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CHAPTER IV. THE BIGGEST PRO-FAMILY PROGRAMME SINCE 1989

 

The demographic crisis is one of the most serious challenges faced by modern Western civilisation. Processes described as demographic transformation or transition – leading from high natural growth to a population decline, with deaths outnumbering births – can today be observed to varying degrees in all parts of the globe. Katalin Novák, secretary of state in the Hungarian Ministry of Human Resources (Emberi Erőforrások Minisztériuma) said at the 2017 Economic Forum in Krynica, during discussions by ministers responsible for social policy in the Visegrád countries, that no European Union member state currently has a birth rate sufficient to ensure full generational replacement. In Hungary, after years of decline, it has finally been possible to increase the fertility rate to 1.49 children per woman, but this is still below the expectations of demographers.^[1] As long as the average number of births remains low in the future, the populations of most European countries will decrease significantly, and they will experience accelerated ageing processes.

Facing up to demographic decline

The only EU country with a fertility rate almost at the level required to maintain the population (an average of 2.0 children per woman in 2007, compared with 1.27 in Poland, for example) was – until recently – France, which has long implemented an active pro-family policy. It should be noted that in the case of France it is hard to estimate the effect of the higher birth rate among immigrant families, since the statistics are not permitted to include ethnic breakdowns. Can a link not be made, however, between the fourth consecutive fall in the French birth and fertility rates (just 1.87 children per woman in 2018) and successive decisions made in recent years to reduce state assistance to families or make it dependent on income? In any event, in the Scandinavian countries, which also implement active pro-family policies, the rates are again relatively high compared with other European countries. The implementation of such a policy is therefore recommended by demographers. It should be oriented towards increasing the number of births and providing lasting welfare benefits to families and children.

The effectiveness of a country’s positive family policy will depend on many factors, including the position of the family in society’s value system. In Polish society, according to sociological research, the family enjoys a very high standing. It can therefore be expected that government action, particularly increased expenditure on help to families, with suitable organisational support from non-governmental institutions, might bring significant results. The main difficulty here is that the costs are incurred here and now, while the effects will show in many years’ time.  In order to make the right decisions, politicians must therefore show far-sightedness and put the long-term interests of society before narrow short-term political interests.

Until the mid-1980s, Poland was one of the countries with a high rate of population growth: around 0.9% annually, meaning that the number of people living in the country was increasing by almost 350,000 each year. The rate of natural increase has been falling in Poland since 1984, and the decline became systematic in the 1990s. From 1990 onwards the increase became smaller each year: while the number of Poles rose by 145,000 in 1990, in 1998 it rose by only 7,000. In 1999 the population fell for the first time in the post-war years – the fall of around 0.03% meant a decrease in the population by 13,000. Since 1989 the fertility rate among women has not been sufficient to ensure full generational replacement. This would require a rate of at least 2.10–2.15, while the actual rate in 1998 was just 1.43.^[2] Poland thus found itself among the European countries most at risk of depopulation and demographic crisis. Moreover, the demographic changes in Poland have taken place rapidly over a relatively short time, although the rate of the decline is comparable to that of other Central European and Balkan countries.^[3]

In 2013, only 370,000 children were born in Poland. This was well below the number of deaths recorded in the same year, leading to the largest natural decrease in the population since World War II. Reasons for this state of affairs include the two-figure unemployment from which Poland suffered from the 1990s until the middle of the present decade, unstable conditions of employment, and the weakness of the state welfare system. Indirect evidence for this type of causal link comes from data on Poles living abroad, among whom the fertility rate was much higher than in Poland itself at the same time. Polish women living abroad were more likely to decide to have children, since the family policies of their countries of residence gave them a sense of security that they lacked in their home country. The fertility rate of Polish women in Germany in 2013 was 2.1, compared with just 1.3 in Poland. The situation was similar in Norway, which allocates 13% of GDP (Hungarian A bruttó hazai termék) for welfare assistance to families, where women from Poland and other countries of our region had an average of two children at that time.^[4]

More than 3% of the children born in the UK each year are Polish. Polish women living in that country willingly opt to have children because they can count on state assistance both during pregnancy and after giving birth. While the average fertility rate for Polish women living in the UK was 3.3 in 2015 (as reported by the Office for National Statistics), the figure for those resident in Poland was just 1.3.^[5]

Apart from the weakness of the social policies of the Polish governments up to 2015, another main reason for the negative trends is the tax system constructed in the two decades following 1989, which discriminated against families that consciously decided to have and bring up children, treating children more as a mark of luxury consumption than as an investment in the nation’s future.^[6]

