INVESTMENT POTENTIAL of GDAŃSK in the New Economic Reality

INVESTMENT POTENTIAL OF GDAŃSK in the new economic reality

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GDAŃSK

Voivodeship Pomerania

Mayor Aleksandra Dulkiewicz

Area 2 262 km

Population density 17872 os./km

Population 468 158

CONTACT DETAILS

Gdańska Agencja Rozwoju Gospodarczego Sp. z o.o. Żaglowa 11 80-560 Gdańsk +48 58 722 03 00 [email protected] LESS REVENUE, MORE CHALLENGES

Currently the greatest financial challenge for Gdańsk is to maintain the provision of education and fight the consequences of the pandemic. We also need to help our entrepreneurs. This is an unusual year - says Aleksandra Dulkiewicz, Mayor of Gdańsk.

How well is Gdańsk doing at present? The answer to this question is not a simple one. On the one hand, the Fitch rating agency gave us an “A-“, which is a high rating. On the other hand, Aleksandra like any other local government, we have a problem with current expenses, Dulkiewicz, mainly in the area of education. On top of this, we are also facing difficul- Mayor of Gdańsk ties caused by the Covid-19 pandemic. This forces us to make changes in the budget. So far we have cut our expenses by PLN 295 million. On the other hand, our revenues have fallen by 250 million compared to the budget adopted in December 2019 year, due to smaller revenues from personal (PiT) and corporate (CiT) income taxes or public transport tickets. Let me add that the revenues were initially estimated at PLN 3.8 billion, while the expenses would amount to PLN 4.28 billion.

Are you only reducing your current expenses or also your investment expenses? The reduction in current expenses amounts to approx. PLN 110 million. As for investments, we have decided not to cut them, but to postpone them. Then, there are investment projects, which have already been launched, but which - for various reasons - need to be extended over time, therefore their settlement will also be delayed. An example of such a large investment is the construction of the Biskupia Górka flyover in the city centre. It is quite a complicated project that runs over a railway.

Revenues from the PiT 4 tax have always been an essential source of income for the local government’s budget. How much was it affected by the changes in the regulations? The changes in PiT 4 became effective last year. For this reason, already at the stage of budget approval for 2020, we took into account that the revenues would be PLN 100 million lower. So we were already facing difficulties at the beginning. Later, this situation, which not only Gdańsk, but the whole world is trying to deal with, caused a further reduction in the revenues from PiT by another 50 million PLN..

This makes PLN 150 million in total. In 2017, Gdańsk still had a budget surplus, but in recent years it changed into a deficit. Are the changes in PiT the main reason for this? Not only that. The years when we had a surplus was the time of significant EU investments, and our budget was boosted with large subsidies. The main reason for the deficit is education. This is a difficult topic and it seems to me that it is sometimes hard for local government officials to explain the mechanisms of financing education to the public. The difficult financial situation of local governments is aggravated by the problems in the sector of education. Serious problems. Each year, the gap between the government subsidies and the real costs we incur on education widens. In September this year, another pay rise for teachers was accepted. Though it is justified, Gdańsk received an additional PLN 13 million subsidy for this purpose, while the real cost of this pay rise is estimated at almost PLN 50 million. This means that we have to cover PLN 37 million from our own budget. I want to stress that cutting our expenses in the budget for this year by PLN 300 million did not affect the sector of education. We are not cutting any expenses in this area. Far from it, we have to pour even more funds into education at this difficult time.

What is then a greater challenge in this unusual year - counteracting the consequences of Covid-19, or the implementation of tasks imposed on local governments with reduced funding? this makes it sound like there are no hospitals in Gdansk, which isn’t true. So what exactly do you mean? As they generate considerable expenses. We support hospitals run by the marshal of the province in various ways, but this is not our biggest financial concern. What is our main concern at present is, as I mentioned, education, followed by the measures against the consequences of the pandemic. There are other problems as well, such as reduced revenues from public transport. For many years we were able to keep a balance in terms of expenses on public transport, with 50% covered by revenues from tickets and 50% from the city budget. However, for three years this balance has been disturbed. In the budget for 2020, ticket revenues were estimated to account for only 37%. Now the pandemic has taken its toll, too. We estimated revenues from tickets at PLN 125 million, but we already know that the number will be lower by at least PLN 40 million. Which means we will have to add even more money. In addition, we need to have an entire fleet running, because since we are in the red zone, only 30% of places in vehicles can be occupied. So the gap is continuously widening.

