The Family 500+: Poland’s new child benefit programme

shutterstock 268247162Spotting a mum pushing a stroller down the main street of the Polish city of Radom is not easy these days. The town lies in the Masovian Voivodeship, the same region that Warsaw is in, but in recent years it has seen many of its younger residents moving to the Polish capital or migrating abroad in search of better opportunities. Today with its 217,000 inhabitants, Radom is still among the largest fifteen cities in Poland, but lack of jobs in its area and low wages are affecting its growth. Suffice it to say that in 1996 the city had 233,000 inhabitants, meaning that Radom lost 16,000 people – 7 per cent of its population – in just twenty years.

 

Photo by Shutterstock

 

When it comes to the rest of the country, things are not that different. With just 1.35 births per woman in 2015, Poland has one of the lowest total fertility rates (TFR) in the European Union where only Czech, Lithuanian and Romanian women give birth to less children. This lack of Polish children born in Poland is even more significant when compared to the much higher fertility rates of Polish women living abroad. According to the 2011 UK Census, the Polish TFR there was 2.13, well above the British average.

 

This significant gap in natality could be explained by the possibility that Polish mothers and parents feel more confident in having children in the UK thanks to higher salaries, widespread maternity (and paternity) leaves and more inclusive welfare policies. This mix is hard, if not impossible, to replicate in today's Poland, where basic salaries are much lower than those in the UK and the state cannot afford the generous welfare policy and benefits couples can get in London or Edinburgh.

 

Polish government: “Educational benefits for 3.7 million children”

 

Poland today is an aging country as its current Law and Justice (PiS) led government knows that very well. Twelve years after entering the EU, and despite the country’s good economic performance over the last several years, hundreds of thousands of Poles still emigrate abroad each year. They mostly look for employment or better paid jobs because with Polish salaries they would not be able to save money or provide for their families.

 

In July last year, a survey conducted by the Polish Association of Human Resource Management (PSZK) found that 46 per cent of the students interviewed were thinking about leaving their home country. This flow of young Poles emigrating abroad combined with low natality rates as well as with the limited presence of foreign residents in the country (only 0.3 per cent in 2014, the lowest in the EU) means that Poland's population is shrinking and aging.

 

It is estimated that, in the worst case scenario, by 2050 one third of Poles will be over 65, meaning that the state may struggle to provide pensions and healthcare to its growing elderly population. A grim picture was confirmed by Mateusz Morawiecki’s calculations, those of Poland's current deputy prime minister, according to whom – with the current natality rates – the Polish working age population will fall 22 per cent by 2050.

 

That's why one of PiS’ flagships during their electoral campaign was to boost natality and convince Poles they could have a future in their country. In order to do this, they promised to give Polish families a monthly allowance of 500 złoty (PLN) – equivalent of €114 – for all second and subsequent child up to the age of 18, including those already born. A subsidy programme was later launched named “Family 500+” (Rodzina 500 plus), whose purpose is clear. So much so that the deputy minister of Labour, Bartosz Marczuk, claims that 278,000 more children will be born in the next decade as a result of the programme.

 

Postponed on the government agenda by other bills such as the reform of the Constitutional Tribunal and the first stage of a new media law, the child benefit scheme was approved by the lower house of Polish parliament on February 9th and by the Senate three days later. The government estimates that thanks to Family 500+: “more than 3.7 million children may receive educational benefits.”

 

The new law will come into force on April 1st while the first allowances will be paid in July this year. Together with families with two children or more, parents with a combined monthly income below 800 PLN (€184) will also be eligible to get 500 extra PLN per month starting from their first child. It is a significant change from the current situation where only families earning less than 675 PLN (€154) a month get a handout of 118 PLN (€27) per child.

 

 

Given that up to 2.7 million Polish families will be entitled to the payment, this policy is not going to be cheap. The estimated cost of the programme is up to 22 billion PLN (€5 billion) per year. In 2016, however, due to its July start, Family 500+ should cost 12.3 billion PLN (€2.8 billion), equalling 23.3 per cent of the 2016 Polish budget. These expensive price tags suggest the Polish government will have to finance the programme by getting extra funds, for instance by raising taxes on mainly foreign owned banks and large retailers as it is going to do.

