The Law and Justice (Prawo i Sprawiedliwość) Party’s campaign slogans promised “solidarity,” which the party seems to equate with wealth redistribution. Its new program “Family 500+” consisted of granting the 500 zloty family allowance to second and all subsequent children up to the age of 18, and extended the subsidy to existing families rather than newborns. The amount of 500 PLN is relatively high, equal to roughly one-third of the recently increased minimal wage. At the beginning, the flagship project of the new government was highly criticized by the opposition which however did not propose any other solution to the demographic problems and after a couple of months claimed that the program should be even extended to the first child.
Mixed consequences of 500+
After more than a half-year of the new welfare program, its consequences are beginning to trickle in. First of all, Polish families show both a slightly higher level of consumption and a lesser lever of debt. An increasing number of births have been reported. The National Health Fund reported an increase of 16,000 births in 2016 compared to 2015. This trend may result from both, a better financial conditions of the family together with the feeling of economic security that was given to parents by the ‘500+’ program – or they may come from a better “family climate,” a cultural change which may be observed in Poland due to the political leadership’s greater emphasis on families and child-bearing.
Nevertheless, the “Family 500+” program has also some unexpected effects. One of them is the fact that it induced low-income mothers to leave their work and stay at home with their children full time. This pressured employers to increase salaries – but it may also result in seeking a cheaper workforce from other countries. In 2016, about a million Ukrainians worked in Poland which equals to approximately one-third of all the immigrants in Poland in 2016, and the number of guest workers from Eastern Europe is constantly increasing. As with all welfare programs, Poland will see the higher tax rate – levied upon foreign-owned businesses – discourages overseas investment and, if extended to native businesses, saps economic vitality. Simultaneously, it increases households’ dependency upon the state.
The attitude that the government will take care of one’s family is a threat to liberty and responsibility for all Polish citizens. Subsequent liberal governments may be encouraged to increase this subsidy, increasing taxes. Today, the income tax varies between 18 percent and 32 percent, not including a Value Added Tax (VAT) equal to 23 percent on most products. Additionally, contributions for pension funds, public healthcare, disability funds and so on are deducted from workers’ gross salaries. This contributes to the relatively low rate of entrepreneurship in Poland. Who is to say families may not benefit more from economic growth than redistribution of a shrinking economic pie?
Similar wealth redistribution policies, designed to encourage childbirth, have produced at best mixed results elsewhere in Europe. Germany’s high investment in pro-natalist policies did not produce a substantial change in that nation’s low birth rate. According to a recent PwC report on such policies, regardless of the substantial spending on pro-family policies throughout Europe, France remains the only country in the EU which has a fertility rate at replacement level. Furthermore, the report ignored the impact of cultural differences, in which the nation’s large Muslim population has many children while the once-Catholic, native-born French population continues to dwindle
A holistic response to a hedonistic culture
In this context, an important question appears: Should Poland rely on welfare solutions that have already been implemented in neighboring countries with poor or mixed results, or should we come up with something original and courageous that allows families to flourish apart from the controlling hand of the state? The Polish “Family 500+” program seems to be another welfare remedy which may bring another set of mixed results. However, it ignores the non-quantitative, cultural and sociological factors that influence attitudes toward child-bearing – factors like religious faith, a cultivated sense of selfless love, altruism, optimism and a belief in the future. This is the time for European governments to embrace a more holistic model that would reflect the entire human person, not just his basic financial needs.
(Photo credit: Bev Sykes. CC BY 2.0. This photo has been cropped.)