8. Welfare Provisions
8.2 Family Support
region. In the view of the IMF, these changes would help to solve the problem of the over-inflated budget expenditure in the case of Hungary, and the over-extended (but low-quality) social support system in Ukraine.
Figure 1.3
Pre-primary Enrolment Rate [% of relevant population], 1989–1997
In 1991 in Latvia, a new system of family assistance was introduced by the decree of the Latvian Council of Ministers (No.238/1991) and, at the same time, the previous forms of family support were abolished (benefits to single mothers, large families and low-income families). In their place, specified, demogrant-type support for families with children was introduced. They attempted to preserve the value of this support, in the first few years after transition (during 1991 and 1992 the amount of benefits was raised six times, and fluctuated between 24 and 60% of the minimum monthly wage). No increase in assistance occurred between 1993 and 1998, so currently family support might be considered a symbolic rather than an effective contribution to the costs of raising children, taking inflation into consideration. Since 1999, the value of benefits has been gradually increased each year by a determined percentage, and family assistance provides a different level of support to children depending on their date of birth.
The Ukrainian act on family allowance was inaugurated in 1990. The Ukrainian law On State Benefit for Families with Children, which was put into effect on 1 January 1993, determined the level of financial support guaranteed by the state through the provision of benefits. The law’s basic intention was to unite all the previous benefits and create new criteria for entitlements, taking into account the structure and income of
0 20 40 60 80
1989 100
1990 1991 1992 1993 1994 1995 1996 1997
Hungary Ukraine Latvia
families as well as the age and health-conditions of children. According to the law, state benefits are calculated as a percentage of minimum salary. Low-income families became entitled to extra support. The local governments might have granted benefits from their own budget as well. The situation in Ukraine, however, is determined by the continuously deteriorating economic indexes. In 1996, Ukraine’s GDP stood at only 43% of its 1990 level. The declared and undeclared rates of unemployment have been increasing continuously; recession has been coupled with hyperinflation; the consumer price index is now 165,000 times higher than it was in 1990, while average wages are now only 56,000 times higher.6 Since 1996, any increase in the amount of benefits has been entirely incidental, and has not been adjusted for any social indicators.
According to the government’s concept concerning the reforms of social policy, the various currently functioning family assistance schemes in the Ukraine should be unified, their overlapping components should be terminated, and families that are left out of the schemes should be re-integrated into them.
The lack of appropriate financial resources, however, precludes the proper imple-mentation of the law On State Benefit for Families with Children. Under these conditions the government aimed at providing extra measures to reduce poverty among families with children through regular targeted benefits based on the assessment of the financial situation of the families.
In Hungary, the family allowance scheme functioned within the framework of the social insurance system and has been considered to be the most decisive element of the family support system. At the beginning of the 1990s, pro-natalist measures were intro-duced to influence the disadvantageous demographic processes and to strengthen the traditional family models and roles.
Table 1.14
Rate of Fertility in the Central Eastern-European Countries from 1980 to 1998
Country 1980 1990 1995 1998*
Latvia 1.88 2.02 1.25 1.1
Ukraine 1.95 1.90 1.40 1.4
Hungary 1.90 1.80 1.60 1.3
* SOURCEOFDATAFOR1998: World Health Report, WHO, 1999.
SOURCE: TransMONEE, Unicef, 2000.
In the middle of the 1990s, benefits became means tested, resulting neither in cuts in the budget, nor in the improvement of the living conditions of low-income families.
Since 1998, the direction of the reforms has changed: the system of tax allowances is openly in favor of the middle classes, and handles low-income families residually. Although
family allowances became universal after 1998, social assistance—in the form of regular child protection benefit—gained an important role in poverty relief. This kind of solution is unprecedented both in the post-socialist countries and in the member states of the OECD.
