Charles Carnall has been running the Polish office of recruitment firm Hays since December 2016. Before moving to Poland, he was director of MacKenzie King, a recruiter specialising in accountancy and finance. Prior to this he was an operations director in the accountancy and finance sector at Hays. He has a BSc from the University of Hertfordshire.
We begin by discussing the regional differences in the labour market supply and demand across Poland. “We carry out recruitment across all sectors, and it is indeed a mixed picture. For example, IT contractors are generally hard to find, but it's geographically tougher in Warsaw and Tri-City,” says Mr Carnall. “Companies are making investments, relocating to these areas. A shortage of suitable housing stock is another limiting factor. In Kraków, it's a struggle, in Katowice, the situation is a bit better.” I mention two recent meetings the BPCC held, one in Lower Silesia, where HR directors in the manufacturing sector were all reporting increased difficulty in recruiting and retaining factory workers, while in Podkarpacie, employers in the aerospace sector were saying that it's not that difficult to find specially qualified employees for manufacturing activities.
We move on to the question of salaries. “Pay levels are being pushed up; after a relatively long period of deflation, prices have started to rise, just as unemployment is at a record low. Employers are finding the right employee hard to find, so they have to pay more. We'll be seeing salary inflation, which has been manageable, becoming a more significant factor for employers. Richer companies can dig deeper to keep up,” he says.
Brexit is the unavoidable topic. When the UK opened its labour market to Polish citizens after EU accession, Poland was experiencing record high unemployment. Now, as the UK is looking to restrict the inflow of migrant workers, Poland is experiencing record low unemployment. “The movement of workers from the UK back to Poland will have positive effect on Poland's economy, especially because many employers will prize the skills that the returnees have acquired during their stay in Britain. Many of those returning, especially those who've been away a long time, will hardly recognise the Polish labour market,” says Mr Carnall.
“While the effect of Brexit at this stage is unknown, things are starting to move. The east coast of England, especially in the agricultural sector, is heavily dependent on non-UK labour. Brexit is likely to have a severe impact on productivity.
With uncertainty uppermost in the minds of many investors, looking to relocate to within the EU makes perfect sense. Many BPCC members in areas such as real estate advisory are noticing increased levels of enquiries about moving production, logistics, back office activities or even R&D to Poland. Concerns about the UK's future access to the single European market, and indeed its membership of the Customs Union make it logical to at least consider a Plan B.
I ask about that sector of the Polish economy that is increasingly interesting to the BPCC's members offering business advisory services, namely mid-sized Polish companies owned and run by the founder. Many Polish entrepreneurs are starting to think business succession or selling their firms as retirement age looms. “For these guys, it's really difficult giving away decision-making powers to external managers,” says Mr Carnall. The founders are emotionally tied to their business, and although in many cases they've grown into successful medium-sized companies employing hundreds of people and turning over hundreds of millions zlotys, they are still run like micro firms. The owner-managers typically find delegating their authority difficult.
“Very often the finance function in such firms is run by a number-crunching accountant, rather than a finance head with a commercial sense,” says Mr Carnall. Without a good CFO or head of HR that can think strategically rather than just operationally, it's difficult for Polish mid-sized businesses to scale up and reach their potential. Small businesses can outsource all their HR box-ticking work, but once a company becomes mid-sized, the HR function becomes strategic in nature rather than merely compliance-oriented. This is key to further growth.
The subject of qualified managers brings us on to the next question, which concerns professional qualifications. “We're finding that professional qualifications are now becoming more sought-after by employers than experience. Without those qualifications, candidates are hitting glass ceilings. The notion of 'being qualified by experience' gets you only so far these days, but not into the top positions. All the big corporate employers require professional qualifications; CIMA in management accounting, CIPS in procurement, RICS in real estate,” says Mr Carnall.
The Chartered Institute of Personal Development (CIPD) is not yet present in Poland; a recognised qualification for HR professionals would be welcomed in this market.
Poland's long-running boom in shared services and business process outsourcing looks unlikely to run out of steam, though investors have noticed that the Kraków and Wrocław BPO/SSC markets have reached a saturation point from the point of view of labour supply. Retention is the main concern of employers in this sector. “Getting an employee to change jobs for 200 złotys a month is relatively easy, the problem is stopping them from moving again. In these two cities, the staff turnover rate in the BPO/SSC sector can be as high as 30% in a year. We're finding that the most effective retention tool is having a good, strong benefit package in place,” says Mr Carnall. “Long-service rewards for three, five, seven years in service; a good healthcare scheme, other incentives to make people stay.” I mention corporate social responsibility (CSR) programmes, which offer employees – especially the Millennials – the chance to give something back to society – as a way of binding BPO/SSC employees to an employer. “CSR is a big thing in the UK among the younger employees, but volunteering and charity work is less popular in Poland than it is in the UK, where it has longer traditions,” says Mr Carnall.
He speaks very positively about Poland's education system, with school leavers and graduates having a strong grasp of the fundamentals. “They are also highly motivated, these are the first generations to have the chance to make something of their lives, without the safety-net of inherited wealth.” This is the main reason that Poland continues to be an attractive destination for foreign direct investment. But the labour market is getting tighter.
“We're finding more and more Ukrainians for work in Poland, in IT contracting in particular,” he says. I mention our manufacturing HR event in Lower Silesia, where around a quarter of the 1.2m Ukrainian nationals working legally in Poland are currently employed. Employers there say that many Ukrainians want to work longer than the legally permissible 48 hours, earning as much as possible to save or to send home. “Like Poles in the UK,” observed Mr Carnall. “They also work longer hours than native British workers.” Which brings us back to Brexit; “the fall in the value of the pound after the referendum has meant that money sent back to Poland is not as good as it was, this will impact movement.” Indeed, last year saw a 16% drop in applications from Poles for National Insurance numbers, down to 93,000 compared to 113,000 in 2015.
“There is trepidation on the market right now. Stock markets are at a record high, companies are feeling that they need to have plants here and there, they're looking at servicing the EU market as well as global markets; hedging against uncertainty is the main tendency that I can see,” said Mr Carnall. This uncertainty will certainly make itself felt in the HR market, in Poland and globally.