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The most generous child benefits in the world

27 Feb 2019 15:56|Marcin Lipka

"Extension of the Family 500+ child benefit program for each child will additionally absorb about 20 billion PLN a year. According to the available data, the Polish family support system for direct cash transfer will be the most generous in the world," writes Marcin Lipka, Conotoxia Senior Analyst.

From July 1st, according to the members of the ruling coalition, the Family 500+ program will be extended - benefits will be available to all children up to the age of 18. There will be no income threshold, which means an unconditional cash transfer for all families with children.

The total expenditure of this program will probably oscillate around 40 billion PLN each year. When Eurostat updates the data on social security in Poland and other EU countries, it will turn out that Polish taxpayers (companies and consumers) are the most generous in the world.

Child benefits not very popular outside Europe

The International Labour Organisation (ILO) has analysed social protection programs around the world. They show that, on average, the world spends only 0.4% of GDP on child benefits (whether in cash, in material support or in some kind of service).

Apart from Western Europe, there is hardly any region in the world where this support would exceed 1% of GDP. Excluding the Old Continent, only a few wealthy countries in the world (Australia, New Zealand, Israel) spend more than 2% of GDP on child welfare transfers. However, these are not only regular cash benefits but also payments towards nursery schools and housing for more impoverished families, financial support for school meals or health care, as well as help at home. They also take the form of in-kind support, for example, children’s clothing.

A significant number of countries (75 out of 183 in the ILO analysis "Social protection for children: Key policy trends and statistics") do not have any support for children at all. In turn, those that exist are linked to employment or depend on parent or guardian income. As a result, it may be concluded that outside Europe and several OECD countries cash transfers to families with children are symbolic or even non-existent.

European Union at the forefront of helping families with children

Recent Eurostat data (2016) show that Denmark, Luxembourg, Norway, Germany and Finland spend most on childcare. In all cases, this is more than 3.0% of GDP. However, if we consider only cash transfers (e.g. monthly or quarterly payments or those related to childbirth or low family income), only Luxembourg clearly exceeds 2.0% of GDP (2.4%). Other countries spend significant resources on in-kind assistance and services, but not on cash payments.

Before the first phase of the 500+ program, Poland spent 1.5% of GDP on family benefits, including only 0.8% on money transfers (almost the lowest level from the whole EU). After 2016, the Family 500+ child benefit program changed the statistics significantly. Cash transfers increased to 1.8% of GDP and only 6 countries surpassed Poland in the EU.

What will happen after July 1st, 2019?

The world's largest cash transfer for families

In 2016, Polish families received 33.4 billion PLN (including the 500+ program). Extending this program by eliminating the income threshold for the first child will increase transfers to 53.5 billion PLN. Along with the "Good Start" school pack ("Dobry start"), annual costs are already rising to about 55 billion PLN, i.e. to 2.8% of GDP.

This means that Poland will have the highest cash transfers to families in the European Union in relation to GDP. Apart from Luxembourg (2.4%), in other countries, these benefits are at least 0.8% lower.

Support for families in cash from the state (i.e. de facto from taxpayers) outside the EU is not very popular. As a result, Polish child benefits, mainly in the form of the Family 500+ program, will be the largest in the world from July 1st.

27 Feb 2019 15:56|Marcin Lipka

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