Project co-financed by the European Union under the European Social Fund

1. „Employers of Podkarpackie Voivodship” study conducted within Podkarpackie Labour Market Observatory Project co-financed by the European Unionunder the European Social Fund

2. Purpose of the study

3. Purpose of the study ‘Employers of Podkarpackie Voivodship’ • identification of development trends among the employers in Podkarpackie voivodship and to specify their needs in the area of human capital development • diagnosis and evaluation of competitiveness of the Podkarpackie voivodship compared to other Polish voivodships • identification of the current socio-economic condition in the region as well as expected development tendencies

4. The specificity of the analysis - panel study • The ‘Employers of Podkarpackie Voivodship’ survey is a so called panel survey • Other waves of survey will be repeated annually • The report presents the results of the first survey conducted in 2011

5. Methodology

6. Methodology Analysis of the secondarydocument and data Summary of the results Quantitativeresearch Qualitativeresearch • Moderated discussion of experts • In-depthinterviews(140 personstotally): • at the local level (in 4 poviats) – localauthorities, educational establishment administrative staff, employment agencies and education sector, selectedemployers and employees • at the regional level (the local government authorities and voivodship authorities, VoivodshipLabour Office and academic staff) • thematic interviews (with labour market experts and representatives of institutions operating as part of the business environment) • Data from Polish Central Statistical Office • Otherreports and documents • Strategic documents • PAPI – 500 employers (companies with different numbers of employees - small, medium and large, different location in poviats and according to their PKD classification • PAPI- 1180 employees– women and men - management and technicalstaff)

7. Survey Results

8. Diagnosis and evaluation of the competitiveness of the Podkarpackie voivodship compared to other Polish voivodships

9. Population potential and demographic structures Population potential and demographic structures fall into the middle of thescale (as compared to other regions) • The rank of Voivodshipsis based on synthetic indicators • Each indicator consists of various measures of socio-economic development • For example, the indicator "Population potential and demographic structures" consists of the measures: • agefactor • feminisationfactor • migrationfactor Ranking of Voivodshipsaccording to demographic potential and demographic structures Source: own calculations

10. Population potential and demographic structures • Afavourable demographic structure of the region (the ratio of old age persons to pre-working age persons ratio is lower in Podkarpackie then in any other Voivodship) • The highest level of life expectancy in Poland • One of the highest population growth levels Source: own calculations based on CSO data

11. Population potential and demographic structures • unfavourable feminisation factor • (in some gminas, especially in those situated in the east, there are less than 80 women aged 20 to 34 per 100 men) • The reasons for the increased outflow of women from rural areas : • social barriers • lack of perspective and a desire to improve the quality of life • work hardship, • difficulties with finding employment outside agriculture Source: own calculations based on CSO data

12. Population potential and demographic structures • very unfavourable processes of spatial concentration and de-concentration of population • (high levels of inhabitants migration – both internaland external) • At the internalvoivodshiplevel within the largest out-migration characterized by: • areaslocatedperipherally • (poviat bieszczadzki, lubaczowksi, lezajski) - due to poorsocio-economicsituation • subregionalcenters • (Przemysl, Krosno and Tarnobrzeg) – due to the processes of suburbanization (migrationfromcities to the suburbs) Source: own calculations based on CSO data

13. Social and occupational structure Social and occupational structure of the inhabitants may be considered highly unfavourable Ranking of Voivodshipsaccording to the social and occupationalstructure Source: own calculations • The percentage of persons with a university degree is similar to other regions, but these persons are unequally distributed within the Podkarpackie region, mostly in big cities Source: own calculations based on CSO data

14. Social and occupational structure • There is high balance in the share of population working in various sectors of the economy Source: own calculations based on CSO data However there is a concentration of individual sectors in different parts of the voivodship In 200928% of the populationworks in agriculture, but there are poviatswhere the percentageis more than 50% 28% of the population works in industry - especially in the western part of the region (above 40%working in industry)

15. Economic condition of the region Economic condition of the region can be described as very poor Ranking of Voivodshipsaccording to the economiccondition of the region Source: own calculations • The lowest average monthly wage in Poland • (since 2002 it has been 83-84% of the country's average), but at the same time a small wage gap within the region, which may be considered as a positive sign Source: own calculations based on CSO data

