Polish companies are plugging the holes with automation

Polish industry is undergoing some dynamic changes. Only a few years ago, many businesses couldn’t see the need to automate because of an abundance of skilled Polish workers and low labor costs.  
Now, increasing labor costs and labor shortages in certain industries have changed this around, paving the way for more automation in Poland as manufacturers are looking for a new source of competitive advantage. 
A good indication of this is the rise in the minimum wage. In the last five years alone, it has increased by more than 50 percent from 489 EUR in 2019 to 782 EUR in 2023. This increase is of course enticing business to look to automation.

Another reason is the demographic changes. According to the EU’s “2021 Ageing Report” the Polish population will decrease by 20% before 2070. Another alarming factor is that the old age dependency ratio (the number of individuals aged 65 and over per 100 people of working age defined as those at ages 20 to 64) will increase to over 65%, meaning Poland's labor force will shrink by at least one third. In this respect, the country is among the top six EU countries where this problem is most acute.

In recent years, the impact of these factors has been partly mitigated by immigrants from Eastern Europe, especially from Ukraine, who have been willing to take on low-paid jobs. However, the war in Ukraine has affected many industries in Poland, especially construction and engineering.

These developments are forcing changes in the organization of companies with the need for production reliability and resilience, leading manufacturers to automate parts of processes where human labor could be supplemented by robots. This was especially evident in 2021 where the number of newly installed industrial robots increased by 56%. 
The main areas of robotization in Poland reflect the largest industries. Polish factories are concentrated in industries such as food & beverage, metal, automotive, rubber and plastic products, as well as manufacturing of electrical equipment, and this is where you find the most cobot installations in Poland.

Handling operations account for 52% of the total share of applications. Welding is also one of the most popular automated applications, accounting for 17% of all new installations in Poland. This can also be seen in the demand for welding cobots, which is the fastest growing application. 
The main reason for this situation is the lack of skilled workers in Poland. Welders have been needed in all regions of the country since at least 2016, according to the Polish Ministry of Family and Social Policy's Occupation Barometer report. The companies turning to cobots are both huge international concerns and their daughter companies in Poland, as well as local small and medium enterprises.

In 2022, according to the latest World Robotics Report from IFR, we saw a 13 % decrease in robot installations in Poland compared to the year before. However, this reflects the very high growth of robots in 2021 and, most importantly, that 2022 was a year full of uncertainties with the war breaking out in neighbouring Ukraine, increasing inflation and high interest rates – all something that has sparked cautiousness among business leaders.

Despite these societal challenges, the constant modernization of Polish industry is resulting in growing interest in automation of production processes. To continue and further spark this development, the government in 2022 decided to implement the robotization allowance, which will remain in force until the end of 2026. During this period, taxpayers can deduct from their tax base the equivalent of 50 per cent of the tax-deductible costs of qualified investments in robots.

This can e.g. cover the purchase of brand new industrial robots and the machines and equipment functionally related to them, as well as leasing fees, costs related to implementation and the training of employees.

We can only expect this government initiative to have a very direct positive effect on Polish businesses desire to automate, as it makes it even more attractive for them to turn to robots as the solution to their struggles with attracting labor and the continuous desire to improve productivity and efficiency.

And overall, the automation potential in Poland is huge. The McKinsey consultancy report “Shoulder in shoulder with robots. Tapping the potential of automation in Poland” shows that half of workplace activities today in Poland – the equivalent of 7.3 million jobs – could potentially be automated by 2030 using technology that already exists today.

This doesn’t mean that they all will, or should, be automated. There will always be a need for humans, also in production. But it definitely shows that robots have a great part to play in the future development of Poland’s businesses - big and small.