Schuman Foundation: The European Union pays off

About 1400 PLN gross per month less would be earned by an average Pole if Poland had not joined the European Union in 2004. The minimum salary would be lower by PLN 800 gross than at present. Our income, which is 25-30% lower in real terms, would be at the level of the income of the inhabitants of Bulgaria – the poorest country in the entire EU. These are the conclusions of a report by the Schuman and Adenauer Foundations which summarises the impact of membership on the Polish economy.

Poland owes much of its economic success in the last two decades to its membership in the EU. If our country had remained outside the community, we would most likely not have experienced nearly uninterrupted high economic growth for a dozen years in a row. Poland‘s GDP per capita has risen during the 17 years of its membership from 49% to 76% of the EU-27 average, thanks to which our country has more than halved the economic gap with Western European countries, and has already surpassed some of them. EU membership accounts for more than half of all GDP growth recorded by Poland after 2003.

The main economic benefit of EU membership is Poland‘s participation in the Single European Market (SEM), including the ability to freely sell Polish goods and services abroad.

Contrary to popular opinion, European funds only play an auxiliary role,” stresses Professor Witold M. Orłowski, scientific coordinator of the report. – The effects of participation in the Single Market are at least three times greater than the commonly perceived benefits from the inflow of EU funds to Poland“.

Importantly, the effects of participation in the JRE are permanent and may accumulate in the future, while the effects of the inflow of EU funds to Poland will diminish.

Polish exports of goods to the EU have increased in 17 years from 39 billion to 189 billion EUR. At the same time, imports from EU countries grew much more slowly, from €42 billion to €129 billion. This allowed for a marked improvement in the trade balance, thanks to which Poland achieved a significant surplus. Exports of services also grew dynamically, increasing from EUR 7 billion to EUR 41 billion between 2003 and 2020. At the same time, Polish imports of services from EU countries rose “only” from EUR 7bn to EUR 28bn.

Membership of the Union is also fundamental for Polish agriculture. And this is not determined primarily by transfers resulting from the Common Agricultural Policy (although they play a supporting role), but also by Poland‘s participation in the JRE. Polish agri-food exports to EU countries increased almost tenfold between 2003 and 2019, rising from EUR 2. 8 billion to EUR 25. 9 billion, with the surplus increasing from EUR 0. 5 billion to EUR 10. 5 billion in that period. Being outside the Union and the associated barriers to selling goods would have a disastrous impact on the situation of Polish farmers.

Poland‘s participation in the JRE has also resulted in an increase of investments modernizing the Polish economy, which, to a large extent, enabled the mentioned jump in exports. Of course, the consequence of this is also the division of the gained benefits between Poland and foreign owners. However, about half of the profits generated by foreign investors were reinvested in Poland, it should also be remembered that foreign companies paid salaries to Polish employees and paid numerous taxes.

Membership in the Union significantly reduced the cost of government bond purchases, which left more money in the state budget for other purposes. The yield on 10-year Polish government bonds fell from 8. 5% in the pre-accession years to around 3% in 2012-2020. By comparison, interest rates on similar bonds in non-EU Turkey were around 10% between 2012 and 2020.

“European funds, most often associated with the Union, obviously also had an impact on accelerating Poland‘s economic development,” says Rafał Dymek, director of the Schuman Foundation, “However, this impact was not as great as participation in the Single European Market. The funds, on the other hand, have certainly contributed to improving the quality of life in Poland and have helped give our country a leap forward in terms of civilisation“.

To sum up, Poland‘s membership in the European Union had a fundamental impact on the development of the national economy. If Poland remained outside the EU, our country would not enjoy constant, dynamic economic growth, and Poles‘ incomes would be lower by at least 1/4. The most important economic benefit of membership is Poland‘s participation in the Single European Market and the resulting facilitation of the movement of goods, services, people and capital. Contrary to popular belief, European funds have a supporting function. It should also be added that the above analysis only covers the economic effects of membership, without discussing the other benefits of being in the European Union. These include, among others, an increase in Poland‘s security, civilization leap in our country, numerous facilitations for our citizens (e. g. in travelling) and many others.

Full report “Where are the jams really? The most important economic benefits of Poland’s membership in the European Union” is available at schuman. pl/bilansPL.

The report “Where are the jams really? The Most Important Economic Benefits of Poland’s Membership in the European Union” was prepared for the Schuman Foundation and the Konrad Adenauer Foundation by a team of authors: Prof. Witold M. Orłowski (scientific coordinator), Prof. Maciej Duszczyk, Prof. Grzegorz Gorzelak, Prof. Marta Götz, PhD, Prof. Elżbieta Kawecka-Wyrzykowska, Prof. Walenty Poczta and Dr. Joanna Stefaniak.

The report is based on the research results presented in the scientific monograph of the above mentioned authors with the same title. The full monograph is planned to be published at the end of 2021 in cooperation with the University of Warsaw Publishing House.

[1] The median total salary in Poland in 2020 was 5100 PLN gross: Ogólnopolskie Badanie Wynagrodzeń (OBW) conducted by Sedlak & Sedlak in 2020.