Labour incomes and economic activity in Poland

Abstract

ObjectivesThe purpose of the paper is to examine the impact of labour incomes on economic activity and growth in Poland.Material and methodsThe thesis of the paper is rooted in the hypothesis of underconsumption and it claims that a proportion of labour incomes to the domestic product exerts an influence on the structure and the value of the aggregate demand and thus it eventually has an effect on economic activity. Empirical analysis provided refers to macroeconomic data for the period 2010-2019.ResultsThe results support the thesis; relatively low growth of labour incomes is followed by low rates of economic growth and investment and higher rates of unemployment.ConclusionsThe analysis of changes in real production per employee, real wages, the rate of unemployment, the rate of GDP growth and changes in households’ consumption spending strongly support the claim that low wages at least periodically stand behind a demand constraint in the Polish economy and that they impair economic results.