By Yasin Okyay
Between 1990 and 2026, Poland nearly tripled its per capita income, becoming one of Europe’s fastest-growing economies. It was the only EU country to avoid recession during the 2008 global financial crisis and the first former Eastern Bloc economy to attain “developed” status.
Economist Marcin Piatkowski explains this leap by arguing that Poland dismantled the exclusionary and exploitative social structure inherited from the rule of the nobility in the 16th century and, for the first time in its history, transformed itself into an educated, inclusive society built on equality of opportunity. According to Piatkowski, World War II and the subsequent period of Soviet-style planned economy eliminated the old feudal elites, and promoted social equality and mass education. Privatization after 1989 and the adoption of Western-style institutions then established a market economy without producing an oligarchy.
Yet was the development performance marketed as the “Polish miracle” really nothing but a triumph of institutional transformation and the free market? Or does the other side of the coin reveal Poland’s positioning as Europe’s hub for young, low-cost labor and a manufacturing base dependent on German capital?
Poland, which recently became Europe’s sixth-largest economy, owes its economic success to a combination of different factors.
After spending less than 15 years in the upper-middle-income category, Poland escaped the middle-income trap in the mid-2000s and joined the group of High-Income Countries (HICs). It also became the first post-communist economy from the former Eastern Bloc to be granted “Developed Market” status by FTSE Russell. According to the World Bank’s detailed 2017 report, “Lessons from Poland”, Poland’s economic success can be explained through five main dimensions. How impartial they really are about Poland’s growth is the question of this article.
Economic indicators
Since 1989, Poland’s real output has grown nearly ninefold, while GDP per capita increased by 240 percent between 1990 and 2023. Poland was the only EU economy to avoid recession during the 2008–2009 global crisis, growing by 2.8 percent. The economy expanded by another 3.6 percent in 2025. The European Commission expects growth of 3.5 percent in 2026.
Alongside this growth, the minimum wage has risen by more than 40 percent in real terms. Meanwhile, the share of university graduates among young people aged 25–34, which stood at just 14 percent in 2000, has risen above 45 percent. This is a figure surpassing the EU average.
Governing: This dimension rests on establishing sound economic and political institutions and steering reforms through a shared vision. According to the report, rapid liberalization in Poland was followed by the construction of democratic institutions at both the local and national levels, and EU membership served as an anchor for reform. (Yet when this process of institution-building began, Poland had little choice but to do what Western capital demands. Rather than creating institutions around national development priorities, the process produced a bureaucratic apparatus designed to ensure full compliance with the rules laid down by Brussels and international capital.)
Sustaining: This refers to maintaining macroeconomic stability through a flexible fiscal framework that constrains budget deficits and public debt. Strict supervision of the financial sector and successful bank privatizations also helped Poland avoid potential financial crises. (Yet the process presented by the World Bank as “successful bank privatization” resulted in more than 70 percent of the Polish banking system passing under the control of Western European financial monopolies during the 1990s, while households became increasingly exposed to foreign-exchange risk.)
Connecting: This aims to improve the competitiveness of domestic firms by integrating local markets into global ones. By encouraging foreign direct investment and joining global production and value chains, Poland secured technology transfers and expanded its market share. (Rather than fostering an autonomous domestic industrial base, this integration turned Poland into a subcontracted supplier of intermediate goods that helped raise the profit margins of Germany’s automotive and machinery industries.)
Growing: This refers to the effective use of market mechanisms to shift resources toward higher-productivity sectors as the economy grows. Particular emphasis was also placed on human capital, and education reforms raised the university graduation rate among younger generations above the OECD average. (Yet after EU membership, a substantial part of this skilled labor force, educated at public expense, was compelled to migrate to Western European big centers as a source of relatively cheap labor.)
Including: This dimension seeks to promote equality of opportunity by ensuring broad access to education across different income groups. Regular increases in the minimum wage are intended to protect the earnings of lower-income workers. (But this claim of “inclusion” obscures the reality of a dual labor market in which millions of workers are employed precariously under so-called “junk contracts,” deprived of basic labor protections.)
