Poland’s employment growth remains in contraction territory at -0.80% YoY for November 2025, unchanged from October and stable relative to the six-month average. This marks the ninth consecutive month of negative employment growth, signaling ongoing labor market challenges. The persistent decline contrasts with the modest -0.60% contraction recorded in January 2025, indicating a sustained slowdown.

Drivers this month

• Manufacturing sector layoffs amid global demand softening.
• Service sector stagnation due to cautious consumer spending.
• Reduced hiring in export-oriented industries affected by geopolitical tensions.

Policy pulse

The current employment contraction sits below the National Bank of Poland’s (NBP) comfort zone, which targets stable or positive employment growth to support inflation near 2%. The NBP’s recent rate hikes have tightened financial conditions, contributing to subdued labor demand.

Market lens

Immediate reaction: The Polish zloty (PLN) weakened 0.30% against the euro within the first hour post-release, reflecting concerns over economic momentum. Short-term government bond yields rose by 5 basis points, signaling increased risk premiums.

Employment growth is a key macroeconomic indicator reflecting labor market health and economic vitality. Poland’s -0.80% YoY contraction contrasts with the Eurozone average, which recently showed a modest 0.20% expansion. Inflation remains elevated at 6.10% YoY, while GDP growth slowed to 1.10% in Q3 2025, underscoring a deceleration in economic activity.

Monetary Policy & Financial Conditions

The NBP has raised its benchmark interest rate to 7.25% over the past year to combat inflation. This tightening has increased borrowing costs, dampening investment and hiring. Credit growth slowed to 3.50% YoY, down from 6.20% a year ago, reflecting tighter financial conditions.

Fiscal Policy & Government Budget

Fiscal stimulus has been restrained amid rising public debt, which stands at 56% of GDP. The government’s budget deficit narrowed slightly to 2.80% of GDP in 2025, limiting scope for expansive labor market support programs.

External Shocks & Geopolitical Risks

Ongoing geopolitical tensions in Eastern Europe and supply chain disruptions have weighed on Poland’s export sectors. Energy price volatility and trade uncertainties continue to pressure industrial employment.

Drivers this month

• Manufacturing employment down by 1.20% YoY, driven by export demand weakness.
• Services sector flat, with 0.00% growth YoY, reflecting cautious consumer behavior.
• Public sector employment stable, cushioning overall declines.

Policy pulse

The NBP’s restrictive monetary stance continues to weigh on employment growth. The labor market contraction aligns with the central bank’s objective to cool inflation but raises concerns about growth sustainability.

Market lens

Immediate reaction: Polish 2-year government bond yields rose 7 basis points, while the PLN depreciated against the USD by 0.40%, indicating market jitters over economic momentum.

Looking ahead, Poland’s employment growth trajectory hinges on several key factors. We outline three scenarios with associated probabilities:

Bullish Scenario (25% probability)

• Global demand rebounds, boosting manufacturing exports.
• Monetary policy easing in H2 2026 supports credit growth.
• Employment growth returns to positive territory (0.50% YoY) by mid-2026.

Base Scenario (50% probability)

• Continued subdued demand and cautious hiring.
• Monetary policy remains restrictive but stable.
• Employment growth remains flat to mildly negative (-0.50% to -0.80%) through 2026.

Bearish Scenario (25% probability)

• Geopolitical shocks intensify, disrupting trade and investment.
• Further monetary tightening to combat inflation spikes.
• Employment contraction deepens to -1.50% YoY or worse.

Structural & Long-Run Trends

Poland faces structural headwinds including demographic aging and labor force shrinkage. These factors, combined with automation and shifting global supply chains, suggest that long-run employment growth may remain modest without significant policy intervention or innovation-led growth.

Poland’s persistent employment contraction at -0.80% YoY signals ongoing labor market challenges amid tight monetary policy and external uncertainties. While the current reading is stable relative to recent months, the lack of improvement underscores risks to growth and consumer confidence. Policymakers face a delicate balance between controlling inflation and supporting labor demand. Financial markets have reacted cautiously, with the PLN weakening and bond yields rising. Structural demographic trends further complicate the outlook, suggesting that sustained recovery will require coordinated fiscal support and structural reforms.

Year	Employment Growth YoY (%)	WKDP Annual Return (%)
2020	-2.10	-15.30
2021	0.50	18.70
2022	0.20	12.40
2023	-0.30	3.10
2024	-0.50	-1.20
2025 (YTD)	-0.80	-4.50

Insight: WKDP returns have broadly tracked employment growth trends, with negative employment growth years coinciding with weaker equity performance. This correlation underscores the importance of labor market health for investor confidence in Poland.

Takeaway: Poland’s persistent employment contraction at -0.80% YoY signals ongoing economic headwinds, with recovery dependent on easing financial conditions and external demand stabilization.