5 In this case, perhaps it is necessary to increase ticket prices? For many years, we have been consistent in maintaining an attractive pricing policy for those who regularly use public transport. What I mean is various season tickets. This year, in cooperation with the marshal of the province, who supervises railway transport (SKM - Fast City Rail and PKM - Pomeranian Metropolitan Railway), we introduced a special offer. Now we have a joint ticket for trams, buses, SKM and PKM within the city of Gdańsk. A monthly ticket costs PLN 99. We want to keep encouraging people to use public transport despite the pandemic..

Tourism is a very important sector of the economy of Gdańsk. How was this season? First of all, would like to point out observe that it is not the city that directly derives revenues from tourism, but its inhabitants and businesses. This is important. The season was relatively good, taking into account the pandemic, but the number of foreign tourists declined by approx. 78%. These are shocking figures. On the other hand, we had an increase in the number of domestic tourists by 28%. Nonetheless, it is a vast difference.

In absolute terms, it looks much better. In the summer of 2019, Gdańsk was visited by 1.09 million tourists, while this year by 0.96 million. The decline does not seem so sharp. While the statistics may look relatively good, you also need to take into account where these tourists were staying. Last year, about 60% of them stayed in hotels. This year - only 31%. The number of tourists who declared that they were staying with family, friends or were using a rented apartment significantly increased by almost 15% compared to the previous year. This type of tourism is evidently different. And the reason is a reduced number of visitors from abroad..

Probably the restrictions related to social distancing and isolation also played a role. That is true, although it is a little strange, as hotels, which have to meet strict sanitary requirements, seem to provide greater safety. Probably financial aspects were also involved.

The summer allowed us to recover a little, but it lasted two months, while Covid-19 has been around for six months already. What measures have you adopted to support entrepreneurs? Handling the anti-crisis shield was a great challenge, since - as should be remembered - it was mainly the task of labour offices. This support had to be organized in a short time and we delegated a lot of people for that purpose. Rental fees for catering establishments located in municipal premises were automatically reduced to PLN 1. This city revenues by PLN 1.4 million. There is also a possibility of such a rental fee reduction for premises used in other industries. However, in this case we ask the entrepreneur to prove a decrease in revenues, as this support is after all provided by all taxpayers in Gdańsk.

6 Investment potential of gdańsk

In the autumn, the situation has gone bad again. Are you planning any support measures? We will prepare a support program, although this situation is constantly changing and taking us as well as entrepreneurs by surprise. We also have other forms of aid. Gdańsk Entrepreneurship Foundation is running the project „Get hold of the crisis”. Anti-COVID laws are problematic. Many people have no experience or simply cannot afford legal aid. In this way, we can provide support and mentoring for micro-entrepreneurs.

We have been talking so far about the condition of the city. And what about the condition of entrepreneurs from Gdańsk? I believe it is good. It just depends on what data we use to assess it. As a city, we were active in the crisis management team appointed by employers’ organizations, for which we received awards and gratitude. According to the data provided by the Gdańsk Labour Office, the level of unemployment increased only slightly. There are very few reports of collective redundan- cies, and those that we received were not large in scale. Naturally, we can see a decrease in the revenues from the CiT tax, but we also know that companies pay it in a different way, depending on the legal form. We need time to assess the impact of the crisis.

Can you see the will to fight among entrepreneurs? Definitely. Both among the small and large entrepreneurs. I try to be in touch with many of them and I can see that for many it was an impulse for introducing changes. We can come out of the crisis even stronger, equip- ped with better ideas and even more efficient management of businesses. I can also see changes in administration, such as the city hall. We do not lose heart and hope for sure, because only by working together can we overcome the crisis.

7 GDAŃSK IS MANAGING THE CRISIS

Gdańsk has gone down in the history of Poland not only as a city of freedom, but has also been associated over the centuries with trade. The great entrepreneurial spirit of the inhabitants has shaped the city for decades, which is why Gdańsk is nowadays a strong centre for business and modern technologies. And despite the pandemic and the related crisis, it is still prospering. Office space in the city has increased by 60,000m2 this year, which places Gdańsk second in Poland. Unleased space accounts for 9.4%, which, in turn, is below the national average. Gdańsk airport has managed to rebo- und after the spring lockdown, and a large office complex currently under construction is expected to help diversify its revenues. The tourism sector is trying to cope with the situation. Although far fewer foreign tourists visited Gdańsk during this summer vacation than a year ago, domestic visitors filled the gap. The port in Gdańsk recorded a drop in transhipment in the first half of the year, but the pace of investments is not slowing down. In addition to the deepwater container terminal, which is the largest container facility in the southern Baltic Sea, the Pomeranian Investment Centre is currently being developed. - The ongoing pandemic has had a relatively mild impact on our labour market - says Roland Budnik, Head of the Gdańsk Labour Office. In Gdańsk, the unemployment rate is currently 3.3%. Although it is higher than last year, the difference is only 0.8%. The number of students admitted to universities was similar to that last year. Some institutions even recorded an increase in this regard. Meanwhile, the local government of Gdańsk is cutting down expenses and adjusting the budget to the new economic conditions in preparation for the autumn lockdown.. European transport hub