The low birth rate is not just a problem relating to the future, of concern from a demographic point of view. It represents a real problem of millions of Poles who would like to have more children, but whose material conditions do not allow it, or at least make it extremely difficult. According to a CBOS survey in 2013, almost all adult Poles express the desire to have children. Only 3% of respondents preferred to remain childless, for reasons including their life situation or state of health. The largest number (49%) said that they would like to have two children, while a quarter of respondents (26%) would like three. Smaller numbers opted for one child only (7%), for four children (6%) or for a larger number (4%), while 3% wished for any number depending on circumstances, and a similar number did not express a clear preference. It turns out that there is a large difference between desired numbers of children and the numbers that people actually have. The data collected show that more than a quarter of adult Poles (27%) do not have children, one-fifth (20%) have one child, just under 31% have two, and one in eight (13%) has three. The statistics on preferences corresponded to reality only in the case of the largest families: at the time of the survey 6% of respondents had four children and 4% had five or more.^[7]

It was thus likely that fertility rates would fall even further in subsequent years. The continuation of this trend threatened to reduce Poland’s population by a million, just in the period to 2020.

Political reactions

For a long time, the only idea put forward by successive governments in Warsaw to address the demographic decline was family tax relief (equivalent to a családi kedvezmény). While it is true that the 2007–2015 Civic Platform–PSL coalition proposed a concept of a coherent long-term family policy promoting independence and professional activation, increased satisfaction from parenthood through the gradual lengthening of maternity and parental leave, improved quality and availability of health care, etc., it was only in the Civic Platform manifesto of 2011 that mention was made of possible direct financial assistance to families with children. From 2006 – the time of the first Law and Justice governments – parents received a one-off assistance payment on the birth of a child, although in 2013 this was made dependent on an income criterion.

Even in the 2005 election campaign, Law and Justice acknowledged the problem of the poor situation of Polish families, which was then something of  a  novelty on the Polish political scene. It was pointed out that Poland might be in danger of demographic catastrophe. It was noted that birth rates were consistently falling, and the decision to have children was not favoured by the economic situation: very high unemployment (which had reached 20% over a decade earlier) and low household incomes. For a majority of Polish families, then, a decision to have a child would mean a significant lowering of living standards and inability to make use of the opportunities offered by modern civilisation. The largest number of children at that time was born to families having inadequate means or even suffering from poverty. Mechanisms to equalise the life chances of children from poor families were practically non-existent, and most of them were not able to escape the cycle of poverty.^[8] The main remedy proposed at the time was a change to personal income tax (equivalent to SZJA) introducing relief for families with children. The relief was to be available to families whose gross income did not exceed 500 zloty per person in the family.

A concrete idea for regular state payments to support families with children was put forward in Law and Justice circles in 2013, while the party was in opposition. Professor Krzysztof Rybiński, former deputy chairman of the National Bank of Poland (equivalent to Hungary’s MNB) and expert advisor to Law and Justice, proposed that parents of children under 18 should receive a “demographic grant” of 1000 zloty monthly (over 74,000 Hungarian forints at today’s rates) for “every child born in a Polish family”. Rybiński also proposed ways of funding the scheme. His ideas were strongly criticised at the time by economists and finance experts from the liberal and monetarist camps.^[9] The idea for the benefits currently paid by the Polish government was born a year before the 2015 parliamentary election. Such a concept had been lacking in Poland for 25 years.

The payment of such benefits is common throughout Europe. They exist in 21 of the 32 countries of the European Union and European Economic Area (EEA).

The government’s flagship programme “Family 500+”

The 500+ programme serves to implement an active family policy. It aims to reduce the financial burden on families resulting from bringing up children, and thus encourage them to have larger numbers of children. Under the scheme, all families, irrespective of income, receive 500 zloty every month (37,000 Hungarian forints at the current rate) for their second and each subsequent child up to age 18. Families on low incomes also receive support for their first or only child, conditional on the monthly income per person in the family not exceeding a specified sum, which in 2018 was 800 zloty (around 59,000 forints).^[10]

Arguing for the need for such a programme during the election campaign of summer 2015, Law and Justice pointed out that Poland had one of the lowest fertility rates in the EU, below the replacement level. To change this, it was necessary simply to give support to families with children, particularly those with larger numbers of children. During the campaign and when the party took power in autumn 2015, it was still unclear which state institution at central or local level would be responsible for paying the benefit. In response to suggestions that parents might misuse the benefit, representatives of the new government underlined that it is parents themselves who know best how to spend the money coming in to the household budget, and that cases of misuse would be dealt with by the social services and specialised administrative bodies responsible for family assistance.^[11]

The introduction of the “500+” benefit was announced in the initial  policy   statement given to parliament by prime minister Beata Szydło in November 2015. She said that the formal arrangements for its payment would be made within the government’s first hundred days.

