Orbán dreams of making Hungary's population great again

At the end of February, the government declared it would work out a family support package to encourage population growth, the details were made public by Orbán on Thursday.

Detailed measures for the Population Action Plan:

• The family tax allowance will be raised. Between 2015 and 2018, the family tax allowance for families with two children will have been raised to HUF 20,000 per child from HUF 10,000 in any case. This is to be raised further, according to current plans. For families with three and more children, the amount of the present monthly allowance (HUF 33,000) per child would also be increased.
• If you’re a woman with two children and a student loan, you can expect 50% of your loan to be forgiven, whereas if you have three or more children, you may say goodbye to your student loan, the state will take care of it.
• Graduates’ period of eligibility for childcare allowance (GYED) will be extended by one year, meaning that for university students also it will be extended to two years.
• Families with a mortgage loan can write off a total of one million forints per child after the third, fourth and so on; the state will be assuming their debt.
• Nursery development will be on an “unprecedented scale".
• The so-called ‘baby bond’ and maternity allowance will also be available for Hungarian families living abroad.
• The government will set up a family policy research institute.

It's a real problem

All recent population estimates suggested there is very little good news about the future of Hungary’s population numbers. According to the grimmest estimate (by the Hungarian Demographic Research Institute), the country’s population could dwindle to 6.7 million by 2060, and even the most optimistic estimate (by Eurostat) is for a drop to 9.4 million from the present 9.8 million. Take your pick, the overall picture is the same: Hungary’s population is likely to keep shrinking and aging of the population is likely to pick up.

There are two ways to stop and reverse the decline in population: with a rise in the number of births and via immigration. The government is well known to be sharply against immigration. The only option left is to encourage women to give birth at a higher rate in order to stop the decline in population by 2030.

Fewer women are choosing to have children either way

The goal of this plan is to bring the total fertility rate to 2.1 from 1.5 by 2030. The simple definition of this indicator is that it shows the average number births per woman in her child-bearing years (15-49 years). In order to maintain the population in the medium term, this assumed number of births needs to reach or come close to the level of 2.1, otherwise the reproduction of the population is not ensured.

As long as that level is not reached, the population will continually decline.

To stop the population decline, the number births per year should grow by 30,000 by 2030, according to the government.

In 2016, 93,000 children were born in Hungary. The last time the number of live births was over 123,000 was during the years of the change of regime. However, an important detail must be taken into account, that back then, there were 270,000 more women of child-bearing age (15-49 years) compared to last year.

According to the Population Research Institute, the number of women of child-bearing age will decline by more than half a million, between 2016 and 2030.

They will have been the female population born between 1980 and 2014.

The fertility rate between 2011 and 2016 grew by 20%, while the rise in the number of live births did not reach even 6%, which - from a distance - looks very much like stagnation.

The reason behind this phenomenon is that regardless of the rise in the fertility rate, the number of women of child-bearing age has been dropping constantly therefore fewer and fewer women are affected by the increased willingness to have children.

Hungary’s population pyramid indicates that this trend will continue. The last “great" generation born in the 1970s will soon leave child-bearing age and the “replacement" is about a group half that size.

In other words, encouraging the population to have more children is also urgent because the demographic conditions created in the past could alone lead to a muted growth in the number of births.

According to our calculations, 100 women of child-bearing age had given birth to 4 children in 2016, whereas by 2030 100 women should have 7 children to stop the population decline. The desired fertility rate of 2.1 was last recorded 50 years ago in 1977, when 100 females of child-bearing gave birth to 6-7 children.

What would be the cost?

In his speech, Orbán did not specify how much the programme could cost next year, but János Lázár, the minister leading the Prime Minister’s Office, said related spending could reach HUF 100 billion in 2018. However, we do not know the details of the expenditures and there is no impact study yet.We therefore have contacted the National Economic Ministry to see how the specific measures will work and how they will be covered in next year’s budget and beyond.

Front page photo by MTI/Zoltán Balogh

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• economy,
• viktor orbán,
• student loan,
• population