Polish finance. Social transfers represent nearly 18%. GDP

Last year, more than forty percent of all public expenditure (general government) was allocated to social transfers. Almost PLN 470 billion was spent there. Most (about PLN 419 billion) were cash benefits – this is the result of the multi-annual national financial plan for 2022-2025.

The document contains an analysis of government revenue and expenditure for the previous year. Expenditure by the general government sector accounted for 44.2% of the total. GDP (almost PLN 1.16 trillion).

About PLN 470 billion was spent on social transfers, almost 18%. GDP, of which PLN 419 billion for cash benefits. At that time, more than four times less money was allocated to public investment. And less than 5.5% was allocated to education and health protection. GDP.

The largest social transfer is pensions (more than 10% of GDP), but the list of benefits on which large sums are spent is long. The Family 500 plus program cost PLN 40.3 billion (excluding service fees, childcare allowance and lump sum allowance), almost PLN 10 billion more than two years ago. PLN 11.9 billion was spent on the 13th retirement pension and PLN 10.4 billion on the 14th retirement pension. Family and care benefits as well as benefits from the Maintenance Pension Fund amounted to PLN 12.4 billion (excluding contributions). Social pension and funeral grant from the Solidarity Fund amounted to PLN 4.3 billion, and for various benefits financed from the budgets of ZUS and KRUS they received PLN 3.4 billion. These include benefits for veterans, a lump sum for energy, coal allowances and money for the Mama 4+ program. PLN 3.3 billion has been allocated to help people with disabilities and their carers from the Solidarity Fund. And the Good Start program was worth PLN 1.3 billion.

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Ryszard Szarfenberg, a professor at the University of Warsaw specializing in social policy issues, points out that universal benefits and benefits for families with children have many economic and social reasons and exist in most countries of the world. 500+ effectively reduces the poverty of families with children, as well as income inequalities. According to him, supplements to old-age and invalidity pensions also reduce the material problems of the poorest elderly and disabled people. The problem is not the effectiveness of these services in reducing poverty and alleviating the material problems of the poorest individuals and families, but how they are designed to lose real value or cost more than necessary. They could therefore be more effective and efficient after the redesign, even if their electoral effectiveness could then deteriorate.

Other experts believe that the mode of payment (such as 500+, such as 13th pensions) for all people, regardless of their financial and material circumstances, makes their protective function “blurred”.

Ryszard Szarfenberg draws attention to two issues. First, in Poland there is a significant imbalance in spending on cash and in-kind benefits for families. Eurostat data shows that in 2017, 2% of money was spent on cash benefits in Poland. GDP and non-monetary – 0.6%. GDP.

Similarly, families are supported in the Czech Republic and Slovakia, but also in Switzerland and the United Kingdom. In the Scandinavian countries, but also in Ireland, more is spent on benefits in kind than on benefits in kind.

Second: cash benefits for families in Poland are not indexed, their value is decreasing, on which the budget saved at least PLN 10 billion in 2022. – Benefits should be indexed systematically and not – as I assume – before the elections or every 10-15 years – believes Ryszard Szarfenberg. When asked if a state that cares about the well-being of citizens can neglect improving the quality of public services, she replies: In 2019, the income criterion for the payment of the 500+ benefit was abolished , which was mainly used by the middle class. and wealthy families. Another path of reform could be chosen: ensure the enhancement of family benefits and 500+, integrate these benefits and allocate an additional ten billion zlotys to improving the availability of various services for families and children.

Małgorzata Starczewska-Krzysztofoszek, an economist at the University of Warsaw, believes that the state should finance public services that are important for development: education and health. – Their quality and availability will determine well-being in a broader sense, not just profitable – he explains.

The economist pointed out that the government assumes that in the coming years debt service costs will increase by 1.7%. GDP at 2.1% GDP. – For some social expenditure, we have to incur debt and issue bonds. Their profitability is already above 6%. (10 years) and unfortunately growing. When we look at the PLN 49 billion in debt costs and less than PLN 15.5 billion spent this year on basic health care by the National Health Fund or the PLN 27 billion allocated to higher education and science, it turns out that the costs of debt are two or three times higher. According to Małgorzata Krzysztofoszek, a change of philosophy is needed when constructing state expenditure. More money should be allocated to services that increase development potential.

Aleksandra Fandrejewska

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