Poland’s Businesses Are Running Out of Workers

By Piotr Skolimowski

Tawo, a Warsaw-based textile maker, is on the frontline of Poland’s struggle with demographic decline.

“In the past three years, we’ve been unable to hire a single Polish worker,” says human resources manager Aleksandra Rucinska.

The company, whose woven labels can be found on mattresses sold at Ikea, is one of thousands of enterprises in the European Union’s largest eastern economy that’s enduring a labor crunch.

It reflects a regional problem. In the Drivers and Disrupters Report, Poland—and other Eastern European countries, rank among the lowest in the world on workforce growth.

Tawo’s solution is to hire migrants. Fifteen of its 65 employees come from Ukraine and Belarus. Without them, “we would be in a bind,” Rucinska says.

That’s not a fix Poland’s government favors, even though the country has one of Europe’s lowest birth rates. Populist politicians vociferously opposed to foreign labor have thrown money at families to encourage them to have more children. Per-child government benefits, in relative terms, are more generous than the ones on offer in oil-rich Norway.

Hungary has tried similar tactics. It offers subsidies for seven-seat cars to couples who have at least three children—or a third one on the way. Bigger families can count on support to buy homes, and may even end up paying no income tax.

While demographic challenges afflict Europe as a whole, its Eastern flank is particularly vulnerable. The International Monetary Fund warned recently that the region’s workforce may fall by a quarter by 2050.

Poland has struggled to recover from an exodus of as many as 2 million workers who decamped to the U.K. and Ireland. Officials expect the current population of 38 million to shrink by more than 7% in the next quarter-century. By the end of that period, every second Pole will be over 50.

The influx from war-torn Ukraine has been a blessing: Ukrainians accounted for almost 5% of the workforce last year and contributed as much as 0.9 percentage point to growth, according to central bank estimates.

But that shift has probably peaked, and some of the more skilled visitors could move on to Germany when its job market opens to them next year. Poland’s red tape, which makes Ukrainian workers wait months to get work permits, doesn’t help.

So some companies have tried to look further afield. That’s what Ontos, an employment agency based in Chwaszczyno in northern Poland, has been doing for the food industry. It sources staff from as far as Nepal and the Philippines.

But a flood of requests for job permits has overwhelmed the system, according to its owner, Magdalena Derlacz-Poplawska.

“Employers have started to reduce production and orders because they just don’t know how long it will take to obtain workers,” she says. “It will eventually have a knock-on effect on the economy.”

That’s bad news for Filip Dabrowski, who started his meal delivery business, Lunch Cat, in Warsaw last year. He has six staff, and after seeing demand grow fourfold, he wants to expand. But when he tried recruiting recently, only one person turned up for an interview out of 10 scheduled to do so.

“We really need to find a way out of this,” he says. “Before it’s too late.”