Saturday, April 27, 2024

Success or failure? Eight years of pro-natal policy in Poland

Child standing on windowsill somewhere in Poland (Photo: iStock – dzika_mrowka).

The Polish 500+ child allowance, which was the flagship pro-family and pro-natality program of Law and Justice (PiS), has had primarily a very positive, even spectacular, impact on reducing poverty in Poland, but it has not had a lasting significant impact on the birth rate, as initially assumed. Poland’s economy is doing extraordinarily well, but its demographic time bomb is ticking louder than ever.


Olivier Bault

The gravest threat to Western society over this century is neither global warming nor international terrorism. Rather it is the unprecedented, sustained decline in the birth rate in almost all developed countries to levels that are well below replacement rate.” These words were uttered by future Australian Prime Minister (2015–2018) Malcolm Turnbull in a speech titled “Is the West dying out?” at the University of New South Wales (UNSW) in 2007. They were repeated in 2019 by his successor, Tony Abbot, at the Third Demographic Summit in Budapest, where he warned: “Great cultures like Italy, Spain, Greece, and Japan could become functionally extinct within a century (…). Having fewer children in Western countries will hardly make the climate better, given all the children that will be born elsewhere. It will, though, certainly make Western countries smaller and probably weaker too.

The problem of declining birth rates is particularly acute in the former Eastern Bloc countries. They experienced a sharp demographic collapse after the fall of communism, accompanied by the collapse of welfare systems, reductions in social spending due to difficult reforms of the economy and state finances, and a large increase in poverty. The region’s demographic collapse is all the more apparent because, unlike the countries of Western Europe, the countries of Central Europe, having the historical experience of very long and difficult periods of struggle for independence and preservation of their national identity, are unwilling to turn to mass immigration from other continents to compensate for the lack of births.

It was not until 20–25 years after the fall of communism that Central European countries, which had regained full independence from Moscow in the late 1980s and early 1990s, really began to acknowledge the threat this could pose in the long term and put more resources into pro-natal and pro-family policies. Hungary was a pioneer in this area, as it began to promote family-friendly policies in the early 2010s, after Viktor Orbán’s Fidesz came to power in coalition with the Christian-democrat KDNP party. Today, with government spending equivalent to 5% of GDP, it is among the European Union’s leaders in this area. Prime Minister Viktor Orbán put things bluntly when he said in 2013, during a visit to London: “A community that is unable to sustain itself biologically will not survive and does not deserve to, either. Immigration is not the answer. It’s a trick, a bluff. Most European countries, including my homeland, are suffering from demographic decline. We have to acknowledge demographically motivated family policies are essential and legitimate.

Poland followed in Hungary’s footsteps after the PiS-led United Right coalition came to power in 2015, and the Law and Justice (PiS) leadership seemed to be well aware of the problem. The party’s leader himself, Jaroslaw Kaczyński, stated in 2013 that “the problem of the huge shortage of children is of paramount importance for Poland’s future. The quality of a society may vary (…) [as well as] its position among other nations, but above all a society needs to be, to exist, and for it to exist there must be children. There must be a replacement of generations.” Kaczyński was also aware that the problem of childlessness is partly cultural, and therefore, as he stressed back then, “children should be included in a good life model that is accepted by a significant part of society.”

The assessment of the conservative opposition at the time contrasted with the earlier assessment of the liberals led by Prime Minister Donald Tusk, according to whom, as he put it in 2010: “The demographic bomb will not be defused by anyone but ourselves. We can write 150 laws, build 65 pension systems, but the demographic bomb in Polish is called: not enough children. And since there aren’t enough children, there’s no need to write laws, but to get down to a completely different task.” By this, he implied that the conception of children is only a private matter for Polish women and men, over which the state can have no influence. However, in 2012, in his second opening policy statement after the PO-PSL coalition won again in the 2011 elections, Prime Minister Tusk took a very different view when he announced an action plan to counter the demographic collapse, justifying the plan with the following words: “This is the only area where the word ’revolution’ will pass my lips: a revolution for fertility, for the security of the mother who decides together with the father to give birth to a child. Poland is indeed in need of such a revolution.

A very significant increase in spending on family policy under the governments of the United Right

There was no revolution, however, and instead rather modest pro-family measures: a small tax credit for each child and a modest one-time benefit at birth. The revolution came only after the United Right won the 2015 elections, with the introduction in spring 2016, for the first time in post-communist Poland, of an allowance of 500 zlotys per month for each child born, regardless of income (starting from the second child initially, but from the first child since 2019). To give an idea of how much this represents, today’s average wage in Poland is around 7,100 zlotys/month before tax. Back in 2015, it was about 3,900 zlotys/month. At today’s exchange rates, one euro is worth a little over 4.30 Polish zlotys and one dollar is a little less than 4 zlotys.

