Interview: Longin Pastusiak

Area I

• Location: “Koszalin” Subzone of the SSEZ Plot 9/67 • Area: 4.1553 ha • Local master plan designation: production, storage and warehousing facilities • Approximate land price from PLN 67 / m2 • Percentage of permissible development: 65% • Utilities Gas Calories 31,0 MJ/m3

Capacity 1.000 m3/h Water Capacity 5.000 m3/h Sewage Capacity 5.000 m3/h Electricity Voltage 15 kV Power Up to 31 MW

Contact:

Municipality of Koszalin 75-007 Koszalin PL Rynek Staromiejski 6-7

Piotr Jedliński

Mayor of Koszalin Phone: (+48) 94-348-86-03, Fax: (+48) 94-348-86-25

Joanna PiotrkowskaCiechomska

Mayor's Representative in charge of Key Investors and Employment Phone: (+48) 94 348 87 93; Mobile: (+48) 504 049 375 Fax: (+48) 94 348 87 92 Area II

• Location: “Koszalin” Subzone of the

SSEZ Plots 9/58 and 9/59 • Area: 4.6029 ha • Local master plan designation: production, storage and warehousing facilities • Approximate land price from PLN 68/ m2 • Percentage of permissible development: 65% • Utilities

Gas Calories 31,0 MJ/m3 Capacity 1.000 m3/h Water Capacity 5.000 m3/h Sewage Capacity 5.000 m3/h Electricity Voltage 15 kV Power Up to 31 MW

Achilles and the tortoise

In the 1990s, former President Lech Wałęsa promised that Poland would be like Japan, Donald Tusk wanted Poland to become the second Ireland, but no Polish politician has ever dared compare Poland with Germany. For years, Poland’s main economic goal has been to catch up with its western neighbor. Polish salaries are constantly compared with their German counterparts, and the country’s economic and social system is perceived as a role model. The average Pole is often bothered by a fundamental question: when are we going to be as rich as the Germans?

BY SERGIUSZ PROKURAT

as a child, in the 1990s, I asked my father: “When will life in Poland be like in the West?” I remember that my father thought about it for a while and said that 30 years must pass in order for Poland to reach the level of Western societies. Now, nearly 30 years have passed since that conversation. Poland may no longer resemble the country from the 1990s – unkempt, post-communist, with almost no innovative products and services, with raging hyperinflation, mafia on the streets and low salaries – but have we gotten closer to Germany, the largest European economy?

On the one hand, Germany is an ideal to which the Polish economy aspires, on the other hand, in a certain sense, it looks like Poles have a German hang-up, which results from historical events, and imaginary civilizational inferiority. So much so that Polish nationalism has chosen a narrative of turning this perceived inferiority into an alleged superiority. Nothing heats up Polish pride as much as the memories of the few victories over Germany in wars, or fairly rare victories over German sports teams. Every comment from a German politician concerning Polish politics is widely publicized and appended with a comment that the Germans are yet again interfering with Polish affairs. Nevertheless, German vehicles are predominant on Polish streets – the Volkswagen Golf has been the car of choice for Poles for years, and BMW is still a dream make for many.

DIFFERENT PATHS

Historically, Poland and Germany started from a similar level. Both countries were almost completely destroyed after World War II. In Germany, however, human capital was at a much higher level, and Poland was gripped by socialism. We could compare this to a situation of two people who, as a result of a catastrophe, have lost absolutely everything. One of them is a well-educated engineer who is well-known and well-connected. He has extensive professional achievements, a portfolio of self-developed constructions and proprietary patents and a head full of interesting ideas. He knows influential people in the right places. If he starts a business, there will be banks to give him loans and people who will invest in his ideas. The second person is a very solid and hard-working laborer who can offer only his two hard-working hands and readiness to work. This is how Poland and Germany started out in the mid-20th century and this is why their paths diverged.

American social psychologist Richard Nisbett, in the book Geography of Thinking, showed that a lot results from the cultural background in which people function. If we assume that the basic indicator of economic development is the purchasing power of the GDP per capita (i.e. GDP per capita adjusted by the cost of living according to the methodology of purchasing power parities), it turns out that Poles are now about 38 percent poorer than Germans. If we assume that the indicator of economic development is the GDP per capita in the euro in current prices, it turns out that Poles are about 65 percent poorer than Germans.

A country’s prosperity can be measured not only through GDP per capita, but – perhaps more accurately – by all of the wealth accumulated over generations. There is currently €5 trillion in German accounts. In order to get close to this amount, Poles would need to save money for 100 years, putting aside everything they earn, and yet they would not be able to make it, also because

the population of Poland is over two times smaller than Germany’s. Wealth is also visible in infrastructure. Germans have 13,000 km of efficient highways – eight times more than Poland, and 400 high-speed trains (vs. 20 Pendolino trains in Poland operated by PKP since 2014). Added to this, there are also valuable, well-known and reputable brands built over the years: Porsche, BMW, Mercedes, Siemens, Volkswagen, Bosch, MAN, SAP. The best we could say about Poland is that is “on the right track” to having such global brands in the future.

ARE WE CATCHING UP?

When we look at the pace of economic growth, in the last 10 years the real GDP per capita in Poland has grown at an average rate of 3.4 percent annually, and in Germany at a rate of only 1 percent. At the same time, Germany experienced an extremely deep recession back in 2009, which significantly distorted its growth rates. If such differences in the pace of development persisted and the German economy didn’t move forward, theoretically the income in both countries would draw level at around 2039. Unfortunately, the assumption that Poland will be able to maintain such a rapid pace for the next 20 years is a daring one. Most economists believe that due to supply restrictions, such as employee shortages, the Polish economy is bound to lose its momentum to some extent. Moreover, the richer the country, the harder it is to maintain rapid economic growth.

German Lidl, Aldi and Kaufland still make a great contribution to Polish economic development, but at the same time Poland is a back-up country; a service-outsourcing center and a subcontractor to the West. Global giants such as CD Project, a producer of world-class games such as The Witcher 3; or Synthos, a chemical industry tycoon, are some of the relatively few impressive brands of Polish origin. The model of economic growth, based on hard work, not innovation, will at some point be exhausted, so the road to achieving the level of German economic development will sooner or later start to steepen.

In the Salary Catch Up Index report, Grant Thornton analysts looked at monthly salaries earned in various European countries and tried to estimate when Polish employers will start rewarding their employees at the same level as their counterparts in Western Europe. How quickly have salaries in Poland been catching up with the richer countries of the EU? Not too quickly. In 2000, the first year for which data is available,