hungary: mother’s employment and children poverty report.pdf · in the first quarter of 2001, in...

UNICEF Innocenti Research Centre Piazza SS. Annunziata, 12, 50122 Florence, Italy websi te: www.unicef .org/ i rc www.unicef- i rc .org Tel: +39 05520330 Fax: +39 055 2033 220

HUNGARY: MOTHER’S EMPLOYMENT AND CHILDREN POVERTY

Co-ordinator: Judit Lakatos Hungarian Central Statistical Office, Budapest

MONEE Country Analytical Report 2003

The opinions expressed are those of the authors

and do not necessarily reflect the policies or views of UNICEF

2

MOTHER’S EMPLOYMENT AND CHILDREN’S POVERTY

Hungary, 2003

3

1. Demography and the Family

The study of the employment situation of women and mothers requires reviewing

the changes in reproductive behaviour and demography. In the past one or one

and a half decade matrimonial and reproduction patterns of the Hungarian

population have significantly changed, which is generally explained by the

adoption of western patterns. Certainly, radical economic changes have impacted

the demographic characteristics of the population too.

• One of the most apparent phenomena is the spreading of cohabitation without

marriage. The larger share of persons choosing cohabitation are young people.

With respect to activity and education, however, there are no differences

between married couples and cohabiting partners. The spread of cohabitation

is the primary explanation why nearly one third of children today are born

outside marriage. (In 1989 their share was approximately 12%).

• Not only people marry at a later age on average but also they tend to have

their first children later. Younger generations become adults at an increasingly

later age. These findings are well proven by the results of the Household Panel

Survey in 1992 as well as the survey “Turning points in Our Lives”: in 1992

about half of the age group of 29 lead an adult way of life while in 2002 only

about 25%. (i.e. does not live with parents any more, is in full time employment,

does not participate in education, is married or lives in a solid cohabitation

relationship)

4

Child: lives with parents and is in education, does not hold a full time job, is unmarried

Adult : does not live with parents, holds a full time job, is not in education, married or lives in cohabitation. Source of data: Hungarian Household Panel 1992 „Turning Points in Our Lives” 2002

• This change has an impact on fertility. While the share of women without

children in those having children born in the 1970s and 80s is 7 to 9 %, which,

taken into account that not all of them were married, is close to biological

infertility. In 2002 60 % of women under 25 years, and 27% of women under

30 do not have children. These data suggest that generations currently in

propagative age will almost certainly produce fewer children than earlier

generations.

Life situation of young people aged 18 to 29, 1992

0%

20%

40%

60%

80%

100%

18 19 20 21 22 23 24 25 26 27 28 29age

"adult"

"child"

Life situation of young people aged 18 to 29, 2002

0%

20%

40%

60%

80%

100%

18 19 20 21 22 23 24 25 26 27 28 29

age

"adult"

"child"

5

• The young today consciously plan smaller families. (According to the answers

to the questionnaire of the survey Turning Points in Our Lives*/, the planned

number of children currently is fewer than two.) A new and unfavourable

phenomenon is the first signs of voluntary childlessness, typical mostly for

unmarried young under 25 living in Budapest, the capital city. Should current

family planning tendencies realise, extended reproduction seems ensured in

women with lower education, who live in bad financial situation in villages in the

countryside. According Zsolt Spéder’s research related to the survey referred

to above, the drastic drop in the number of births is primarily the result of lower

reproduction by higher education mothers.

Estimated TRF by highest educational level of mothe rs, 1990-2000

Mother’s highest completed education level

Year Not completed primary

Primary Vocational Secondary Higher Total (N)

1990 2.245 1.815 1.915 1.731 1.858 1.846 1991 2.322 1.845 1.899 1.738 1.903 1.862 1992 2.357 1.776 1.816 1.607 1.825 1.772 1993 2.455 1.686 1.794 1.519 1.694 1.692 1994 2.719 1.759 1.755 1.417 1.560 1.652 1995 2.706 1.684 1.654 1.334 1.548 1.578 1996 2.662 1.561 1.524 1.209 1.486 1.464 1997 2.668 1.510 1.439 1.108 1.385 1.386 1998 2.447 1.435 1.382 1.088 1.347 1.341 1999 2.344 1.354 1.352 1.071 1.308 1.300 2000 2.335 1.400 1.350 1.120 1.364 1.337

Source: Calculation of Zsolt Spéder

• Over the past decades, the need to reverse, or at least curb, unfavourable

demographic processes (first of all declining number of births) was included in

the programs of each of the governments. There is, however, no exact

evidence on what is the effect, if there is an effect at all, of various family

support measures on reproduction and on motivating parents to have the

desired number of children.

*/ Head of research: Zsolt Spéder, HCSO, Demography Research Institute

6

2. Mothers on the labour market

After the mass scale loss of jobs in the late 1980s, by the mid 1990s the number of

employees stabilised, then slowly started to grow. This growth, however, has to be

understood in the light of a gradually increasing official retirement age, altogether

by 7 years for women and 2 years for men, and of the large generations born in

the 1970s actually entering the labour market as late as the end of the millennium

as a result of the trend of recent years to spend more years in education.

Currently, the employment rate of women entering the labour market at a later age

than earlier generations due to longer education is significantly higher up to their

age of 29 to 30 than 10 years earlier. Nevertheless, this seems to be in

conjunction with women’s having children at a later age rather than with improving

labour market positions of the young. The employment rate of women reaches that

of men after their age of 40 only primarily because of raising children (in 2002 it

did not reach that level as opposed to 1993.); the employment rate is the highest

in women aged 40 to 50, not having young children any more.

