RURAL HOUSEHOLDS ECONOMY IN POLAND - THE RURAL SURVEY IN MAZOWIECKIE REGION

Xiaoman Zhu, Mieczysław Adamowicz

ABSTRACT

This report starts with an overview based on national-level data from official sources and then presents the findings of a survey of rural households conducted in 2001 in Mazowieckie region, Poland. The study focuses on income distribution differences and income level comparison among four subregions. The change of rural household living standard during the socio-economic transformation and the attitudes of rural households towards the transformation are also examined. By analyzing source of income and related effect factors, some components of potential sources of income and the policy urgently needed to develop rural area in Poland are suggested.

Key words: rural household, income, transformation..

INTRODUCTION

On the turn of 1980s and 1990s in Central and Eastern Europe (CEE) started deep political, economic and social changes, Poland was the first country in CEE to re-establish a market economy. The economic and political transformation in Poland commenced at the beginning of 1990. The new government introduced a number of dramatic economic reforms, including the elimination of most of a large state sector, ending the state control of prices and liberalizing trade, investment and capital flow. As one of society’s fundamental social and economic institutions, the rural household was strongly affected by the above changes, and faced with big difficulties in adaptation to new economic and social conditions. With the changes of economic and social conditions and factors of households’ environment, of necessity for forming of active attitudes and behaviours of households is required in using possessed resources and searching new income sources.

In order to understand how families are making a living and to assess rural household living conditions and changes during this period of rapid change of economic transformation, a survey of rural households conducted in 2001 in Mazowieckie region of Poland. Investigation of households were conducted according to equal method in 3 countries: Poland, Slovakia and Hungary in a joint research project in which apart from Warsaw Agricultural University, the Slovak Agricultural University in Nitra, Saint Stephens Agricultural University in Godollo and the Sociology Department of Cornell University (USA) took part. Material for research collected by means of questionnaires, after verification, was coded and accumulated in data bank by using computer software SPSS. Analyses were conducted inside national series.

This report presents some findings of the survey and focuses on income distribution differences and income level comparison among four subregions. The change of rural household living standard during the socio-economic transformation and the attitudes of rural households towards the transformation are also examined. By analyzing source of income and related effect factors, some ideas of components of potential sources of income and the policy urgently needed to develop rural area in Poland are suggested.

METHODOLOGY

The survey included 677 rural households in a new voivodship (province) - Mazowieckie in central-east (Warsaw). It was carried out in 4 administrative districts (powiat) with the number of communes (lowest administrative unit) in the province: Przysucha, Sokołów Podlaski, Żuromin, Żyrardów (Table 1). These administrative districts were purposefully chosen because they represent differences of rural areas in this province and different levels of influence by large municipal agglomerations. In each district, three communes were selected based on the different number of population. (Large commune means 7000 inhabitants and above; medium commune 5000-6999, and small commune means below 5000). Household survey was done in 12 communes of 4 districts with each type of settlement (small, medium and large). All our samples are selected randomly such as households and villages. The survey covered representative collections of rural households maintained by different agricultural and non-agricultural sources of living.

The households’ survey started on 1st of September and ended at the last day of September 2001. The research was conducted by means of questionnaires. It includes 15 pages and 776 codes in 80 questions, among which questions 1 to 47 are common ones and the rest is added by each country. Code number from 1 to 208 in the first 47 questions is the same as that of common questionnaire. While questions marked by a, b (for example 20a, 27a, 27b and so on) and code number from 209 to 776 belong to national part. After verification, was coded and accumulated in data bank by using computer software SPSS. This software was used for the analysis of variance (ANOVA), correlation between pairs of variables and structural analysis etc. Descriptive method, graphical method and tabular presentation were used for results of presentations. Tables and figures presented without a specific source reference are based on survey data.

STATISTICAL CHARACTERISTICS OF MAZOWIECKIE REGION

In accordance with administrative reform binding from January 1, 1999, the 16 new administrative units in Poland, called voivodships, were created (See Fig.1).