Poland’s economic miracle still going strong after three decades of exceptional growth

Another measure introduced in 2019 by the government of Mateusz Morawiecki to favor families with children is the “Mom 4+” allowance, which is paid to mothers of at least four children upon reaching retirement age if they had to stop working (and thus paying contributions) to raise their children. This allowance is equal to the minimum pension (just under 1,600 zlotys/month in 2023). At the same time, the pre-existing tax credit of 92.67 zlotys/month for each child and a one-time means-tested allowance of 1,000 zlotys at birth were maintained.

Additionally, under the United Right government, an annual allowance of 300 zlotys was introduced, which is paid at the beginning of the school year for each child going to school. Last but not least, since 2022 an allowance called Family Care Capital to an amount of 12,000 zlotys has been paid to families between the 12th and 35th month of each child’s life, starting with the second child in a family. These benefits are not means-tested.

Unfortunately, despite high inflation, these amounts have remained frozen for years.

It was only this year, a few months before the October elections, that it was announced the “500+” child allowance would become an “800+” allowance. This means that as of January 1, families will receive a monthly allowance of 800 zlotys instead of 500 zlotys for each child. During the election campaign, Donald Tusk’s Civic Platform promised voters that the allowance would be maintained, although there were voices among liberals and center-left allies of Tusk that the allowance should be made conditional on income or reserved for working parents.

Overall, spending on family policy has increased in Poland under the United Right government, from less than 2% of GDP before 2015 to about 3.5% of GDP today. Added to this are various housing support programs, which were intended to support families and fertility. However, they were aimed at supporting the purchase of small apartments, which by nature do not foster the establishment of large families given the lack of living space, and can therefore hardly be counted – despite the declarations of politicians of the ruling camp – as a pro-natal policy.

After the eight years of rule by the United Right that ended on December 13 when Donald Tusk’s new left-liberal coalition government was sworn in by President Duda, it is time to have a look at the effects of the pro-natal family policies pursued by the governments of Beata Szydło (2015–2017) and Mateusz Morawiecki (2017–2023).

As for the birth rate, the results are unfortunately not impressive, to say the least. Although the fertility rate (the number of children a statistical woman will give birth to, assuming she maintains her fertility at the level observed in a given year) did rise initially, from 1.26 children per woman in 2013 to 1.45 in 2017, it fell again in subsequent years to return to 1.26 in 2022. A fertility rate of at least 2.1 is needed to ensure generational replacement.

In terms of the number of births, the situation is even worse, since even the initial increase in the statistical fertility rate of women could hardly reverse the long-term downward trend in a situation where the generation now of childbearing age comes from the demographic low of the 1990s. In other words, independently of their fertility rate, the number of women of childbearing age is decreasing every year. In 2022, the number of births in Poland was the lowest since the end of World War II. With 305,200 (including 14,570 born to foreign women) there were 26,000 fewer children born in 2022 than a year earlier. In 2017, when the ruling coalition announced the success of the 500+ allowance introduced a year earlier, 402,000 children were born (after 369,000 in 2015 and 382,000 in 2016), and since then the number has again steadily declined year after year. Due to the aging population, deaths have outnumbered births every year since 2013.

Poland doing worse than Hungary

Compared with Poland, Hungary, which has focused its efforts on supporting families with substantial tax breaks and assistance in buying a home or a large family car, has also experienced a decline in births and an excess of deaths over births (also due to delayed pro-natal policies, which, as already mentioned, are associated with today’s decreasing numbers of women of childbearing age). Hungary, however, can boast relative success in reversing the downward trend in the fertility rate. Indeed, the ratio was 1.52 children in 2022, against only 1.23 at the very beginning of the Fidesz government. In 2021, on the other hand, it was 1.59, and we will have to wait a little longer to see whether last year’s decline is just a one-off or the beginning of a reversal of the favorable trend. Between 2011 and 2021, Hungary’s fertility rate never declined, although there were years when it stagnated.

