Can Poland catch up with the West on digitisation?

by Karolina Zbytniewska

Christian Bodewig is Program Leader for Inclusive Growth in European Union Member States, Europe and Central Asia at the World Bank Group and co-author of the “Growing United: Upgrading Europe’s Convergence Machine” report.

He spoke to EURACTIV Poland’s Karolina Zbytniewska.

The GDP per capita in Poland amounts to 68% of the EU average. This is both, good and bad: Good, because it increased from 52% in 2004. Bad, because it is still well below the average. How can we achieve 100%?

The EU acts like an effective convergence machine that balances the wealth and development of new and old member states. So far, this process has been observed in all member states, both those in Southern and Central Europe. The general pattern for the South included first a process of rapid convergence, followed by stagnation. Here, I have in mind those countries that joined the EU before 2004, namely Greece, Spain, Portugal and co-founder of today’s EU, Italy.

Perhaps Central and Eastern Europe are not yet long enough in the convergence machine to get the level of economic development of the old EU countries?

Poland, the Baltic States, Bulgaria and Romania recorded an increase in income per capita in relation to the EU average, and this trend has been maintained. The rate of economic growth in these countries is – so far – higher than in Western Europe. However, there are questions: Will this convergence continue? And whether convergence works for everyone. This can be seen on the example of Poland, which will reach other EU countries, although at the same time regional inequalities increase. The disproportions between people also grow.

Acceleration of technological development provides huge opportunities for qualified employees, however the rest is lagging behind. This leads to growing inequalities. That is why the main message of our ‘Growing United: Upgrading Europe’s Convergence Machine’ report is that we cannot accept the continuation of convergence as a certainty. Technology increases productivity and helps countries to continue to grow.

On the other hand, there are noticeable disproportions in terms of the pace of the development. Member states cannot develop properly if low-skilled workers are still a large part of their labour market. This is the case for Bulgaria and Romania, but also for Croatia and Hungary. To reverse this trend, you need to create a positive, competitive and motivating environment. For the convergence to continue, employees and businesses need to have effective tools at hand to raise the standards of their activity.

In 2012, despite everything, the World Bank Group considered the EU as the most effective convergence machine. Simultaneously, the inequalities between the member states and inside of them increased. Isn’t that the opposite of convergence?

Preparing the report from 2012, we compared Europe with other world regions and saw that from the 1960s onward, in Europe, poorer countries were catching up with the richer ones faster than was the case anywhere else in the world. This is, of course, the merit of the EU, mainly due to the accession process, the single market and structural funds. However, in recent years, many people have noticed that the convergence machine is not functioning properly.

Therefore, we looked not only at countries, but also at regions, and even households. And from this perspective, it becomes even more evident that the average is one thing and the reality is the other. Many people worry about the increase of inequalities; for example, that their region does not develop as fast as metropolises, not to mention capitals – and rightly so.

‘Technological changes are driving the markets, giving great opportunities for some companies and employees, leaving others behind’, we read in the report…

Just as in the case of employees, we also see growing disproportions in productivity between very efficient companies and those operating worse. But it’s not just about the rich and the poor. If you are going to Bucharest or Sofia, you can see prosperous cities where companies are at the global level, doing business in Silicon Valley, for example. But if you drive 200 kilometres out of town, the reality will change dramatically.

Poland today still deviates from Western European countries in developing the market of routine mental (cognitive) jobs, while in the West there are more and more non-routine mental jobs.

Poland is very good at taking over a large part of production from Western Europe, which has moved to Central Europe because of lower wages, as well as a good level of education, which harmonised with the type of production transferred here.

And these low wages are still our main competitive advantage.

Yes. But it will not always be that way. The time has come to prepare the ground for the next development phase, when Poland will have more advanced production and higher productivity, generating higher earnings and a higher standard of living for all. How to do it? You still need to invest more in human capital.

Over the last 25 years, Poland has made a real civilizational leap, creating a solid foundation of the education system that equips young generations with the right skills. Not for everyone at once, because there are still differences between the city and the countryside, as well as between the poorer and richer – but the level of Polish education is relatively balanced. Therefore, there is no compromise between equality and high quality, thanks to which Poles receive a really solid educational basis.

Now it is essential that each student needs to be equipped with cognitive (and mental) competences that will allow for the continuous development and updating of skills. Especially, in the context of the fact that the world of work is constantly changing, the machines take on the tasks that people have done in the past. And the skills and competences that the machines do not have or do not yet have are becoming more important. I am referring primarily to non-routine cognitive skills, social competences, ability to interact with others as part of team work, as well as empathy.

We also need to be able to learn from each other, drawing on models from other countries. Seven of the ten best education systems in the world are located in East Asia, and they all constantly innovate.

The discussion in Poland on how to improve the education system has been going on for several years. I will venture to say that a teacher’s salary of about PLN 2,000 (EUR 467) not only does not motivate teachers to treat their work as a mission, but also does not give them the impression of any relevance of their work. Not to mention the willingness and means to develop their competences. I think this one aspect – pay – makes any structural change impossible.

