Ukrainian refugees in Poland have increased the country’s gross domestic product by over 320 billion zloty (or $85 billion at the current National Bank exchange rate) during their three years of stay. At the same time, Polish spending on aid to Ukraine during the war amounted to just $2.3 billion, analysts found.
A report by the auditing firm Deloitte, detailing the impact of Ukrainian refugees on Poland's economy, was published on the website of the United Nations (UN).
- Progress in market integration
Ukrainian refugees have been increasingly successful in terms of labour market integration.
The large influx of refugees since February 2022, has further increased and changed the demographics of the already significant Ukrainian migrant population in Poland. Refugees from Ukraine are primarily women and children, with over 67% of female-headed households. Poland was quick to open its labour market to refugees from Ukraine, who – despite difficulties – surprisingly promptly began their economic integration and soon supported themselves primarily from employment. In the past year, refugees’ employment rate grew from 61% to 69%, with the median net wage rising from PLN 3,100 to PLN 4,000 and narrowing the gap to the median net wage in the entire economy.
As Ukrainian refugees entered the labour market, the economy adapted, resulting in more specialization and higher productivity.
In a simplistic supply-demand framework, the influx of Ukrainian refugees would have had a negative impact on Polish workers employment or caused a decline in real wages. However, this has not occurred. First, Polish citizens employment rates have grown, and unemployment rates have fallen. Second, poviats in which the employment share of Ukrainian refugees has grown by 1 pp. saw 0.5 pp. higher employment rates among Polish citizens, and 0.3 pp. lower unemployment rates. Third, there is no evidence of lowered wages, in fact the limited available data indicates that a higher share of Ukrainian refugees in a poviat may have caused local wages to rise. Such findings are in line with academic literature, which documents a positive impact of migrants on native workers. With foreigners entering the labour market, native workers increasingly shift to complementary, higher value and better paid tasks. This can be seen in the data, as Polish citizens are moving to better paid occupations. It constitutes a positive shock to productivity, which is what counterbalances labour market pressures.
- Macroeconomic impact
In 2024, Ukrainian refugees’ net impact amounted to 2.7% of the Polish GDP.
This is the amount that would be lost, should refugees “disappear” from the Polish economy. It is mainly driven by a higher number of workers in the economy, but also accounts for increased productivity brought about by more specialization. Considering all aspects, the overall impact of the refugees has been predominantly positive, and it moved the Polish economy to a higher growth path. Refugees contribute to the economy slightly more than their employment share – they increase the labour supply as both workers and entrepreneurs and expand demand as consumers. The rise in productivity due to more specialization across the labour force further boosts the economy. The impact of refugees is lowered by a temporary decrease in the capital-to-labour ratio (companies need time to invest in equipment and machines to match the rise in the number of workers), as well as an increase in competition on the labour market.
The figures are higher than those in the previous Deloitte (2024) report, which – due to scant data available at the time – did not account for the positive impact on labour productivity.
In the earlier report, the overall positive impact of refugees was reduced based on conservative assumptions, in the absence of available/clear data on the increased competition in the labour market. The model notably considered lower wages and higher unemployment among native workers. However, recent data indicates that these concerns did not materialize. Instead, Polish workers have moved on to better paid occupations, and the economy has benefited from a larger pool of talent, enabling deeper specialization and increased productivity growth.
- Remaining challenges
Despite significant progress in integrating refugees into the labour market, several challenges persist.
Refugees are half as likely to have an employment contract as Polish citizens and few of them achieve high incomes. Although refugees have been moving on to more desirable professions at a faster rate than other groups in the economy, their jobs continue to be disproportionately skewed towards elementary occupations. These issues are most evident among those with university diplomas, but those with below university education also face obstacles. As of June 2024, there were several interconnected issues:
- There is a disparity between the educational attainment and labour market position of refugees, reflecting their significant overqualification compared to Polish citizens. While the proportion of individuals with tertiary education among refugees is slightly higher than among Polish citizens (40% vs 38%), only 12% of refugees work as managers, professionals, and technicians (occupational groups usually requiring higher education) compared to 37% of Poles. Consequently, the wage premium for individuals with tertiary education is much lower among refugees than among Poles (22% vs 84%).
- Widespread occupational licensing is an obstacle to efficient use of refugees' human capital. Only 3.6% of Ukrainian refugees insured at ZUS work in regulated professions compared to 10.6% of Polish citizens. Many barriers on entry to a profession apply to foreign citizenship rather than skill or exam requirements. This is relevant in education, medical professions, and even fire service.
- Lack of fluent Polish negatively affects the labour situation of refugees. Although language skills improve over time, still only 18% of refugees speak Polish fluently, usually those who arrived in Poland 29 months ago. On average, those at the beginner level have been in the country for only 18 months.
- Lack of work experience negatively affects the labour outcomes of older refugees. Refugees who back in Ukraine managed the household or were not employed remain underemployed in Poland. The employment rate among the most enterprising refugees, who were self-employed back in Ukraine, is 91%. In contrast, those who did not work, study or train in Ukraine, have an employment rate in Poland of approximately 35%.
Addressing the remaining issues of refugee integration into the labour market would improve their situation and further benefit the Polish economy.
The key measures to improve refugees' standing include advanced language courses for professionals, easing of occupational licensing, especially requirements based on citizenship, and active labour market policies to help specific groups enter the labour market.
Potential macroeconomic benefits from the further integration of refugees into the labour market are considerable.
Addressing even half of the existing gaps can generate significant macroeconomic gains of at least PLN 6 billion value added annually. Such an increase in GDP would contribute more than PLN 2.5 billion to public sector revenue through taxes and social security contributions. These estimates are conservative, as they consider only the direct gains for workers. As the economy adjusts to a more skilled workforce, additional growth would result from increased company investments necessary to meet needs of more advanced workforce. While increased competition might reduce overall gains, deeper specialization can mitigate such effects, as suggested by the experience with refugee integration into the labour market.