The Mazovia Province occupies the Southeastern territories of Poland, which consists of 38 districts, 4 cities with district rights, and 325 communities. Warsaw is the capital of the region (See Fig. 2).

The area of Mazovia Province is 35.579 square kilometres, and accounts for 11.4% of Poland's territory. The population amounts to 5079000 people, 35.7% of which live in rural area, and makes this region the largest in the country in regard to administrative region and population. According to the data from Main Statistical Office in Poland (GUS), the share of labour in agriculture, hunting and forestry sectors accounts to 25.7% in 2001 (Table 2).

CHARACTERISTIC OF RURAL HOUSEHOLDS SAMPLE

Households in the sample ranged in size from 1 – 10 members. From Table 3, it can be observed, that the average family size is not large. The gender of householder is mainly male. The average householder age is 49. This confirms the widely known fact that the aging population is predominant in rural Poland. Their education level is not high, mainly skilled workers, elementary, and secondary. Economic status of householder is mainly farmers, retired pensioners and employed. About 77.7% of households own or rent land, 58.0% of them raise animals and 85.3% households sell animals or their products. The average owned land is rather small, in comparison to the agricultural census - only 6.27 hectares versus the main representation of farms being over 15, land leasing is also lack of mobility.

The above facts indicated that most households rely on farming and raising animals, and the level of education of householder is rather low. It is the problem to increase production and to raise income level.

Income is the key element to decide rural families’ living standard. According to Ellis [6], the concept of livelihood is that ‘A livelihood comprises incomes in cash and in kind; the social relations and institutions that facilitate or constrain individual or family standards of living; and access to social and public services that contribute to the well-being of the individual or family.’ Rural livelihoods thus include income from both farm and non-farm sources [5]. In Poland, households connected with family farms dominated in rural areas. Therefore, the report focuses on differences of income distribution and income level comparison among four subregions.

Davis and Pearce [4] suggest that one approach be to study the components of potential sources of income (See Fig. 3). Farm household income can come from farm income, off farm income and unearned income. On farm, income includes agricultural core activities, non-agricultural activities. Off farm, income can be divided into three components: income from non-agricultural employment; non-farm enterprises; and remittances. Unearned income includes pensions, dividends and interest. Thus, potential sources of income are disparate, likely to vary substantially in importance between farmers, and exhibit wide variations in their attractiveness as financial sources [5].

Source of income of rural household tend diversification during socio-economic transformation. There is growing evidence that rural households in the CEECs may obtain 30% to 50% of their income from non-farm sources [3,8]. In Poland, agriculture is the main source of income for only 29% of village households, whereas non-agricultural income is the main source for 30% of village households [2].

Table 4 shows that rural non-farm livelihoods are derived from a wide variety of activities in Poland during transformation period. In the early stages of transition, households were pushed into the rural non-farm economy due to poverty, high unemployment in urban centres, and a lack of opportunities on-farm, for example, as a result of drought or small landholdings [5].

From Fig. 4, it can be noticed that diversifying income sources help household to increase total household incomes. In Poland, the lowest income band incorporates the largest share of households relying on farm incomes only. The two highest groups have the greatest frequency of diversification occurring through off-farm employment and diversified enterprises [1]. Total annual household income bands are expressed in EUR.

The rural non-farm economy (RNFE) is seen as having a potentially positive impact on household income generation and livelihood security. Now considered within a theoretical context is the potential for further RNFE income generation in the post-socialist societies of CEE [5].

DIFFERENT SOURCES OF LIVING IN THE RURAL AREAS

Table 5 shows that average total cash income per month was 1383.3 PLN for the examined households. Sokołów Podlaski district represented highest income level at which total cash income per month was 1645.4 PLN on average. Przysucha district represented lowest income level - 962.2 PLN on average. It is below average, and it also lags behind another 3 subregions. Another two subregions were higher than average, and they were similar with Sokołów Podlaski district. Total cash income per month (mean) was divided in 5 scales. Among all the surveyed rural households, there were 274 rural households, 40.8% of total, fell into the lower scale 500-1000 PLN, lower than average total cash income per month (1383.3 PLN). Only 39 rural households (5.8%) fell into the lowest scale below 500 PLN, and only 7 rural households (1.0%) fell into the highest scale above 5000 PLN. The other two scales were 1000-2000 PLN and 2000-5000 PLN, account to 39.3% and 13.1% respectively (Table 5).

