Cheap cars and loans, a fragile basis for the Hungarian baby boom plan

BUDAKESZI, Hungary (Reuters) – Tucked away in a leafy hillside suburb west of Budapest, Julia Scharle is living the family life that Hungarian Prime Minister Viktor Orban has long promoted with the slogan “three children, three rooms, four wheels “.

Scharle, 28, and her husband share a new home with their two-year-old daughter, and she is expecting a second daughter in July.

The couple plan to have at least one more baby after this and, since Orban introduced additional incentives for families with four children, maybe two more.

“It’s always a question of whether we are planning three or four children,” she said.

Low birth rates and people heading west have reduced Hungary’s population from 1 million to 9.8 million in a generation, fueling labor shortages and growing concern among the country’s rulers.

Orban, one of the most ardent opponents of immigration among European leaders, insists that natural growth should reverse population decline.

Last week, he promised young Hungarians with large families a package of loan grants, tax cuts, grants and car allowances totaling up to 37.5 million forints ($ 135,000). , with those with four or more children eligible for the largest payments.

“There are fewer and fewer children born in Europe. For the West, the answer is immigration, ”Orban said in his State of the Nation address. “But we need Hungarian children. For us, immigration means surrender.

Under her program, women who have four or more children will be exempt from income tax, while grandmothers will be able to take maternity leave so their daughters can return to work and public daycares will add significant capacity.


Will this stop the decline of the Hungarian population? History suggests not.

Scharle agrees with Orban that the solution lies in large families rather than immigration. But she won’t develop hers for money.

“I don’t think that should be the main motivation,” she said. “You have to want it, and if you do, it frees you from financial doubts.”

Documented experiences from several countries suggest that the effects of government policies focused on population growth on actual fertility rates tend to be small.

These include Hungary, whose birth rate fell off a cliff in the late 1980s and has remained low since despite attempts by several governments to increase it.

Average fertility rates above 2.1 children per woman are generally necessary for population growth. Hungary stands at 1.5 and, according to an expert, it is unlikely to exceed 1.7 due to the Orban package.

“Material benefits usually induce a baby boom when the support is direct, like a lump sum in exchange for a baby,” said Balazs Kapitany, a demographer at the Central Bureau of Statistics.

“The system described here is too complex, conditional and delayed for a rapid increase in births. “

The story is similar elsewhere. In Japan, among the fastest declining populations, a 2017 study by a unit of the Boston Consulting Group found that people were simply ignoring the government’s financial incentives to procreate more.

Programs in Russia and Singapore have also failed to significantly increase birth rates, studies show.

OTP Bank analysts said they expect Hungary’s effort to cost 0.3% of gross domestic product this year, while Bank Raiffeisen is forecasting 0.1%.

The program has also created frustration among the unemployed or the less well-off, for whom tax subsidies and loans are irrelevant.

“This program does not motivate us at all,” said nurse Liza Ludmann-Vank, who is raising three children aged 4 to 12 on the eastern outskirts of Budapest. “Without a lot of help from grandmothers and babysitters, raising four children is impossible anyway.”

Report by Marton Dunai; edited by John Stonestreet

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