22 December 2015

Poland is considering restricting payment of child benefit for non-resident children

The Polish government has got itself into a bit of a muddle over its flagship election pledge of introducing a new universal child benefit of 500 zł (around £90) per month for the second child and above – specifically on the question of whether this would be restricted to children living in Poland or also paid out for children living abroad. When asked if families living abroad would also receive the benefit, Prime Minister Beata Szydło said that “yes, this is a programme directed at all Polish families.” However, deputy Prime Minister Mateusz Morawiecki argued that:

We don’t want to pay money out for children who live in very wealthy countries in the West and already receive such benefits there… We cannot at this point afford to help out the British state.

Polish Deputy Prime Minister Mateusz Morawiecki, 23 December 2015

Aside from its electoral potency, the policy ultimately has two objectives – firstly, to reverse Poland’s long-standing demographic decline (Poland’s fertility rate of 1.29 children per woman is one of the EU’s lowest) and secondly to serve as a form of domestic economic stimulus. It is clear how sending this money to the tens of thousands of Poles living abroad (Morawiecki cited a figure of around 700,000 in the UK alone, 350,000-400,000 of which he said were children) would undermine both of these objectives.

The problem for the Polish government is how to factor in often complex family arrangements and the restrictions of EU rules. While it would seemingly be simple not to pay the benefit to whole families who have moved abroad, it is less obvious how it would deal with families where one parent has moved abroad and the other stayed behind, or where both have moved abroad and left the children in the care of grandparents.

How does this relate to EU rules and the UK’s renegotiation?

Ironically, there are some parallels with the UK debate on how EU free movement rules interact with access to benefits, where the UK – alongside several other countries – also wants to scrap the ‘export’ of child benefit for non-resident children. This could well be agreed as part of the renegotiation, even though Poland has consistently and strongly opposed changing EU benefit rules (see here for example).

The UK’s demand for a four year ban on access to in-work benefits is slightly different as it deals with people coming in as opposed to those who have left, and also as it seeks to discriminate on the basis of nationality rather than residency (an issue we have discussed at length here). But the same broader principle applies of wanting to tailor policies to achieve specific domestic economic objectives. In the UK’s case, tax credits aim to reintegrate unemployed Brits back into the labour market, while in Poland’s case, the new generous child benefit aims to address its demographic crisis/provide a domestic economic stimulus.

While Poland might be able to introduce a residency test for its new child benefit within current EU rules (although on that basis the benefit will also have to be made available to all EU nationals with children living in Poland, no matter how wealthy), it underlines the need for a rethink on how EU rules on social security co-ordination work in practice. It is worth remembering that the EU’s social security rules were originally drawn up to ensure people commuting cross-border could build up and retain social security entitlements, but since enlargement there has been a much greater move towards longer-term resettlement. Given the former, one could also argue that the child benefit issue cuts to the heart of the discussion around ‘fundamental principles’ of free movement.