Poles are feeling the effects of the cost-of-living rise, though what damage this will do to the ruling party’s popularity ahead of next year’s election is still unclear.
At the Rozycki Bazaar in the North Prague district of the Polish capital, the mood is bleak. The market has existed for 150 years, but the owners of stalls think its days may be finally numbered.
“It used to be a place where the business was passed down from one generation to another,” 55-year-old Jacek Suska, who owns a business selling dumplings and other home-made food, inherited from his mother, comments. “But nowadays, when one of us dies, no one comes to replace them.”
On the one hand, over the past few years social security and tax contributions for one-person businesses like those run by Suska and most of his colleagues at the bazaar have increased by a few hundred euros monthly. On top of that, the recent surge in inflation is clearly starting to hurt business: Suska and his colleagues say that the number of customers is down to a third compared to pre-pandemic times, while the cost of getting the merchandise to market has risen.
“People think twice or three times before buying anything,” 50-year-old Malgorzata, who sells women’s clothes and hats in a booth nearby to Suska’s, explains.
“On top of that, I have a mortgage on my apartment, and the [monthly payment] has increased by 900 zloty (190 euros) in just the last couple of months,” she adds. “We can barely make ends meet. We’re basically trying to live day to day, and make it to retirement.”
Like elsewhere in Europe, Poles have been feeling more and more the impact of rising food and energy prices brought on by a war happening at the tail end of a global pandemic. In June, Poland’s inflation rate reached 15.6 per cent, one of the highest in Europe and a level not seen in this country since 1997.
And it is those on lower wages, who spend the biggest proportion of their income on food and utility bills, who are the worst affected. For a government like that of Law and Justice (PiS), whose popularity has been built on guaranteeing a decent life for “ordinary Poles”, this could be hugely problematic, especially with the next general election looming in a year’s time.
Whose fault is it anyway?
Already in electioneering mode, the opposition is doing its best to capitalise on the difficulties the government finds itself in over its handling of the economy.
“The inflation didn’t fall out of the sky; there are problems with inflation in many countries,” Donald Tusk, the leader of the biggest opposition party, Civic Platform, told Gazeta Wyborcza in an interview on June 29. “But you can clearly see that inflation can be dramatically high, average or lower… controlled. PiS and [National Bank of Poland President Adam] Glapinski did everything in their power to ensure inflation in Poland is of the uncontrolled type.”
Economists tend to agree with Tusk that some of the causes of the high inflation rate in Poland are domestic.
Partially, explains economist Michal Brzezinski from the Warsaw University, an expert in inequality, it has to do with massive government spending since PiS came to power in 2015, particularly in the form of cash handouts. There’s also the fact the inflation rate had already surpassed the targets of the National Bank by early 2021, while the institution only decided to start increasing the reference rate to cool the economy in October last year.
But to Polish voters, the blame game seems less important than seeing whether the government is prepared to help them get through this cost-of-living crisis.
Back in the Rozycki Bazaar, everyone BIRN spoke to was quick to point out that prices are rising all around the world, rather than this being a unique problem to Poland. One of the hawkers, a retired women who keeps a shoe stall as a side business, had nothing but praise for the government: pensions are indexed to inflation in Poland and PiS has been offering supplementary pensions each year as elderly voters are part of its key electorate.
Someone else to blame
Rather than rail against the government, people’s frustration seems to be slowing turning against the millions of Ukrainian refugees that fled to Poland after Russia’s invasion in late February. More than 3 million have crossed the border into Poland in total, with about half estimated to have remained.
Malgorzata, the clothes seller at Rozycki, complains that the government is not doing enough for small business owners like herself who are struggling, while at the same time spending money on refugees.
“That money is mine,” she says, referring to the child benefit the Polish state is now paying to Ukrainian families with children at the same level as to Polish families.
That same attitude could be heard among clients of the charity shop OCH Dzielnia, in the Ochota district of Warsaw, where lower income Poles can pick up food and clothes for free.
“I wanted to pass in front of the line at the shop because the kids’ ice-creams were melting, but this Ukrainian woman was sitting there with her beer not letting us through,” a Polish mother complains to another, as they both sift through piles of children’s clothes. “All the things we do for them, and this is the gratitude they show to us.”
Malgorzata Kuleszka, the administrator of the shop, says that she’s been hearing more and more complaints from Polish clients about Ukrainian refugees over the past few weeks.
Time will tell
In addition to rising supermarket costs and higher bills, the focus of public debate in Poland has centred on the explosion in interest rates for people with mortgages, as a result of the monthly increases to the reference rate by the central bank.
In some cases, like the aforementioned Malgorzata, people have seen their monthly rate increase by as much as 200-250 euros in the space of just a few months.
But, as Michal Brzezinski points out, the government has been paying attention to these people – it’s usually the middle class who have mortgages – because they usually turn up to vote. In a much talked about intervention at the European Business Congress in Katowice in April, Prime Minister Mateusz Morawiecki told a room full of bankers that they’d have to accept measures, such as “credit vacations” (temporarily suspending interest payments), to support society at large.
“Some other social categories are also well protected,” explains Brzezinski, “for example, families with children or pensioners.”
“It’s really the poorest, who account for about 5-10 per cent of Polish society, who are the most vulnerable,” the economist points out. “And among those who can be hurt significantly are particularly those families that live mostly on social welfare, because those transfers are not automatically indexed to inflation.”
Brzezinski says that unlike the measures targeting the banks which primarily help the middle class, he has not yet seen any government interventions aimed at supporting the poorest through this crisis. And that’s because, the economist says, “the poor living on benefits usually do not have high rates of electoral turnout, so they are not a priority for a government seeking reelection.”
Despite its public image as the party defending “the ordinary Pole”, this crisis shows PiS acting as just another vote-hungry party. “To maximize electoral output, PiS is focusing on the middle class, pensioners and families with children, forgetting about the poor, the group that is anyway invisible to the public,” Brzezinski’s says.