Fig. 5 indicates lowest income level in Przysucha district. Its average total cash income heavily fell into 3 national income scale: 500-1000 PLN, 1000-2000 PLN and below 500 PLN, accounting to 55.1%, 29.9% and 11.4% respectively. Sokołów Podlaski and Żyrardów districts average total cash income heavily fell into three national income scale: 1000-2000 PLN, 500-1000 PLN, and 2000-5000 PLN respectively. While average total cash income of Żuromin district heavily fell into three national income scale: 500-1000 PLN, 1000-2000 PLN, and 2000-5000 PLN respectively.

From Fig.6 we can see that the majority of rural households received their main income from the pension system (34.9%), sales (33.3%), and employment (25.2%).

Furthermore, from Fig. 7, we can see that in both Przysucha and Żuromin districts average total income sources mainly depended on retirement system (56.0% and 43.8% respectively), sale (18.2% and 31.5% respectively) and employment (15.4% and 18.9% respectively). In Sokołów Podlaski and Żyrardów districts, average total income mainly came from sale (46.7% and 38.1% respectively), employment (36.3% and 31.0% respectively) and retirement system (13.5% and 24.6% respectively).

In order to understand the real differences for the data of total cash income per month within four subregions, ANOVA (analysis of variance) was applied. The calculated F value at a less than 0.01 probability level indicates the real differences among the means of total cash income per month within 4 subregions. Thus, multiple comparisons of the mean differences were done by using the Least Significant Difference method (LSD).

Table 7 shows the real differences of total cash income per month within four subregions. It can be seen that Przysucha district differed to all others. However, Sokołów Podlaski and Żuromin district made no difference, and Żuromin and Żyrardów districts no difference either.

In order to see the potential related effect factors of income, correlations were done between total cash income per month and some survey items (Table 8).

Some socio-economic characteristics of the household indicate that negative correlation was not significant between income and average household size. Strong negative correlation was seen between income and gender of householder, which means that male householder tends to have higher income. Strong correlation was seen between income and birth date of householder, which means that younger householder tend to have higher income. In addition, the Table 8 indicated a strong correlation between income and education of householder.

To the farm or non-farm household, those owning or renting lands in big size tend to have higher income. While those raising animal has negative correlation to income level. Negative correlation was not significant between income level and average of rented land out, and household sells any animals or their products.

In regards to economic activities, employment, business and sale had positive correlation to income level. Pension and social welfare had negative correlation to income level. Negative correlation was not significant between income level and investment.

From Table 9, we can see that rural households were extremely dissatisfied with their standard of living, the effects of the systemic transformations in Poland. Only 9.3% of responders on average thought their living condition were much better than 5 years ago, and 12.0% found their living condition better than before 1989. The above facts indicated that most village inhabitants and farmers consider themselves to be the losers, and they are facing enormous difficulties adapting to the new economic system. Although there have been many profound systemic changes – both in the field of the economy and politics as well as accelerated modernization processes in Poland over the last decade, farmers and village inhabitants only have relatively limited degree to which they may participate in these changes. As a result, the disparity between urban and rural areas has further deepened in many fields, such as: income levels and living standards, access to education, health care a nd the benefits of the free market, etc [13]. These phenomena urge Polish policy maker to accelerate rural development.

CONCLUSION AND SUGGESTIONS

Over the past decade in socio-economic transformation, Poland today stands out as one of the most successful and open transition economies: GDP in 2000 was 20% higher than in 1990. Consumer price inflation is on a downward trend from 585.8% in 1990 to 10.1% in 2000, and Exchange rates continue to grow. Inflation has shown an impressive decline to just over 1 percent per annum and the current account deficit has improved from 7.5% of GDP in 1999 to 3.6% in 2002 (Table 10).

