The amount of debt unpaid on time by individuals aged 18 to 24 stands at 1 billion PLN, according to data from the Debtors Register of BIG InfoMonitor and the credit information base of BIK, as of the end of July. The arrears increased by over 18% over the year. The number of unreliable debtors also increased by more than 7,000. Many of them are likely to be students, as according to Eurostat over 39% of Polish 20-24 year olds are still studying, putting us in 11th place in this respect in Europe.
Although Generation Z is only just entering the period of professional life and serious financial obligations, it already has significant arrears at the starting point. Their total currently amounts to 1 billion PLN. Data collected in the Debtors Register of BIG InfoMonitor and the BIK’s credit information database shows that the scale of financial problems of the young generation has significantly increased over the past 12 months. In July 2022, arrears amounted to over 853 million PLN. Meanwhile, the number of unreliable debtors increased from 125,000 to over 132,000.
Changes are not surprising if one considers the economic crisis and rising prices of almost everything necessary for daily functioning, especially rental of flats, but also food and transport. On the other hand, young people are favored by low unemployment, which allows them to find employment relatively easily, also in a flexible time frame. They are also helped by the lack of tax on annual income up to 85,528 PLN.
As calculated by Eurostat in Poland, nearly four out of ten 20-24 year-olds are students. The percentage of students, according to the latest available data for 2021, was 39.2%, and was 3.1 percentage points higher than the EU average. The most popular are full-time studies, according to the WIB and ZBP report “Student’s Portfolio”, in this mode, the vast majority of people (over 64%) study. Unfortunately, this excludes full-time employment, providing a steady and sufficiently high income. And this in a situation when, as the report indicates, the average monthly student’s expenses currently exceed the amount of 3.8 thousand PLN and are over 21% higher than a year ago.
The average delay of an 18-24 year old increased by 11% over the year, to 7,637 PLN. In terms of debt topography, the Silesian Voivodeship leads. Its young residents collectively have over 137 million PLN in unpaid payments. The next places are occupied by those registered in the Mazowieckie (122.9 million PLN) and Dolnośląskie (106.6 million PLN) voivodships. The least unpaid debts are held by people from the Świętokrzyskie voivodship (17 million PLN). Analyzing the percentage of unreliable debtors in this age group, the top of the voivodships looks slightly different. Indeed, the Lower Silesian Voivodeship is in the first position, where 7% of 18-24 year olds have financial problems, but the next places are taken by the voivodships: lubuskie (6.5%), warmińsko-mazurskie and zachodniopomorskie (6.4% each). The smallest proportion of young people not paying their obligations is in the following voivodships: podkarpackie (2.1%), świętokrzyskie (3.1%), and lubelskie and podlaskie (3.3% each). The average for the country is 5%.
“The record holder is a 20-year-old from the Silesian Voivodeship, who is in arrears with banks and other institutions over 788 thousand PLN,” says Sławomir Grzelczak, President of BIG InfoMonitor. Although the record holder is a woman, men are more likely to forget about payment deadlines. The Debtors Register of BIG InfoMonitor and the BIK database lists 80.8 thousand men (61%) aged 18-24, their arrears exceed 611 million PLN. There are 51 thousand women (39%), and their arrears amount to just under 398 million PLN. “What is worrying in the case of young debtors, more than a quarter of them immediately go deep into the water and have both problems with servicing loans and other non-credit obligations. For comparison, among all adult Poles, one in five unreliable debtors is in such a situation. In addition, considering that the majority of 18-24 year olds are not working at all yet and thus have limited opportunities to incur obligations, 5% of Generation Z with financial problems only seemingly seems low, against the backdrop of the whole society, where nearly 9% have problems,” Sławomir Grzelczak points out.
As can be seen from the databases of BIG InfoMonitor and BIK, over half (51%) of the overdue debt of people between 18 and 24 years of age consists of non-credit arrears. The total amount of unpaid current bills, penalty fees for traveling without a ticket or alimonies amounts to over 513 million PLN – an average of 4,987 PLN per person. However, the average amount of debt differs depending on the type of obligation. In the case of alimony, these can already be five-figure sums – 10,247 PLN. When it comes to the phone or internet bill, it’s about 3,376 PLN, and the average value of penalty fees for ticketless travel is 266 PLN. Men have more of this type of arrears – almost 63.5 thousand of them are listed in the BIG register. In comparison, there are “only” 39.5 thousand women.
In the case of credit obligations, the total amount of overdue debts is lower and amounts to 496 million PLN, but the average debt per person is higher and amounts to 7,676 PLN. In the case of a mortgage, the average value of the arrears is 60,704 PLN, and in the case of consumer credit it’s 7,501 PLN. Here, too, men take the lead – there are 38,000 late male debtors and 26,5 thousand female debtors.
“It is worrying that 132 thousand young people are starting their life marked with the stigma of an unreliable payer. This means not only being excluded from the credit market but also from the possibility of using many services. The dominance of men among unreliable young debtors is partly due to the fact that among students there are more women, according to the “Student’s Portfolio” report, there are 58%. This means that men are more likely to take up professional work at this time, and thus can use credit products,” says Dr. Hab. Waldemar Rogowski, the chief analyst at BIG InfoMonitor.
[1] https://ec.europa.eu/eurostat/databrowser/view/educ_uoe_enrt08/default/table?lang=en