16. Economic condition of the region • The lowest GDP per capita in Poland • (although it has a very high growth dynamics – 33% between 2003 and 2008 being the best result among the regions of eastern Poland and the third best result in Poland) • The unemployment rate ranks among the highest in Poland • (15% on the average in 2011 while in the voivodshipperipheric territories in terms of development and in regions near the Ukrainian border this rate exceeds 20%) Source: own calculations based on CSO data

17. Economic condition of the region • The region has the lowest number of economic operators • The productivity of the SME sector is low (small family-owned undertakings with small sales volume, low competitive power and a low level of innovation prevail) • However, small and medium enterprisesplayan important: • economic role - activating the local markets • social role -supporting the formation of the middle class Source: own calculations based on CSO data

18. Innovative potential Voivodship innovative potential is fairly low • Howeverthe region innovative potential has a high growth dynamics • This growth is especially stimulated by: • the developing cluster structure (26clusters and cluster initiatives in 2011) • Special Economic Zones • the fact that the universities focus their activities on new technologies(creation of newdirections) Ranking of Voivodshipsaccording to the innovativepotential Source: own calculations

19. Innovative potential • The number of universities and technology universities which is higher than the country average and the number of business schools which is lower than the country average • (positivephenomenon) • One of the lowest levels of persons employed in R&D • (although lately the number of R&D centres has risen and in 2010 it amounted to 67) • A distant 10th place in terms of per capita number of submitted patent applications • (40 patented invention per 1 million inhabitants in 2010) Source: own calculations based on CSO data

20. Development of technical and social infrastructure Development of technical and social infrastructureis fairly low Ranking of Voivodshipsaccording to the development of technical and social infrastructure Source: own calculations • Relatively poorly developed and internally diversified technical infrastructure • (lowdeveloped waterworks and canal network, although in recent years the situation has been improving) Source: own calculations based on CSO data

21. Development of technical and social infrastructure • Poorly developed and highly diversified internal social infrastructure • The region has one of the lowest percentages of children aged 3 to 6 who are attending nursery schools (63% in 2010) • One of the lowest density of medical personnel per capita (3.08 per 1 thousand. Inhabitants in 2010) Source: own calculations based on CSO data

22. Development of technical and social infrastructure • In term of transport infrastructure, the region is poorly linked both internally and externally, • (yet it should be noted that due to high population density a large number of potential employees lives in the vicinity of region’s main development centres) Accessibility to sub-regionalcenters Accessibility to voivodshipcenters Accessibility to poviatcenters

23. Social activity of inhabitants The level of social activity of inhabitants is very high Ranking of Voivodshipsaccording to the socialactivity of inhabitants Source: own calculations • High percentage of sport club members (39 per 1000 inhabitants in 2009). Source: own calculations based on CSO data

24. Social activity of inhabitants • High percentage of artistic groups’ members (11.17) • High percentage of special interest clubs’ members (7.13) Source: own calculations based on CSO data

25. Determination and assessment of the current socio-economic condition of the region and predicted directions of future development

26. Determination and assessment of the current socio-economic condition of the region and predicted directions of future development Podkarpacieisa very diverse region and will continue to developunevenly, because of the social, economic, political and naturalconditions As in other regions there are substantial differences city-rural areas dimensions onomically underdeveloped regions are those located outside large urban centres and poviats in the southern and eastern part of the region The biggestcitiescan be defined as areas of growth, such as Rzeszow, Krosno, Tarnobrzeg andPrzemysl

27. Determination and assessment of the current socio-economic condition of the region and predicted directions of future development Spatial variations in resource use districts for local communities to build wealth The results of macro-economic modeling for Podkarpacie Source: owncalculationsNote: ++ thereis much better income population than would appear from available resources, + better, - worse, - - much worse. • Regardinfg influence of different socio-economic factors on the wealth level of local communities (in poviats): • Thereisnegative impact of the employed in agriculture and services, • Thereispositive impact of the population with higher education degree . Poviats that best utilize their resources to build the wealth level of local communities include: przemyski, rzeszowski, tarnobrzeski, dębicki and town of Krosno Poviats that worstutilize their resources are : Lubaczow, Lezajsk, Lancut and the townof Przemysl

