The Impact of COVID-19 on Poverty in Poland

Impact of COVID-19 on Poverty in PolandGlobally, the COVID-19 pandemic has negatively impacted those already struggling with poverty. Here is some information about the impact of COVID-19 on poverty in Poland and the country’s response.

The Impact of COVID-19 on Poverty in Poland

The COVID-19 pandemic increased income inequalities by reducing the employability of those with lower levels of education. For example, the populations who were already at a greater risk of poverty due to their positions in the labor market became more impoverished. In 2020, the poverty rate amounted to 5.2%, which is 1% higher than in 2019.

Prior to the virus reaching Poland, citizens expressed greater fear of the virus’ impact on the economy than its health effects. Given that less than 30% of Poles have any savings and a quarter of workers are in flexible forms of employment and do not receive coverage from unemployment insurance, the government’s reaction to COVID-19’s effects on the economy is crucial. In 2020, Poland’s economic activity showed a  decline of several percentage points for the first time in several decades.

In a survey that More in Common conducted, nearly half of the respondents stated that COVID-19 worsened their financial situation, with the 40 to 45 age range expressing the most concern. COVID-19 affected the hotel, catering and recreational industries the hardest as it prevented the industries from operating. Additionally, 70% of entrepreneurs reported that the pandemic reduced their income, which will inevitably affect their businesses and employees. In January 2021, Poland reported 6.5% unemployment, which is more than 3% higher than in 2019.

Poland’s Response

Poland acted fast and prepared the country before the first case of COVID-19 arrived, minimizing the pandemic’s effect. Poland closed borders and enforced strict quarantine measures before many other countries in Europe and the government put strategies in place to minimize economic impact despite having an unprepared health system.

On April 1, 2020, the Polish government introduced the Anti-Crisis Shield to provide employers and employees with solutions to cushion the impacts on employment. The Anti-Crisis Shield included more flexible employment, subsidized salaries of employees, gave loans to micro-entrepreneurs and gave sickness benefits to those required to quarantine. The government updated the Anti-Crisis Shield five times during the COVID-19 pandemic in order to cater to the industries and workers that suffered most, such as the cultural sector, the wood processing sector and the catering and transport industries.

Minimum Wages and Vulnerable Populations

Protecting income from work through implementing a minimum wage is an important factor in reducing poverty and minimizing the impact of COVID-19 on poverty in Poland. In 2020, Poland increased the minimum wage by 11%. This change was crucial in order to prevent major changes in household income. Additionally, as COVID-19 led to more workers losing their jobs and wages, the government introduced temporary benefits to compensate for the loss. Still, the crisis had a greater effect on weaker regions of Poland and disadvantaged workers.

Even before COVID-19, people in rural areas of Poland were 11% more at risk of poverty than those in cities. The risk of poverty for women in Poland is higher than men, and due to COVID-19, the rate of women who had to stop working was almost twice the rate of men. Furthermore, the majority of healthcare workers at the frontline of the pandemic are women. This raises the question of whether or not the Polish government is doing enough to aid women during this crisis.

Learning and Growing Following Crisis

While COVID-19 brought many negative effects, it has also presented an opportunity to learn and use the pandemic as a catalyst for change. Globally, the pandemic highlighted the importance of quality governance and today’s technology offers the potential to optimize government functioning, resource allocation, efficiency and transparency. Projections determine that Poland will rebound from the pandemic with an expected economic growth of 3.3% in 2021.

In May 2021, Poland revealed the Polish Deal, an economic package to aid in recovering from the pandemic. The package focuses on improving economic and social systems with an aim to make systems more crisis-proof. The Polish Deal aims to bridge income gaps by supporting people with the lowest incomes and placing more of the tax burden on large companies and higher-income groups.

COVID-19 exposed weaknesses in Poland’s healthcare system, and by 2023, Poland plans to spend 6% of GDP on improved healthcare. Additionally, the Polish Deal plans to provide support for parents and homebuyers, reduce the tax burden on lower-income Poles and create more than 500,000 new jobs. Many of the jobs will come from infrastructural investments including plans to build a network of expressways, railroad lines, sports infrastructure and an airport.

The Road Ahead

Overall, the Polish Deal aims to build the foundation for developments that will help future generations earn more and work in better conditions. Poland is on the cusp of vast civilizational changes and the Polish Deal plans to assist in bringing about these improvements. Poland is still waiting to see the effects of its new policies, but in the meanwhile, the future looks promising.

– Jacqueline Zembek
Photo: Flickr