“No alternative” during the 1989 transition
The well-known Polish economist Jerzy Osiatyński, for example, argues in his 2022 article “The Political Economy of Reinstating Capitalism in Poland: 1989–2020,” published in PSL Quarterly Review, that the range of options available to Poland during the 1989 transition was extremely limited. According to the article, by that point Poland effectively had no alternative but to comply with the demands of the West. The country was unable to pay its foreign debt and urgently needed foreign-exchange support in the form of a stabilization fund. This financial assistance came precisely from the actors imposing neoliberal policies: the West. The institutions providing the money, and the countries controlling those institutions, therefore had a decisive say both in Poland’s initial “shock therapy” and in the liberalization reforms that followed.
EU Cohesion Funds
Poland’s success in macroeconomic indicators such as GDP cannot therefore be explained solely with liberalization, as the World Bank report tends to suggest. Since 2004, Poland has been the largest net beneficiary of EU Cohesion Funds. Between 2007 and 2020 alone, it received more than €150 billion in direct grants and infrastructure funding. The return on these funds provided came in the form of cheap labor for the EU, high profits flowing to Western Europe, and a low-cost manufacturing and operational base for German and Western capital.
Growth driven by labor exploitation
The economic growth, productivity gains, development projects and infrastructure expansion in question were achieved not simply through the virtues of the free market, but on the basis of EU funds, public transfers and labor exploitation. Poland’s growth, productivity gains, infrastructure development and advances in human capital are not a free-market miracle. They are rather the outcome of building a profitable production platform for Western capital through EU funds and public subsidies. Moreover, the fact that wage growth has remained considerably below levels in countries such as Germany despite rising productivity suggests that the real driving force behind Poland’s growth has not been the magical hand of the free market, but the extraction of surplus value.
Flow from Poland to Western centers
Although Poland’s Gross Domestic Product (GDP) per capita has risen steadily, the liberal narrative focusing exclusively on GDP obscures the question of who actually owns the wealth being created.
GDP measures total output produced within a country’s borders, whereas Gross National Income (GNI) indicates how much of the income generated is retained by the country’s citizens and domestic institutions rather than being transferred abroad in the form of profits. According to data cited by renowned economist Thomas Piketty in his article “2018, the Year of Europe,” between 2010 and 2016 the resources transferred from Poland to Western centers by Western multinationals in the form of repatriated profits and property income amounted to 4.7 percent of annual GDP. This figure is almost twice the net EU public transfers Poland received from Brussels, which amounts to 2.7 percent of GDP. Contrary to the discourse of “public assistance” to Poland, these figures indicate that the net flow of value has consistently run toward Western capital.
Still a low-wage economy
Despite its economic achievements, Poland remains one of the EU’s lower-wage economies and continued in 2025 to function as a reservoir of relatively cheap labor compared with Western Europe.
In 2015, the average hourly labor cost across the EU stood at €25, while in Poland it was only €8.60. According to Eurostat’s latest Europe-wide data for 2025, average hourly labor costs reached €34.90 in the EU, compared with €19.10 in Poland and €45.00 in Germany. So, labor costs in Poland therefore remain less than half those in Germany. Furthermore, between 2000 and 2016 productivity increased by 51 percent, while workers’ wages rose by only 33 percent. In his article “Poland has become Europe’s growth champion, but can this success continue?”, Marcin Piatkowski links the persistence of Poland’s competitive advantage to maintaining a labor force that is productive yet still cheap compared to the West.
Miracle of “junk contracts”
A World Bank policy note on the condition of workers in Poland paints a rather different picture. Behind Poland’s headline growth figures and macroeconomic stability lies a labor market marked by deep exploitation and institutional precarity. With 25 percent of wage earners employed in temporary jobs, Poland for many years ranked at or near the top among OECD countries in terms of temporary employment. The most significant source of fragmentation in the Polish labor market, however, has been the dual structure created by Civil Law Contracts (CLCs), widely known in Poland as “junk contracts” (“umowy śmieciowe” in Polish), which cover millions of workers.
These contracts, which place millions of workers outside the protections of the Labor Code, give the capital a set of big structural advantages: workers may fall outside minimum-wage regulations, have no entitlement to annual paid leave, maternity leave or sick leave, receive only highly limited social-security contributions, and remain exempt from the jurisdiction of labor courts in the event of potential disputes. Far from being a flexible arrangement designed primarily for highly skilled, high-tech professionals or the self-employed, this cost-cutting model is disproportionately imposed on workers in low-skilled and low-paid sectors such as security, cleaning and food services.
Poland’s growth and its celebrated free-market “miracle” are precarity of its working people and cheap labor.