Shocking data. Family 500+ program reform is essential

Feb 5, 2018 10:24 AM|Marcin Lipka

“The professional activity of young women in Poland has decreased to the lowest level in at least 19 years according to the latest Polish Central Statistical Office (GUS) publication. The data also shows how surprisingly low the professional activity levels are among families with one child receiving the Family 500+ benefit,” writes Marcin Lipka, Conotoxia senior analyst.

Marcin Lipka, główny analityk

We have been waiting for nearly two years for data regarding the impact of the Family 500+ child benefit program on the labor market. Data that emerged over the past few days clearly suggests an urgent need to reform the program. In its current state, 500+ encourages professional inactivity.

Professional activity is at its lowest level in nearly 20 years

The professional activity factor, an extremely important labor market measure, shows the percentage of people that are currently working or willing to work in relation to the population in varying age ranges. The low value suggests serious structural problems in the labor market. In the future, this may also translate into extremely low retirement benefits which will lower the quality of life for elderly as well as increase the costs of social insurance.

The Labor Force Survey (BAEL), which is cyclically conducted by GUS, looks particularly disturbing in this context. According to the data for the third quarter of 2017, the professional activity of women aged 25-34 decreased to its lowest level since 2003 (oldest data from GUS) and amounts to 74.2%. However, according to Eurostat data, which covers an even wider time range, these are the lowest values since at least 1999 - almost 20 years.

500+ favours professional inactivity

GUS, for the first time in its quarterly reports, made data on professional activity among families receiving the Family 500+ benefit available.

The fact that the professional activity of parents in households where the benefit for the first and only child is collected is only 69.7% on average is particularly worrying. In the case of families with one child, where 500+ is not received (as the income criterion is exceeded), professional activity is much higher - amounting to 89%.

According to the latest data from the Ministry of Family, Labor and Social Policy (MRPiPS), 723,000 households receive the 500+ benefit for their first and only child. A more than 30% professional inactivity level among these families may indicate that about 350-400k adults raising one child have no job and are not looking for one, and get the Family 500+ benefit.

Reform is essential

The basic problem of the Family 500+ program is the relatively low income criterion to receive the benefit for the first child. The risk of losing the benefit discourages parents from looking for a job. A spouse taking up employment in some households means that they will receive only about 15% net additional income due to the loss of social benefits and the need to pay taxes.

Failure to raise the income criterion in the 500+ program or introducing tax incentives to work among the least-favored families will only reinforce their professional inactivity. As a result, instead of improving the financial situation of these households, 500+ will start to do the opposite.

Feb 5, 2018 10:24 AM|Marcin Lipka

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