Slovak social system consists of several parts. Its main goal is to provide benefits and pensions to retirees, poor people with no or very small income, handicapped and families. Family benefits take more than EUR 740 million out of the state budget. If we include the insurance payments, the government pays for people who take care of a child as well, the total sum of family support in Slovakia is around EUR 1 billion.

Benefits for the rich?

What makes the Slovak family support different from those in many other countries is that it provides the same amount of the benefit in cash to all families – both rich and poor. That means that the Slovak Prime Minister’s family receive the same amount of the child benefit as an unemployed mother with a low-income husband.

The system was designed in the name of equality – no child should be discriminated just because of the income of its family. However, this idea seems to be more and more ridiculous. The government only has the resources that it takes form the people. High-income parents pay much higher taxes and social contributions than low-income individuals. If the government wants to provide the child benefit to the richer family, it has to take it anyway in taxes. That is why we could call this transaction a needless transfer.

Main benefits

Four most important family benefits paid are: child benefit (315 million a year), parental allowance (350 million a year) and two benefits on birth (45 million a year).

The one and only condition to receive a child benefit is to have a child that is younger than 16 years old. In a case of the child’s university studies, the parent is entitled to receive the benefit until their child’s 25th birthday. That means that the government provides the same child benefit for the new-born babies as well as for the adults finishing their master’s degree.

One of the parents is also entitled to receive a parental allowance. The only condition is to have at least one child that is no more than 3 years old. Again, family is entitled to the benefit regardless of the property or income. Full-time care by one of the parents is not required either.

The same applies to the benefits on birth. The first one (EUR 151 per child) is paid for the birth of every child. The second one (EUR 630 per child) is paid if the birth is given to the first, second or third baby.

To sum it up: All the main benefits are of the same amount for all the beneficiaries regardless of their property or income.

Proposal

INESS has published a study which analyzes the family benefits. The study focuses on the income distribution of the families receiving the benefits. The conclusion is that if we stopped providing the benefits for the richer part of the society and only the poorer families were entitled to them, public expenditures could decrease by EUR 270 million a year.

The study proposes that a family with one child should be entitled to receive the child benefit if its net income does not exceed EUR 1006. Family with two children would lose the benefit if its net income is higher than EUR 1219.

 

EUR 270 million is too huge an amount to be overlooked for the Slovak public sector which faces a deficit of more than EUR 3 billion this year. The government has made an effort to stabilize the budget but it focuses now mostly on raising taxes instead of cutting the spending. As the study shows, there is a huge space to be considered as for the spending side as well. The government should make allowances for the effectiveness of the public expenditures especially in the time of crisis.

More solidarity required

The most important question is the philosophical one: What should be the role of the family support and social support in general? Most people would agree that once the benefits in cash are provided they should be provided to the ones that are in need. That means, to the poorest families. There is no point in providing benefits to the richer part of the society which has to pay them in taxes anyway.

This means that, should there exist any social system, it should be based on solidarity and it should target specific families and individuals who might be entitled to receive the benefits. There is no need to make the whole society dependent on the government transfers. Instead, the government should let people and families enjoy the fruits of their labour. Society with strong independent families and individuals has the best resources to provide care to the ones in need.

Ján Dinga