The economy of Gdansk is largely determined by its geographical location, so it comes as no surprise that the capital of Kashubia, located on the Baltic coast and the estuary of the Vistula (the largest Polish river), is the most important maritime economy center and an intercontinental transport hub. Of key significance is the port which beats its transshipment records year by year. In 2008, 17 million tons of cargo were handled there. Ten years later, the figure grew to 49 million tons. The year 2019 ended with a record number of 52 million tons. Thanks to its extremely dynamic growth, Gdańsk was classified among the top 15 largest European ports in 2019. It is already the fourth largest port on the Baltic Sea and the 2 million TEU of container transshipments earned it the second place in 2019, right behind St. Petersburg. This is due to the deep-water DCT terminal, the so-called "hub” – a port handling large intercontinental cargo which is then transported to smaller ports. The DCT can accommodate the largest ocean vessels and handle two of the world’s big container lines – 2M, Maersk Line and Ocean Alliance. After its extension in 2016, it became the largest terminal in the Baltic Sea. The growth of the terminal is accompanied by the development of intermodal transport, combining different modes of transportation – cargo is to and from the port not only by car, but also by train. Railway transport is

Cargo during 2009–2020 (in thousand tons)

31 632 30

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 I–VIII

liquid fuel general coal other bulk grain 9 cargo (aggregates, and wood sulfur, ore) becoming increasingly popular in this respect. As a result, the port serves not only Poland, but also our southern neighbors. This year has been much more difficult for the Port of Gdansk. It handled 23.2 million tons in the first half of the year, which is a 15.2 % decrease compared to the same period in 2019. However, not all cargo categories have experienced a drop. Despite the pandemic situation, the figures in other areas of trade increased: grain (by 188.8 percent), so-called other bulk (up by 10%) and ore (up by 1127%). “Even if the epidemic effect does not disappear, the adjustment in our port will be small,” explains Adam Kłos, Commercial Director of the Port of Gdańsk. “Since the beginning of the pandemic, we have not had a single day of downtime in the movement of goods. The Port of Gdansk is a stra- tegic import window for the country’s economy in terms of raw materials, such as fuel and coal. The falling demand for them led to the decrease in transshipment. As a universal port, we are able to discount the declines of other transshipment groups. Our small operators in the Inner Port react to the changing situation much more flexibly, thereby catching up with the losses in the specialized major terminals.” The pandemic has not stopped our investments and we are operating not only in the port itself, but also in its surroundings. At a distance of two kilometers from DCT, the Gdańsk authorities and Gdańska Agencja Rozwoju Gospodarczego Sp. z o.o. have prepared the infrastructure for the Pomeranian Investment Center. It is a nearly 70-hectare park, designed for both logistics and industry.

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“PIC is undergoing intensive commercialization,” says Agnieszka Barto- szewicz-Pietrzak, Representative of the Board of Directors for Development and Communication at the Gdańsk Agency for Economic Development Ltd. z o.o., also called InvestGDA. The Company completed the construction of an internal communication system, including infrastructure, and suc- cessfully carried out two tenders. The current global conditions have not affected the development of the PCI infrastructure itself, including the large associated entities, however, they have had an impact on the smaller companies. Enterprises Passen are not sure whether they will find external financing for their planned 2007–2020 investments. Two of them had to withdraw from their previous plans. (in millions)* At the same time, InvestGDA is still carrying out its mission. We have launched the construction of the storage yard for small and medium-sized enterprises and already opened the lease procedure. 5 Passengers return to flying

