The coronavirus has significantly undermined the finances of Polish consumers. Small businesses in Poland have also been affected. Almost 11% of entrepreneurs across the country managing small and medium-sized enterprises are concerned that there is a real risk of their closure.
The Costly Pandemic
“Since the beginning of the epidemic, we have been closely monitoring small and medium-sized enterprises, as they dominate the Polish economy. In November, entrepreneurs rated their economic situation worse than in October and do not plan any investments or job growth in the next three months. Businesses in Poland after the pandemic have incurred additional expenses for disinfecting workplaces and protecting employees, up to 25% of corporate expenses. For them, this is a heavy burden,” says Adam Lecki, Chairman of the National Debt Register.
COVID-19 drained a lot of money from consumers’ pockets. At the end of 2020, their total overdue debt, registered in the National Debt Register of Poland’s database, amounted to more than 59.2 billion PLN, nearly 3.5 times more than in 2019.
The gender ratio of debtors has not changed. Men have the most unpaid obligations. Their debt amounts to 34.8 billion PLN, compared to 13.2 billion PLN for women.
The largest increase in debt is observed in the group aged 36 to 45 years. Poles in this age group are burdened with loans, installments for household appliances, and need money to support their children. The debt of elderly people has decreased. Individuals over 65 have liabilities amounting to 4.4 billion PLN, though a year ago, this figure was 4.5 billion PLN.
Business in Poland After the Pandemic
According to a study conducted by IMAS International, 38% of consumers directly state that their financial situation has worsened. Many Poles are trying to control their expenses – 39%. However, more than half have not changed their approach to spending money and manage their finances in the same way as before COVID-19.
“During the quarantine, companies have shown more caution than before when collecting debts from consumers. They are concerned about their financial liquidity,” says Jakub Kostiecki, President of the Board of the debt collection company Kaczmarski Inkasso.
Last year, business debt increased by 11%, reaching nearly 11.2 billion PLN. The situation is worst in the sole proprietorship sector. Companies from this group have not paid more than 6 billion PLN, which is 917 million PLN more than at the end of 2019.
This group, although the largest in the Polish economy, has the weakest market positions. Microbusiness owners often have to wait for payment from contractors at the back of the line. They also lack financial preparation, so each unpaid debt from a business partner worsens the situation.
Only 37% of companies rate their current financial situation positively. The group of entrepreneurs dissatisfied with their economic situation has grown to 30%, and 40% expect the situation to worsen in the next three months.
Less than half (43%) of entrepreneurs say they can operate without state aid, and 22% believe they cannot survive without support. They mainly expect delays or exemptions from social insurance contributions (85%), job subsidies (70%), and tax reliefs (52%).
Fear of Bankruptcy
According to another study conducted on behalf of the BIG InfoMonitor Debtors Register, at the end of last year, one in ten entrepreneurs lost faith in ever being able to restore their business’s financial state to its previous level.
At present, more than a third of small businesses in Poland fear bankruptcy. The fear of failure in business is most common in service and transport companies and less so in manufacturing and commercial firms.
For more news about life and business in Poland, join our Telegram chat. If you are planning to enter the Polish market or scale an existing business, contact us, and the Uniconsulting team will assist you.