However, despite the remarkable achievements over the past decade, Poland today still faces considerable economic challenges in the period ahead: unemployment rate has risen rapidly from 3.5 % in 1990 to 16.1 percent in 2000. Another is income distribution and composition (structure) of farmers’ income [9].

The problems connected with low incomes of farm households are probably the most pronounced in Poland [1]. The low level of education of farmers has been identified as a substantial constraint to labour mobility and this has created concerns about the competitiveness and viability of rural Poland within the enlarged Union [7].

There are many factors influencing income level of rural households in Mazowieckie region, Poland. Among them, the relatively small size of household farms and the low level of householders’ education are the important impediments to improve income level. Particularly Poland appears to present a clear structural problem: there are too many people farming on too small land areas shown by the characteristics mentioned above.

Rural household surveys provide a rich source of data on economic behaviour and its links to policy. Our data are a base for discovering how people live and how people respond to changes in the economic environment in which they live. Therefore, these data will help us recommend new social policies that are informed by the actual condition in which people are living today. Our studies suggest that the factors essential for growth of the rural household’s income in transition economies as follows:

• education improvements;

• improvements in rural physical infrastructure and in quality and objectives and organization of services;

• opportunities created through local, regional and national government policies and access to capital services and credit;

• removing of land market constraints, special further structural change in farming, contracting large farms, and fragmented small subsistence farms should be amalgamated into larger, more viable units;

• creating non-agricultural sources of income in rural areas, such as micro and small-medium sized enterprises, rural tourism to increase family and rural employment.

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2. Christensen, G. and Lacroix, R. 1997. Competitiveness and employment: a framework for rural development in Poland. World Bank Discussion Paper No, 383, Washington DC, World Bank.

3. Davis, JR. and Gaburici, A. 1999. The economic activity of private farms in Romania during transition. Europe-Asia Studies, Vol. 51 No, 5 pp 843-869.

4. Davis, JR. and Pearce, D. 2001. The non-agricultural rural sector in Central and Eastern Europe. Natural Resources Institute Report No. 2630. See: http://www.nri.org/rnfe/pub/papers/2630.pdf

5. Davis, Junior. 2001. Conceptual issues in analyzing the rural non-farm economy in transition economies, Natural Resources Institute Report No, 2635, Research Project V0135. See: http://www.nri.org/work/2635.pdf

6. Ellis, F. 1998. Rural livelihood diversification: framework and categories. Unpublished paper prepared for the Natural Resources Institute, Chatham, UK.

7. European Commission.2001. Enlargement Papers. The economic impact of enlargement. Directorate General for Economic and Financial Affairs, No 4, June2001. See: http://europa.eu.int/economy_finance

8. Greif, F. 1997. Off-farm income sources and uses in transition economies (unpublished mimeo). Federal Institute of Agricultural Economics, Vienna and FAO/REU, Rome.

9. Klank,L.2002. Economic transition and income distribution of Polish farmers. See: http://www.boku.ac.at/oega/tagung/2002_abstracts/klank_e.pdf

10. Main Statistical Office in Poland

11. Regional Portal – Mazovian (see: www.mazowsze.uw.gov.pl)

12. Statistical Yearbook of Mazowieckie Voivodship in 2002

13. Wilkin, Jerzy. 2000. Rural Poland in the process of systemic transformation, attitudes of the rural population towards the market, state and European integration. International Conference: European Rural Policy at the Crossroads, 29 June – 1 July.

Mieczysław Adamowicz
Department of Agrarian Policy and Marketing
Warsaw Agricultural University, Poland
ul, Nowoursynowska166
02-787 Warszawa
e-mail:adamowicz@alpha.sggw.waw.pl

Responses to this article, comments are invited and should be submitted within three months of the publication of the article. If accepted for publication, they will be published in the chapter headed ‘Discussions’ in each series and hyperlinked to the article.