Jobless growth: a new challenge for the transition economy of Poland

Abstract

PurposeTo explain the sources of jobless growth in Poland, the country undergoing economic system transition and integration with the European Union (EU).Design/methodology/approachThe research used the Harrod‐Domar model together with an interpretation proposed by Barro and Sala‐i‐Martin to determine the growth threshold level of jobless growth in Poland. The technical, econometric calculation does not dominate the paper, which is destined for both academic and non‐academic readers studying the phenomenon of jobless growth.FindingsThe paper provides a review of literature and theories of jobless growth. The calculations show that Poland has a high threshold of jobless growth. The Polish GDP needs to grow at least 4 per cent to add new jobs.Research limitations/implicationsTo evaluate the overall long run impact of labor productivity on the job market one needs to include the growth of non‐manufacturing jobs in the service sectors which accommodate the needs of more affluent worker/consumers. This long‐term analysis is outside the scope of the paper.Practical implicationsThe authors calculated an important variable for the Polish economy, i.e. the threshold growth rate of jobless growth, which indicates a minimum rate of growth, needed to create a net demand for labor. This research is likely to be quoted by the economists studying sources of unemployment in Poland and as well as in any high growth economies.Originality/valueIt is the only research known to the authors attempting to explain high level of unemployment in transition economies using recognized economic theories. The paper contributes to a better understanding of the phenomenon of jobless growth in market economies in general.

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“…One of the problems that has been affecting developed and developing economies alike during the past decade is the question of jobless growth. Most emerging economies grow at significant annual rates and many of these economies also deliver in terms of population welfare but this seems to occur with no real growth in employment (Bhalotra, 1998, Verme, 2006, Wolnicki, 2006.…”

“…Yet, these positive economic developments seem inconsistent with the changes depicted by the Employment Rate (ER) and the Labor Force Participation Rate (LFPR), which have been both rather stable despite large differences across space and gender. The phenomenon of GDP growth combined with employment stagnation has been observed elsewhere in developing and developed economies alike and labelled as "jobless growth" (Bhalotra, 1998, Verme, 2006, Wolnicki, 2006. Explanations of this phenomenon vary from pure demographic factors related to the growing size of the working age population to purely economic factors such as sharp increases in productivity due to technological changes.…”

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“…Further, this continuing oil dependency has significant long-term labour market consequences. Oil, as a highly capital-intensive industry, has contributed to a perpetuation of 'jobless growth', a common problem in the contemporary global economy (see, for example, Onaran, 2008;Wolnicki, Kwiatkowski, & Piasecki, 2006). Since Libya has had an overall unemployment rate consistently over 25%, with youth unemployment hovering between 30 and 35% (IMF, 2012, pp.…”