Human resources in Kraków and Małopolska Region

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1 Human resources in Kraków and Małopolska Region

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3 1 Table of contents INTRODUCTION... 2 KRAKÓW, MAŁOPOLSKA REGION IN A NUTSHELL... 4 Małopolska Region... 4 City of Kraków... 4 DEMOGRAPHIC STRENGTH OF THE MAŁOPOLSKA REGION... 6 Demographic potential... 6 Population density... 6 Age structure... 6 Education... 7 Structure of employment... 8 Unemployment... 8 Migrations Advantages resulting from demographic analysis CAREER IN THE MAŁOPOLSKA REGION - EMPLOYEES Employment according to Polish Business Clasification in Małopolska Region Popular occupations Basic requirements set to employees by employers Job offers Tendency to upgrade skills - employees attending courses, postgraduate studies Expertise and availability of employees, with particular emphasis on BPO/SSC and R&D Advantages resulting from analysis of employees BUSINESS DEVELOPMENT IN THE MAŁOPOLSKA REGION - EMPLOYERS Economic potential of the Małopolska Region Dynamics of the formation of new businesses The biggest employers Pay scale depending on industry and position of employee Comparison of average wages Popular non-wage solutions Views of employers by employees Advantages resulting from the analysis of employers DIVERSITY OF EDUCATION PATHS - STUDENTS, GRADUATES AND HIGHER EDUCATION Universities in the Małopolska Region Universities in Kraków University rankings Fields of study Language skills Cross-border mobility Motivating factors in selecting an employer Advantages resulting from the analysis of diversity of educational pathways LOOKING FOR EMPLOYEES - EMPLOYMENT SERVICES IN THE MAŁOPOLSKA REGION, INCLUDING FORMS AND METHODS Barriers in acquiring employees Projects implemented by Magistrate Labour Office in Kraków Projects implemented by the Regional Labour Office in Kraków Job fairs held in Kraków Labour market institutions operating at universities Advantages resulting from the analysis of job placement SPECIFICS OF POLISH LABOUR MARKET Establishing an employment relationship and types of contracts in Polish labour law Rights and obligations of employees and employers Labour Code regulations on public holidays with public holidays calendar Flexible forms of employment REFERENCES... 38

4 Introduction This report was prepared by Hays Poland upon commission of the Małopolska Region Regional Development Agency. It is addressed to investors considering locating their businesses in Kraków and the Małopolska Region and aims at presenting and analyzing information that may affect their decision on the final selection of a start-up location. The report is focused on an in-depth analysis of human resources potential in the broad sense, as well as any activities that increase their value. It answers the questions frequently asked by investors, gathering the information in one place, whose acquisition would take a considerable amount of time. During the preparation of the report, data was provided by the Central Statistical Office, Magistrate Labour Office in Kraków, Regional Labour Office in Kraków, Kraków City Council and public and private high schools located in Kraków was used. The data was also based on a survey among students and staff of service centres and on information obtained during the direct talks with the employers from the Małopolska Region. Based on the data collected, the following advantages of Kraków and the Małopolska Region were established: Kraków takes first place on the world s list of Top 10 Emerging Cities for Outsourcing, prepared by the consulting companies, Global Services and Tholons; stability of the demographic structure ensures a low demographic load, i.e. the number of people in retirement age per 100 people of working age; 21% of the inhabitants of Kraków have higher education (second in the country - behind Warszawa); in 2010, 4,000 of these people were unemployed, which allows a relatively easy acquisition of workers, along with those with a higher education; unemployment rate in Kraków at the end of the third quarter of 2010 was 4.4%; The Małopolska Region has a positive balance of migration among people from abroad, as well as from other Polish regions; favourable changes are occuring in the structure of employment in Kraków: the share of services increasing from year to year, particularly in the section in the Administrative and support activities and Transportation and warehousing sectors; Kraków s BPO/SSC sector employs 16 thousand people, the largest number in Poland; The Institute for Market Economics places the Małopolska Region in second place in Poland in terms of attractiveness of resources and labour costs; 31% of Poles think the Małopolska Region is the main tourist attraction in Poland - scoring the highest in the study; Kraków has 755,000 permanent residents - the second largest city in Poland; by 2025 the population in the Małopolska Region is expected to increase; 98% of workers in BPO/SSC speak English; 14 thousand people are employed in the research and development sector (second place in Poland); in Kraków, 110,000 businesses operate, of which 2,545 are funded by foreign capital; 13% of businesses in Kraków are in the Professional and Technical sector, which proves that they employ highly qualified staff; 135 new businesses are registered per 10 thousand

5 3 inhabitants in Kraków (third place among large cities in Poland), also average salary according to CSO is lower than in most large Polish cities; in Kraków there are 23 universities, including the Jagiellonian University and the University of Mining and Metallurgy, which took second and third place respectively in their categories in the ranking of Perspektywy, a nationwide periodical; Kraków educates 185,000 students with 35.5 thousand students graduating per year, of which 9.5 thousand graduated in Economics and 1.1 thousand in IT; universities can be proud of holding the largest number of students and graduates in Science and Engineering in the country; almost 100% of students declare knowledge of English, and 5 % of German language; Regional and Magistrate Labour Office in Kraków implement innovative projects aiming at staying professionally active, thus increasing the pool of available workers; 15 of the 23 universities have career centres, thanks to which reaching the right candidates is much easier; in the year 2010, Kraków was visited by 8.1 million people. We would like to extend special thanks to all those who in any way contributed to this report, in particular those who have agreed to complete the surveys necessary to prepare the chapters on staff and students.