28. Determination of the current economic condition of employers

29. Determination of the current and future economic condition of employers High level of employers’ economic stability • Entities effectively resisted the negative effects of the financial crisis in 2011 • due to the character of the region's capital structure (low level of debt, low level of foreign investments, and reliance chiefly on the internal market) Source: PAPI methodcarried out on employers , n=540 • Next year’s economicforecasts – good Offices and institutions assessed their economic situationmore negativelythanenterpreneurs It may be explained by reduced public spending and in the case of education - from demographic decline and declining number of students in schools Source: PAPI methodcarried out on employers , n=540

30. Determination of the current and future economic condition of employers External factors affecting the situation of employers • Factors which negatively influence an employer’s economic situation include: • the financialcrisis • general condition of business • costs of the materials • exchange rate of currencies • competition from other entities Source: PAPI methodcarried out on employers, response scale from -3 to +3, where -3 indicates a very negative impact, 0 - no impact, and + 3 is a very positive impact.

31. Determination of the current and future economic condition of employers High activity of employers who have been affected by the finacial crisis More frequent investment in upgrading the vocational skills of staff More frequent use of loans, particularly for investments More frequent investment in machinery, equipment More frequent change or extension of business profile Morefrequentcosts’ cutting

32. Determination of the current and future economic condition of employers Internal factors affecting the situation of the employers • Internal factors were rated as most likely to achieve the goals of the entity Source: PAPI methodcarried out on employers , the scale of answers from -3 to +3, where -3 indicates a very negative impact, 0 - no impact, and + 3 is a very positive impact. The exception is the internal financial situation of the employer Concerning the internal factors, the answer often indicated by the employers was "no impact„ It means that the employers see greater relationship between their economic condition and the external situation

33. Determination of the current and future economic condition of employers Recommendation The solution is to provide educational activities (consulting, training) among entrepreneurs Activities should focus on raising awareness of the interrelation between the long-term strategic objectives of employers and the business environment as well as the the importance of human capital for building the entity's competitive position Conclusion Most employers tends to use their intuitionwhilemakingstrategic and ling-term decisions

34. Undertaken and planned activities of employers Source: PAPI methodcarried out on employers , n=540 • The investment potential of employers can be regarded as stable. The level of investments may slightly decrease, but it will still remain on a relatively high level • Almost half of all entities cutcosts, but it should be noted that this solution does not significantly restrict investments

35. Determination of employers’ HR policies HR policiescan be considered a strength of employers Source: PAPI methodcarried out on employers , n=540 • In over 50% of cases the level of employment remained unchanged (even if there were staff rotations) • Employers’ human resources plans show that the situation will be stable – the majority intends to keep the same level of employment

36. Determination of employers’ HR policies Strongemployer’s market in the voivodshipmeansno difficulties in recruiting skilled personnel • Entities will not be affected by difficulties in recruiting skilled personnel • The exception here is the Construction business where occasionally it is hard to find highly-skilled specialists Source: PAPI methodcarried out on employers , n=540

37. Forecasts for a labor market Difficulties with access to the relevant employees in the labor market may appear soon Recommendation Conclusion The solution is to develop and implement a program of promoting age and knowledge management in entities (trainings, conferences) Using the HCOP funds Demographic changes (as demographic decline or the ageing of the population) and competition from other regionsmay soon result in a deficiency of proper staff It may mean the necessity of using the potential of older workers and a need to optimize the management of human resources in entities Conclusion Recommendation Difficulties with access to the relevantemployeescanquicklyappear in the tourism and hospitality At the same timeeducationsectoris not focusedon training of relevantpersonnel for the tourismsector The solution is to involve universities and secondary schools in the organization of directions related to tourism and hospitality

