CEFinancialObserver: Only twenty-five per cent of Poles claim that their income does not allow them to meet their current needs. The number of those who cannot afford to buy stimulants, such as alcohol or cigarettes, has decreased to 15 per cent. The number of Poles who have savings is growing, the number of those who are in debt is falling. Despite our national tendency to complain, four out of five Poles say that the year 2012 was successful for them. Do we really have a financial crisis in Poland ?
Professor Janusz Czapiński: We certainly have a crisis of public finances, but personal finances have not yet been hit by the crisis. Poles do not suffer from the crisis, although they hear a lot about it. The study clearly shows that our personal situation is improving, although for the last four years, we have been less satisfied with the country’s general situation. Satisfaction with reforms implemented after the year 1989 has also decreased. Two years ago, 37 per cent of Poles were critical about the reforms whereas now almost half (44 per cent) of the Polish society criticise the reforms.
It’s a fact that unemployment has been growing steadily, up to 13.5 per cent in May, entrepreneur sentiment is poor, not a day goes by when we do not hear the word “crisis” in the media. At the same time, it seems that we can afford more and your study shows it very clearly: the number of Poles who own computers, laptops, TV sets, satellite TV and cars is increasing.
We believe that the unemployment rate in Poland is 10.3 per cent, including hidden unemployment, i.e. people out of work who are willing to take on a job and who are not registered in the employment office; given the above, the actual increase of unemployment in Poland is not significant. Besides, there are very few households where nobody has a job. In the majority of cases, one adult works, providing therefore a steady income, and that means the possibility of making purchases. Poles have already grown inured to bad economic news.
It is not true that we have been hit by ‘seven misfortunes’ because of the global economic crisis. The only true fact is the public finance crisis.. Poles are well aware of it, especially since our government is trying to carefully control the situation and reduce the risk of breaching the thresholds provided for in the Constitution. Therefore, Poles, unlike the Greeks and the Spaniards, have never been subject to drastic tax increases, mass layoffs or reductions of salaries and pensions.
On the one hand, we are capable of distinguishing the poor state of public finances from the state of your personal finances, and the number of indebted households is decreasing. On the other hand, there is a growing group of people whose debt is higher than the value of their annual income. Why is it that as many as 11 per cent of Polish households, i.e. 5 per cent more than in the previous study, have incurred high debts?
It is true that the number of households taking out quick cash loans and consumer loans has decreased, and therefore the percentage of those with a smaller debt has dropped. However, the number of households with large debts, i.e. those that have mortgage loans is growing quickly. It seems that Poles are refraining from purchasing goods of lower value, but do not hold back from investing in high value goods.
It is interesting, especially given that the lending terms for mortgage loans are becoming more tight: e.g. down payment is required and it is more difficult to receive a foreign currency loan. Does this mean that these are not actually major obstacles?
This means that contrary to what it may seem, there is a growing number of Poles who make good money and can afford to take out a loan in zloty and make a down payment.
More Poles have started to save money (as much as 40 per cent, i.e. 3 pp more than in 2011); at the same time, the number of those who have larger savings, amounting to the equivalent of several months’ salary, has decreased. Why has the number of people with savings amounting to only one monthly salary increased (from 22 to 24 per cent)?
Given that the number of savers has increased, it seems natural that those who have just started saving have not yet been able to put aside significant amounts of money. This process takes time. The same is true for higher education. The more people have access to it, the lower its average quality. The quality of a mass product is always inferior.
This rosy picture of Polish prosperity is somehow tainted with data on the level of poverty in Poland, which rose from 4 to 5.2 per cent over the year.
It should be noted that, in recent years, the poverty level has been falling. It began to grow again in 2011, so this small increase does not significantly affect the overall picture of wealth of Polish households. It does not mean, however, that we should not be concerned about the rising poverty levels. We must never ignore the situation of low income families.
In fact, the situation of these households mostly depends on their place of residence. The threshold of PLN 522 per household, which we decided to adopt this year, means one thing in the countryside, where every family has a field and a vegetable garden, and something else in an urban area, especially a big city, where the cost of living is incomparably higher.