6 Kraków, Małopolska Region in a nutshell Małopolska Region The Małopolska Region, with a population reaching nearly 3.3 million people, is the fourth largest region in Poland. It is also second in terms of population density, being 217 persons per km 2. The Małopolska Region is a very diverse region; its territory includes industrial areas (Olkusz in the western part of the region), touristic areas (Jura Krakowsko-Częstochowska, the city of Kraków, Zakopane) and the concentrations of modern services and research and development activities - especially areas of the Special Economic Zones in Kraków. The Kraków zone was established in 1999 and will exist until So far it has issued 90 licenses and created nearly 9,000 jobs 1. Permits to operate can be obtained by all the companies from industrial and services sectors, providing IT services, Research and Development in terms of natural sciences and engineering, Accounting and Auditing services (excluding tax returns), Technical Testing and Analysis services and Call Centre services. Comarch Grupa Onet.pl, MAN Trucks, and Shell Business Service Centre Poland are just some examples of companies conducting their business in the Kraków zone. In recent years, particularly high-tech businesses flourished in the Małopolska Region, in both the industry and services sectors. The centre of this activity is of course the region s capital - Kraków. The region occupies a prominent place in the number of people employed in the R&D sector - almost 14 thousand in 2009 according to CSO (second place in Poland) - and expenditures on research and development per capital: 279 PLN according to CSO (also second place in Poland). In the region, there are R&D centres of such companies as ABB, Google, Sabre and Motorola, which together employ almost 2,000 people 2. Kraków is also one of the most popular locations for business activities from the BPO/SSC sector. Investment attractiveness of the Małopolska Region is confirmed by reports published every year by the Institute for Market Economics, in which it consistently maintains one of the leading positions. In the latest edition from 2010, the region took fourth, and also took second in an evaluation of resources and cost of labour. These factors includes among others: the number of workers, unemployment, influx of graduates and wage levels. The region owes its high ranking primarily to access of highly qualified staff, a large number of students and graduates, especially in science and technology. The Małopolska Region is also one of the most attractive regions for tourists. In a study conducted in 2008 by Synovate, 31% of Poles considered it the most attractive tourist region in Poland, which was the highest score in the study. In addition, the region has 8 of the 19 Polish sites entered on the UNESCO World Heritage List. These are: the historical centre of Kraków, the Wieliczka salt mine, the Nazi concentration camp Auschwitz- Birkenau, Kalwaria Zebrzydowska and wooden churches of the southern Małopolska Region. All these make Kraków and the Małopolska Region one of the most recognized Polish regions abroad and attract the largest number of foreign tourists. In 2009, according to CSO data, more than 810 thousand people from abroad used hotel accommodation, placing Kraków first in Poland. City of Kraków The capital of the Małopolska Region and its economic and cultural centre is Kraków. In 2010, according to CSO data, the region was inhabited by 755 thousand people, which puts it in second in terms of population in Poland. Not without reason, Kraków is considered the Polish academic centre. There are 23 universities, which educate more than 200 thousand students, including doctoral and graduate students. Particular attention is drawn to the large number of students and graduates in science and engineering, strongly sought out in Poland. Kraków is also the largest BPO/SSC service centre in Poland in terms of number of employees. It is estimated that it employs about 16 thousand people, most in the whole country (calculations based on data of ASPIRE 3 from June 2010). Kraków is the seat of one of the two Polish associations of entrepreneurs from this sector: ASPIRE. The following are among the largest BPO/SSC companies in Kraków: CapGemini, employing almost 2,500 people in the Kraków division providing business process outsourcing and IT services, Shell Business Service Centre, providing services for Shell Group companies from Europe, Brasil 1 The data come from the official website of the Special Economic Zone: 2 The data come from a press query, the study Centra Usług w Krakowie i ich relacje z otoczeniem lokalnym (Service Centres in Kraków and their relations with local business) and from information provided by the Kraków City Council 3 The Association of IT & Business Process Services Companies

