Family budgets under stress due to COVID-19 pandemic

The coronavirus pandemic has greatly impacted not only the health, but also the economic sectors of all countries around the world and Poland is no different.

The extended closures of many sectors of the economy, including retail, entertainment, fitness and restaurant sectors have left many people in limbo, unsure of steady employment or plain unemployed.

Financial impact of the pandemic

“The first closure in modern history of economies on such a huge scale and shutting down of whole industries left up to 20 percent of people on the lowest incomes (depending on the country), jobless almost overnight,” notes Dariusz Świniarski, fund manager at BPS TFI, an investment fund company.

European countries whose GDPs rely more than 15 percent on tourism, such as Italy, Spain, and the UK, have recorded losses of 20 percent in the second quarter of this year. Comparatively, a decrease of 8.2 percent of GDP in the second quarter of 2020, in Poland, looks relatively positive. Although unemployment has increased slightly, from 5 percent at the end of 2019 to 6.1 percent in June 2020, more people (160,000) lost jobs as compared to new employment in the first half of 2020. The unemployment rate remained the same at the end of the third quarter of 2020.

Financial experts claim that one should have at least three-months savings to cushion any potential employment hiccups, however a June 2019 report by Unum Insight indicates that merely 30 percent of Poles save regularly, while 27 percent do not have enough money to last them even a month in case of unexpected difficulties. Only 15 percent of Poles have financial cushions that could tie them over for more than six months.

Psychological cost of the pandemic

Since the end of the current pandemic is nowhere in sight and far-reaching economic consequences are hard to predict, an increasing number of people are experiencing symptoms of anxiety and depression.

According to a psychiatrist Elżbieta Bonder from Gedeon Medica clinic, having savings may provide some, albeit fleeting, comfort, because people know that the money will not last forever.

More affluent individuals, such as business owners, are not immune to financial worries either. They fear for their businesses, relationships with their customers and suppliers, and they worry about their employees.

Therefore the psychological cost of the pandemic is also high. “Disregarding or diminishing symptoms of anxiety or depression may lead to serious consequences, including suicide attempts,” warns Elżbieta Bonder.