Gdańsk has daily ferry connections to Sweden operated by two ferries 4 managed by Polish Baltic Shipping Co. Both of them are suitable for carrying passengers, cars and trucks. On the other hand, air traffic is handled by Gdańsk Lech Walesa Airport. 3 It is the third busiest airport in Poland. In 2019, it handled 5 million passengers. During the three quarters of 2020, 1.47 million passengers passed through. The spring lockdown and 2 unstable, volatile situation have led to a significant decrease compared 1,47 to 2019, however, the airport authorities believe that passengers will soon return. 1 “In July, there were 154 thousand travelers, more than 233 thousand in August and almost 178 thousand in September,” sums up Tomasz Kłoskow- ski, Head of Gdansk Airport. “This means that we are slowly returning to 0 the air. This year, the Port of Gdansk has the chance to service the total number of about two million passengers – compared to 5 million in the 2017 2016 2014 2010 2011 2015 2013 2018 2019 2012 2020 2007 2008 2009 previous year. This decrease is a direct consequence of the coronavirus.” The port authorities estimate that it will take about three years to compensate for the losses “People want to travel, meet friends, explore other countries, they want to fly to work and be free to travel. Currently, some of them are concerned about restrictions introduced by individual countries, such as flight bans, quarantine or mandatory tests for coronavirus. In times of uncertainty, passengers abstain from flying, while aviation needs comfort to rebuild air traffic. We are therefore waiting for the situation to stabilize,” says Tomasz Kłoskowski.. Fall in relation to the 3rd Global brands and modern technologies quarter in 2019

Gdańsk industry also includes some strong sectors: shipbuilding, fuel, energy and construction. The second largest fuel company in Poland, Lo- tos, is based there. Some well-known brands – not only Polish but also -64,2% global – were born in Gdańsk. Family-run and Gdansk-based LPP, a national

11 titan in the clothing industry, has its headquarters there. The company has 5 brands, including Reserved, and sells its products in 1700 stores on 3 continents. According to the manufacturer, it sells 265 million pieces of clothing per year. For years, the company has been gradually increasing its online sales and this year is particularly successful – the sales channel grew by 125%. After the lockdown, the company closed the second quarter of the year with a net profit and the share of online sales amounted to almost 30% of the total value. “The recent upward trend in revenues is a positive signal for us. Although this does not yet mean a return to the levels from before the pandemic,” comments Przemysław Lutkiewicz, Vice President of the Board of LPP. “After many months of great uncertainty, our company’s stable situation has also given us the opportunity to defer our investment plans. Of course, due to the ongoing pandemic, the market situation is still fragile and we still need to prepare ourselves for different scenarios. Nevertheless, the actions taken during the crisis and the optimization of many areas of the company’s business, combined with the financial cushion, give us a sense of security.” At the same time, the so-called advanced services industry is develo- ping very strongly in Gdańsk. Regional office market “Data shows that modern IT, finances, R&D and services are the most Q3 2020 dynamic sectors in terms of growth and new investments. We observe the (in millions) greatest employment dynamics in this area,” says Alan Aleksandrowicz, Deputy Mayor of Gdansk. 2,0 Over the past two decades, global players such as PwC, Bayer, Intel, Amazon, Nordea, Boeing and Lufthansa Systems have established their headquarters or main branches in Gdańsk. The development of advanced technologies is also the domain of companies established in Gdańsk. Incubator of new technologies is the Gdańsk 1,5 Science and Technology Park, operating as part of the Pomeranian Special Economic Zone. It focuses on supporting innovative solutions for the industry. This is a place where many startups and acceleration programs are implemented, including Space3ac Intermodal Transportation. The mission 1,0 of this accelerator was to develop the Polish space sector. It is worth 0,8 mentioning that the Polish Space Agency has its headquarters in the GSTP. Thanks to the program, 23 startups have developed solutions for 11 large companies. The Pomeranian Interizon Cluster is also based in the GSTP. “The cluster involves 91 entities, 70 of which are companies. The biggest 0,5 group is the ICT industry, software producers and electronics companies,” says Jarosław Parzuchowski, President of the Board of the Interizon Fo- undation.