An act of parliament was passed in February 2016^[12] with exceptional speed. The government’s bill on the 500+ scheme was put before parliament at the start of February, and passed both houses and received the President’s signature within the month. Executive orders were signed the day after the act’s publication, on 18 February; within a week, funds for implementation of the scheme had been provided to local authorities. The Ministry of Family, Employment and Social Policy issued a special guide for local authorities with detailed explanations relating to the act, including information on the determination of family income. Moreover, two days after the act was signed by the President, training began for employees of district authorities (község) responsible for the programme. From March 2016 special help lines were set up in the ministry and all provincial offices. These are used by parents and guardians enquiring about the benefits, as well as by local government employees. In May 2016 a total of 2.3 million people applied for the benefits, and local authorities issued almost a million decisions in the same month.^[13]

In January 2016 an extensive interview concerning the project was given to the newspaper Rzeczpospolita by Bartosz Marczuk, under-secretary of state in the Ministry of Family, Employment and Social Policy. In it, he noted that no previous Polish government after 1989 had introduced such a broad programme of support as the then planned “500+” scheme. He also explained the whole philosophy behind the project.

The state’s greatest asset is its people. Its strength, development, future and independent status are dependent on the number and the abilities of its citizens. This is a universal law, confirmed all over the world. The United States, Brazil, Germany, China, Indonesia and Nigeria are or will be the leading powers in their regions. Moreover, without people, there can be no strong economy. A country’s GDP is the sum of the growth in the resources of the productive labour force. The strength of an economy, and consequently of a state, is therefore decided by its human potential and how it makes use of the work done by its population.

The second foundation is the rejection of the belief that family policy is the same as social policy, and that the money spent on it will deter people from taking jobs. Family policy is an investment. This is a fundamental observation, confirmed not only by intuition – if we invest in people, we build a strong state. Poland is faced with a huge challenge. After 25 years of transformation we have realised that a model of development based on cheap labour and the import of foreign capital may reduce us to the role of fork-lift operators and suppliers of easy profits to foreign concerns.

A similar challenge – and this is the third foundation of the 500+ programme – is the need to protect Poland from demographic catastrophe. This spectre is augmented by three additional factors: the small number of children being born; emigration, chiefly among the young (around 10% of Poles born between 1976 and 1985 left the country after it joined the EU); and the absence of a realistic and strategic immigration policy.

It was children that were most at risk of poverty in Poland. According to data from the Central Statistical Office, at the end of the term of the Civic Platform–PSL government almost 840,000 Polish children were living below the “minimum existential level” (insufficient to satisfy basic biological needs), while more than a million relied on social security.

The final foundation of “500+” was summed up by deputy minister Marczuk in terms of trust in the Polish people and a rejection of paternalism. The transfer of money to parents is an expression of faith in the principle that they know best what their children need. It is up to parents, not officials, to decide whether that money should be spent on education or food. Of course, it is laid down in the programme that in extreme cases of serious family dysfunction, assistance may be provided in material form.

“We do not want to overwhelm you with data showing what a difficult situation we are in demographically. It is enough to note that in terms of fertility rates, Poland is in 216th place worldwide among 224 countries. And this is our last chance. The last of the large generations, born in the 1980s and early 1990s, are now entering adulthood. If we do not encourage these people to stay in Poland and to have children here, the chance to improve our situation will be irreversibly lost. There is therefore no time to scratch our heads. We have to start to act (...)” – the deputy minister said.^[14]

Detailed principles. The effects of the programme

Since April 2016 in Poland, a monthly benefit of 500 zloty has been paid for the second and each subsequent child up to age 18, irrespective of the family’s income. The benefit is also paid for the first child when income does not exceed 800 zloty per person in the family; for families with a disabled child, this limit is raised to 1200 zloty (about 89,000 forints).

Thanks to the “Family 500+” programme, the percentage of children at risk of poverty has been reduced from 23% to 11%. This act is not the only plank in the government’s demographic programme; for example, extra funding has also been announced for crèches and pre-schools. Based on banks’ estimates, it was predicted that the introduction of the programme would speed up economic growth, leading to an increase in GDP by 0.5%.^[15]

After the act came into effect, the minister directly responsible for the organisation of 500+, Elżbieta Rafalska, emphasised that, besides investing in human capital and reducing child poverty, the programme also had a natalist goal. It was initially projected, based on Central Statistical Office   forecasts, that the programme would lead to a rise in the number of births by 278,000 in the next 10 years, and the fertility rate would rise from 1.29 to 1.6.

Even in its first year, the programme had a decidedly positive impact on the Polish birth rate. Central Statistical Office figures on births in the first half of 2017 showed that for the first time for many years in Poland, the number of children born had reached almost 200,000 in a six-month period. Final figures for the whole of 2017 show a total of 403,000 births, almost 57,000 more than had been projected.^[16] The fertility rate, which stood at 1.32 children per woman in 2014 and 2015, increased to 1.36 in 2016 and to 1.45 in 2017.