 

What four Polish parents think about Family 500+

 

“I believe the programme is very helpful for poorer families with children, as for them 500 złotys is a lot of money,” Anna O. who lives in the Polish region of Silesia with her husband and their daughter told New Eastern Europe. She does not qualify for Family 500+ and is alright about that, “but other parents may feel cheated as no one clearly mentioned the scheme restrictions during the electoral campaign,” she stresses.

 

Justyna lives in Warsaw with her husband and is currently expecting her second child. She does not think the subsidy will convince young couples to have more children, but agrees “there are many families for whom this benefit is going to be a great help as it will ease their hard financial situation and encourage them to spend more money on their children.”

 

Mr. and Mrs. Kot are both Polish and live in the UK with their daughter. They are sceptical towards Family 500+ which they consider “a programme that helped PiS get more votes during the latest elections and whose costs will be hard to cover.” Their concern is shared by Anna O., according to whom “500 złotys per month is only a drop in the ocean of needs for families, but a huge expense for Poland” and by Justyna who believes that “the government cannot afford it.”

 

All four parents are aware that Polish society is aging too quickly and that something needs to be done to tackle this. Anna O. reckons that “the government is going in the right direction,” but would have liked the money funding the programme to be invested elsewhere. “What would encourage me to have more children is not 500 złotys per month,” she says “but cheaper housing loans, the opportunity to return to work after pregnancy and more well-financed kindergartens.”

 

“I'm glad this government put family as a priority, but I'm not sure giving money directly to parents is a good choice and am sceptical about the subsidy lasting for 18 years,” Justyna told New Eastern Europe. “The former government introduced a one-year-long maternity leave showing that there are other ways, like better working conditions for women, to try to increase natality rates,” she adds. Mr. and Mrs. Kot do not see the child benefit scheme as a priority for Poland and would have preferred the government “to finance kindergartens, nurseries and help women return to work after maternity.”

 

Socioeconomic pros and cons of the programme

 

But how are Polish parents with two or more children planning to spend their Family 500+ benefits? A recent poll published on the daily Gazeta Wyborcza shows how priority would be given to more clothes for the children. Secondly comes the purchase of extra food for all the family and third schoolbooks followed by educational activities for children. As for Justyna, she explains that “I will happily use those 500 złotys to cover at least a part of our child expenses like diapers or kindergarten costs.”

 

However, young parents aside, not everyone in the country is enthusiastic about the forthcoming child benefit scheme. Some economists and journalists are worried about the costs of the programme for the Polish state, while others dismiss it as a populist gamble. “Child benefits are a noble, but ultimately futile idea,” wrote Polish economist Sergiusz Prokurat in a commentary for the daily Dziennik Gazeta Prawna: "Such baby bonuses or monthly payments for children are typical examples of government measures that, although they pursue good and noble ends, are ineffective.”

 

The two main opposition parties, Civic Platform (PO) and Modern (Nowoczeszna), have also criticised the programme. The leader of PO, Grzegorz Schetyna, accused PiS of “dividing the children” and asked for 500 złotys per month to be given to all parents for each child. Nowoczesna proposed three amendments to the bill, which were all rejected: an upper income threshold to get the subsidy, the programme to include single parents with one child and the exclusion of families with a per capita income of above 2,500 PLN (€572).

 

Indeed, it does grate on the ear a bit that the approved programme has no maximum threshold so that all Polish parents, whatever their income, will be entitled to the subsidy from their second child onwards. Practically speaking, this means that families whose total monthly income is, say, 2,000 PLN (457 €) will get the same money from the state as those earning 10,000 PLN (€2,286) per month. As Anna O. puts it: “A wealthy couple of doctors with two children will get the subsidy and a single parent working in a supermarket who has only one child will not."

 

 

As for the new programme’s positive impact on natality, only time will tell. Data from Poland's Central Statistics Office (GUS) gathered before the introduction of Family 500+ shows how the number of Polish parents interested in having a second and third child is growing, while the number of those deciding to have their first child is dropping. What is certain by now is that, according to a recent poll, 79 per cent of Poles support or strongly support the 500 złotys per child benefit. A feedback that looks encouraging for the current government whose Family 500+ is already paying off in terms of political consensus, waiting to see whether the programme will reach its goals and be economically viable.

 

Lorenzo Berardi is a freelance journalist based in Warsaw. He is a contributor for Lettera43, The Varsovian, Polonicult.com and former correspondent of Lettera43 from the UK.

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