ctrl-fYes
"Since Poland completed the transition from Communism to democracy in 1991, its economy has been growing at an average annual rate of 4 percent"

Poland has the eighth largest economy in the EU and the largest of the former Eastern Bloc countries. In July 2017, Ruchir Sharma, Chief Global Strategist and head of the Emerging Markets Equity team at Morgan Stanley, penned an Op-Ed for The New York Times highlighting Poland’s economic success since the disintegration of the Soviet Union[1]. “Since Poland completed the transition from Communism to democracy in 1991, its economy has been growing at an average annual rate of 4 percent and, remarkably, has not suffered a single year of negative growth. In those 25 years, Poland’s average income has risen to near $13,000, from $2,300, and it is now on pace to pass the $15,000 mark by the turn of this decade,” he wrote.

But recently Poland has run into difficulties due to a shortage of skilled workers. In November 2018, the Polish unemployment rate was just 3.8%, according to Eurostat[2], with the latest economic forecast from the European Commission predicting it will fall to 2.9% in 2019[3].

“The labour force shortage has become a permanent problem in Poland, and it’s increasingly weighing on the future performance of the Polish economy,” Andrzej Kubisiak, Analyses and Communication Team Director at Work Service SA, Poland’s largest HR company, told Bloomberg last year[4].

Poland’s answer to this problem is automation. In countries suffering from higher unemployment, bringing up the subject of automation is often frowned upon, conjuring as it does for so many a terrifying vision of a world in which human workers have been replaced by machines and there is mass unemployment – but not in Poland.

"The Polish government is focused on bringing about Industry 4.0, sometimes referred to as the fourth industrial revolution"

The Polish government is focused on bringing about Industry 4.0, sometimes referred to as the fourth industrial revolution, and defined by Tech Radar as, “the gradual combination of traditional manufacturing and industrial practices with the increasingly technological world around us.”[5] traditional manufacturing and industrial practices with the increasingly technological world around us.”[5]

This commitment to automation has been demonstrated by the Future Industry Platform, a collaboration between the private sector and the Polish government’s Ministry of Economic Development. “The main objective of the Platform will be to improve the competitiveness of Polish industry while establishing the conditions for Industry 4.0 to prosper in the country,” according to the European Commission[6].

This is a long-term goal. When it comes to automation and Industry 4.0, Poland is lagging behind the rest of Europe, but the tide is starting to turn. “In terms of the level of production automation, Poland is hugely behind the majority of European Union member states,” Industry Europe reported last year[7].  “There are three fundamental reasons behind it: more difficult access to modern western technologies prior to 2004, capital deficit and low labour costs which do not encourage investment in expensive machines. Despite this, the current growing employee shortage and consequential emphasis on increased wages may result in a situation in which entrepreneurs are more likely to veer towards automation and robotics solutions.”

"Poland installed an average of just 32 robots per 10,000 employees, but recorded a growth in robot density of 45% over the previous two year"

In 2016, the average number of installed robots worldwide was 74 per 10,000 employees, according to the International Federation of Robotics[8]. In Europe, the figure was 99 per 10,000 employees, with Germany leading the race to Industry 4.0 with 309 per 10,000 employees. Poland installed an average of just 32 robots per 10,000 employees, but recorded a growth in robot density of 45% over the previous two years[9] and, with the launch of the Future Industry Platform would be expected to continue to grow.

Even back in 2016 there were signs Polish manufactures were starting to embrace automation. Smart Industry Poland 2017, a study of 251 SMEs commissioned by the Ministry of Development and the German conglomerate Siemens, revealed that 77% of those companies had implemented at least one innovation support solution[10].

The Polish government admits Industry 4.0 is some way off. In 2017, Jan Filip Staniłko, Deputy Director of the Department of Innovation in the Ministry of Development, told the Central European Financial Observer that many Polish companies should be classified as Industry 2.5[11]. “They are only aspiring to introduce more significant changes,” he said. “However, the owners will be increasingly likely to make decisions to invest in advanced automation, for example due to the lack of skilled workers, or such decisions will be made by their children, who will inherit the businesses and who are more open to new technology. In both cases they will conclude that it makes no sense to buy 3.0 machines in order to be quickly forced to upgrade them to 4.0, but that it is worth investing in devices which have the potential to cooperate with each other, as well as investing in digital management systems.”

Nevertheless, one third of the companies surveyed for a report, In Which Technologies are Polish Companies Investing?, produced for Polish automation solutions company Astor in 2017, stated they were taking measures designed to aid their progress towards Industry 4.0, with most seeing these measures as crucial to remaining competitive.

[1] NY Times, [2] Eurostat, [3] Eurostat, [4] Bloomberg, [5] TechRadar, [6] Europa, [7] Industry Europe, [8] International Federation of Robotics, [9] Industry Europe, [10] Switzerland Global Enterprise, [11] Financial Observer

This article is designed to throw an everyday lens on some of the issues being discussed and debated by investors across the world; it is not research, so please do not interpret it as a recommendation for your personal investments. If something has piqued your interest and you would like to find out more or discuss what investments might be suitable for you, please contact one of our Investment Managers on 020 7337 0777.

You May Also Like
...

Why Automation is Good for Business

Robots will take your job. That, we’re so often told (and in increasingly gloomy tones) is an inevitability, and one that for many of us, will render us irrelevant – or at least make us feel that way.

Technology Innovation Service

Discover our Technology Innovation Service. This service is a managed service that aims to achieve long-term capital growth via a portfolio of fund-based investment strategies across the global technology sector.