7 5 and the Middle East and that employs 1,500 people and IBM BTO Business Consulting Services, providing accounting outsourcing services for external clients, who employ almost 1,600 people. Investment attractiveness of the city for these types of services is confirmed by placement by Kraków earning first place on the list of the world s top 10 Emerging Cities for Outsourcing in 2010, prepared by the consulting companies, Global Services and Tholons. The confirmation of the investment attractiveness of the high-tech service activities and sub-region puts the Kraków sub-region, in fourth and second place respectively in Poland for the ranking of investment attractiveness prepared by the Institute for Market Economics. Kraków is also a very profitable location for other types of activities. In the ranking of investment attractiveness for the year 2010, prepared by the Institute for Market Economics, the Kraków sub-region took four th place in terms of service activities and second in terms of the most technologically advanced activities. Kraków is also a major tourist attraction; its centre, among others with well-known market squares, St. Mary s church and the castle on Wawel Hill, are on the UNESCO World Heritage Lists, and tourists can find accommodation in one of the 195 hotels, motels or B&Bs. In 2010, according to data from the Małopolska Regional Tourist Organisation, a record number of 8.1 million visitors came to Kraków. The Centre for Business in the Małopolska Region, along with others, help promote the image of Kraków and the Małopolska Region as a city and region attractive to both investors and tourists. The Małopolska Region Agencja Rozwoju Regionalnego S.A., as a leader of CeBiM initiative, together with the Małopolska Region and Kraków Technology Park, have been jointly promoting the region s economic strengths since January CeBiM participates in international business meetings, trade fairs and conferences such as: BioConvention fair in the U.S. in 2009 and 2010, the conference Israel Gateway 2008, Prime Minister s Conference for Export and International Cooperation in Israel, participation in the World Investment Conference in France in 2009, as well as the organization of investment seminars during the 2010 Expo in China and during the mission to India in For two years the Centre has been organising the Annual Business Meeting in the Małopolska Region, a cyclical event bringing in foreign investors, politicians and local government officials interested in supporting the Małopolska Region. The Centre for Business in the Małopolska Region coordinates foreign investment projects in southern Poland. It helps businesses seeking trade and development opportunities in foreign markets, and creates the conditions for obtaining EU funds on projects with large budgets. With an established position in the market of institutions that support the economy, Centre for Business in the Małopolska Region is actively involved in the promotion of Krynica Economic Forum - an international event known around the world. The Centre works in partnership with the highest authorities in the region and major business organizations at home and abroad. In 2010 and 2011 CeBiM carried out a large promotional campaign in the largest international television station CNN - nearly 500 commercials reaching over 200 million people worldwide. Centre for Business in Małopolska Region also takes care of the appropriate materials to promote Małopolska Region: it issues periodic reports on Human Resources, Real Estate, sector of shared services or methods of doing business in the Małopolska Region.

8 Demographic strength of the Małopolska Region Demographic potential for investment location means, on one hand, market availability of a sufficient number of people who may in the future be employees of a company, and on the other - the number of potential customers with an appropriate profile. In order to measure the potential, such statistics as the population size for different age groups, population density, natural increase and the migration balance are used. In this chapter, these figures are approximated for Kraków and the Małopolska Region, and for comparison, for other major Polish cities. Demographic potential At the end of the year 2010, the Małopolska Region was home to nearly 3.3 million people, which gave it fourth place among the Polish regions. The region s capital, Kraków, had about 755,000 permanent residents, and additional tens of thousands of people, mainly students, lived here temporarily. Figure 1 shows the population in major Polish cities. Figure 2. Forecast of population for the years in the Małopolska Region (source: CSO, Local Data Bank, 2010) The age dependency ratio in Kraków is 28.8 persons, which is higher than the national average, but still lower than in other large cities; in Łódź, being 32.8, and in Warszawa 32. This puts Kraków among cities that are not as affected by the progressive aging of the population. A positive birth rate continuing in Kraków since 2008 is also significant. In 2009, the surplus of births over the number of deaths was 691 people above the current state. This data is presented in Figure 2. Population density Figure 1. Population in major Polish cities in late 2010 (source: CSO, Local Data Bank) In light of the problems of population aging, affecting almost all developed countries in the world, what is essential is not only the current number of inhabitants, but also the changes over time and the extent of the demographic load on the number of people in retirement age per 100 people in working age. According to the population forecasts published by the CSO, the Małopolska Region will keep growing until 2025 when it will reach 3.37 million inhabitants (compared to 3.3 million in 2010), and then begin to decline, however remaining at a level above the current state. This data is presented in Figure 2. The average population density in the Małopolska Region in 2009 was 217 persons per km 2, which is second place in Poland. Most densely populated poviat in the region was the city of Kraków - on average, 2,310 people lived on one square kilometre. Other densely populated regions are two other major towns of the region: Tarnów (1,591 persons per km 2 ) and Nowy Sącz (1,498 persons per km 2 ). The lowest population density occurred in Miechów poviat - only 74 people per km 2. Such a large diversity in the Małopolska Region is however typical and reflects the difference between rural and urban areas. Age structure Diagrams 3 and 4 show the age structure of population in the Małopolska Region and in Kraków. Persons of

