It will be difficult to offset the long-term negative consequences of the emigration of Poles seeking better-paid jobs-including an expected decrease in potential GDP or a rise in inflationary pressure-with benefits such as money transfers from abroad, according to an Economy Ministry report.

On Poland's entry to the European Union some EU countries opened their labor markets to Polish people and it is expected that by 2011 access to EU labor markets will be fully liberalized. As a result, there is a relatively strong outflow of labor force from Poland, a trend which is expected to last for at least a decade. There are both temporary and long-term economic consequences of this phenomenon.

It is generally assumed that migration benefits mainly the people involved. Related advantages to countries from which the migrants leave and those which receive them are subject to controversy in literature on the subject. One indisputable benefit of migration is a fall in unemployment. But there are also disadvantages. According to the Economy Ministry's report, the identified threats to Poland resulting from the migration shock include the risk of a long-term economic slowdown, a brain drain, an outflow of young people, reduction of human capital, deterioration of the demographic structure, a rise in inflationary pressure, and a decrease in the profitability of exports and the country's attractiveness as a location for foreign investment.

According to the authors of the report, a long-term economic slowdown and a decrease in potential GDP are the main negative consequences of emigration in the long run. Theoretical studies indicate that potential GDP of the migrants' country of origin should decline, while that of the recipient country should increase. Opinions as to the scale of these impacts differ but most experts believe that related GDP changes will be marginal-it is estimated that an outflow, or inflow, of 10 percent of a country's labor force would shed, or add, some 0.1-0.2 percent to its GDP.

Meanwhile, this differs considerably from research findings recently presented by British experts who assessed the impact on potential GDP of economic emigration from Poland to other EU countries. In their study, experts of the National Institute of Economic and Social Research in London, assumed that 1 million Poles would leave their country from 2006 to 2010, of whom 400,000 would emigrate to Germany, 500,000 to Britain and the remaining 100,000 to other EU countries.

The study predicts that after 10 years the Polish migrants will contribute 1.1 percentage points to Britain's annual potential GDP growth. In Germany, potential GDP growth will be higher as a result by 0.5 percentage points. In the 20 years from 2006 to 2025, the accumulated increase in Britain's and Germany's potential GDP will reach respectively around 16 percent and 9 percent of their 2005 GDP.

Meanwhile, Poland-as the migrants' country of origin-will record a fall in labor force and a resulting major decrease in potential GDP. For a long time, Poland's potential GDP growth will stabilize 3.5 percentage points below the level it would reach if the migrants stayed at home.

The accumulated decrease in potential GDP in the 20 years from 2006 to 2025 will be around 45 percent of the country's 2005 GDP.

Another unfavorable consequence of emigration is increased inflationary pressure. The unemployment rate falls thanks to emigration, strengthening the bargaining power of employees. As the Polish economy is growing fast and the immediate capacity for improving efficiency is being exhausted, this may put additional pressure on wages. Wage hikes, if not coupled with an increase in productivity, lead to a rise in unit labor costs. But in contrast to recent years, it is no longer possible to raise productivity through cuts in employment. As a result, economic migration may boost prices as a result of growing labor costs. Research by the Economy Ministry shows that the main consequence of economic emigration from Poland now is difficulty in recruiting new workers, including well-qualified specialists.

A positive consequence of the migration wave is a rise in money transfers to Poland, something which stimulates the economy. The migrants' money transfers contribute to the strengthening of the zloty because they increase the supply of foreign currencies on the market. The transfers also improve the country's current account balance, which reduces the risk incurred by foreign investors and lowers their operating costs in Poland. The advantages also include increased demand for Polish consumer exports, easier business contacts and business experience acquired by Polish migrants, something which can be exploited after they return home.

According to a recent survey carried out by the CBOS public opinion research center, since Poland's EU entry no less than 3 million Poles have worked abroad at least for a short time. The CBOS research concerned Poles' employment abroad in the past 10 years.

Of the 3 million Poles who left Poland after May 1, 2004, to work abroad, an overwhelming majority found employment in one of the EU countries. At present, more than 1.1 million adult Poles are working or looking for jobs abroad. Britain has attracted the largest share of these people (26 percent), followed by Germany (16 percent), Ireland (10 percent), Italy (6 percent) and Belgium (5 percent).

Most of the people who have sought employment abroad following Poland's EU entry come from rural areas or small towns with populations below 100,000, particularly those located in southern and eastern Poland.