Office buildings on the national podium 0 Łódź

There are also other institutions and areas supporting innovation and Lublin Poznań Kraków Szczecin Wrocław modern technologies. The Black Pearl fund, which invests in modern tech- Katowice GZM other nology companies, operates in the Olivia Business Center complex. Office The Tricity

centers are another large economic sector as the Tri-City office space Metropolia G-Z vacancy

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market is one of the largest in Poland. The convenient location, living conditions and access to staff encourage global companies to locate their headquarters and branches there. As a result, new, large office facilities are constantly being built. According to data by Colliers International, the total office space in the Tri-City at the end of the third quarter of 2020 was 898 thousand square meters, ranking it third in Poland in terms of regional markets – after Kraków (1.52 million) and Wrocław (1.23 million). More than two thirds of this space is located in Gdańsk. During the first nine months of 2020, facilities with a total area of over 305,100 square meters were completed in Poland, most of which in Kraków (approximately 107,300 square meters), Tri-City (60,300 square meters) and Wrocław (57,200 square meters). At the end of the third quarter of 2020, the space immediately available for rent in the eight major regional markets amounted to 679 thousand square meters, which means that the vacancy rate increased to 11.9%. At the end of the third quarter of 2019, the ratio In the Tri-City was 4.8%, which rose to 9.4% in the same period of 2020. The main reason, however, is not the withdrawal of tenants from already occupied space due to the pandemic, but the completion of new facilities. The managers of Olivia Business Center, currently the largest office complex in Poland, perceive the situation as healthy. “Olivia is a project that has been constantly expanding since 2010,” says Krzysztof Król, OBC Communication Manager. “This year, we opened the Prime B Building which, together with the Prime A Building, is the third

13 largest office building in Poland. Its commercialization procedure is currently underway and the decisions regarding the construction of new buildings can be made after the commercialization of the newly opened facilities is completed. The complex area already comprises 175 thousand square meters and 200 companies and 12 thousand people work there today. “The occupancy rate in terms of the number of residents has increased. Recently, four new contracts have been signed with the RMF Group, PZU, Abax, Veco, including the highest office in Poland outside of Warsaw. The current residents have also extended their lease space with the total area of 10 thousand square meters,” explains Krzysztof Król. “As for the number of stationary employees, it is constantly changing. Each resident chooses its work system individually based on its own policies. Thus, there are companies with an attendance of nearly 90-100%, while others, due to the standard used in their entire structure, introduced a systemic ban on office work for a number of employees defined at the companies’ discretion, Tourist numbers regardless of where the office is located worldwide.” in Gdansk The second largest complex in the city, Alchemia, was built by Torus (in thousands) right next to OBC – also in the Gdańsk Oliwa district. The construction +28% began in 2011 and covers four facilities with a total area of over 122 thousand square meters, including 112 thousand square meters of office space. 600 Three facilities have already been sold, one of which for a net amount of EUR 92 million – a record sum for the Tri-City. The fourth one still belongs 500 to Torus which manages the entire complex and is currently building new facilities in other parts of the city – Oliwa and Wrzeszcz districts. Their 400 completion is scheduled for 2021. Furthermore, the Doki Office complex with an area of 37 thousand square meters is planned to be built in the +28% Młode Miasto post-shipyard district. 300 The largest planned investment in Gdańsk is currently Airport City Gdańsk. The investment will be implemented by Port Lotniczy Gdańsk Sp. 200 z o.o. in which the City of Gdańsk holds 33% stake. Seven buildings with the total area of 120 thousand square meters will be built near the airport. The names of the office buildings are to refer to the aviation alphabet: 100 Alpha, Bravo, Charlie, Delta, Echo, Foxtrot, Golf and Hotel. Covid-19 has not thwarted the construction of the complex. 0 “The construction of the first Alpha office building is in progress,” in- 2019 2020 forms Agnieszka Michajłow, spokesman for the Gdańsk Airport. “The facility has already been up to the top floor, i.e. the structure is now being 0 filled. The contractor plans to put the building in use in April. There are no delays or problems with the construction. The Gdańsk Airport is working 100 with Pekao bank on issuing bonds, which has been planned as the source of financing for the construction from the very beginning.”. -78% 200 Gdańsk as a tourist attraction 300 Tourism is an important area as it drives gastronomy and new construction investments. The city center is a dynamic construction site. The 400 areas around the Old Town are experiencing the fastest development -78% as the number of revitalized buildings is constantly increasing. In 2019, tourists visitors

14 Investment potential of gdańsk

the Wyspa Spichrzów (Granary Island) complex was launched. Its archi- tecture corresponds with the nature of the existing Old Town buildings. Apartment buildings are being built in the area between the Old Town and the beach. Tourism drives the economic situation not only in gastronomy, but also in the entire sphere of the so-called leisure industry. “This is the third showcase sector of the Tri-City. I mean the entire hotel and catering industry, all service providers who serve visitors in Gdańsk. It also includes the entire public sector, i.e. museums, zoos and other places,” explains Aleksandra Dulkiewicz, Mayor of Gdańsk. Despite the pandemic, this year is not lost. In the summer, Gdańsk was visited by as many as 960 thousand people, slightly less than in 2019 (1.08 million). “Despite the difficult pandemic situation, Gdańsk was the most frequ- ently visited Polish city in the summer, which proves its great tourist va- lues related to cultural heritage and a wide range of leisure opportunities, both indoor and outdoor. Remember that Gdańsk was recognized by the European Best Destination as one of the safest European cities in the time of the coronavirus pandemic,” says Aleksandra Dulkiewicz. On the other hand, the tourist structure had changed – 90% were Po- les and only 9.5% foreigners. Among the latter, Germans were the largest group (35.7%), followed by Scandinavians (14.8%).