9 7 preworking age (below 18 years of age) represent 20% of the inhabitants of the Małopolska Region, people of working age (15-60 years old for women and years old for men) - 64%, while those in the retirement age - 16% of all residents. People of working age can be divided into those in occupational mobility age (18-44 years) and those that have already exceeded this age. The age structure of inhabitants in Kraków is slightly different from the population structure of the Małopolska Region. Comparison of diagrams 3 and 4 shows that the society of the Małopolska Region is younger - pre-working age population is 20% compared to 15% in Kraków. The number of people in retirement age is also smaller (16% in the region, 19% in Kraków). In Kraków, a greater percentage of people are in the mobile age. The number of people who are most attractive to employers in terms of age is nearly 320,000, which will ensure an adequate supply of workers in the coming years. Education Kraków has always been regarded as an academic capital of Poland and city of educated people. This is confirmed by the data, since according to a report on the major Polish cities, published by PriceWaterhouseCoopers at the beginning of 2011, 21% of people living in Kraków had higher education. This is second place in the country, behind Warszawa. Data on the structure of education in the Małopolska Region are presented in Figure 5 (Labour Force Survey by CSC; including people above 15 years of age). non-mobile working age (23%) retirement age (16%) vocational education (28%) junior secondary, primary and lower education (24%) mobile working age (41%) pre-working age (20%) Figure 3. Population by age groups in the Małopolska Region (own study based on CSO data, 2009) general secondary education higher education (16%) post-secondary and secondary vocational education (21%) non-mobile working age (24%) retirement age (19%) Figure 5. The structure of education in the Małopolska Region in 2009, according to LFS (source: CSO Bank of Local Data) mobile working age (42%) pre-working age (15%) Figure 4. Population by age groups in Kraków (own study based on CSO data, 2009)

10 Structure of employment Unemployment The structure of people working in the Małopolska Region according to LFS broken down by economic sectors is presented in Figure 6. It shows a clear advantage of the services sector, which employs 54% of all workers, and puts the Małopolska Region in the group of highly developed regions where the sector plays a dominant role. This is evident not only in the number of people employed, but also the fact that this sector creates, according to CSO data, 74 percent of added value in the whole Małopolska Region. Figure 8 presents the comparison of the unemployment rates in the regions. Unemployment in the Małopolska Region is one of the lowest in Poland. The registered unemployment rate is 9.5% there lower by 2 percentage points than the Polish average (11.5%). agricultural sector (15%) services sector (54%) industrial sector (31%) Figure 6. Structure of the people working in the Małopolska Region according to LFS broken down by economic sectors in 2009 (source: CSO, Bank of Local Data) Figure 7 shows the structure of people working based on age. Population seems evenly distributed between four age groups: 15-29, 30-39, and 50 and above. It is significant that fewer people are now in the first than the second group, which is the result of aging, but at this moment (2011) the Małopolska Region is able to provide an adequate number of skilled workers years of age (29%) years of age (24%) Figure 8. The registered unemployment rate at the end of the third quarter of 2010 in the Polish regions (source: CSO, Bank of Local Data) Figure 9 presents a comparison of unemployment rates in selected Polish cities. Kraków is one of the cities where the rate is relatively low, especially when compared to Łódź and Szczecin, where those rates oscillate around 9%, but is still higher than in Warszawa, Katowice and Poznań, which makes it easier to find workers, higher unemployment results in more job seekers with relatively easy access it is enough to contact a local Labour Office to find employees with the required qualifications years of age (24%) 50 years of age and more (23%) Figure 7. Structure of people working in the Małopolska Region according to the LFS based on age in 2009 (source: CSO, Bank of Local Data) Figure 9. Registered unemployment rate at the end of the third quarter of 2010 in selected Polish cities (source: CSO)

11 9 Figure 10 presents variations in the unemployment rate in Kraków and the Małopolska Region in There are clear analogies in the formation of the two unemployment rates: when the unemployment rate in the region decreased or increased, the same happened in the city. However in Kraków this rate was always lower by about 5 percentage points, which is a normal phenomenon when comparing regions to their capitals. Unemployment reached the lowest level in 2008, then increased as a result of the economic slowdown that hit Poland in 2009, and in 2010 remained at similar levels. In the year 2011, especially in the second half, the Ministry of Labour predicts a further decline in unemployment on the Polish scale. This is partly dictated by seasonal trends and partly by economic acceleration. According to the Ministry forecasts, the unemployment rate at the end of December 2011 will be 10.9 percent, 2.2 percentage points lower than the rate observed in March. Figure 10. Registered unemployment rate in Kraków and the Małopolska Region in the years (source: CSO, Bank of Local Data) Figure 11 shows the level of unemployment among people with higher education. This indicator is particularly important for investors wishing to locate a business in the region that requires skills and expertise in a given field. The higher level of unemployment in this group may facilitate relatively quick and easy acquisition of employees with desired skills. Figure 11. Number of registered unemployed with higher education in Kraków and Małopolska Region in the years (source: CSO, Bank of Local Data) The number increased in 2009, both in the region and in Kraków. In real numbers, the growth in the region amounted to more than 4,000 people, and just over 1,000 people in Kraków, but looking at the percentages of these indicators, the results are arranged slightly differently. The number of unemployed in the Małopolska Region increased by 44% and in Kraków by 51%, i.e. an increase was slightly higher. The relatively higher growth in the capital region could be caused by the influx of people from nearby villages who came to Krakow in search of work and were also registered as unemployed. In 2010, the number of unemployed also increased, but growth was much lower than in The reason was, of course, the economic acceleration. Investors from BPO/SSC might find it interesting that in the third quarter of 2010, 18% of unemployed in the Małopolska Region were university graduates of up to 27 years of age, and in Kraków they accounted for 13% of this group. This group is particularly attractive to employers, as its members already have the skills required to work in basic positions and at the same time quickly learn new skills and do not have high salary expectations. In addition, the image of service centres changes, as they are increasingly seen by students as an attractive place to work

