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Thursday, December 13, 2007

An Unlimited Need For People

The gentleman in the photo is Konrad Jaskola, Chief Executive Officer of Polimex-Mostostal SA, Poland's biggest construction company, and according to this article in Bloomberg today, he has just one message for us all: "I have an unlimited need for people".

The issue is that Joskola has plans to hire "several thousand" new workers next year to meet demand for new bridges and factories, but the problem is that due to Poland's growing labour shortages he may have difficulty finding them.

Construction in Poland rose 20 percent in the first nine months of 2007 as the economy grew at an annual pace of 6.7 percent. According to Joskola, Polimex needs to offer higher salaries to engineers and managers as skilled workers move abroad and local competition increases.

Polimex has raised wages by 11 percent over the last 12 months and will need to raise them them by a further 10 percent next year.

The former state machinery supplier, established to drive Poland's post-World War II reconstruction effort, plans to spend as much as 200 million zloty on acquisitions next year, to add workers and production capacity, Jaskola said. I imagine some, at least of those acquisitions will have to be of workers from outside of Poland.

And Inflation Continues To Rise

Meantime Polish inflation accelerated to the upper end of central bank's target range in November on the back of higher food and oil prices, meaning policy makers at the central bank may be forced to raise interest rates again in the coming months, in so doing possibly pushing up the value of the zloty, and attracting even more funds in search of even more workers to put to work.

Polish inflation rate rose to 3.6 an annual percent in November from 3 percent in October, the Central Statistical Office reported today in Warsaw. Consumer prices gained a monthly 0.7 percent after rising 0.6 percent in the previous month. Food prices grew an annual 7.2 percent 1.3 percent from the previous month, while fuel prices soared 13.2 percent from November 2006 and 2.5 percent from last month

As I say, inflation in Poland is also being fed by a 10 percent average wage growth and record low unemployment this year. The central bank lifted the seven-day reference rate a quarter-point to 5 percent only last month, and this was the fourth increase since April, when the key rate was 4 percent. So as we can see, at this point of time , and against all traditional expectation, monetary tightening may actually be having the perverse effect of accelerating the economy.

At the same time the zloty continues its rise, trading at 3.58 to the euro after the release, holding near its highest in five and a half years.

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