Table 1.15
Types of Family Allowance at the End of the 1990s
Country Type of Entitlement Main Features of the Benefit Financing Benefit
Latvia State Universal benefit 15 Varying amount, depending on the child’s State benefit (20 if the person is at date of birth (amount of benefit is less for budget
a secondary school) children who were born before 1 January 1999, than of those
who were born later)7
Hungary State Universal benefit 16 Family with one child: HUF 3,800; State benefit (20 if the person is a Single-parent family with one child: budget
student of an institute HUF 4,500;
of public education) Family with two children:
HUF 4,700/child;
Single-parent family bringing up two children: HUF 5,400/child;
Family with three or more children:
HUF 5,900/child;
Single-parent family with three or more children: HUF6,300/child;
In case of permanently ill or handicapped child: HUF 7,5008
Ukraine State Partly means tested Child under 16 years: 50% of the minimum State benefit with demogrant type wage in single parent families; budget
of targeting 16 Three children under 16 years: 100%
(18 if the person of the minimum wage per family;
is a student) Four children under 16 years old: 200%
of the minimum wage per family
SOURCES: Social Security 1999, MISSCEEC 1999, European Council 1999, Phare Consensus 1999, Social Report—Latvia 1999, Social Report— Lithuania 1999, UNICEF 1999, Social Policy … 1999.
Family allowance plays the most important role in poverty relief. According to various data sources, in the majority of the former socialist countries, the real value of the family allowance schemes decreased continuously throughout the 1990s.
Various analytical works illustrate that the decreasing value of the family allowance has hit low-income families the hardest. Although this decrease has affected all families with children, those who have been most seriously affected are families with three or more children and households without appropriate “market” income (i.e. they only have
social transfer incomes such as a pension, social assistance, or the household has nobody participating in the labor market); this has meant a considerable increase in the poverty rate among families with three or more children.
Figure 1.4
Family Allowance—Average Wage Ratio (for one child in two-parent—two-children families)9
Table 1.16
Factors Influencing Family Allowances at the End of the 1990s
Country Number Age Means Amount Disabled Single-parent
of Children of Children Testing of Benefit Children Families Depends on
Income
Latvia Yes No No No Significantly No
higher level supplement
Hungary Yes No No No Higher level Yes, but not
systematically or
signi-ficantly
Ukraine Yes No Yes No Significantly Yes
higher level
SOURCES: Social Security 1999, MISSCEEC 1999, European Council 1999, Phare Consensus 1999, Social Report—Latvia 1999, Social Report—Lithuania 1999, UNICEF 1999, Social Policy … 1999.
0 5 10 15 20
1991 25
Hungary Ukraine Latvia
1993 1995 1998
Changes in the family benefit systems resulted in a basic transformation of the social policy measures targeted to families with children.
Table 1.17
Features of Maternity Leave at the End of the 1990s10
Country Entitlement Period of Support Level Source of
of Support Financing
Latvia To be employed 112 days (56+56), that 100% of the Insurance can be extended by previous salary funds
14 days in case of complications or birth of twins.
It can also be extended by 14 days if the pregnancy support
began before the 12th week.
Hungary To be insured at the 24 weeks (168 days) 70% of the Insurance social insurance institute (4 weeks before the previous salary funds
for at least 180 days expected time of in a period of 2 years delivery, 20 weeks before delivery after delivery)
Ukraine Employees, students, 70+56 days (it can be 100%, students: 100% Insurance and the unemployed extended by 14 days in of the scholarship, funds
if special conditions case of complications mother registered as and are fulfilled or birth of twins) unemployed for a State
minimum of budget
10 months: 100% of the minimum salary, unemployed mothers due to liquidation or abolition of companies:
100% of the last salary, wives of men doing military service: 100%
of the husband’s salary
SOURCES: Social Security 1999, MISSCEEC 1999, European Council 1999, Phare Consensus 1999, Social Report—Latvia 1999, Social Report—Lithuania 1999, UNICEF 1999, Social Policy … 1999.
At the end of the 1990s, the family support system was far more sophisticated than it had been in previous decades. However, the significance of the benefits has decreased mainly as a result of the lack of indexation.
Table 1.18
Main Features of Child-care Leave at the End of the 1990s
Child-care Conditions Period Level of Benefit Possibility Financing
Leave of Entitlement of Getting
Work
Hungary GYES** and GYET*** GYED: GYED: 70% of the wage GYED: State are universal benefits; 2 years max.: 200% of the no GYES, budget
the pre-condition GYES: (minimum wage) GYET: yes of GYED* is 3 years GYES, GYET: minimum
employment old-age pension
Latvia Universal support 3 years 60% of minimum Yes State
within the social salary up to the budget
protection system child’s age of 1.5 years, 15% of the minimum
salary11 after child’s age of 1.5 years
Ukraine Employment, students, 3 years employed: 100% of n/a Social
specified groups of minimum salary; security,
unemployed women student: 100% of state and
minimum salary; municipal
unemployed: 50% of budgets
minimum salary up to the child’s age of
2 (for a further 1 year period the condition is certificate of income)
* GYED: child-care allowance
** GYES: child-care benefit
*** GYET: child-upbringing subsidy
SOURCES: Social Security … 1999, MISSCEEC 1999, European Council 1999, Phare Consensus 1999, Social Report—Latvia 1999, Social Report—Lithuania 1999, UNICEF 1999, Social Policy … 1999.
