Slower growth of minimum salary and average salary in the enterprise sector

In accordance with the GUS data published today, nominal salary growth rate in the sector of companies employing more than 9 employees fell from 6.6% YoY in December to 4.8% YoY in January, running above our forecast (4.1%) and below the market consensus (5.1%). In real terms, after the adjustments made to take into consideration the changes in prices, salaries in companies rose by 2.1% YoY in January comparing to +4.1% in December. The rise of the minimum salary, which was lower than year before (+15.6% in 2020 vs. +7.7% in 2021) contributed to a significant deceleration of the salary growth rate in January. The deceleration in the salary growth rate between December and January was also driven by a statistical effect: the difference in terms of business days was unfavourable (in December 2020 there was one day more comparing to 2019, while in January 2021 there were two days less comparing to 2020). The effect mentioned above drove down the salary growth rate in the case of employees hired on a piecework basis. Data on the salary growth rate in the enterprise sector in January is consistent with our scenario, in which the nominal salary growth will slow down significantly across the entire economy, going down to 2.8% YoY in Q1 vs. +5.0% in Q4 2020, largely due to pay freezes in state administration units. The results of the January business survey for the enterprise sector (NBP’s Quick Monitoring), which are indicative of the salary pressure stabilising on a low level, and a significant drop in the percentage of companies planning to raise salaries in Q1 2021 support our scenario of salary growth slowing down in 2021.

Employment falls in January for the first time since 2004

In accordance with the GUS data, the employment growth rate in the enterprise sector in January stood at -2.0% YoY comparing to -1.0% in December, which was below our forecast (-1.6%) and well below the market consensus (-1.2%). In monthly terms, the number of employed fell by 14.9k, which was the first drop recorded in January since 2004 (in January 2020, that figure rose by 44.9k). The decline in employment in January resulted from the annual revision of data on the number of employees in micro-enterprises (companies employing less than 10 people). Wherever the number of employees fell below ten last year, companies were removed from the category of companies employing at least 10 people. Furthermore, due to a strong slowdown in the economic activity caused by the pandemic and related restrictions, the growth of employment in micro-enterprises slowed down as well. Consequently, a smaller number of micro-enterprises was added to the category of companies employing at least 10 people. Attention should also be paid to additional reasons behind the decline in employment in January, which were mentioned in the GUS’s announcement, such as the expiry of fixed-term employment contracts which were not renewed (sometimes for pandemic-related reasons), redundancies and retirement. They show that pandemic-related restrictions still have a negative impact on the situation in the labour market. It will be possible to assess this impact in more detail when final employment data for February is published, which will not be biased by the impact of the annual verification of categories of companies analysed by the GUS. However, we still assess that launching the support programme for companies affected by the economic consequences of the pandemic (“Shield 2.0”) and keeping moderate restrictions in Q1 2021 will, on balance, result in slight changes in employment in the enterprise sector in the months to come. We expect the employment for enterprises to grow significantly in H2 2021.

Crawling lockdown suppresses the growth of consumption

Data on employment and salaries in the enterprise sector published today supports our scenario, in which the consumption growth rate will increase from -3.0% YoY in Q4 2020 to 0.0% YoY in Q1 2021. Consumption growth in households will be constrained by restrictions adopted to curb the spread of the pandemic, and some of those restrictions (closed restaurants and gyms, limits of guests in hotels, remote education) are likely to be kept in force until the end of the first quarter. A slower decline in the number of new COVID cases observed over the last couple of days (see CABP COVID Dashboard of 15/02/2021) is indicative of a high probability of keeping the crawling lockdown in force. Our "suppressed consumption” scenario is also supported by the consumer sentiment survey results released by the GUS today, which show that the main sentiment indicators have stabilised on low levels.

Data on salaries and employment in the enterprise sector are slightly negative for PLN and bond yields.

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