PiSonomics: When “Common Sense” Replaces Evidence-Based Policymaking in Poland

family-bike
Senor Hans via flickr // CC

Many words have been written on the reasons for the Law and Justice party’s (PiS) electoral victory in October 2015 and its persistently high popular support (despite numerous cronyism and corruption scandals involving top-tier PiS politicians, and the party’s hostility towards the rule of law) confirmed by the PiS’s landslide win inthe European Parliament elections on May 26, 2019.

Analysts investigating the roots of the PiS’s dominance agree that one of the strongest pillars of its success is a massive universal child benefit scheme called “Family 500+”, providing each and every Polish family with a monthly payment of PLN 500 (ca. EUR 115) for their second and every next underage child (the payments for first children in a family are means-tested)

Family “500+”

The programme was promised by PiS during the 2015 electoral campaign as a response to feeble demographics in the country. Having won the elections, the PiS government was very quick in delivering on their promise (which is unusual in Polish politics) – the appropriate law was passed in February 2016.

In April 2016, Polish families started to receive the benefit. The scale of the “Family 500+” programme is substantial – the program costs around PLN 20-25 billion per year (ca. 6% of the central government expenditure), thus making Poland one of the top EU member states in terms of the growth of welfare spending.

The programme has also become one of the key points of the political messaging of the party. Both PiS politicians and public television (which has been turned into an almost Soviet-like propaganda machine since the party’s coming to power) routinely threaten Poles that the opposition parties dream of depriving them of their monthly transfers.

However, in May 2019, the massive “Family 500+” programme was put to trial by a team of Polish top-tier economists specializing in social policies representing the country’s principal economic universities and faculties as well as prestigious economic think-tanks. The researchers, led by Professor Iga Magda, published a report1 assessing the programme after three years of its launch.

The results of the assessment are far from positive. First and foremost, the economists point out that the programme failed to achieve its principal goal of improving Polish demographics – there is no evidence of its impact on the country’s fertility rate.

Moreover, the researchers indentify the programme’s further economic inefficiencies.

Even though they agree that the programme has helped to significantly reduce child poverty rate in Poland, they claim that such a goal could have been achieved by targeting the transfers only to underprivileged families. Such a targeted programme would cost only a 12% of the current costs of the programme.

Finally, the authors of the report state that the programme reduces labor market participation of women (those who are not well educated, with low income, and residing in smaller towns and villages). It has been estimated that around 100 thousand women could have left labor market as a result of the programme.

This is perilous not only for the economy (reducing labour supply), but also for the said women as their withdrawal from the labor market might deprive them of skills required to come back to work as well as may reduce their retirement pensions in the future.

However, the alarming report did not incentivize the PiS government to change their policies. On the contrary, the party has doubled down on its spending spree.

New Programmes

A few weeks before the 2019 European Parliament elections, a law was passed to provide all pensioners with a one-off transfer of PLN 888 (ca. EUR 200) – senior citizens received the money in the weeks preceding the vote (the programme is worth ca. PLN 11 bn.).

Moreover, another law was passed to extend the “Family 500+” to all “first children”, thus abolishing the means test and doubling the costs of the programme. The extension law will come into force in July 2019 but parents will start to receive the money in October (July, August, and September payments will be merged into a single transfer).

This means that every Polish family with underage children will receive a “gift” of PLN 1500 (ca. EUR 350) just a few weeks before the parliamentary elections scheduled for autumn. The political logic behind this step suddenly becomes apparent.

Criticism

The never-ending spending spree of the PiS government faces increasing opposition from scholars, think-tanks, and opinion leaders. Now, it is not only liberals (traditionally reluctant to social spending increases) and economists (worried about long-term prospects of Polish public finance) who criticize the decisions.

Left-wing pundits begin to realize that the PiS government uses direct monetary transfers as a substitute of providing high-quality public services such as healthcare and education, which they are completely unable to cope with.

For instance, public healthcare and education are notoriously underfinanced and the reform attempts of the Law and Justice party have had a tendency to backfire.

Recently, even conservative think-tank Klub Jagielloński (the Jagiellonian Club) has joined the club of critics by rightly claiming that the spending spree has absolutely nothing to do with conservative principles of building solid institutions and thinking about the state in terms of the next decades and centuries rather than the next elections.

Despite voices of criticism, it is almost certain that “PiSonomics” is here to stay, as long as the party behind it is in power. Opinion polls show stable support for PiS and its spending policies and it is the general public who will make the decision in autumn 2019.

Moreover, it turns out that the coalition of opposition parties led by the Civic Platform has joined the spending race by… promising to overspend PiS.

The prospects of coming back to evidence-based policymaking in Poland seem to be very bleak, and PiSonomics may last longer than the PiS party itself.

Lukasz Dabros
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