15 “The drop in the number of foreign tourists is significant, but the most important thing is that Polish travelers are trying to fill in the gap. This helped us to reduce the losses in the industry, while Poles had the opportunity discover our beautiful Gdańsk,” explains Łukasz Wysocki, President of the Board of the Gdańsk Tourism Organization. Visitors gave Gdańsk very high marks – 8.9 out of 10. The Amber Sky viewing wheel was the most popular spot – according to the data of the Gdańsk Tourism Organization, 21.6% of respondents indicating it as the top attraction.

Scientific potential of the business

The city’s economy is supported by strong education and science resources. There are 13 universities in Gdańsk. The largest is the University of Gdańsk established in 1970. This year, over 11.2 thousand students started their education at its 11 faculties located on three campuses. The university offers 87 fields of study and 277 specializations. “This year’s recruitment figures were very similar to the previous year, taking into account the reduction in the number of students due to the culmination of the demographic decline, the ministry’s policy and the need to maintain appropriate indicators to obtain the required amount of subsidy,” explains Monika Rogo from the UG press office. “Dropouts remain at a constant level but we observe a slight increase in interest in completing degrees by those who previously gave up their education. Online learning fosters such an attitude.” Every year, the University of Gdańsk introduces new courses and specializations. In recent years, these included: practical computer science, management of health care institutions, production of audiovisual forms, protection of natural resources, genetics and experimental biology, mathe- matical modeling and data analysis, medical biology and chemical business. The University of Gdańsk is also recognized for its infrastructure. In recent years, one of the most modern campuses in Europe has been built in the Gdańsk Oliwa district with new buildings and unique equipment available to various faculties and institutes. The UG campus has changed this part of the Tri-City beyond recognition – modern business centers have been established, which strengthens cooperation with the economic environment. Classes are currently held remotely. “Thanks to appropriate software, such as MS Teams, and lessons learned from the previous academic term, we have improved the way classes are run. It is also worth mentioning that organizing remote classes requires more time from academic teachers,” explains Monika Rogo. The second largest academic institution is Gdańsk University of Techno- logy with 9 faculties and nearly 16 thousand students each year. In the year 2020/2021, 4.1 thousand full-time and 690 part-time students started their education there. “During this year’s recruitment, we did not notice any drop in interest in studying here. On the contrary, more people took up full-time studies at Gdańsk University of Technology than last year,” says Maciej Dzwonnik, spokesman for the university. “We have managed to launch all planned faculties

16 Investment potential of gdańsk

and open new ones, such as Construction project management – a new field of postgraduate studies at the Faculty of Civil and Environmental Engineering. Gdańsk University of Technology has the status of research university thanks to having reached the top position among technical universities in the ministerial competition of “Excellence Initiative – Research University”. Since 2017 GUT has also been allowed to use the logo of HR Excellence in Research, which is granted to recognised research centres. ‘In 2020, for the first time we were listed in the prestigious Academic Ranking of World Universities, known as “ShanghaiRanking”. With this de- but in the ranking, we exceeded two other universities from Poland,’ says Krzysztof Wilde, Prof., Rector of GUT.. “Since 2017, Gdańsk University of Technology may use the HR Excellence in Research logo – an award given to elite research units. Gdańsk Univer- sity of Technology is also the only technical university in Poland that was included in the prestigious Times Higher Education World University Ran- Gdansk city budget kings 2016–2017,” says Professor Krzysztof Wilde, Rector of the University. (in millions) Gdańsk University of Technology works with the business community on various levels. EXCENTO, established in May 2013, aims to promote revenue activities related to the practical application of science and was the first 5 company of this type in Poland established by a university. Some examples of cooperation between researchers and businesses include eco-cutlery 4 made of an innovative polymer composition developed by a team of scien- tists from the Department of Polymer Technology, Faculty of Chemistry, Gdańsk University of Technology. 3 The Medical University of Gdańsk holds a high position among Polish universities. Each year it educates over 6 thousand students, doctoral students 2 and postgraduate students, including 935 foreigners. This represents over half of all foreign students in Gdańsk. Every year, approximately 180 people 1 from abroad study at the MUG, with Scandinavians being the largest group. The pillar of artistic education is the Academy of Fine Arts, founded on the basis of the State Higher School of Fine Arts. The academy has 4 fa- 0 culties and its seat is based in the medieval Old Town, the heart of Gdańsk. 2017 2016 2015 2018 2019