In fact, the Polish 500+ allowance, which was the flagship pro-family and pro-natality program of the United Right, has had primarily a very positive, even spectacular, impact on reducing poverty in Poland, but it has not had a lasting significant impact on the birth rate, as initially assumed. In 2012, according to the Polish Central Statistical Office (GUS), a quarter of Polish families with four or more children lived with a per capita income below the subsistence level. According to Eurostat data at the time, more than a third of Polish families with three or more children were at risk of poverty. As early as December 2016, eight months after the introduction of the 500+ child allowance program, simulations by the World Bank and the European Anti-Poverty Network showed that extreme poverty in Poland had fallen by 48% for the entire population and by 94% for children, while the estimated impact on relative poverty was –26% for the entire population and –64% for children alone.

The importance of the cultural factor

Meanwhile, the hypothesis that the decline in the number of children is a permanent cultural phenomenon is, unfortunately, being confirmed, and it appears that removing the financial barriers holding Poles back from the decision to have children is not enough to reverse the dangerous demographic trends. Hungarians understand this and have been waging a cultural war too, which may be a factor in the better results of their pro-natal efforts in the longer term. This can be seen, for example, in the large increase in the number of marriages in Hungary (from 36,000 in 2010 to 64,000 in 2022), with a simultaneous decline in divorce and abortion, although abortion on demand is legal there (up to the 12th week of pregnancy), unlike in Poland. In Poland, the situation is quite different: there has been no such increase in the number of marriages or significant decline in the number of divorces under the United Right government.

According to studies, such as one by the French demographic research institute INED published in 2013, married couples on average have more children than couples living in non-marital relationships, including civil unions. In a conversation with the author of this article for the Remix News website, Deputy Minister of Family and Social Policy Barbara Socha, who was Mateusz Morawiecki’s Government Plenipotentiary for Demographic Policy, defined the following areas that influence whether couples have a child: the financial security of families, housing conditions, the labor market, child care, the health care system, the durability of families, and culture.

It must be said that when it comes to the financial security of families and the job market, thanks to the 500+ child allowance, higher salaries (especially in the case of the minimum wage), and record-low unemployment, great progress has been made in Poland over the past eight years. More money has also been pumped into the healthcare system, and the number of nurseries has been greatly increased. On the other hand, generally speaking, the Morawiecki government failed to act in the cultural sphere. Families in Poland are no more stable than before, and the proportion of women aged 18–45 who plan to have a first child or another child in the future dropped from 41% in 2017 to 32% in 2022, according to a CBOS survey. Unfortunately, the biggest change was among younger women. Between 2017 and 2022, the percentage of Polish women who do not plan to have a first or subsequent child (who do not want to have children or do not know if they will want to have children) increased from 16% to 29% in the 18–24 age bracket and from 30% to 45% in the 25–29 age bracket.

Thus, the most pessimistic forecasts, according to which Poland’s population may shrink from just under 38 million today to 23 million in 2100, in the absence of mass immigration, may come true.

European countries still reluctant to apply the real solutions to the migrant crisis

On the other hand, the success of the Czech Republic and Romania and the relative success of Hungary in the field of pro-natal policies show that the nations of Central Europe are not doomed to extinction. In Romania, the fertility rate rose from 1.47 in 2011 to 1.8 a decade later, and in the Czech Republic it leaped from 1.13 in 1999, when it was among the lowest in the world, to 1.8 in 2021.

As Deputy Minister Socha pointed out in the interview mentioned above, in both countries, state support policies do not encourage young mothers to return to the labor market as soon as possible, and the bulk of financial assistance is focused on the first years of a child’s life: “It can be said that the Czechs pay a salary to mothers who are not working professionally but are taking care of young children. They have moved toward a traditional family childcare model, despite being seen as a culturally modern country. Their attachment to the family is evident, and there, women are not at all expected to be in the labor market when they have a child aged 0 to 3. In the Czech Republic, the labor force participation of young women is low. (…) Czechs pay women for maternity and don’t expect them to return to work for two or three years. Romanians have two years of high-paid maternity leave. The policies of these countries do not go in the direction of activating mothers of young children professionally. And there lies the most important difference.

Deputy Minister Socha also pointed to a revolutionary measure conceived in Slovakia. There, an alimony system has recently been introduced, in which part of the pension contributions of economically active people are transferred directly to the account of their parents. This is to encourage people not only to have numerous offspring but also to provide them with a good education and make efforts to prevent them from emigrating. This marks a return to the old social model, in which having more children was the best security for old age, rather than a difficult financial burden to bear.

We need time, consistency, but also courage in implementing solutions. Our region shows that the situation is not a foregone conclusion. I still believe that we will succeed in reversing unfavorable demographic trends,” Deputy Minister Barbara Socha insisted a few months ago. She herself is a wife and mother of five children.