Posting annual GDP growth rates nudging 5 per cent, Poland’s economy remains relatively vibrant compared to the rest of the EU. With the Ministry of Finance estimating that 200,000 expatriate Polish workers could return home after Brexit – a hugely over-optimistic forecast, according to seasoned Poland watchers – the central European country remains a potentially attractive place for financial services firms to locate parts of their business.
Close business and political links with the UK, where more than 1m Poles are currently living and working, mean the nation is particularly suited to working with Western banks and financial services companies.
Of the major international names in wealth management, Credit Suisse has been the one to invest most significantly, starting five years ago with a major outsourcing centre in Warsaw and Citi has allocated significant resources too.
Local experts in Warsaw say that after Brexit, they expect more business from foreign finance firms to move there, as the Polish capital develops its reputation not just as an outsourcing hub, but a location for other, value-added services.
“What really plays to the strength of Warsaw is the depth and breadth of our financial, analytical and IT abilities,” says Olga Grygier-Siddons, a partner at PwC Polska, speaking on the sidelines of the Belvedere Forum 2019, convened in Warsaw’s Royal Palace to advance UK-Polish co-operation.
“Initially, it was a great place to set up back office operations, with basic strategies, but now those operations are doing more and more, as they have proved so successful.”
PwC estimates that 80,000 employees in Warsaw are working for business process outsourcing (BPO) companies, with 300,000 employed in this sector across Poland. Brexit is just one of the factors triggering financial firms to move some activities to the country. Others include lower costs and plentiful availability of high quality, qualified graduates.
Latest moves have embraced technology-related specialities such as artificial intelligence, robotics and big data, says Ms Grygier-Siddons, fuelled by a plentiful supply of young graduates, especially in Warsaw and surrounding areas, with language and analytical skills.
“Anecdotally, we are also seeing people looking to come back to Warsaw,” having gained valuable work experience in the UK and other European countries, she says.
Although “labour arbitrage” means it is cost effective for financial firms to base certain functions in Poland, where the average monthly salary is $1,300 according to PwC, Warsaw can still attract experienced workers to come home because the salary for specialist roles is much higher.
“The authorities could be doing more, but they don’t have to do all that much as business is already coming here,” believes Ms Grygier-Siddons. “That trend has been established. The government is very supportive of investment which would generate work and capabilities being expanded from Poland. But they are also worried about foreign firms coming here and grabbing market share.”
Internal critics believe the Polish government could be doing much more to aggressively attract new business and that it is in fact taking the country backwards, while acknowledging there is a risk to damaging relations between London and Warsaw if Poland tries to actively poach finance business from the UK. “For those global companies who have made a decision not to invest [in the UK] after Brexit, we are in a better position than Germany or France,” says one Polish participant at the Belvedere Forum.
“We are trying to change the business environment in Poland, relating to tax reform, demography, immigration and healthcare,” says Tomasz Wroblewski, president of the Warsaw Enterprise Institute (WEI), a think-tank representing Polish entrepreneurs.
Today’s population of 38m needs to be pushed closer to the 50m mark by 2050 in order for growth prospects to be transformed, he believes, taking inspiration from Ireland’s tax reform and calling on his government to take more migrant workers from Ukraine, Poland’s eastern neighbour.
“Our economy cannot fulfil its potential unless we improve our skill levels, which means inviting in up to 3m Ukrainians. Currently we have 1.3m,” he says, with increasing competition for this labour force from Germany, which has loosened restrictions.
The WEI is calling for the government to review and overturn some of its ultra-conservative rulings, such as forbidding many shops to open on a Sunday. “We predicted this would mean disaster for small Polish store owners and it led to 16,000 small stores going under in just one year,” laments Mr Wroblewski.