12 Migrations Advantages resulting from demographic analysis Migration after birth rate is the second cause of changes in the population of the region. As mentioned in chapter two, Kraków and the Małopolska Region are very attractive to tourists, and the quality of life here is high. Both these factors bring a lot of foreigners, not only as tourists, but also to settle permanently. Figure 12 shows the increasing number of registrations for permanent residence from abroad in the Małopolska Region. Kraków and the Małopolska Region is a region with high demographic potential. It is demonstrated by the large number of people in the mobile age (42% of the total population), and good population forecasts for the next 15 years. The structure of education in Kraków is very beneficial for enterprises wishing to locate their business here - 21% have a university degree and in 2010, nearly 4,000 of them had the status of unemployed, which makes it easier to acquire them for work. Kraków and nearby municipalities are also very attractive to people from other regions of the country and abroad, as shown by the high positive migration balance, both foreign and between poviats. Figure 12. Permanent residence of foreigners in the Małopolska Region in the years (source: CSO, Bank of Local Data) With the growing number of arrivals, the number of departures decreased. Maintaining a positive balance of foreign migration was possible, which is currently at the level of 765 people. Inter-poviat migration balance for the poviat and city of Kraków is also positive. In 2009, 161 people moved to Kraków and 3,762 people moved to the neighbouring poviats (Kraków and Wieliczka). This indicates a trend to move to the quieter suburban villages, which are usually very accessible from the main city, making the daily commute to work possible.

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14 Career in Małopolska Region - employees For the proper functioning and development of enterprises, suitable employees are indispensable. Depending on the industry, different qualifications are required, but employers always look for employees with particular skills and experience in work identical to the one they offer. Therefore, for investors, structure of the employed broken down into Polish Business Classification sections is important. It allows them to specify how many people with qualifications are currently working on a given territory. Also, the number of advertisements on major websites is important, since they inform the demand of a given type of qualification, and of competition expected by an investor locating its operations in the region. Employment according to Polish Business Classification in Małopolska Region and Kraków and changes in occupational structure Figure 13 shows the average employment in the corporate sector in some sections of the Polish Business Classification in the Małopolska Region - sections were included in the Local CSO Data Bank as of 23rd March It clearly shows the importance of the industry sector, which provides work to 41% of all employees. Other people work in services - most often in trade (26.4% of the workforce), construction (10.1%) and other sections (9.6%), which include services related to information, communication and transport. industry industrial processing (35.0%) trade, car repair (26.4%) Figure 13. Average employment in the enterprise sector by Polish Business Classification sections in the Małopolska Region in 2010 (source: own study based on CSO, Bank of Local Data) real estate services (1.4%) accommodation and catering (2.8%) professional, scientific and technical activity (3.5%) administration and support activities (4.8%) industry other (6.4%) other sections (9.6%) construction (10.1%) Figure 14 illustrates the average employment in enterprise sector in Kraków in 2010 by sections of Polish Business Classification. The first four items on the chart reflect the number of people employed in industry, in 2010 it was 27.1% of all employees. The remaining 72.9% worked in services (comparison skips those working in the agricultural sector, which due to the urban character of Kraków employs a negligible number of people). Among the people employed in the services most work in trade (32.6%), construction (9.6%) and industry-related administration and support activities (8.3%). trade, repairs (32%) industrial processing (20.4%) other sections (8.5%) Figure 14. Average employment in enterprise sector by Polish Business Classification sections in Kraków in 2010 (source: own study based on City of Kraków Statistical Bulletin 2010) Between the end of 2008, and 2010 in Kraków the employment structure has changed. These changes are shown in Table 1. First of all, a 3 percent increase in the number of all employees occurred and at the same time, the number of people employed in industry fell by 6 percent. This means that large, 7 percent increase in the number of employed in services has occurred. The largest percentage increase, however, is seen in Mining and quarrying section, where the number of employees grew by 75%! This high percentage however is mainly due to a small total number of employees in this sector. Major changes also occurred in transport and storage, where the number of employees increased by 45% compared to Employment in the section related to the administration and support operations also increased by 3,166 people, or 24 percent. Also the number of trade employees slightly decreased. mining and quarrying (0.8%) water supply, sewage management (1.2%) real estate services (1.5%) accommodation and catering (3.4%) transport and warehousing (3.8%) production and supply of utilities (4.6%) information and communication (5.2%) administration and support activities (8.3%) construction (9.6%)

