Strongest growth in real wages since February 2019

In accordance with the GUS data published today, nominal wage growth in the sector of companies employing more than 9 employees rose from 8.0% YoY in March to 9.9% YoY in April, running below market consensus (10.4%) and our forecast (10.3%). In real terms, after the adjustments made to take into consideration the changes in prices, wages in companies rose by 5.3% YoY in April comparing to a 4.7% growth in March (the highest growth since February 2019). Last year’s strong low base effects related to the outbreak of the pandemic, with wages decreasing by 3.7% MoM at that time (the worst decline for an April since at least 2005; see MACROpulse of 20/05/2020) were the main reason behind a significantly stronger growth in wages between March and April. In turn, a statistical effect resulting from an unfavourable difference in the number of working days (in March 2021 there was one day more comparing to the preceding year, while in April 2021 the number of working days was the same) had the opposite impact. Furthermore, according to the GUS, wage growth in April also slowed down as the impact of annual, quarterly, discretionary, incentive and Easter bonuses and remuneration for overtime work paid in the previous month was no longer present. The number of people absent from work fell as the epidemiological situation improved, and in our opinion it had a negative impact on the salary growth, as the decrease drove the amounts of remuneration for overtime work paid in April down comparing to March.

Employment growing again, though not as much as expected

In accordance with the GUS data, the employment growth in the enterprise sector in April stood at 0.9% in April comparing to -1.3% in March, running below the market consensus, which was consistent with our forecast (1.1%). Last year’s strong low base effects were the main factor driving the employment up in April comparing to March, just as it was the case with wages and salaries (see above). In monthly terms, the number of employed fell by 13.4 thousand. According to the GUS, the decrease was caused by such factors as downward adjustments to working time bases, expiring fixed-term employment contracts which were not renewed (sometimes for pandemic-related reasons), terminated employment contracts, and sickness benefits and carer’s allowance. Overtime work was less needed in April comparing to March in relation to an improvement in the epidemiological situation, with fewer people absent from work, and in our opinion this was also driving the employment down. A decline in the month-on-month employment is consistent with our scenario, in which we expect a significant, sustainable growth of employment in enterprises to take place in the second half of 2021, i.e. when the negative impact of the working-time basis adjustments ceases as a result of the labour market being “unfrozen” (abatement of the positive impact of the first financial shield on employment).

Consumers see a light in the tunnel

A stronger growth in the wages and employment combined with a significant inflation growth in April (see MACROpulse of 14/05/2021) resulted in a strong increase in the real wage fund growth rate being the product of employment and average salary in the enterprise sector to 6.3% YoY vs. 3.3% in March and 1.2% in Q1. This data is consistent with our consumption growth forecast for Q2 2021 (10.2% YoY vs. 0.6% in Q1). Our consumption scenario is additionally supported by consumer sentiment survey results published by the GUS today, which showed a strong increase of both current and leading consumer confidence indicator. An appendix to the survey results including additional questions related to the epidemiological situation shows that the easing up of the pandemic is a significant factor conducive to the improvement in consumer sentiment.

In our opinion, today’s data on wages and employment in the enterprise sector are slightly negative for the PLN and the yields on bonds.

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