However, the city’s academic potential reaches far beyond its borders. 2020* Gdańsk, Sopot and Gdynia complement each other and form one organism, 0 the Tri-City agglomeration. Universities located in other places, for example in Gdynia, also serve the needs of Gdańsk employers. This includes the spe- 1 cialized Maritime University and the Naval Academy. In Sopot, historically associated with Gdańsk, there is the campus of the University of Gdańsk where the first post-war artistic academic institutions were established, 2 forming the foundation for the current universities.. 3 An A- budget

Dynamic companies, good economic ecosystem, strong scientific activity 4 and proper management affect Gdańsk’s economic indicators and budget. In June, Gdańsk, Sopot and Gdynia took the fourth position in the ranking 5 of European agglomerations „The Tech Cities of the Future”. The ranking is expenditure published by fDi intelligence X TNW related to the British daily The Financial Times. Experts assessed 50 cities in terms of entrepreneurship, development *budget accepted in 2019

17 and ecosystem. The Tri-City was just behind powerhouses such as London, Barcelona and Berlin, beating, for example Amsterdam, Zurich, Munich, Cambridge, Valencia, Hamburg, Manchester, Rotterdam and Helsinki. Due to the dynamic development, the city budget also swells every year. In 2015, this amounted to PLN 2.7 billion in revenues and PLN 2.53 billion in expenditures. In 2016, respectively: 2.79 billion and 2.68 billion, in 2017 – 2.92 billion and 2.87 billion, in 2018 – 3.27 billion and 3.3 billion, and in 2019 – 3.5 billion and 3.82 billion. Unfortunately, in 2018 a budget deficit was observed for the first time, partly as a result of the changes in the national law – local governments are assigned more and more re- sponsibilities, whereas their financial resources are reduced. This year’s budget, adopted in 2019, amounts to PLN 3.8 billion in revenues and PLN 4.28 billion in expenditures, which amounts to the deficit of PLN 490 million. The revenues from the PIT slightly decreased by nearly PLN 100 million, as a result of the legislative changes. Undoubtedly, there will be a budget adjustment as a result of the pandemic. In terms of current income, the city has lost PLN 135.9 million this year, including: PLN 50 million from PIT, PLN 30 million from CIT, PLN 40 million in revenues from public transport tickets and PLN 15.9 million from other sources. On the other hand, there was also some so-called unexpec- ted income – including PLN 81.5 million from the Governmental Fund for Local Investments (intended only for investments) and PLN 18.3 million on account of higher revenues from municipal companies. The Gdańsk authorities have cut their current expenses by 5% and some investments have been postponed. “We were forced to take two types of action: the first is to secure this year’s and the upcoming years’ city budget liquidity, and the second is

18 Investment potential of gdańsk

the decision-making model itself,” explains Alan Aleksandrowicz, Deputy Mayor of Gdańsk. “The liquidity was secured by freezing investments in the amount of PLN 70 million and shifting these funds to the years 2021–23. This is reflected in the updated budget and long-term financial forecast. PLN 9.5 million in the area of constructing and reconstructing local roads was transferred to the years 2021-2023. Examples may also include the revitalization of the Main City streets, such as Szeroka, Długa, Ogarna. Here we are shifting tasks and the amount of 10 million.” On the cost side, the budget will be reduced by nearly PLN 300 million. This will enable the city to safely navigate through the turmoil of the pandemic. The city’s activities have been highly acclaimed. In October, the Fitch rating agency awarded the city a high A- rating. “The A- rating is five minus in the Polish school grading scale,” comments Aleksandra Dulkiewicz. “The budget situation and its management are the result of our hard, everyday work and the implementation of our long-term financial strategy. The pandemic is not a good time for local government officials as cutting services for residents can never be be a source of satisfaction. Most importantly, this cautious approach to making initial cut-backs was assessed as appropriate. I believe that we will all finally deal with the crisis and return to normal.” “In the latest rating, specialists concluded that our revenue is relatively stable and we manage to keep our expenses at a safe level,” explains Iza- bela Kuś, Gdańsk Treasurer. “However, experts on the whole acknowledge the fact that in the event of the state experiencing financial difficulties, we will be able to reduce expenses in Gdańsk even more, which will not affect meeting obligations that are the absolute resonsibility of local governments.”