15 13 Table 1. Comparison of average employment in enterprise sector by Polish Business Classification sections in Kraków in 2008 and All these developments indicate that the economy in Kraków is becoming more modern: the number of people employed in services increases at the expense of those working in industry. You can also see an increase in the number of people whose job is to support the activities of other economic entities, which provides a particularly good condition for business development. Change absolute numbers percent Total 190, ,800 percent 3% Total industry 56,491 53,137-3,354-6% mining and quarrying 939 1, % processing 43,195 40,008-3,187-7% production and supply of utilities water supply, sewage management 9,373 9, % 2,984 2, % Total services 134, ,663 8,319 7% construction 17,602 18,894 1,292 6% trade, repair 64,185 63, % transport and warehousing accommodation and catering Information and communication 5,059 7,353 2,294 45% 7,108 6, % 9,919 10, % real estate services 2,687 2, % administration and support activities 12,996 16,162 3,166 24% Other sections 14,788 16,617 1,829 12% source: own study based on City of Kraków Statistical Bulletin from 2008 and 2010 are the future of the labour market. The trend of growth in demand for specialists in new technologies, business services and financial services expected several years ago is reflected in the current job market in Kraków and Małopolska Region - the number of employees in the Polish Business Classification section of financial services has grown in the Małopolska Region in by 8 percent, despite the economic slowdown. In addition, one of the labour market trends for 2011, presented by the portal hrstandard.pl, is employment growth in IT, telecommunications and construction industries 5. These changes are caused by, among others developing BPO/SSC and R&D sectors. Previously the sector businesses employed primarily those entering data and supporting clients in terms of using applications and hardware, but now financial analysts and software developers are finding employment increasingly more often. Furthermore, demand for sales and marketing experts is not decreasing. In the final months of the year 2010 and early 2011, growing interest in the promotion in social media and throughout the Internet could be seen. These trends have led to the creation of a new specialty: Internet Marketing Specialist. Due to the increasing role of the Internet in our lives, the popularity of this new profession and other professions related to the Internet will also increase. Popular occupations The Labour market is constantly changing, jobs are being created which no one even thought of a few years earlier. To enable the education system to adapt to the growing demand for new specializations, the Interministerial Team for Work Demand Forecasting was established, which in 2007 prepared and issued a publication entitled New professions 5

16 Basic requirements set to employees by employers good team work, The modern job market in the Małopolska Region is subject to extensive changes; international corporations, recognizing the potential of the region, are willing to locate here and grow their investments. The bar put at employees and applicants for employment is rising, and employers face an increasingly difficult task of how to encourage and retain the best professionals. Interviews with HR managers of major companies employing specialists in the Małopolska Region show that the following factors play a key role during recruitment and internal promotion of staff: Experience and working knowledge of the profession, as well as in a given industry, or the ability to adapt quickly to new environments and work methodology of an organization - the so-called corporate approach. Directional education and the ability to use knowledge in practice, especially in companies which promote hiring people directly after graduation and their rapid development within the organization. Knowledge of foreign languages, with particular emphasis on niche European languages, i.e. Nordic languages and Dutch. Increasingly, candidates are sought out with fluent command of Middle East languages, such as Arabic or Hebrew. constructive, professional communication, self-confidence, faith in own ability, capability to act within the strict time frames and coping with stress, analytical skills team management, project management skills, especially in the case of candidates up for promotion. To properly diagnose these soft skills, employers in the HR departments are building ever more sophisticated systems of personnel evaluation called Assessment Centres, or use services of external specialists. Job offers On February 28, 2011 on the website Pracuj.pl, there were 1,733 job offers posted by employers from the Małopolska Region. Their breakdown by sector is shown in Figure 15. Ability to use basic computer programs efficiently. Employers are willingly to train talented employees in the internal systems used in the organization, such as SAP, and prior experience with such systems is obviously a big advantage. Also, so-called soft skills of the candidates are important in hiring and promotion. In large international teamoriented organizations, the following features are of particular importance: Figure 15. Ads posted on the website pracuj.pl as of February 28, 2011 by employers from the Małopolska Region by industry (source: own study based on Pracuj.pl) Most advertisements concerned positions in sales, there were (724) more than 40%. Also, finance and economics professionals (295 offers) and employees of customer service