38. Staff potential of companies and institutions, and their needs in terms of staff qualifications Is employment relevant to the needs of employers? The staff potential of companies and institutions is high • The current employment status is in line with the needs of most employers Source: PAPI methodcarried out on employers , n=540 Do employers feel the lack of adequately trained human resources - in terms of professional qualificationsand psychosocial skills? • Employers highly value their employees, both in terms of professional qualifications, as well as psychosocial skills • Although few employers regard this as a factor which is essential in building his competitive power Source: PAPI methodcarried out on employers , n=540

39. Preparation of employers for the challenges of a knowledge-based economy Most employers of the region, in terms of human potentialare not prepared for the challenges of knowledge-based economy • Their expectations with regard to employees are very loosely related to skills and predispositions connected with knowledge-basedeconomy, namely: • Readiness of constantly improving their qualifications • knowledge of foreign languages • analytical abilities • ability to reactflexibly to emergingchanges • overall creativity and ingenuity The employees themselves do not feel the need to have such skills. Moreover developing of such competencies is not included in the majority of vocational education programs.

40. Preparation of employers for the challenges of a knowledge-based economy Expectations for top level staff The lack of sufficiently high requirements for top level staff Source: PAPI methodcarried out on employers , n=5326 Recommendation The solution is to announce the competition using the HCOP funds concerning implementation of innovative research and training projects, which prepare employers and workers for the challenges of knowledge-based economy

41. Determination of the economic condition of employers in particular sectors

42. Determination of the economic condition of employers in particular sectors C - Manufacturing • A significant sector of the PodkarpackieVoivodship economy. In comparison with other sectors, number of small, medium and large companies in this industry was the largest (1536 in 2011) Sectorcharacteristics Assessment of the last year’s economic situation • Very good - the highest rating among all sectors • Flexibly respond to changes - 26% of entitiesextended or changed the profile of theiractivities duringthe last year Assessment of the future economic situation • Optimistic forecasts - 72% employersbelieve that their situation will not change or even improve • Ambitious investment plans for next year. Employersintend to invest in machinery and equipment, purchase and modernization of buildings and grounds, and, like others, in raising employees’ professional qualifications Activities planned for next year • High stability of employment, and even aiming to increase, since 11% of entities is planning to employmoreworkers Employmentplans The next year's overall forecast • Stable and good economic situation, despite the negative impact of financialcrisis

43. Determination of the economic condition of employers in particular sectors F – Construction • Construction is a very important section on theregional labor market. Following Section G -Wholesale and retail trade, itis the largest source of jobs Sectorcharacteristics Assessment of the last year’s economic situation • Very good - high assessment of the situation during the last 12 months (89% of positive marks) Assessment of the future economic situation • Optimistic forecasts –further improvement. Impact of large infrastructure investments, thanks to EU projects. A large number of marks"hard to tell" showsa dynamic change in thissector • Ambitious investment plans - almost 50% of employersdeclares that they will invest (mainly in equipment and qualifications of employees), but also a large percentage, higher than in other sections, chose the answer "I do not know" Activities planned for next year • Employment relatively stable. The majority did not intend to change number od employees in the next year Employmentplans • Good; the uncertainty of part of the employers is connected with the necessity of gaining new orders The next year's overall forecast

44. Determination of the economic condition of employers in particular sectors G - Wholesale and retail trade • Essentialsector for the regionallabour market. A greatnumber of small, medium and large companies - in 2011 there was 1438 suchentities. The sectiondevelopedrapidlyin recent years Sectorcharacteristics Assessment of the last year’s economic situation • Economic situation in 2011 can be assessed as average, which may be a reaction to the economic slowdown. 81% of companies assessedit as good(but not enthusiastic), but also 13% gave the negativemarks Assessment of the future economic situation • Unstable; more than half of employers (56%) believes that their situation in the year 2012 will not change, but 14% expects deterioration. A fairly high percentage of "do not know / hard to tell" (18%) Activities planned for next year • Averageinvestment plans - similar to last year mainly in the equipment, machinery(every secondentity) • In the following year there will be a "movement" in the labor market in this section: 8% intend to increase number of employeesand 7% decrease it Employmentplans • Relatively good; the situation in the sectoris fairly stable, but dynamic growth of the recent years will slow The next year's overall forecast