Protecting employees

The spring lockdown and the ongoing pandemic have only changed the labor market in Gdańsk to a small extent. From January to June, the unemployment rate increased from 2.4% to 3.1%. At the end of June, there were 7.9 thousand unemployed people, including 4.3 thousand women. “The labor market in Gdańsk and the whole country is seasonal. This means that in certain seasons of the year there are fluctuations in the number of people seeking employment,” explains Roland Budnik, Director of the Unemployment in Gdansk Gdańsk Labor Office. “In spring, usually in March, the revival of the tourist (in percentages) sector and the resumption of work in the construction industry and agri- culture traditionally lead to a drop in the unemployment rate. This situation lasts until October or November, followed by a slight and gradual increase 4 in the number of people registering with employment offices.” As Budnik emphasizes, this year has slightly different characteristics as 3 the unemployment rate is rising in the months that are traditionally better 2 for the labor market. Apart from the domestic lockdown, the difficult eco- 1 nomic situation of Poland’s western neighbors, our main economic partners, is also not without significance. The largest increase in the unemployment 0 level was recorded in the wholesale and retail trade as well as the mo- January June September

19 tor vehicle repair. In terms of occupations, the greatest unemployment was recorded among salesmen (394), cooks (99), warehouse workers (67), customer advisers (87) and hairdressers (58). On the other hand, during Anti-crisis shield the first six months of the year, 518 unemployed people started working. used in 2020 At the end of September 2020, the unemployment rate in Gdańsk increased (Gdansk and the Gdansk region. to 3.3%, which means an increase by 0.8% compared to the previous year. State of playat of 22.10.2020) “Although this data is obviously not optimistic, the level of unemployment is still very low. We should also look at the current data from a broader perspective. The ongoing epidemic was relatively gentle with “our” labor market, which is confirmed by the latest data from the EU’s 48 thousand statistical office. According to Eurostat calculations, the unemployment rate in August 2020 remained unchanged (3.1%) compared to the same entities period last year. Only three other countries recorded a similar or better result, Belgium, France and Slovenia,” says Roland Budnik. The attitude of Gdansk entrepreneurs and their readiness to fight were also crucial. LPP S.A., the largest Polish clothing manufacturer based in Gdańsk, employing 24 thousand people in total, took many measures to 297 million protect workplaces. The members of the management and supervisory boards elected not to take their salaries, dividends were suspended, all zlotys personnel costs were reduced, salaries and working hours were reduced, and a small number of employees was put on furlough. “Although it was not possible to fully maintain employment levels from before the pandemic, the reduction affected only 0.4% of the staff,” explains LPP. Aid programs, provided both by the local government and the central 17 thousand government (distributed by the labor office), were also very important. According to the Gdańsk Labor Office, by the end of October 2020, 48,089 employees entities benefited from the aid programs in City of Gdańsk and the Gdańsk poviat and the support exceeded PLN 297 million. “This money also included financial resources dedicated to medium and large workplaces for the payment of salaries to over 17 thousand employees. However, we will have to wait for some more detailed summaries, including the assessment regarding the effectiveness of the support offered under the Anti-Crisis Shield. The labor market always reacts to changes in the economy with a delay of several months,” explains Roland Budnik.

20 Investment potential of gdańsk

Authors

Michał Stankiewicz (e-mail: [email protected]), Hanna Wawrowska (e-mail: [email protected]), Irmina Zakrzewska (e-mail: [email protected])

Coordinator thousand Irmina Zakrzewska 48 Translation

Summa Linguae Technologies

Graphic design / editing

Agata Klepka i Aleksandra Olszewska – OKI OKI Studio (e-mail: [email protected])

Photos

Photos of Gdańsk (Jakub Maj/Archiwum UM Gdańsk) Aleksandra Dulkiewicz (Łukasz Głowala)

Content

“Less revenue, more challenges” (Michał Stankiewicz), “Gdańsk is managing the crisis” (Michał Stankiewicz)

Publisher

Gremi Media S.A. ul. Prosta 51, 00-838 Warszawa www.rp.pl Warsaw, October 2020