Poland considers the objections of the Netherlands to the export of unemployment benefits, which allows employees to benefit from a Dutch unemployment benefit in their own country for up to 6 months, to be outdated. “The exchange of employees is in the interest of both countries”, says Minister Jadwiga Emilewicz of Entrepreneurship and Technology, who visited the Netherlands last week. “All countries within the European Union benefit from the common market. I can hardly imagine the Netherlands without Polish workers. I think that some construction sites would simply have to be shut down.”
Don’t you find it unfair that they take their benefits to Poland to enjoy a long holiday there?
“When I speak to my colleagues from Western Europe, I always say: imagine all Polish workers going back to Poland. They are more than welcome. Do you think that your workers would fill their places and would like to do their work? I very much doubt that. Ageing societies, such as the Dutch one, must be very careful when talking about the labour market. Polish employees in the Netherlands are also changing. Ten years ago it may have been very simple work, but now Polish IT programmers are among the best in the world.”
44-year-old Emilewicz is a woman on a mission. Being a minister in a right-wing conservative government, she shows the world the modern image of Poland. A Poland that has been able to achieve economic growth for more than 26 years, with around 5 percent in the past two years. For the Polish-Dutch Business Forum that was held in The Hague last week, the minister brought with her a selection of modern Polish companies that are eager to invest in the Netherlands. “The time when Poland could compete with cheap labour is definitely over. For that we have to go 600 kilometres further East, to Ukraine or Belarus.”
In the Netherlands Poland is still perceived as an underdeveloped country, where companies compete with cheap labour. How much of this is true? What are the signs of Poland moving towards a knowledge-based economy?
The free market economy has been present in Poland for 30 years. In 1989, we started from a very low ceiling. Development processes take time. We are increasing our prosperity at one of the highest rates in the world. FTSE Russell promoted Poland to the group of the 25 most advanced global economies. We are increasingly competing on quality and innovation rather than labour costs. Our production and export of high-tech goods is growing. Research and development expenditures are increasing. Digital services based on human capital of the highest quality – Polish IT specialists – are increasingly important. Investors come to Poland because of the quality of Polish engineers, which is evident from all international rankings. With regard to the most important programming languages, Java and Python, Polish IT professionals even rank first and second. Foreign investments mainly concern advanced technologies. As a result, wages also grow, which creates a “virtuous circle”. Employees expect higher wages, but they are increasingly understanding the need to take care of modern skills and knowledge for themselves and their children.
“The perception is that we are still at the beginning of our transition as we were in the early 1990s. We are very proud of having the lowest unemployment rate since 1995 but that also means that we have to pay more in order to get the highly qualified people into employment. We are also trying to make the Polish economy even more innovative. This is a difficult process, because we are traditionally a very industrial country.”
The Minister lists a number of sectors in which Poland is at the forefront. “We are very proud of the Polish banking system. It is among the most developed in Europe and in the world. You can pay anywhere in Poland with a card or app, or smartphone. The Polish population of 38 million inhabitants uses more non-cash systems than any other country in the old Europe, which is why we are boosting the market. This is generally overlooked.”
Together with ten Central and Eastern European countries, Poland is seen as a ‘digital challenger’ because of its digital potential. Emilewicz: “The total number of IT engineers in Central Europe is higher than in the entire United States. We have the potential and invest a lot. In 2016, 6.2 percent of our GDP came from digital economy. The forecast in 2025 could potentially triple this.
To what extent do you, as Minister of Technology, mind that the government has a conservative signature? How does this relate to the 24-hour economy for example?
“This week we had a cabinet meeting about the introduction of the compulsory free Sunday, starting next year. What we are discovering is that in the run-up to the introduction, the digital domain has grown strongly. The grocery store may be closed on Sundays, but the e-grocery store is open. For many SMEs, however, this digital transition is not easy, and that is why we, the government, are doing everything we can to help them with it. But for this government, digitalisation starts much earlier: that is why we have introduced programming lessons at primary school.”
If Europe is to continue competing with China and the United States, we need more collaboration, according to Emilewicz. “If we don’t make progress on Artificial Intelligence partnerships, IBM Watson and Microsoft will stay ahead of us and we have to accept that we will have to buy AI solutions in the future.”
When the first Polish unicorn will be born (a privately held company with a valuation of over $1bn). What sector would you expect it to come from?