45. Determination of the economic condition of employers in particular sectors H - Transportation and Storage • Section not essential to the labour market and economy of the region, which is proved by a small population of entities, low participation of the sector in regional employment structure, lowfinancial incomes Sectorcharacteristics Assessment of the last year’s economic situation • Averageassessment - the majority of entities assessed the economic situation as rather good Assessment of the future economic situation • Relatively stable - 63% said that their situation in the next year should not change, however 13% declares that it will deteriorate Activities planned for next year • In the last year the frequency of investment was average. Moreoverin the next year employerswillinvesteven less frequently • A hugeuncertainty in termsifthe employnmentpolicy - a quarter of the employers was unable to tellif the employmentdends to increase or decrease Employmentplans • Moderately stable, which is reflected by little ambitious investment plans and unspecified employment plans of the employers The next year's overall forecast

46. Determination of the economic condition of employers in particular sectors O - Public Administration and Defence • The administration is an important partner in the labor market, especially in periphericpoviats. The number of entities (mostly small) was 375 in 2011 Sectorcharacteristics Assessment of the last year’s economic situation • Verygood, with more than 90% of positive marks Assessment of the future economic situation • Stable - a small percentage of entities assessed that the situation will change in the following year; the balance between positive and negative responses iscomparable • In most cases the investments related to raising employees’ professional qualifications and in equipment and machinery. A large part of entities introduces organizational improvements in cooperationwith customers Activities planned for next year • Nearly 14% of employers encounter deficiency of staff, but only 3% intend to increase employment. The number of employers planning reductions of employment is significant – 14% Employmentplans • The situation will be stable in spite of the anticipated budget constraints. In recent years, increases the attractiveness of employment in public offices and institutions due to stability and job security The next year's overall forecast

47. Determination of the economic condition of employers in particular sectors P – Education • Quite a difficult situation in the sector is a consequence of financial constraints (constant struggling with limited resources) and the negative effects of demographic decline (fewer pupils in schools) Sectorcharacteristics Assessment of the last year’s economic situation • Averageassessments Assessment of the future economic situation • Bad;21% believe that their situation will get worse, which can be associated primarily with the effects of demographic decline Activities planned for next year • Almost every secondentity intends to cutcosts. Investment plans are mainly associated with raising the qualifications of employees • Taking into account the last small changes of the employment and moderate plans for the following year, it might be expected that in the next year the situation in employment in education will not be dynamic Employmentplans The next year's overall forecast • The situation in the education sector is unstable. Due to budgetary constraints and the effects of demographic declineitmay worsen

48. Determination of the economic condition of employers in particular sectors Q - Human Health and Social Work Activities Sectorcharacteristics • In 2011 there was almost 400 of small, medium and large entities Assessment of the last year’s economic situation • Average(16% of assessmentswerenegative) Assessment of the future economic situation • Bad’every third examined employer believes that his financial situation will get worse • Investment plans are mainly related to increasing the qualifications of workers. Quite large percentage of entities introduced and intends to introduce organizational improvements in the area of ​​customer service Activities planned for next year • Despite the weaker financial condition, in the following year new jobs should be created, 12% of employers declares to increase number of employees(although the demandsare higher - 16%employersneedmoreworkers) Employmentplans The next year's overall forecast • The situation in the sectoris difficult, and due to limitations in the budgets of local governments, may deteriorate

49. Determination of the economic condition of employers in particular sectors R - Activities related to culture, entertainment and recreation • In 2011 therewereonly160 companies employing over 10 employees Business characteristics Assessment of the last year’s economic situation • Bad; amongthe all analyzed sections, entities related to culture, entertainment and recreation assessed their economic situation atthe worstlevel (38% indicated a negative marks) Assessment of the future economic situation • Deterioration; every second entity points that his situation will get worse in the following year (due to limitations in household expenditure on culture and entertainment, and poorbudgets of local governments financing those entities) Activities planned for next year • The frequency of investment does not differ from that indicated in other sectors, however70% of companies declares the need to cut costs • Most entities do not plan to hire new workers, despite the fact that nearly half of them indicate the insufficient number of employees Employmentplans The next year's overall forecast • Unstable and difficult situation in the sector

50. Determining the training policy of the employers