Maciej Grabowski Foreigners and informal labour market in Poland dr Maciej Grabowski The Gdańsk Institute for Market Economics

Maciej Grabowski People flows and migration in and out of Poland - facts, reasons and rules Main push and pull factors for illegal migrants in Poland and prospects Conclusions Informal labour market - main characteristics

Maciej Grabowski Informal labour market Change of nature of informal sector: from excessive business limitation to cost reduction Informal labour market during transition Main reasons of informal labour: - economic causes; - institutional causes; - cultural causes. Main reasons of informal labour: - economic causes; - institutional causes; - cultural causes.

Maciej Grabowski Informal labour market Economic reasons: (i) lack of legal jobs; (ii) insufficient income; (iii) strong (and/or) unfair competition Informal labour market during transition Institutional reasons: (i) high taxation on labour, (ii) generous unemployment Institutional reasons: (i) high benefits, (iii) easy rules of granting unemployment benefits, (iv) labour market regulations (incentives to hire on black), (v) limited capability of public administration Cultural reasons: (i) low tax morality, (ii) high risk-taking attitude, (iii) identification with state

Maciej Grabowski Informal labour market Main sectors: (i) gardening and agriculture, (ii) construction professions, and related, f.i. plumber, (ii) car repairs, (iii) retailing, (iv) tailoring, (v) transport services, (vi) child and elderly care, (vii) education, (viii) medical services, so mainly labour-intensive jobs in services Main sectors: (i) gardening and agriculture, (ii) construction professions, and related, f.i. plumber, (ii) car repairs, (iii) retailing, (iv) tailoring, (v) transport services, (vi) child and elderly care, (vii) education, (viii) medical services, so mainly labour-intensive jobs in services Informal labour market during transition Illegal labour supply (real time) is strongly correlated with rates Unemployed are the most involved in illegal labour market. Other characteristics: young, male, vocational education

Maciej Grabowski Informal labour market Decreasing migration trend out of Poland, but increasing numbers of Poles working temporary abroad (legally and illegally) Migration flows in and out of Poland Increasing flows of foreigners coming into countries Small number of work permission, but high value of expenditures done by foreigners

Maciej Grabowski Migration to Germany from Poland in (in 1000) Source: Info-Dienst Deutsche Aussiedler

Maciej Grabowski Inflows into Poland (in mln) Source: GUS

Maciej Grabowski Work permissions in (in 1000) Source: National Labour Administration

Maciej Grabowski Work permission structure (as in 2000) Source: National Labour Administration

Maciej Grabowski Foreigners expenditures in Poland (in mln US$) Source: GUS 2001

Maciej Grabowski Sales in selected Polish baazars (in mln US$) Source: IBNGR

Maciej Grabowski Current situation Some conclusions Estimations of foreigners, who work illegally in Poland vary significantly: from to , most probable it was in 2000 There are strong evidence of high flows between Poland and Eastern countries Reduced activities at baazars suggest that part of these flows is related to illegal labour - work permissions are v.low

Maciej Grabowski Some conclusions There are three groups of illegal foreigners workers in Poland: - Workers from East, which take in low-profile jobs; - Professionals from West, which work for MNCs; - Transit migrants from East to UE There are three groups of illegal foreigners workers in Poland: - Workers from East, which take in low-profile jobs; - Professionals from West, which work for MNCs; - Transit migrants from East to UE The most numerous group is the first one

Maciej Grabowski Current situation Push and pull factors for illegal migration and/or illegal foreigners workers in Poland Large and growing regional disparities in economic development (bad perspectives), including labour markets Large income disparities Low costs of migration: low cultural and languages barriers, low transport costs Easy institutional environment: no visa regime vs visas requirement in EU countries for Bialorus and Ukraine citizens

Maciej Grabowski Current situation Large economic disparities Labour Market developments (productivity, unemployment and employment rate) Economic developments

Maciej Grabowski Wage disparities

Maciej Grabowski Unemployment

Maciej Grabowski Employment

Maciej Grabowski Employment rates

Maciej Grabowski GDP per capita (as in 2000)

Maciej Grabowski Current situation Push and pull factors for other groups Transit migrants accept any job to secure income for travel payments Professionals working mostly for MNCs: - tax incentives (f.i. In UK and Poland highest rate of PIT is 40%, but threshold is Ł in UK and ab Ł in Poland; - necessary paper red tape to get work permission, - weak enforcement by tax and labour administration

Maciej Grabowski Current situation and prospects Some conclusions and prospects New phenomenon - illegal foreign workers reached ab.20% of total illegal workers in Poland In some regions and sectors (east and central part of Poland, in f.i. construction) such workers are becoming important part of economy Polish illegal workers (estimated to ) work in the US and in the EU countries, but don’t accept jobs, which are taken by mostly Ukrainians

Maciej Grabowski Current situation and prospects Some conclusions and prospects Foreign illegal workers will probably remain significant part of informal sector until Schengen treaty is fully implemented in Poland In such case, informal sector would be reduced, and cross-border trade would also decreased Polish labour market regulations should provide more flexibility to offset this situation