The news of the 20% pay cut was an unpleasant surprise for Wioletta, a project manager from Warsaw.
- I earn as much now as I did ten years ago. You could say that the coronavirus erased my two promotions and forced me to go back to the times when, after paying the bills, I had to choose whether I go to the cinema or to the hairdresser's, and spend several months saving up to buy decent winter shoes. It's frustrating that after a dozen or so years of work my standard of living can fall so quickly and I don't know when I'll be back on track because we didn't get a guarantee that wages will rise to the previous level," she adds.
Wioletta's home budget has shrunk from 5.4 to 4.2 thousand PLN. She has no savings. She can't make any additional money because her employer hasn't agreed to temporarily suspend her loyalty clause. The chances of changing employment are small. The advertising industry, in which she works, has suffered greatly from the pandemic.
Kamila's family is in a similar place. - My husband's salary was reduced by 20 percent, and he lost all his additional orders. I get 60 percent of my salary as [art of my parental leave. We recently bought an apartment and spent all our savings. For a month, maybe two, our parents will help us. If Maciek does not start making additional money during this time, we will have to sell the car," she concludes.
Only six months ago, they earned a total of PLN 10 thousand per month. Today make half of that. Kamila started having trouble sleeping. She is afraid that when the job protections enshrined the "anti-crisis shield" expire in the autumn, Maciek, who is a movie editor, will lose his job. Her salary, even full-time, will barely cover her bills.
Middle class, meaning who exactly?
Most discussions about the condition of the Polish middle class start with an attempt to define who really belongs to it and who only aspires to be part of it. Opinions vary. Some believe that in the current reality only the income criterion oscillating around 2.5 thousand PLN per person in the family should be taken into account.
Others are of the opinion that education and occupation have the same meaning as the balance of the account.
Finally, some researchers are convinced the whole discussion is pointless because, in their opinion, the middle class in Poland is only just coming to being, which the current epidemic forcefully proves. If we had a veritable middle class, a temporary fluctuation in income would not ruin the household budgets.
This is what the experts have to say.
An interesting voice in the discussion comes from the latest CBOS survey conducted in March this year. It shows that over half of Poles consider themselves as part of the middle class. According to self-identification, the lower class includes 4.1%, 1% people see themselves as poor and 1.2% as the upper class.
The respondents determined their class affiliation based solely on the income criterion. People who self-identified as middle class were most often between the age of 25 and 44, living in cities with at least 100,000 inhabitants, with higher education and earning at least PLN 3,000.
This self-assessment of Poles is coherent with the research conducted by the Polish Economic Institute, which in the second half of last year made an attempt to examine the country's middle class. Its conclusions are as follows.
Taking into account the income criterion at the level of 2.5 thousand per person in the family, as many as 54% of Poles belong to the middle class in the age group of people between 24 and 64. This amounts to between 11 and 12 million people. When we add to that the class distinction according to the professional (social) criterion, related mainly to education, job qualification and position in the company's hierarchy, then 51% of Poles will belong to the middle class. This is a lot.
Paula Kukołowicz, an analyst and the author of the survey, emphasised that the result achieved puts our country near the top of all European states. We have a broader middle class than such countries as Russia, Lithuania, Hungary, as well as Portugal and Spain. The countries where the middle class includes the largest part of the society are the United Kingdom, the Netherlands and Norway.
Well-fed but in debt
A high position in the ranking of the size of the middle class certainly looks good in a PowerPoint presentation, but does it really translate into empirical standard of living? After all, one of the features of the middle class is financial stability, which consists, among others, in having savings.
Meanwhile, in Poland, putting money aside for bad times is still such a big sacrifice that 45 percent of the members of the middle class have no savings whatsoever. The same number of people are burdened with various types of debt.
- The fragility of the Polish middle class lies in the fact that it is largely separated from the precariat by three unpaid loan instalments. Its financial status is difficult to maintain, because it is enough for one of the family members to start earning less and the whole budget has to be thoroughly recalibrated - says Arkadiusz Wódkowski, researcher and owner of Marketing Research Agency.
Renata and Jacek are a married couple in their thirties. They became parents a year ago. Their income fell from 11 to 6 thousand zlotys per month within a few weeks. - We will not starve to death, we will pay the bills, but we will not send our daughter to a private nursery anymore, because it is an expense of 1.7 thousand PLN. We did not get a place in the public nursery. I will apply for the possibility of working from home, because it is the only solution for us. In terms of leisure, we only have Netflix left. We had to cancel the rest of subscriptions such as gym or additional medical package. We don't know what to do with our car. In July we wil have to pay the yearly insurance fee, and that's several thousand zlotys. If nothing changes, I think I'll take a short term loan from the money sharks for the first time in my life", Renata complains.
The U.S. middle class turns to welfare
While the impoverishment of the Polish middle class is currently taking place behind closed doors, and can be noticed by looking at the decrease in clothing sales or general expenditure on so-called leisure, in America it resembles more closely the explosion of a bomb.
It took four weeks of freezing the economy for 40 million people to apply for unemployment benefits. The president of the aid organization Feeding America estimates that 17 million more Americans will start relying on food aid in the next six months.
When the food banks announced aid to people who were in trouble because of the pandemic, people in Los Angeles, Pittsburgh and Irving, Texas, were queuing in several kilometers long car queues to get free food.
Small businesses, service workers, and a whole lot of workers who couldn't do their jobs remotely joined the ranks of the lower classes. Some of them were forced to use state support for the first time.
The example of the U.S. somehow confirms the theory of some economists and sociologists that the new iteration of the middle class will rely, at least periodically, to a large extent on social transfers.
- We live in times when there are more and more threats which require responsible state intervention. The coronavirus has clearly shown that regardless of the country's economic model, companies and their employees cannot survive without government support. This means that at least for some time we have to abandon the concept of the self-sufficiency of the middle class. We are reaching the point where achieving sustainable financial security has become a luxury reserved for the richest - says Paula Kukołowicz from the Polish Economic Institute.
The Polish middle class after the pandemic
According to Arkadiusz Wódkowski, the coming months will be a time for the middle class to negotiate, search for compromises, and pretend that nothing has happened.
- It is very difficult for people to accept the loss of status, so we will do everything to make up for it. Working overtime, catching additional orders and doing side gigs during the weekends are all coming back. But discreetly. Friends can't find out how much COVID has weakened the state of our family budgets. For this reason, we will sooner negotiate a reduction in tuition fees for a child's private school than consider moving him or her to a public establishment," explains the researcher.
Where it is not possible to cover the financial holes on our own, various types of loans and credits will emerge.
- The crisis of 2008 has not taught us anything. When the good times came, we focused on consumption and not many people took into account that a good streak could suddenly end. The experience we are now gaining en masse can leave its mark on the strong need for a financial cushion. Time will tell if we will do our homework this time - adds Wódkowski.
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