In 2015, the right-wing Law and Justice (PiS) party won the elections, promising a significant new social support program. In March 2016, with a majority in the parliament, PiS introduced the “Family 500+” program, which provided an additional payment of PLN 500 per child per month. Initially, the program was for a second and subsequent child in a family, but later it was extended to include the first child as well.
After 8 years in power, the same party announced an increase in the benefit, raising it to PLN 800 per month per child. The proposal was immediately supported by the largest opposition party, the Civic Platform. Can Poland afford such expenditure?
The child benefit that Polish parents receive is already very high – higher than similar programs in countries like Great Britain or France. If the increase actually goes into effect, the benefit will be among the highest across the continent. The only country with a higher direct child benefit than Poland is Germany, where the kindergeld benefit amounts to EUR 250 (approx. PLN 1,120).
However, it is worth noting that the average earnings in Germany (PLN 18,431) are almost 3 times higher than in Poland (PLN 6,346). Interestingly, countries associated with high social spending, such as Sweden or Finland, offer lower benefits than Poland after the announced indexation (PLN 498 and PLN 420, respectively). Both countries naturally also have much higher average earnings than Poland.
After the expected increase, the annual costs of the program will amount to approximately PLN 65 billion. In other words, it will be about 13% of annual budget revenues. At the same time, the long-term financial forecast of the state shows that the planned budget deficit for this year will reach PLN 120 billion. Additionally, the European Commission forecasts the second highest inflation for Poland, after Hungary, for the next year.
Is this the right time to introduce an increase in social benefits? From an economic point of view, this is questionable. Political circumstances, however, make it uncertain. We will see the results in the coming years.
