Thursday, 9 August 2012

Some Notes on Poverty in Poland

As part of another larger project I have been writing something about poverty in Poland. Below I include some notes on this topic.

The graph below shows some clear trends in changing poverty levels in Poland. According to all the measurements of poverty, deployed by the Polish Statistics Agency, poverty grew sharply from 2000 until Poland entered the EU in 2004, it then steadily declined until the outbreak of the global economic crisis, before once again levelling out or slowly increasing.

In spite of these changes, the levels of relative and absolute poverty remain similar in 2011, to what they had been in 2001 (we shall consider statutory poverty below). Poverty most affects those families in which at least one member is unemployed. In those families with one unemployed member, 11.5% were below the statutory poverty line, which rose to 1/3 of families with 2 or more members without work. 

However, due to the low income levels of many workers in Poland, just over 9% of those engaged in physical work live below the statutory poverty line (slightly above the 9% who are below the absolute poverty line). 

Women are particularly affected by poverty, due to the high level of deactivation of female labour and the relatively low wages that women receive in comparison to men. The employment and activity rates are around 15% higher for men than women and men on average earn nearly 20% more than women, which rises to around 30-40% in sectors such as trade and finance

 Extreme poverty is most pronounced in the countryside, with the percentage of farmers living in extreme poverty equalling 13.1% in 2011 (up from 8.9% in 2010). Those who have no paid income and do not receive sick benefits or pensions suffer the highest level of absolute poverty (21.9%). The level of absolute poverty also rises markedly in families that have more children, with 24% of families with four children or more living in absolute poverty, compared to just 2.3% of those with one child. 

Children are at particular risk of poverty in Poland. In 2011, 10.5% of those under 18 years of age lived in households whose income was below the statutory poverty line and 9% below the absolute poverty line. This means that 31% of all those categorised as living in absolute poverty in Poland are under 18 years of age, whilst they make up around 20% of the whole population. 

Contrary to common perceptions, elderly people are relatively well protected from poverty. Just 4% of those aged above 65 live below the statutory poverty line and 3% below the absolute poverty line. Therefore, elderly people make up 7.5% of all those living in absolute poverty, whilst they account for 1/7 of the whole population.


The availability of benefits to those not working greatly affects the distribution of poverty. The threat of poverty for the unemployed in Poland is particularly acute. Only 16.7% of all the unemployed receive unemployment benefits, which is given to claimants for a set period of time (between 6 and 12 months) and is of an amount below the relative poverty line.

Pensions in Poland are presently relatively high in relation to other social benefits (averaging 1,755zł in 2010). However the move in Poland from a repatriation pension system to a capital one from the end of the 1990s will result in future pensions, particularly for lower earners, being up to a half lower than at present, thus potentially sharply increasing levels of poverty amongst the elderly.

 The largest concentrations of those living on benefits are in the rural areas where state farms had once operated. For example, of the 20 municipalities where more than 20% of the population are on benefits, 10 are in the Warminsko-Mazurskie province (in 2 of these over 30% of the population are on benefits)  After joining the EU, incomes in the agricultural sector began to increase, partly due to the availability of EU subsidies that already equal around 50% of farmers’ income. From the end of 2005 until May 2011, Poland received around 139bn zł in agricultural subsidies, of which 78.6bn zł came in the form of direct subsidies. As noted above, however, this has not prevented a rise in poverty amongst farmers since the outbreak of economic crisis, returning in 2011 to its highest level since 2005. 

Social help is also available for individuals and families on very low incomes. Until October 2012, such benefits were accessible for a family (2 adults and 2 children) whose income did not cross 1,404zł and for a single person whose income was not above 477zł. These limits (which are the same as the statutory poverty line) are set by the government every 3 years, yet in 2009 the government did not raise it from the position established in 2006. This helps explain why the statutory poverty index declined so sharply from 2006, with GUS estimating that if it was  defined according to the real cost of goods and services then the level of statutory poverty would actually have stood at 11.4% in 2012 instead of 6.5%. This ensured that large numbers of people were pushed out of the benefits system,  with an estimated 1 million children losing their right to benefits over the past 8 years. In fact, for the first time in 2012, the percentage of those living in households below the statutory poverty line was  actually greater than those receiving benefits. From October 2012 the government raised the threshold to 1,824zł for families and to 542zł for single people. This was set according to prices existent in 2010, and therefore, as the rate of inflation is increasing, by 2015 some of those living below the absolute poverty line may not even be eligible to claim social benefits. 


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