Labor costs weigh on construction companies in Poland more than ever

In Hungary

Business confidence among Polish construction companies tumbled early this year, with the heaviest burden, as perceived by the enterprises, coming from labor costs and tax levies, construction market expert Spectis said.

Decline in confidence is chiefly due to such factors as an over 15% increase in the minimum wage and a 10% hike in social insurance contributions faced by sole traders operating in the construction industry.

On top of that, large construction businesses are required to conduct Employee Capital Schemes (PPK) or the alternative solution of Employee Pensions Schemes (PPE).

The January hike in labor costs proved to be a significantly bigger burden on small- and medium-sized construction enterprises, which frequently hire workers who get paid the regulatory minimum wage. It is a relatively rare occasion for large construction companies with 250 or more employees to pay just the minimum compensation allowed by law.

However, the minimum wage increase will indirectly affect the largest market players too as, for instance, subcontractors will raise their labor prices.

Furthermore, in 2020 construction companies are poised to face mounting pay pressures from Ukrainian laborers. Those migrant workers will not be left with the only option of staying in Poland as they can find employment in Germany or, alternatively, go back to their home country, which has recently witnessed a marked economic upturn and fast wage growth, Spectis said in its report, released on February 5.

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