the opposite. To be sure, multinationals such as Mercedes-Benz, ABB, Intel and Nestlé have chosen Poland as a key location for manufacturing and increasingly for the provision of services, especially in the information technology sector. However, in recent years, local entrepreneurs have also become increasingly active as investors. These are usually suppliers that have successfully built up leading positions within a specific niche, and which count large corporations from abroad among their customers.

With this rise of medium-sized companies making extensive investments in their own country, Poland is repeating a development that took place on a large scale in Western European countries such as Switzerland and Germany during the economic boom of the 1960s and 1970s.

In most such companies, the first or at most the second generation is still in charge. They are hungry personalities who want to achieve great things.

This can be seen in the country’s countless new factory and office buildings. The ambitious local entrepreneurs are also setting up chic salesrooms to present their products in the best possible light. And many of them are buying luxurious homes and extravagant items such as works of art, vintage cars or even private jets. Their readiness to spend is enabling numerous other businesses to survive and thrive.

Rising purchasing power

Unlike in certain parts of Germany, in France or the United Kingdom, prosperity in Poland is not just concentrated in a few metropolitan regions. The ongoing boom of the Polish economy is being felt increasingly broadly across the country. It is reaching large parts of the country’s rural areas as well as the urban centers. There is little sign of the depressive mood currently prevailing in some regions of Western Europe.

Instead, the increasingly dominant impression among expanding parts of Poland’s population is that life is materially improving for everyone. Generous wage increases, which have recently reached double-digit rates due to significant labor shortages, are ensuring that employee purchasing power is growing rapidly.

The narrowing of the international wage gap has also been strikingly reflected in cross-country comparisons. A year ago, an analysis by the EU statistics authority concluded that average household consumption within Poland, adjusted for purchasing power, had risen to 86% of the European average, putting the country ahead of Spain (85%) and only just behind Ireland (87%).

Too wealthy to be harvest workers in Germany

The average residents of Luxembourg, Germany and Austria, the EU’s leaders on this measure of household wealth, can still afford to buy significantly more. However, the differences in prosperity, even compared to Germany, have become too small for Polish workers to continue moving to Western Europe in large numbers as harvest workers, truck drivers or care workers. Those who are emigrating today are more likely to be executives seeking international management experience in countries such as Germany or Switzerland.

Poland is increasingly developing from a country of emigration to one of immigration. Like its predecessor, the current government seems to be succeeding in attracting people who not only have the skills needed on the labor market, but who are also easily integrating into Polish society.

Ukrainians, many of them war refugees, remain by far the largest group of immigrants in the country, ahead of Belarusians. It is easy for members of both nations to learn the Polish language. The vast majority of such migrants in Poland are also employed. But the number of immigrants from Kazakhstan, India, Nepal and the Philippines is also growing. It remains to be seen whether members of these communities will be able to adjust to Polish society as successfully over the long term.

Worryingly low birthrate

At the same time, these rising levels of prosperity are driving many young people in Poland to be more individualistic, and to take their time starting families. Last year, statisticians calculated that the country’s women were on average having just 1.16 children each over the course of their lifetimes – one of the lowest such rates in the world.

In order to avoid a dramatic population decline, Poland will thus need many more immigrants in the future. It is not clear that the country is ready for this given its still very homogeneous – that is, largely Polish – population in most places.

Germany gets a junior partner

In Poland’s case, it is clear that the EU’s lavish transfer payments associated with eastward enlargement were largely money well spent. The country has overall become wealthy enough that in the next EU financial framework, which runs from 2027 to 2033, it may be a net recipient of transfer payments for the last time. Thus, the government would be well advised to hurry along the implementation of major remaining infrastructure projects such as the construction of the new Warsaw airport.

In the future, Poland will have to finance more of its major projects itself. As a newly crowned net contributor to the EU budget, it will probably also have to transfer tax money to economically less successful European countries. This may be a bitter pill to swallow for many in Poland. However, those who are relatively better off also have an obligation to pay into the system. That is how the EU’s community of solidarity works. And Germany, which has provided significant financing for the many infrastructure investments in its neighboring country, can look forward to having another junior partner providing funding for others.