An Unlikely Player May Help Solve Poland’s Demographic Problems – Russia

Above, anti-immigrant protesters march in Warsaw.

 

Suddenly, Poland matters again.

This nation of 38 million people – nestled uneasily between Germany in the west and Russia, Lithuania, Belarus, and Ukraine in the east – is back in the news. Its new, right-wing government is making strident nationalist, anti-immigrant noises that are driving its European Union partners to distraction. A separate constitutional crisis has drawn severe criticism from the EU Parliament. Adding to the din, regional tensions with Russia are on the rise, leading to an increased NATO military presence and a call by the Polish minister of defense to increase the size of the Polish army from 80,000 to 150,000 troops.  The last time Poland got this much press was in the 1980s when Lech Walesa was leading strikers in the Gdansk shipyards – and the endpoint of that little job action was the legalization of Solidarity and the start of a socio-political tidal wave that swept away the Iron Curtain.

So why are these recent events important? First, in a European Union that’s facing growing political, economic and social challenges, the future of its eighth largest economy is a big deal.  Second, as a NATO front line state, Poland’s continued political stability and military commitment is critical to the alliance’s plans to counter Russian moves in the Ukraine, Moldova, and elsewhere in the region.

So what role, if any, are Poland’s demographics playing in this turmoil?

 

More than a Numbers Story

Like most of Europe, Poland’s overall population is shrinking and with that its working age population, the result of (1) a decreasing total fertility rate and, (2) significant emigration out of the country during the 1990s.  There are already signs of the population change, with schools closing for lack of enrollment and employers finding it difficult to find and hire workers. Between now and 2040, the working population will drop 18%, which could significantly slow economic growth and drive up wages to uncompetitive levels.

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Poland’s new political leaders, the Law and Justice Party (has a creepy, Orwellian ring, doesn’t it?), ran on a broad, nationalist, traditional values, anti-EU platform that promised incentives to increase the birth rate. (Its recently enacted “500+” program pays families with two or more children a stipend regardless of family income.) Did the prospect of population decline motivate Polish voters to elect what some critics have called throwbacks to the Communist era? Not really, but demographic decline was one part of a larger narrative that brought Law and Justice to power.

The irony of all this? While Poland’s economy has high unemployment and pockets of real income inequality, especially in the rural east (the so-called Polska B region), it has been the most successful of the former Soviet-bloc countries in making the transition to a market economy, with many attributing this to a past commitment to free-market policies, low wages, stable political and financial institutions, EU subsidies, and widespread improvements in education.  Growth rates in the 2000s were well over the EU average, and with annual GDP growth in 2014 of 3.3% in 2014 and 3.6% in 2015, its current growth rate is double the rest of the EU. Add to all this a relatively low level of government debt, and Poland may be economically better prepared for demographic change than any country in Europe.

 

Let’s Get It On, People!

So will Poland’s 500+ program convince its people to start having more babies? Not a chance. No one has documented a government program anywhere in the world that has been able to increase the birth  rate above the replacement level needed to increase overall population. Subsidies, paid child-care leave, special birth bonuses, wacky “National Day” events encouraging couples to get it on, etc., etc., none of them alone or in combination have been demonstrated to do anything except modestly boost fertility rates.

In fact, there are two only two things the Polish government can do to start impacting its demographic future. One would be to convince some of the estimated two million Poles now working elsewhere in Europe to come home.  As compelling as that notion is, it’s a tough sell. Why should Polish expatriates – making competitive incomes in politically stable nations like the UK and Germany – return to a nation with 9.6% general unemployment rate, a youth unemployment rate of 19.5%, and a political environment that’s growing more intolerant by the month.

The second option Poland has in engineering a demographic turnaround is to start attracting immigrants from countries that are facing economic and political travails even more toxic that those in Poland. About a hundred thousand arrivals a year could do the trick.

(At this point, let’s ask the leaders of the Law and Justice Party their general thoughts about opening the nation’s doors wide-open to immigration. Hmm. Does their heads simultaneously exploding mean they think it’s a bad idea?)

 

Thanks, Vlad

But now these leaders have a bit of a dilemma – what to do with hundreds of thousands of new immigrants from Ukraine. In 2014, Poland issued  331,000 short-term work permits for Ukrainian immigrants, up 50% from the previous year. (An important background note: Poland has the fewest foreign-born citizens living within its borders than any country in Europe.)  Many of these new immigrants are fleeing the Russian-instigated chaos in the Crimea, while others are economic migrants, unable to find work in Ukraine’s broken economy. Many of them don’t want to go back and are being given assistance by the Catholic Church. Others see Poland as a transit point for entry into other EU countries.

US Army Stryker Poland 2016
American troops in Poland in 2016. Russian moves in Crimea and elsewhere have prompted a greater NATO presence in Poland and other front line states.

Poland’s government is not welcoming the Ukrainian immigrants with open arms, but nor is it making an effort to send them packing. That ambiguity is understandable.  A mass expulsion would make matters worse in Ukraine and create a wedge between Poland and Ukraine at the very moment they need to act jointly to deter Russian aggression.   And to project a bit, the leaders of the Law and Justice Party probably consider these ethnic Ukrainians to be the least objectionable immigrants out of a world of dark, religiously-suspect people who might want to come to Poland. Ukrainians are Slavic, Christian (although generally not Roman Catholic), and share a mutual enmity towards Russia.

 

A Time for Change

Immigrants from the Ukraine represent a once-in-a-century opportunity for Poland to do something about its long term demographic challenges. A steady stream of immigrants from countries like Ukraine, Lithuania and Belarus (nope, not Russia), could help maintain Poland’s working population and reduce wage pressures. It could also help Poland strengthen economic ties to these nations without foreign aid or direct handouts, and would enhance Poland’s long term political position vis a vis Russia.

To make any of this happen will require the country’s institutions and leaders to undertake a very different kind of dialogue about the country’s future and what it means to be Polish. The Polish Catholic Church has taken a pastoral role in helping Ukrainian immigrants, and in a perfect world it’s well positioned to shape public opinion. But it is a uniquely Polish institution, and may be unwilling to take the lead on such an explosive issue.

Similarly, the Law and Justice Party will not be preaching about the virtues of a diverse, multi-cultural Poland anytime in the future.  The good news? The opportunity has presented itself and there is time to fully debate the issue before the need to act. But it remains to be seen if Poland will have the capacity to put aside its doubts, capitalize on its unique place in the region, and do something to improve its demographic future.

Agree? Disagree? Join the discussion.