Two innovative Polish companies have exceeded the value of one billion dollars. It’s Allegro and CD Projekt. We have created good conditions for the development of start-ups in Poland, we have our own innovation ecosystem, which is constantly supplemented by new elements. It takes time for such a classic unicorn with an external investor to appear. I think we’re closer than we were. To achieve the status of a unicorn, you must create a unique product or service on a global scale, a technology or a breakthrough solution. Now the fastest growing companies are working on solutions based on data analytics and artificial intelligence, cybersecurity or biotechnology, and Polish start-ups are leaders when it comes to big data, analytics, the Internet of Things. In these industries I would look for a Polish candidate for a classic unicorn.
Europe is losing the innovation leadership position to the US and China. What policies could be introduced to reverse the trend? How should European companies respond to the challenge of more innovative American and Asian companies?
It should be the EU’s strategic objective to establish competition with China and the US, but not through imitation and reconstruction of solutions. The EU development path should be a kind of “third way” between these powers. Therefore, innovation, competitiveness, free trade, mobility, cross-border data exchange should be priorities. If European countries are unable to make bold moves towards an ambitious industrial strategy, a well-functioning Single Market without protectionist barriers, a real Digital Single Market as well as the diversification of energy sources, they will face long-term stagnation. In terms of the wider economy, the greatest potential for collaboration lies in the development of European value chains.
Łódź-Chengdu railway connection has become a new symbol of Polish geoeconomics and is being called a new silk road. How much of it is just buzzword? Does the relative proximity to China have true potential for Polish businesses and innovations?
Poland is interested in the potential of the Chinese market. The opening of Polish Foreign Trade Offices in Shanghai and Chengdu is to help our entrepreneurs learn about a different business culture as well as the conditions of doing business in China. Poland has the ambition to become a hub for EU-China trade. Our plans go beyond the terminal in Łódź, encompassing a number of multimodal transport chains. We are expanding Polish ports, restoring the potential of inland waterways, the Polish railway makes the biggest investments in its history. Poland is actively involved in the preparation of conclusions for the upcoming EU-China summit, which is going to be devoted to a large extent to trade, investment and industrial collaboration. We also work with China in the 16+1 formula – the only permanent forum for dialogue with China with the participation of EU institutions.
There are rumours about the possibility of Polexit. Recently you called Polexit “a myth”. How do you think this move would affect the Polish position in the EU?
I stand by my word. Polexit is a myth that is aimed at weakening Poland’s position. We see the benefits of EU membership – functioning within the internal market and the use of the four freedoms. 87% of Poles appreciate the benefits of EU membership. We are a full member of the EU and we fulfil all obligations related to membership in this organisation. We actively participate in EU work, including on key issues. This includes building the advantage of the European economy on the global market in relation to our third partners, which we have already discussed.
How do you think the extensive cross-country social policy in the EU might affect the global competitiveness of Europeans in the long run? Would you consider it an advantage or a burden?
In Poland’s opinion, the social aspect of Europe should be based on openness and respect for the diversity of national social models. We support social convergence, but it must progress gradually, keep up with economic convergence. Unification of social standards at a high level will be artificial, unadjusted to the level of affluence of economies, and will reduce their competitiveness.
The Dutch also see Polish politics as very conservative, while the government is known for its traditional values. Does it affect the investment climate as the tech sector is rather progressive and liberal?
The new technologies sector is free-market oriented, focused on results. It needs fair and transparent market rules. We respond to these needs with a number of pro-business changes in law and facilitation of conducting innovation activities. Also engineers, financiers and scientists voted in favour of our government, who saw the advantages in the vision we propose – the combination of economic transparency with a new ethical quality in public life.
You said that there’s a great potential in cooperation between Polish and German companies in the fields of automation, AI, or robotics. What barriers withhold such partnerships at the moment?
Our economic relations are in very good condition. However, a global race is going on. In order not to be left behind, our economies must enter a higher level of development, and our collaboration should be based on foundations that meet the challenges of the future. On a redefinition of the partnership principles. On the understanding that the biggest added value in the face of global competition are joint, innovative projects, and the main obstacle to collaboration are no longer customs or borders, but different protectionist barriers manifested in excessive regulation.
(together with Bartek Ciszewski in Poland)
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