If the Polish industry does not escape the product trap, we may as well forget about high wages. Regardless of the form of employment or the government-set minimum wage levels, earnings in Poland will remain low until our companies are able to offer something on a wider scale that the world will be prepared to pay well for.

According to the Nationwide Salaries Survey, 74% of all Poles are not satisfied with their salaries. The remaining 26% would also surely welcome the news of an increase in pay with delight. After all, who wouldn’t want to be rich? Do Poles stand a real chance of earning salaries on a Western European level over the period of a single generation and what would need to be done in order to achieve this goal?

The answer to that question requires one to consider the issue of who actually generates wealth. When we look at the list of professions, it will soon transpire that most of them are in fact based upon the work of others. In order for an actor to become wealthy, other people must be able to afford the tickets for films or plays in which he or she is cast. A well-earning writer is a phenomenon which can only exist where there is a large group of sufficiently affluent readers who are willing to buy his or her books. In case of a wealthy official, the relationship is even simpler, for in this case the entire society needs to have sufficient wealth, since the salary of the official in question is paid from taxes. Should we continue along this path, we might face the risk of arriving at a conclusion similar to the one reached by 18th century physiocrats, who believed that the sole source of wealth is agriculture. If this were true, with the level of employment in the first sector reaching 11.5%, we would have been the fourth richest country in Europe after Romania, Bulgaria and Greece.

Where does wealth come from?
Today, agriculture is of a relatively low importance for the overall level of wealth, even though no other forms of economic activity would be possible without it. However, the more efficient the first sector is, i.e. the less people it takes to produce the food which everyone needs, the greater is the number of workers who may strive to satisfy society’s more elaborate needs. For wealth is nothing less that the satisfaction of needs. For most people, nutrition is followed closely by other material needs related to the ease of maintaining one’s household. It is only when the conditions of existence are improved that the community directs its attention en masse towards their intellectual, spiritual or aesthetic needs. For the above reason, a wealthy person is a person who can satisfy his or her basic material needs with little effort, for it is only those people who can afford to satisfy their other needs as well. It follows that wealthy societies are those societies which are exceptionally productive in the way they use their own work and capital resources in order to produce foodstuffs and industrial goods.

Western countries have spent decades in order to reach their current level of technological and organisational advancement. If one wanted to directly reproduce all solutions applied in Germany or the UK, one would need massive amounts of money as well as obtain the appropriate knowledge and competences while at the same time remaining compliant with the applicable intellectual property rights. Luckily, there is a much simpler solution. Instead of manufacturing next-generation medicinal products or Mercedes cars in Poland, we may purchase those in the Western countries, offering them our own products in exchange. This is precisely what we are doing now, exporting our furniture, footwear, windows, cosmetics and foodstuffs to other countries. However, the range of our exported goods is not attractive enough to enable us – with little effort in terms of work performed – to exchange such goods for a large amount of imported goods that we find desirable. Evan though we work long hours and even though more and more goods manufactured by Polish companies is exported to other countries, we still earn much less for the work performed than our counterparts in Western countries. The question is: why is it so?

The Polish product trap
It is with deep regret that one has to conclude that none of the popular Polish exports are in fact unique. This is because they are neither difficult to replace nor particularly coveted. This means that, on one hand, the workforce of Asia and South America, who are less wealthy than we are, will happily manufacture the same products that we now do, hoping to join the global value chain, except that they will do so at a lower price. On the other hand, those products which are difficult to replicate, such as regional foods, are not – for now, at least – perceived in developed countries as worthy of a higher price. They either lack the coveted branding, the quality or the sales channels which would make it possible to reach the more affluent customers. The consequence of these facts is that Polish companies which manufacture goods for export and which do not have the monopolistic position resulting from the fact that customers perceive their products as unique, therefore being forced to complete primarily on prices, continue to have very low margins.

One might ask, what about “The Witcher”? What about automatic parcel lockers? What about graphene? Of course, one could easily find more examples of unique Polish products, yet that does not change the fact that their significance for the economy as a whole remains negligible. A few best-selling computer games does not make Poland a global centre for electronic commerce. Those Polish companies which have the capacity of creating unique products, manufacture them in qualities which are insufficient to ensure that their success translates into an increased income among average households. Unless the number of such companies increases, the level of earnings will be determined by ordinary companies which provide simple operations for an inexpensive workforce. Unless there is a greater number of companies in Poland which are capable of selling, under their own brand, complex and high-value goods on global markets, we run the risk of stagnation in terms of productivity, followed by a stagnation in salaries. This situation is known as a product trap – countries that gets caught in it tend to occupy unattractive market niches and specialise in the manufacture of relatively simple goods, which are then exchanged with more affluent trading partners in an unfavourable relation. The question is, therefore, how can we avoid this trap?

The authors of this article are Mr Maciej Bukowski, the chairman of the Warsaw Institute for Economic Studies, and Mr Maciej Bitner, head economist at the Warsaw Institute for Economic Studies.