It should also be noted that poverty has always been a social phenomenon that primarily affects people who do not earn money, but make their living from seeking allowance. We can therefore conclude that poverty and public assistance go hand in hand.
On the one hand, we are becoming increasingly happy. Yet, 71 per cent of Poles, i.e. nearly three-quarters, are worried about their finances. Doesn’t this group seem too large given such a high level of overall satisfaction?
The majority of us is still worried about our finances because we have not managed to reach the level of our aroused aspirations. Interestingly, it does not mean that those who lack money are concerned. Quite the opposite. The percentage of people whose earnings are sufficient to meet their current needs has increased to 76 per cent. In the 1990’s, i.e. only twenty years ago, three quarters of Poles declared that their steady income was not enough to meet everyday needs.
It is also clear that, when compared to 2011, confidence in public institutions, including commercial banks held responsible for the global financial crisis of 2008, has increased by over 10 per cent (from 41 to 57 per cent). What are the reasons for this increase?
Two years ago, the public took note of the information spread by media about institutions responsible for the global financial crisis: all types of financial institutions – banks, the Social Insurance Company (ZUS), open pension funds, the stock market – were deemed unreliable. In fact, with the exception of the NBP, they had never enjoyed a particularly high level of public confidence.
Why does the NBP enjoy such a high – 83.8 per cent – and rising confidence?
This is because none of us has a bank account with the NBP, so we do not have any direct contact with the central bank. Apart from those who are interested in the evolution of interest rates, an ordinary citizen has no regular contacts with the NBP. And investors know that it is not the NBP but the Monetary Policy Council that is responsible for interest rates. In other words, distance is conducive to confidence building. Furthermore, the NBP has never been involved in any financial scandal.
The increase of the level of confidence in financial institutions in 2011, although minor, has been observed in all categories – it concerns banks, the Social Insurance Company, open pension funds and the stock market. However, no noteworthy event involving all these institutions has taken place recently.
Today, the crisis in public finances is not discussed to such an extent as it was three years ago. Emphasis is now put r on the economic crisis instead, and the majority of Poles believe that certain financial institutions bear no responsibility for it. An increased confidence in the Social Insurance Company is the result of media discussions about the future of open pension funds and the repeatedly used argument that ZUS is a safe institution. Apparently, in this public debate more Poles trust Jack Rostowski than Leszek Balcerowicz.
The results of your study show that, over two years, the number of people trusting others decreased from 13.4 to 12.2 per cent. Are we becoming an increasingly distrustful society?
In my opinion, the decline by one point means that Polish social capital remains at a low level; it is indeed a problem, as we are extremely distrustful. This lack of trust makes it difficult, for example, to merge smaller companies – consequently, we keep failing to conquer large Western markets by launching a good Polish brand. We are pleased that Poland has millions of small and micro enterprises, but in fact it is nothing to be proud of and does not tell well of us.
Can we conclude on the basis of the latest Social Diagnosis that Poles have learned how to manage their money carefully just in case?
I think that the majority of Poles have always been cautious in this respect and kept their feet firmly on the ground. Over time, we have certainly learned what to do to not become poorer and, if possible, how to improve our financial situation. When we combine this long-term cautiousness with learning, we can safely claim that Poles are less prone to taking rash financial decisions than representatives of other nations, and that we rather refrain from taking out loans. The latter are treated as the last resort and not out of a whim.
Poles do not jump on the bandwagon as was the case few years ago shortly after Poland’s accession to the European Union, when many of us would spend a fortune to buy “a hole in the ground” instead of a flat.
We have learnt from those unpleasant past experiences and are now certainly more capable of spending our money in a more effective manner. An increasing number of people have access to the Internet and use it to compare prices. Therefore, we can afford more, even though wages have stagnated or even declined slightly in real terms.
Interviewed by Jowita Flankowska
Professor Janusz Czapiński – social psychologist, lecturer at the Faculty of Psychology at the University of Warsaw and Vice-Rector of the University of Finance and Management in Warsaw. Head of the study entitled „Diagnoza Społeczna” conducted since 2000. The study is co-financed by the National Bank of Poland.