Table 1.19
Features of Maternity Benefits at the End of the 1990s
Country Entitlement Support Financing
Latvia Universal Fixed amount, State budget
200% of the base amount if the prenatal care starts before
the 12th week of pregnancy
Hungary Universal 150% of the minimum pension State budget
Table 1.19 (continued)
Features of Maternity Benefits at the End of the 1990s
Country Entitlement Support Financing
Ukraine Social insurance and subsidy 400% of the minimum Insurance based programs function monthly salary and additional funds, collaterally: the employed, benefit (200%) if the mother and the unemployed, and inactive attends the prescribed state budget
mothers prenatal-care counseling
SOURCES: Social Security 1999, MISSCEEC 1999, European Council 1999, Phare Consensus 1999, Social Report—Latvia 1999, Social Report—Lithuania 1999, UNICEF 1999, Social Policy … 1999.
While these benefits play an important role in the income structure of low-income families, there has been no significant effort to increase the level of benefits even in those countries where the political rhetoric repeatedly emphasizes the necessity of decreasing child poverty.
Table 1.20
Main Features of Family Benefits at the End of the 1990s
Latvia Hungary Ukraine
1. + + +
2 . – + +
3. – – –
4. – – +
5. + – + – –
6. – + – +
7. + + + +
8. + – – –
9. + + –
10. + – + – –
11. + – – – –
1. progressivity of family allowance according to number of children (+: yes, –: no) 2. differentiation of other types of benefits according to number of children (+: yes, –: no) 3. differentiation of family allowance according to age of children (+: yes, –: no)
4. significantly selective family allowance (according to income or other criteria) (+: yes, –: no, +–:
mixed system)
5. significantly higher level of support for single-parent families (longer period of leaves: +, significantly higher level of benefits: +, this aspect has a lesser significance: +–, no: –)
6. normative, undefined targeted benefits
7. child-care leaves of significant length (3 or more years) (+: 3 years, –: less than 3 years, + +:
more than 3 years)
8. demogrant-type of benefits (+: yes, –: no, + –: mixed) 9. tax allowances (+: yes, –: no)
10. guaranteed, calculable support (+: remains unrevised for a number of years, value of benefits is calculable in advance, –: frequent changes and/or lack of definite conception, value of changes in benefits is incalculable in advance, + –: mixed)
11. indexing of the basic benefits (+: yes, –: no, + –: partly, – –: lack of minimum guarantees)
In spite of the differences in the family protection systems in the three countries, there are some important common features that impact families with children.
• The existing systems cannot solve the problem of child poverty.
• There are no adequate measures to maintain the real value of the cash benefits.
• The freedom of choice of women is restricted due to the labor market processes (unemployment), the low income of families, and the shrinking capacity of cheap day care services for children.
• Pro-natalist ideas play a role in the formation of the family protection system.
• The lack of steady, well calculable, rights-based systems increases the vulnerability of families with children.
• Social assistance measures play an increasing role in the family protection systems of all of three countries.
• The basic responsibility for social assistance falls within the competence of local governments. This decentralized solution may render possible a more reliable needs’-assessment, but sets limits to the guarantees of social security for families with children and occasionally results in discrimination against certain, so-called
“undeserving families.”
In Hungary, the introduction of regular, flat-rate child protection benefits, which was provided as of right for every needy child, was a considerable step in the reform of the social assistance system in Hungary in 1997. The official goal of the benefit was to gua-rantee a subsistence level and to ensure that children are brought up in their own families.
But without basic changes in the family support system this benefit cannot eliminate child poverty. Nor can it prevent further impoverishment of children or stop the child protection authorities from taking children away from their families for financial reasons.
This benefit is both income-dependent and property-dependent, and in controlling it local governments have considerable freedom to act on various considerations following home-visits. In the 9th district of Budapest, for instance, before the introduction of the
compulsory property test, families with a car—with the exception of seriously disabled people—were excluded from some cash benefits as it was said that if they have resources to run a car, then they are not so poor.