Disparities in wage flexibility in the Polish economy

Abstract

The paper focuses on the examination of wage flexibility in the Polish economy, indicating the sectoral differences. In spite of the fact that wages depend on many variables, labour productivity (according to the traditional approach) was selected as the most influential determinant of wages. As a result, the paper describes wage flexibility as how wages respond to changes in labour productivity. The research shows that wages are the most flexible in manufacturing. The survey also discovers the lack of wage flexibility in agriculture and its strong diversification in the services sector. Disparities amongst services sections are determined by the specificity of individual sections and consumer preferences. A rising minimum wage attracts the attention of economists in the current economic climate in Poland, as the minimum wage plays a significant role as the institutional factor of wage flexibility. The paper consists of two parts. The first, theoretical, part of the article presents the issues of wage flexibility and its determinants. The efficiency wage theory, which emphasizes a positive relationship between wages and labour productivity, and the wage-requirements curve are also presented in the first part of the paper. In turn, the methodological part of the article includes a study of wage flexibility in the Polish economy on the macroeconomic scale and on a sectoral basis.The division of the economy according to PKD 2007 was applied, while the empirical materials were Eurostat and the Central Statistical Office database.