 In 2018 the number of births in Poland fell slightly compared with 2017 (to 388,000); this coincided with a figure of 414,000 deaths, the largest since the end of World War II. This means that, with the exception of 2017, Poland is still suffering from a natural population decline (the Central Statistical Office gives the total population at the end of 2018 as 38,412,000).   However, this does not represent a failure of the “Family 500+” programme, since the renewed fall in the number of births is a natural consequence of the ageing of society. It results simply from the fact that there are fewer and fewer women of reproductive age. Indeed, in its commentary on the act introducing the 500+ programme, the Ministry for Family projected that 378,200 children would be born in 2017 and 379,500 in 2018. The programme was thus founded from the start on the assumption that the fall in the number of births would be halted or reduced, since it was already too late for the number to be increased. Similar difficulties are faced by Hungary, where in spite of the pro-family policy implemented since the start of the decade, and in spite of the increase in the fertility rate, the number of births is still decreasing, and the population is continuing to shrink.^[17]

By the end of 2016, more than 17.6 billion zloty had been paid out under the “Family 500+” programme, 0.6 billion more than originally projected in the government budget. The programme was assisting 3.8 million children, and had significantly improved the material position of families with children, as there had been a marked fall in the number of such families receiving social security. At the end of 2016 the programme covered 55% of all children aged under 18 – this includes 63% in rural districts, 58% in mixed urban-rural districts and 48% in urban districts, which confirms that the largest number of poor families with multiple children can be found in rural areas.

Under a new law passed by parliament in January 2019, a new programme called “Mama 4+” has been introduced from March of this year. Under this scheme, a mother with four or more children (or the father, in case of death of the mother or her abandonment of the children) will be entitled to the minimum old-age pension even if she (he) has never been employed or has not worked for the minimum required period (20 years). Following the adjustment made in 2019, the minimum old-age pension in Poland is 1100 zloty monthly.

It is generally considered that the 500+ programme has significantly reduced poverty in Poland. It can be stated with high probability – and is confirmed by Central Statistical Office reports for 2017 – that the factors that have most contributed to the improved material situation of households and the reduced extent of extreme and relative poverty are increased pay, lower unemployment, and in the case of families with children, the “Family 500+” benefit.^[18] The 500+ programme and the fall in the unemployment rate have also brought about a significant reduction in the number of people receiving social security. According to a report by the Central Statistical Office, the number of social security beneficiaries fell by 9.2% in 2016, the largest fall since 2008. The number of households receiving social security in 2016 decreased by 5.3%. The report noted that the programme had provided significant help to poor people who had been reliant on social security.

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500+ for every child. Five new reforms

 

In late February 2019, at the Law and Justice convention ahead of the European Parliament elections, Jarosław Kaczyński announced that there would be further strong social programmes addressed to families and pensioners, as well as tax benefits for young people entering the jobs market, and improvement – or reactivation in many cases – of public transport services in rural areas. Notably, the implementation of these plans was not put off until after the European elections or the Polish parliamentary elections in the autumn, but will take place in the election year 2019 – ahead of the elections. The five new proposed reforms are the following:

• Granting of the 500+ benefit for every child;
• Exemption from personal income tax (the Hungarian Személyi jövedelemadó, SZJA) for young people aged under 26 entering employment;
• Reduction in the income tax rate for other workers;
• An annual thirteenth pension payment for old-age pensioners;
• Reactivation of district and county bus services.

In the last case, the proposed change is particularly significant in rural areas, where since the 1990s many public transport services have been lost (for example, connections between small villages and larger urban centres or local government seats). When private firms took over such services they often discontinued the less profitable routes, making transportation unavailable to many residents, particularly those without their own car, and thus causing their cultural and institutional exclusion (difficulties in reaching government and council offices, health care centres, schools, etc.). There was also a crisis on Poland’s railways. In contrast to such countries as the Czech Republic and Slovakia, after 1989 many of the less profitable railway services in Poland’s rural areas were cut. At the beginning of the period of transformation, the once powerful state enterprise providing long-distance bus services, PKS, was first split into smaller local companies. The remains of those companies were privatised during the rule of the Civic Platform–PSL coalition in the years 2009–11. In some cases the assets and infrastructure of these regional companies were given free of charge to local authorities. They, however, struggling with a chronic lack of funds or the problem of debt, were not able to maintain such services in the long term.

In turn, changes in personal income tax for young people will make it more attractive to employ those finishing their education and coming onto the jobs market. Firms report that a fundamental barrier to taking on young workers is the high costs of employment, visible in the level of tax.

Further investment in the family and greater mobility for citizens, including on the labour market, and social solidarity – this, in a few words, is Law and Justice’s programme for 2019. And very possibly for the coming years as well.^[19]