Poles earn increasingly more

21.12.2016 13:29|Conotoxia.com

According to the Eurostat data regarding salaries in the EU, Poland is becoming a leader within their region. Moreover, this country is rapidly decreasing its distance to the euro zone countries – said Marcin Lipka, Cinkciarz.pl senior analyst.

Marcin Lipka, główny analityk Cinkciarz.pl

Comparing net salaries in specific countries is problematic. These calculations should take into consideration the differences between currency exchange rates, as well as between tax systems. However, when examining the EU citizens’ purchasing power, not only are these elements included in their calculations by Eurostat, but marital status and number of children are also taken into consideration.

Eurostat uses the euro purchasing power standard unit (euro PPS). This eliminates the differences of prices between specific countries, and allows the estimation of the amount of goods and services you can afford for your salary, in comparison to the other EU citizens. Due to the fact that in 2015, the cost of living in Poland was approximately 40% lower than in the euro zone, the PPS euro unit is worth approximately 2.55 PLN.

Huge differences

In 2004, when Poland had accessed the European Union, the difference between Polish and EU salaries expressed in terms of current prices or figures, without making allowance for changes over time, were enormous. The average net salary for a single person in Poland was at the level of approximately 4200 euro, while the same salary was at the level of 22000 euro in Germany, 25500 euro in Holland and 31600 euro in the United Kingdom.

This situation wasn’t much better after this data was converted into the euro PPS unit. In 2004, the average net purchasing power in Poland was at the level of 8000 euro PPS, while the same index was at the level of 12100 in Portugal, 21000 in Germany, 24000 in Holland and 29000 in the United Kingdom. Therefore, it’s no longer surprising that the amount of Polish emigrants doubled between 2004 and 2006, reaching the level of approximately two million people (data: Polish Central Statistical Office).

It’s also worth noting that the tax system in 2004 was preferential to families. If we assume that a married couple with two children had an income consisting of the national average salary from one partner and two-thirds of the national average salary from the other partner, their annual income was at the level of 13500 euro PPS. According to Eurostat, only four countries achieved a worse result at that time – Bulgaria, Romania, Lithuania and Latvia.

Not only did the older EU countries have a better living standard (Portugal - 21700, Spain - 30800, Germany - 40500, the United Kingdom - 52000), but also Hungary (14200 euro PPS) and Czech Republic (16200 euro PPS). Moreover, the real net income in Turkey was 15% higher than in Poland, at the level of 15 500 euro PPS.

Poland is the leader

The material situation of Poles has improved significantly in comparison to 2004. The data for 2015 states that the purchasing power of a single person who earns the national average salary is at the net level of approximately 15140 euro PPS. This is approximately twice as much as the current accessing of the EU. Additionally, Poland has managed to overtake every country in their region. The result of Slovenia is at the level of 15100, the Czech Republic has 14100 and Hungary has 11700 euro PPS. Moreover, Poles currently earn approximately 20% more than the citizens of Turkey (12600 euro PPS).

This relation is similar after equalizing the salary median. According to the data from the Polish Central Statistical Office for 2014, this index is equal to approximately 80% of the average. This means that it’s at the level of 12200 euro PPS for a single person from Poland. The only country from Poland’s region, which has a better result, is Slovenia (12500 euro PPS).

Since Poland’s access to the EU, the situation of Polish families improved as well. In 2015, a married couple with two children had an income of 26400 euro PPS, which is approximately twice as large as the similar income from 2004. However, Poland is still worse than Czech Republic (26600 euro PPS) and Slovenia(28700 euro PPS) in this category. Nevertheless, the Eurostat data does not include the 500 plus program, which was introduced this year.

Higher living standard

Due to the fact that the 500 plus program is not taxed and is entitled to every family with two (or more) children regardless of their income, the Eurostat data for a four-person family would increase by 2 400 euro PPS.

If we assume that Poland did not decrease its distance to the other countries and that after adding income from 500 plus, the 2015 data for a four-person family will grow up to 28800 euro PPS. Not only would this allow Poland to overtake Czech Republic and Slovenia, but also Portugal (28400 euro PPS). Moreover, this would put Poland relatively close to Ireland (42200 euro PPS) or France (45700 euro PPS).

The living standard between Poland and the 2004 leader of the EU decreased significantly as well. Over the past eleven years, the net income for the British four-person family decreased from 52000 to 51200. At the same time, the same income in Poland (including income from the 500 plus program) increased from 13500 to 28800 euro PPS.

 


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