The degree to which social needs are met in a region is the result of the interaction between various economic, demographic and social factors, as well as public intervention. The design and protective capacity of public transfer policies, both those aimed at families and those of a general nature, play an important part. With regard to economic factors, the goals of the European Employment Strategy have underlined the need to promote equal opportunities in EU countries, to which end it has been proposed that the participation of mothers and fathers in the labour market be increased through improvements to people’s ability to balance their work and family life. Many countries have policies to reduce the cost of bringing up children by means of tax reductions, monetary benefits and public childcare systems for families.
Public intervention policies are pursued fundamentally through two channels of action: fiscal policy and social spending policy. Child welfare is affected by fiscal policies and specific spending for families, as well as by all the policies of the benefits and tax system, such as retirement pensions and unemployment benefits. Their design and the degree of protection they provide play an essential role.
Family policies in our country have traditionally counted for very little as a proportion of all public policies and at the start of the century did not amount to even half of what other countries in the eurozone allocate to this aspect. These policies developed during Franco’s dictatorship as a result of the prominent role of the family in society at that time. The amounts payable were not uprated in the main during the early years following the establishment of democracy until 1990, when child benefit not linked the employment of an adult in the household was introduced. This benefit, PHC (Benefit per Dependent Child), is means tested to select beneficiaries and is aimed fundamentally at alleviating the financial difficulties of families with dependent or disabled minors and very limited resources.
This benefit did not significantly alter the finances of poor families with children because even though the income threshold established was not excessively low, the amount of the benefit was paltry. Moreover, the income parameters were not altered in accordance with the Consumer Price Index (CPI) in the following years, so there were only small increases between 1991 and 1995. As a consequence of all this, family policies were essentially insignificant as a social solidarity mechanism in Spain until the close of the last century. Subsequently, during the opening decade of this century, they evolved in parallel to the general trend in the other public policies of a monetary nature.
The public policies aimed at children across the EU vary widely in their proportional importance and also in their impact on the poverty among this group. This variance is due, in part at least, to the different types of welfare state in place in countries across the continent. Spain is at the tail end of a ranking of spending on families and children as a percentage of GDP among EU countries. In 2015 (figure 4), spending barely amounted to 1.3% of GDP, whereas the average for EU countries was 2%, 52% more.
The evidence provided by studies that have analysed family policies in Spain shows that the most effective and economically important policies are tax allowances for each child and maternity/paternity benefits, which cover pay for periods of leave following the birth of a child. These allowances are reductions in the amount of tax payable due to a range of family circumstances and some vary according to the autonomous community in which tax is paid. Other tax deductions are related to adoption, multiple births, childcare, the birth of second or third children and some school-related spending. The value of these deductions varies significantly from one autonomous community to another and in general is low. It is unlikely that family minimums and tax allowances will have any significant impact on reducing poverty since a large proportion of households below the threshold are exempt from paying tax.
As Cantó and Ayala (2014) point out, the benefit for dependent children has a much smaller budget than the tax allowances and, above all, meets the needs of families with minors or with children over 18 with a disability. The rest of the benefit system is highly fragmented, with various different policies on childbirth or adoption payments and others that are regulated by autonomous communities. Though these latter benefits rose to an extent prior to 2010 and were significant in terms of the number of beneficiaries in communities such as Catalonia, Asturias and Cantabria, they were abolished or severely cut during the economic recession (Cantó et al., 2014).
In contrast with the situation in Spain, one of the most common family policies in Europe is universal child benefit (Levy et al., 2013). This policy is implemented, with varying degrees of generosity, in 18 EU countries. The countries where it is not in place are those in southern Europe and some in eastern Europe. In Spain, this type of universal benefit payable for each child born was only paid between July 2007 and January 2011 and was received by some 450,000 families. In 2009, the total cost of this policy was close to the benefit payable per dependent child that same year (approximately €1,120 million).
Family policies have a very limited redistributive effect in our country, as they are of little financial importance as an element in families’ gross income. That is to say, it is not that the dependent child benefit (PHC) is insufficiently progressive and does not reach those who most need it, but rather that the amount is so low that receiving it does not significantly alter families’ purchasing power.
One possible yardstick for improving the system is the universal child benefit, implemented in by far the majority of European countries. This consists of a monthly payment made throughout the minor’s life till the age of 18, though a third of countries fix the age limit at 16, and in the occasional case it can be extended to 20 years old. In addition, almost every country with a universal system prolongs the payment period if the child is in education after the fixed period, though the age limits for this vary widely (between 19 and 27 years of age) and in many of them there is no age limit if the children are disabled and unable to take up employment, a situation that in Spain is covered by the benefit payable for a dependent child with a disability. In more than two-thirds of EU countries, this benefit does not vary according to income but depending on the age of each child and the total number thereof. Lastly, there are countries that also recognise unemployed families’ special need for protection, as this is deemed to be a criterion for raising the general benefit, as is single parenthood, which is more widely regarded as an added risk.
There are various questions concerning the possible impact of a benefit of this nature in Spain, such as the way child poverty would be affected by the introduction of universal child benefit similar to the one paid in European countries, its possible cost and its effect on aspects other than the monetary dimension. With regard to these latter factors, the introduction of this type of universal child-related policy may have a positive effect on birth rates (Gauthier, 2007), a negative impact on the rate of women’s participation in the labour market (Schirle, 2015), and it may also influence decisions regarding people making the most of maternity or paternity leave (González, 2011). In general, the literature concludes that the rise in the birth rate and the reduction in the offer of jobs in the early months of a child’s life do occur in many countries, but their effects are relatively small. In the case of Spain, González (2011) concludes that the introduction of a universal single-payment benefit in 2007 effectively raised the birth rate in our country by reducing the number of abortions. It also led to an increase in the number of mothers who extended their maternity leave and, hence, the time that new-borns spent with their mothers in the first year of their life, which could in turn have had a positive effect on these minors’ cognitive skills but could also have had a negative effect on mothers’ possibilities of returning to work.
With regard to the capacity to reduce child poverty, the study by Cantó and Ayala (2014) offers a number of clues based on a simulation of the introduction of a universal benefit designed as a payment of €100 per month per child, an average amount in the European context. The results indicate that a universal benefit of this type would have tremendous potential in reducing the poverty rate: 18% child poverty and 7% adult poverty. In 2014, this would have brought the Spanish child poverty rate down by 5 percentage points to its lowest level since 2004 and, in absolute terms, more than 450,000 children and 550,000 adults would no longer have been in poverty. In addition, this benefit would have significantly reduced the poverty rate among single-parent households and large families and would have limited the income inequality among minors, closing the gap between the disposable incomes of those on the highest and lowest incomes by ten percentage points. The investment required to implement a policy of this type was, according to calculations in 2014, around €9.4 billion that year, 2% of Spanish public spending at that time and 3.5% of all social protection expenditure. Its introduction would have increased spending under the family and children budget heading by 60%, taking it up to 2.3% of GDP, close to the average figure in the EU. To finance this considerable annual investment, a number of alternatives might be proposed, among them making the benefit subject to taxation, which would make it more progressive and reduce the cost to the public purse.
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