17 15 and call centres were sought after offers. Relatively few announcements concerned the posts related to office administration and analysis/research (53 and 45 respectively). A large number of sought-after retailers prove returning prosperity, as in such a case the sales department is expanded at the beginning. Another reason could be a high turnover of salespeople, which forces a constant search for workers to replace those who departed. According to the authors Herbert M. Greenberg and David Mayer, the level of rotation among the insurance agents was 50 percent in the first, and up to 80 percent in the third year of employment. The article on this topic was published in Harvard Business Review Poland in February On the other hand, the large number of sought-after specialists in the field of finance, customer service, and IT result from the BPO/SSC sector constantly evolving in Kraków, which is still in need of new workers. Such high demand can make the availability of these workers decrease and companies will be forced to have to compete among one another to hire the best qualified employees. Tendency to upgrade skills - employees attending courses, postgraduate studies At the turn of January and February 2011, HAYS Poland conducted an electronic survey among employees of international companies employing specialists in the Małopolska Region (n = 300). Among others, the study concerned criteria which guided the choice of an employer by employees, such as salaries, perks as well as overall job satisfaction. For entrepreneurs willing to accept graduates in their ranks it is important that a similar study is conducted among students of the Małopolska Region universities (n = 300). The most important factor determining the choice of a particular employer being a chance to further development and trainings offered (67%). As for the satisfaction with the conditions of employment - 40% of respondents were not satisfied with the support offered by their employers in developing qualifications. The survey of employees also showed that 95% of specialists had higher education. Virtually all declare their willingness to participate in internal training courses offered by employers. When it comes to more complex forms of education, confirmed by academic title, diploma or certificate confirming qualifications: 1.5% opted for doctoral studies, 8% MBA, over 20% postgraduate studies, 23% skills confirmed by an internationally recognized certificate, i.e. ACCA, CIMA, PMI, PRINCE, CISCO, etc. It can be clearly inferred that employees are not only keen on further education, but the opportunity to deepen their knowledge and skills being a key factor; due to which they decide whether to remain with a given employer or select another. 59% of the respondents declared that the offered training and opportunity to develop skills was one of the main criteria for which they decided to choose this specific employer. The three most popular additional components of pay were recognized by respondents as follows: 49% for trainings, 40% for grants to studies or other forms of education, and finally Private health insurance ranking first 60%.

18 Expertise and availability of employees, with particular emphasis on BPO/SSC and R&D Kraków has always been a city attracting investors investing in modern sectors of the economy. This can be seen especially in the case of BPO/SSC sector, very well developed in Kraków. According to ASPIRE 6 data from June 2010, the sector employed about 16 thousand people, most in the whole country! There is, among others, a division of CapGemini, which employs over 2,500 people, being the largest employer in BPO/SSC in Poland. Other major service centres in Kraków are IBM BTO, which employs 1,600 employees, Shell Business Service Centre, which employs more than 1,500 people, and Phillip Morris International Service Center Europe, whose 1,000 employees provide services in finance, HR and IT in 25 European countries. Kraków, due to its academic tradition, is also a highly sought after destination for investment location from research and development sector. Companies such as ABB, Google, Sabre and Motorola located their centres here, employing together almost 2,000 people. The whole R&D sector in Małopolska Region, including universities and government centres, employs nearly 14 thousand people, which gives the region second place in Poland. Employees of companies from both these sectors are not only highly educated specialists in their field, but also know foreign languages. According to the aforementioned survey by ASPIRE in June 2010, employees of service centres in Kraków communicate in 30 languages and 98% of them speak English. The largest employment growth is expected among people familiar with the Scandinavian languages. ASPIRE predicts that the number of people speaking Norwegian will increase 4.5-fold, Finnish - 3-fold, and Swedish fold. There will also be high demand for people who speak Romanian. According to the authors, their number will increase almost four times. Advantages resulting from analysis of employees The structure of the economy in Kraków is very modern, almost 73% of people work in the service sector, including as much as 8.3% in the Supporting and administrative activities. This means that their primary task is to support the work of other companies, reflecting the high economic development. A large number of companies from the business environment also means that by locating its business there, the potential investor will have no problem finding partners that offer services necessary for the proper functioning of the core business. In the last two years the economy has undergone positive changes, the number of persons employed in services increased by 7%. BPO/SSC, which employs most people from all cities in Poland, is particularly developed in Kraków. These are usually people with higher education, who speak more than one foreign language, perfectly capable to find themselves in an international environment. 6 The Association of IT & Business Process Services Companies

