Just two months ago, The Krakow Post reported that unemployment in the city had sunk to 2%.
Now, the coming economic consequences of the COVID-19 (coronavirus) pandemic seem to dash any hopes that this rate will remain even close to so low.
While it should be stressed that no one can foresee the scope of the pandemic or its ultimate impact on any sphere of society, quarantine has kept workers and consumers at home, disrupted supply chains, closed shops and other businesses, and disrupted the global economy literally everywhere with unprecedented shocks to both supply and demand.
Business consultant Jacek Kowalczyk told Polish Newsweek that Poland has not faced such a crisis since the transition from state communism to a more neoliberal market economy nearly 30 years ago. Due to the nature of the current crisis, it is wrong to assume that its consequences can be extrapolated from past economic downturns with any certainty.
With that in mind, looking at past downturns in 2001, 2009, and 2012, each 1% reduction in the Polish GDP has been correlated with approximately 54,000 more cases of unemployment per quarter. The Polish Economic Institute currently forecasts that the worst case fallout from the COVID pandemic could see a contraction in GDP from 3.5-4.7%.
Currently some Polish companies are taking a cautious approach to laying off staff, either keeping them employed in the hopes of a speedy economic recovery after the worst of the pandemic has passed or favoring temporary furloughs over permanent layoffs.
The long-term picture depends on many variables, including the immediate reactions of business owners at this time, how well businesses are able to maintain their existing partnerships, global economic trends, and steps taken by the government now and in the wake of the pandemic to mitigate unemployment and other economic woes.