It is important to recognise that teachers are a key element of the learning process. Effective education systems attract very good people to the teaching profession, preparing them, supporting them and rewarding them well. You cannot change the education system with a flick of your finger, but it is important to realise at the very beginning that you will achieve good results if you have good teachers and treat them well. That is why fair remuneration is important to attract more and better specialists, which has a chance to be part of the positive change process.

The report shows that Poland has a significant potential for inclusive development for both people and companies. This potential is based on high PISA results (results of reading comprehension among 15-year-olds). Are you sure that 15-year-olds already reflect the real potential of cultural capital in a country where the best university ranks only in the fourth hundred in global rankings? Additionally, 2/3 of Poles do not read any books, while reading books – as you yourself mention – increases cognitive potential.

First of all, cognitive skills in reading and mathematics develop from birth to the beginning of adulthood. Therefore, we should focus on their development in childhood and adolescence. That’s when parents should read to children and teach them to read. This not only helps in reading skills, but also develops language and helps shape and organise the mind and processes of logical thinking. At a later stage in our lives, we can still develop, but our brains are already shaped. In this context, I am less worried about whether an adult is reading or not, I am more worried when a child does not read.

In Western Europe, the importance of non-routine cognitive professions, such as engineers, IT specialists, and managers, is growing. Why is it different in Poland, where there are more cognitive routine professions that can be taken over by machines, robots, software?

It is a question of the realities of the labour market, also taking into account the above-mentioned competitive advantage resulting from low labour costs. Many professions are still based on routine activities. However, it does not have always to be like this. If, however, Poland wants to develop and catch up with the Western countries and the EU average in terms of GDP, it will require to raise the qualifications of the workforce towards non-routine competences.

It can already be seen that the routine sector is shrinking – this is where the most layoffs happen. All the more the education of non-routine and interpersonal competences gains in importance. An investment in education and competence development will bring the productivity growth needed to continue convergence. Stagnation is what awaits Poland without it.

Do we completely give up routine professions and tasks? After all, we will still need officials, accountants, notaries, and administrators.

Indeed, we still need these jobs. However, the fact is that the machines take over mainly routine, repetitive duties. In legal, accounting or banking professions, some basic activities and transactions are carried out by machines. In the future, they will perform more and more tasks of repetitive character, taking them from people.

Today, for example, to become a radiologist, you have to finish a medical university and spend many years practicing in a doctor’s office. But it turns out that the machines are better at reading X-rays than the well-educated and experienced people. I am not saying that there will be no more radiologists, but the nature of the radiologist’s work will change, and some of its functions will be taken over by machines.

It will not be like computers and machines will deprive us of working day by day, but they will gradually take over some of the tasks. At the same time, the jobs themselves will change. Administrative support will become less routine, less repeatable, but more interactive and cognitive. We will still need it, but it will be different.

As today, the administration works completely differently than 20-30 years ago, when we used typewriters and computers without Excel. Productivity has increased significantly and will continue to increase. All trends show that to develop, you have to constantly adapt and be able to use new technologies.

However, when all physical and routine activities are taken over from us by computers, robots and machines, what about the work market? Not everyone will find a place for themselves in the new reality of work. What about them? Universal basic income?

Above all, I still emphasise the possibility of retraining employees. We need to understand how adults learn – today we still do not know much about it. Social protection is equally important in order to be able to provide support to employees during transitional periods. Indeed, not all employees can find themselves in the realities of technology driven in more cognitive workplaces.

We must therefore make sure that there is protection for these people. More than guaranteed income for all, we need flexible solutions within the basic social safety net and employment opportunities for those in need. Then everyone will be able to contribute to the enrichment and development of society and state.

Finally, the migration crisis. How can asylum seekers and refugees meet the employment structure of the future? Already today huge investments are needed – financial, temporary, educational – to integrate these people into the labour market. Is this investment profitable?

A report on the employment of migrants during the 2015 migration wave has recently been published in Germany. The labour market has shown a huge absorption potential.

Let us look at these people from the competence point of view. I think we should build systems to use the skills of these people. Because everyone has some skills – not only the so-called hard skills such as knowledge of a specific computer program or tool operation, but also soft skills – social, emotional and behavioural.

You have to show great courage, strength of character, resistance to stress and goal orientation to leave your country and get to Europe. These are huge advantages. Thanks to them, immigrants make a substantial contribution to the countries that receive them. Let us think about the US, the country of immigrants, who are its engine of growth. We must invest in training, but also in our own understanding of how to build educational and vocational systems.

We must think long-term. If we improve the situation and ensure equal opportunities for all children, including immigrants, they can make a huge contribution to our societies. It is about building from scratch a friendly and integrating education system that will allow children to acquire intellectual capital, and skills that will allow them to develop alongside with technology advances on the labour market.

*First published in euractiv.com