19 17

20 Business development in the Małopolska Region - employers Economic potential of the Małopolska Region One of the important criteria considered when selecting sites for a location of a new investment is the level of economic development in the region measured, inter alia, by the number of companies that already operate in the area, both from a related industry, as well as others. This can be of particular importance for companies that provide services for business customers. In addition to the number of enterprises, a range of statistics describing their operations is also significant, such as asset turnover or value of investments. Furthermore, salary levels can also play a very important role, as they directly translate into the subsequent costs of business operations, especially in industries where human capital plays a large role such as the BPO/SSC sector. wholesale and retail (28%) construction (14%) industrial manufacture (10%) professionam, scientific and technical activity (9%) transport and warehousing (7%) Figure 16. The structure of business entities registered in REGON 7 in the Małopolska Region in 2009 by Polish Business Classification sections (source: own study based on CSO) In 2009, the REGON register included more than 320 thousand registered businesses based in the Małopolska Region. Their structure according to the Polish Business Classification is presented in Figure 16 (the sections whose share did not reach at least one percent were omitted). rent and lease (2%) culture, entertainment and creation (2%) information and communication (3%) finance and insurance (3%) education (3%) accommodation and catering (4%) real estate services (4%) healthcare and social aid (4%) other services (5%) A large number of entities involved in retail and wholesale trade can be seen; there are nearly 90,000, representing 28% of all registered businesses. A large number of entities are also registered in manufacturing and construction, respectively 10 and 14 percent. More than a third of all those entities (110 thousand) are registered in Kraków. Their structure according to the Polish Business Classification is presented in Figure 17, with omitted sections whose share was less than 1 percent. Again, there is a majority of the entities involved in retail and wholesale trade, reaching nearly 29,000, which represents 26 percent of all entities operating in Kraków. wholesale and retail (26%) professional, scientific and technical activity (13%) construction (10%) industrial manufacture (7%) transport and warehousing (7%) other services (6%) Figure 17. The structure of business entities registered in REGON in Kraków in 2009 by Polish Business Classification sections (source: own study based on CSO) A lot of entities are operating in the Professional and technical section, which is a clear indicator of how modern Kraków s economy has become, as this section registers companies from the high-tech sectors, such as BPO/SSC and other business services. culture, entertainment and creation (2%) accommodation and catering (3%) rent and lease (3%) education (3%) information and communication (4%) finance and insurance (4%) real estate services (6%) healthcare and social aid (6%) In 2009 nearly 1,400 entities with foreign capital were registered in the Małopolska Region, employing nearly 83,000 people, and gives the region fifth place in Poland. This figure, however, does not include entities involved in: banking, brokerage, insurance and investment companies and pension funds, National Investment Funds and universities. After taking into account these types of organizations, the number of entities increased to 3,565 in the Małopolska Region, and 2,545 in Kraków. Also, in terms of production sold, the value of products sold by entities engaged in the industrial activity, construction, assembly, transport and others, the Małopolska Region is high in the regional rankings, even though it is not the region associated with industrial production. In 2009 this production was 54,697.8 million PLN, which put the region 7 Statistical number given to an economic entity, entered in statistical register - National Register of Entities of National Economy.

21 19 sixth in the country. Kraków is also high in these rankings; in 2009 production sold amounted to 16,094.4 million PLN accounting for nearly 30% of the entire regional production, which gave the city fifth place in Poland, ahead of Wrocław, Łódź and Szczecin. Companies from the Małopolska Region are also investing considerable sums. In the first half of 2010, expenditures amounted to over 2 billion PLN, due to which the region took sixth place in Poland in this respect. However, considering only the funds invested by companies associated with trade and services, it moves the Małopolska Region up to third place behind Wielkopolska and Mazowsze. The value of assets held by companies from the Małopolska Region was 40 billion PLN in the first half of 2010, putting the region in fifth place. Dynamics of formation of new businesses In the first half of 2010, 5,900 new businesses were registered in Kraków according to CSO data. This represented an increase of 25% comparing to the same period the previous year, when 4,699 new businesses were registered. In the same period, the number of deregistered entities also decreased by 5% (from 2,632 in the first half of 2009 to 2,486 in the same period of 2010). This demonstrates the entrepreneurship of Kraków inhabitants (more entities were registered only in Warszawa and Silesia Metropolis). The number of newly registered entities per 10 thousand inhabitants is also significant. In 2009 in Kraków it amounted to 135, which gave it third place among large Polish cities (behind Poznań and Wrocław, but ahead of Warszawa). The biggest employers Table 2 lists the companies from the Małopolska Region, which were on the list of the 500 largest Polish companies in 2009 according to Polityka who employ over 1,000 people. Industrial companies predominate where high employment is often a necessity due to the application of advantages of scale. However, there are also IT (Comarch) and trade companies (Alma Market). Other large companies that were not on the list of Polityka are many companies in the BPO/SSC, including CapGemini BPO, which in 2010 employed over 2,500 people, IBM BTO, which employed 1,600 people, Shell Business Service Center (1,500 employees) and the PMI Service Center Europe and Motorola (1,000 employees). Table 2. Selected companies from the Małopolska Region employing over 1,000 people Name Municipality Sector Employment Grupa Maspex Wadowice Wadowice food industry 5,274 Grupa Valeo Skawina automotive industry 3,605 Grupa Tele-Fonika Kable GK Comarch SA Kraków Kraków electro technical industry telecommunications and IT 3,285 3,260 Grupa Can-Pack SA Kraków metal industry 3,249 Grupa Fakro Nowy Sącz construction 3,200 BP w Polsce Kraków resources and fuels 2,919 GK Stalprodukt SA Bochnia metal industry 2,876 Grupa Kęty SA Kęty metal industry 2,785 GK Alma Market SA Kraków trade 2,748 MPK SA Kraków transport and logistics 2,557 Vistula Group Kraków clothing industry 2,290 Grupa Synthos SA Oświęcim chemical industry 2,200 GK Glinik SA Gorlice machine industry 2,171 Zakłady Azotowe w Tarnowie-Mościcach SA Zakłady Górniczo-Hutnicze Bolesław SA Tarnów chemical industry 2,130 Bukowno resources and fuels 1,771 Mota-Engil Polska SA Kraków construction 1,675 (source: