THE LEVEL AND STRUCTURE OF CONSUMPTION EXPENDITURES IN POLISH HOUSEHOLDS

Justyna Zwierzyk
Department of Organisation and Consumption Economics, Warsaw Agricultural University, Poland

ABSTRACT

The aim of this article was to show the level and structure of consumption expenditures in Polish households in the years of 2000 – 2004. The average monthly sum of money spent on various goods and consumers’ services was estimated on the basis of households’ budgets examining. There was also indicated the kind of expenses within the socio-economic groups. The results of the research show the changes of the financial policy of households in the period of time mentioned above.

Key words: expenditure, income, household budget, consumer goods and services.

INTRODUCTION

One of the standards of free market functioning assessment is the level and structure of consumption expenditures in households. These expenditures are an important factor which indicates the degree and quality in the process of fulfilling basic needs, as well as the differences of the level of spending money. The households are the main subjects of the economy in the context of the socio-economic state policy and its efficiency. The differences between the social groups and their conditions of living are usually determined by the spending directions on particular sorts of goods. Having checked this issue, one can estimate the level of living of the whole society.

AIM AND METHODS

The purpose of this article was to show the level and structure of consumption expenditures in Polish households in the years 2000 – 2004. This aim was achieved with use the data of households’ budgets examination carried out by GUS in 2000 – 2003. The research was participated by the number of 900 people from Mazovia region (681 women, 219 men) with use the poll questionnaire. The structure of the respondents was as follows:

• age: to 25 years of age 23%, from 26 to 40 – 35%; 41-60 – 38%; over 60 – 4%;

• education: primary – 4%; vocational – 19%, secondary – 58%; higher – 19%;

• place of living: city – 64%; rural areas – 36%;

• the main source of income: employees in manual labour positions – 33%; employees in non-manual labour positions – 30%; running own farm – 7%; running own business – 10%; retiring – 4%-3%; other sources of income – 2%;

• the assessment of the income situation: very good – 3%, good – 21%, satisfactory – 54%, poor – 18%, very poor – 4%.

THE EXPENDITURES AS THE LEVEL INDEX OF THE WELFARE OF HOUSEHOLDS

As a standard of the households’ welfare, we take into account the expenditures, not current incomes. There are few factors which could confirm the statement above. As a result of many years of research, it is estimated that in case of households the information of expenditures is closer to the reality than it seems to be. There is also the conviction that the expenditures are more stable and close connected with the level of incomes in households during concrete periods of time [4].

The level of incomes obtained by Polish families is very differential. The statistic data points out the advancing income differentiation. The social differentiation one can describe as an occurrence of different features which determine the places of groups and individuals in social stratification [6]. Therefore, it is very interesting from the social and economic point of view to know how the families spend their profits for consumption and try to secure their future.

THE EXPENDITURES ON PARTICULAR CONSUMER GOODS

Generally, we can distinguish basic expenditures such as on: food, clothing, and footwear, place of living, electricity, personal care and healthcare. The expenditures on education, sport and recreation, communication, transport and others are so called “free choice expenditures”. Such expenditures fulfil more than basic needs of individuals and their families. The percentage of basic and “free choice” expenditures can prove the level of households’ welfare. The higher level of “free choice expenditures”, the higher level of society welfare [1].

It has been observed that when incomes grow, the basic (food) need is fulfilled and the demand for food slowly grows. On the other hand the demand for other goods grows faster. Also, the expenditures on house equipment, communication, transport, sport and recreation grow along with the higher incomes [2].

The decrease of expenditures has been observed for many years in Poland. This decrease has been enforced by economic necessity and, in very few households, by the structure of the diets [5]. The percentage of food expenditures depends on the family position within socio-economic group. The higher percentage of food expenditures, the worse situation of households. The worst situation appears among farmers’ households, who run their own farms [7].

The analysis was carried out with use of the households’ budgets examining results in the years of 2000 – 2003 (table 1). It indicates that among all households the sum of monthly expenditures per capita was on the level of 600 PLN (within 4 years it grew about 40 PLN). During the period of time mentioned above the highest were costs spent on food and non-alcoholic drinks – about 30 PLN, however, the decline of this tendency has also been observed. The house- keeping expenditures were the second priority of spending money (14-16 PLN), but it was getting more and more expensive. In 2000, the house equipment expenditures were on the level of 6 PLN but in further years it decreased to about 5 PLN. Quite high sum of money in monthly budgets was spent on transport – 10 PLN in 2000 and about 9 PLN in the next years. Relatively high percentage of expenditures on culture and recreation (6 PLN) was also observed, whereas expenditures on education were on the level of only 1.5 PLN. The expenses on clothes, footwear, healthcare and personal care were in this same period of time on the constant level (respectively 5.3 PLN; 4.5 PLN; 2.6 PLN). On the other hand the growth of expenses has been observed: on communication (from 3.5 to 4.6 PLN), restaurants and hotels (1.4 to 1.7 PLN) and other expenses (including various gifts for other people etc. from 3.6 to 4.0 PLN).

EXPENDITURES IN SOCIO – ECONOMIC GROUPS

In the years of 2000-2003, the highest rate of monthly average expenses was observed in households of people working on their own – the level of 760-817 PLN and it has grown recently about 56 PLN. During the time period of our interest, it was also observed that elder retired people spent less money than self-employed people (from 636 to 700 PLN). In spite of this fact, the expenditures among retired people were generally higher about 60 PLN. In the households of people working as an employees (workers) the level of expenses was a little higher in 2000, comparing with 2001(about 1 PLN), whereas during the next two years, it grew 40 PLN. In the farmers’ households, in the same time, it was observed the constant growth from 467 to 484 PLN. In 2002 the expenses were on the lowest level: from 441 to 487 PLN.

Concerning the questions of expenditures it is worth to recognize the fact that recently the consumers’ trends from high developed countries have been implemented to the Polish reality. It is caused by the advancing globalization process which, in the field of consumption, leads inevitably to the unification of the manners. There is also an important fact that Polish consumers try to achieve the similar lifestyle as their counterparts from the developed countries. Moreover, the process described above can be an example of growing awareness of certain Polish consumers groups.

One of the standards of the assessment of consumers’ manners concerning expenses is their income. The survey carried out in Poland in 2004 [3] with the participation of 1000 respondents shows, that the consumers of high incomes used to spend their money on good quality products, followed by the ecology, healthcare, shopping in big shopping centres, buying polish native products and spending the free time. People with satisfactory incomes used to spend their money first on healthcare, ecology, buying polish native products, followed by the free time. In this group of people one can observe the limitation of quantity in favour of quality. The consumers of low incomes spent their profits in the first place on healthcare, polish native products and ecology.

THE RESULTS OF THE OWN RESEARCH

The results of the research concerning years 2002-2004 (table 3), indicated that the food expenses were on the same level for 43% of respondents and for the 32% of respondents there was a slight growth of such expenses.

The major group of respondents (31%) were people who spend on food 26 to 35% of all expenditures (graph 1), or 36 to 45% of all expenses (25% of respondents). The expenditures on food which comprise less than 15% of monthly budget, concerned only 3% of people with the highest incomes representing the group of people working on their own. According to the Engel’s thesis: the higher income, the less expenses on food. 7% of respondents used to spend on food more than half of their monthly incomes.

There was also observed the significant growth of expenditures on house-keeping (46% of respondents) and the use of energy (45% of respondents). The expenditures on means of transport, education and dentistry service seemed to divide respondents on two groups. One of these groups noticed the growth of expenses, whereas the second group – not. However, respondents have not noticed significant changes about expenses on such needs as e.g. furniture, house equipment, redecoration etc., and other expenses – hairdresser etc. The expenditures on tourism and recreation are strictly connected with the free time (cinema, theatre, holidays etc.) were on the constant level for about 40% of respondents. The money spent on personal care (63%), insurance (50%) and healthcare (43%), remained also on the same level for the majority of the respondents. During the examined period of time the number of car owners did not change for 65% of the respondents. There were also neither bank loans nor borrowing money from other people (52% for both cases). The examined people were not able to increase their savings (43%); on the contrary, about 17% of the respondents noticed the decrease of the savings, what can prove that the current incomes were too low to fulfil basic consumer needs.

According to the arithmetic average, the results showing the structure of expenditures on goods and services have been obtained (graph 2). Respondents spend money mainly on energy, electricity and home maintenance. Significant expenses were also on medical service, education (children) and means of transport. In the second place there were expenses on: insurance, personal care, house redecoration, food, house equipment, furniture, other services (e.g. hairdresser), or connected with the free time such as cinema, theatre, buying books and newspapers. The statistic values in minus prove the very high index of expenses on goods or services connected with tourism and recreation. The major part of respondents did not possess any savings or did not borrow money from other people, trying to fulfil consumer needs with current incomes. There were also neither bank loans, nor new cars.

On the basis of the statistic test (Chi –Square) it was indicated that the differences within socio – economic groups concerned expenses on living services, insurance, education, free time, number of cars in households and savings (graph 3). Generally, big differences have occurred between people running their own businesses or employees in non-manual labour position, who could afford to buy mentioned above goods and services, and retired people or farmers. People with low incomes concentrated their expenses on fulfilling basic consumer needs (food, medicaments, house – keeping fees, transport). Employees in manual labour positions did not spend much money on education, insurance and services.

CONCLUSIONS

Taking into consideration expenses as a standard of welfare, it has been indicated that in the years of 2000-2003, the richest group of Polish society incorporates people working on their own account. This group of people usually spends more money on consumer goods and services than the rest of the society. Retired people spend usually less money than people running their own business, but the level of their expenditures has recently grown more than within any other socio-economic groups. Farmers and employees represent relatively poor economic situation and, therefore this group of people spend the least money on various consumer goods.

During the period of time mentioned above, people concentrated their expenses mainly on food, non-alcoholic drinks, housekeeping and communication. It can testify about rather low level of welfare within the researched group of Polish society.

REFERENCES

1. Grzega U., “Consumer and Marketing” in “The analysis of the level and structure of expenditures – the estimation of changes in households’ consumption”. UWM, Olsztyn, 2004, p.149 [in Polish].

2. Gulbicka B., Kwasek M., “The influence of incomes on the level of food consumption in households” IERiGŻ, Warszawa, 2001, p.46 [in Polish].

3. Rachocka J., “Contemporary consumers’ trends in Poland” “Marketing and market”, 2005, nr 5, p.24 [in Polish].

4. Słaby T., Zajaczkowski S., “The differentiation of expenditures and the welfare of Polish households in the years of 1998-2002” “Inner trade”, 2005, nr 1, p.1 [in Polish].

5. Szepieniec-Puchalska D.,“The differentiation of expenses on food in various groups of households” “Inner trade”, 2003, nr 6, p.31 [in Polish].

6. Szopa B., “The income irregularities – the way of description” “Social policy”, 2005, nr 2, p.2 [in Polish].

7. Wysocki F., Kurzawa I., “The consumer preferences of farmers’ households in the context of other socio- economic groups”, “The agro- economic issues”, 2004, nr 2, p.49 [in Polish].

Accepted for print: 12.09.2006

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