Female employment rate by age, 1993, 2002

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

20 30 40 50 60 70

Years old

Employment rate (%)

1993 2002

7

The maternity provisions system, to be detailed later in the paper, ensures a long

paid absence from the labour market (with a guarantee of employment by earlier

employer). Returning to work after raising children, however, is far from being

smooth, which is certainly a reason why young women on the whole have their

children at a much later age than even only 10 years ago. Connected to the

Labour Force Survey, possibilities of women to return to the labour market after

staying home on child care provisions has been surveyed four times. Since the

first survey in 1993, the share of mothers in employment before going on a

maternity provision has decreased. According to the 2002 survey, over one fifth of

mothers were not employed before having children. As for those who had been

employed, for some the employer ceased to exist while they were on one of the

maternity provisions. In 2002, over 12% of mothers in employment before having

children and currently on a maternity provision the employer did not exist as

opposed to 8.6% in 1993. While in the period between 1993 and 2002 businesses

became fairly stabilised, with the introduction of the child care support (received by

one fifth of some 300 thousand women on a maternity provision) the average

absence period has grown, increasing the risk of the employer going out of

business by the time the maternity provision period is over. Despite the legal

guarantee, many mothers are let known that their employers do not really want

them back, while a smaller share of women want to work elsewhere. (The reason

for this, however, is very often related to the employer: long travelling or work in

two or three shifts is impossible for mothers with young children.)

In 2002, only 45% of earlier employed women on a maternity provision thought

that after this period they would work with their former employer.

8

Share of mothers according to the possibility of re turn to earlier employer after the maternity provision period

(%)

The possibility of return 1993 1995 1999 2002

Employer ceased to exist 8.6 9.2 10.0 12.3 Employer exists but does not want the mother back

34.3 29.8 32.4 32.5

Employer wants the mother back but she does not want to return

6.7 8.7 11.2 9.9

Employer wants the mother back and she wants to return

50.4 52.3 46.4 45.3

Total 100.0 100.0 100.0 100.0 Source: LFS ad-hoc modul

In the first quarter of 2001, in relation with the Labour Force Survey the module

„Family in Transition” was taken to survey how family and labour market roles can

be harmonised. To one of the open questions, the majority of respondents said

that there was a conflict between raising children and labour market demands.

Employers tend to assume that mothers with small children will be substantially

more time absent than the average because of the illnesses of the children, which

is disadvantageous not only from the point of view of work organisation (with a

lack of surplus labour, all activities have to be carried out by the core team doing

“peak output” anyway) but also from the point of view of finances (the first ten days

of sick leave are paid by employers, and sick leave to stay at home with ill children

is typically taken out several times a year by mothers with small children).

Therefore employers avoid employing mothers with small children. Not only

mothers of small children but also those over this period of life almost univocally

said that today it was much harder to coordinate work and motherhood than

earlier, sometimes simply impossible without the help of the family and

grandparents.

According to the findings of the research based on the Labour Force Survey, the

presence of women with children on the labour market is primarily influenced by

three factors:

• Number of children

• Age of children

9

• Qualifications of the mother, defined in a simplified way by her education level

Apart from these three there are of course other factors such as the education,

profession and income of the husband, housing, potential help from the family in

raising children; with the exception of the type of settlement, these factors are

outside the scope of this paper.

On the whole, in 2002 the employment rate of women with one child was higher

than the rate of the whole female population aged 15 to 64 (60.2% and 55.3%

respectively), with a slightly above average unemployment rate. The employment

rate of women with two children is somewhat lower than the average (52.2%), and

is significantly lower of women with large families (3 or more children), of whom

only 18.6% were employed.

With the definition of child applied here (persons under 15), a significant number of

mothers with 3 or more children are entitled to, and the overwhelming majority of

them actually are on a maternity provision, yet their absence from the labour

market does not seem voluntary, as suggested by their 11.2% unemployment rate,

which is 2.5 times as high as the average of women aged 15 – 64.

10

Labour market participation of women aged 15-64 by number of children and educational level, 2002

Inactive

Employed Un-employed total

of which: in maternity

provision period

Total Employ-ment rate

Unemploy- ment rate

Denomination

number of women %

Primary school or less Women aged 15-64 total

322079

33293

885082

87699

1240454

26.0

9.4

Of which: Mother with children younger than 15 years, total

94748

14049

172705

80440

281502

33.7

12.9 mother with 1 child 62186 7692 71608 19696 141486 44.0 11.0 mother with 2 children 26153 4984 51935 21568 83072 31.5 16.0 mother with 3 or more children

6409

1373

49162

39176

56944

11.3

17.6

Married/cohabiting women without children younger than 15 years

157754

10337

293928

72

462019

34.1

6.1

Vocational school Women aged 15-64 total

378055

26286

221187

78134

625528

60.4

6.5


134339

12110

112381

71278

258830

51.9


4310

681

21028

17877

26019

16.6

13.6


142578

5649

64113

417

212340

67.1

3.8

Secondary school with G.C.E. Women aged 15-64 total

704846

32363

465905

84893

1203114

58.6

4.4


199997

9956

113543

77065

323496

61.8


5680

450

17016

14582

23146

24.5

7.3


290730

9181

133353

221

433264

67.1

3.1 Source: LFS

11

Labour market participation of women aged 15-64 by number of children and educational level, 2002 (continued)

Inactive Employed Un-

employed total

of which: in maternity

provision period

Total Employ-ment rate

Unemploy- ment rate

Denomination

number of women %

University and college Women aged 15-64 total

345017

8576

89296

31164

442889

77.9

2.4


96157

1635

33015

28097

130807

73.5


5085

200

4417

4253

9702

52.4

3.8


141987

2593

29200

22

173780

81.7

1.8

Women aged 15-64, total Women aged 15-64 total

1749997

100518

1661470

281890

3511985

49.8

5.4


525241

37750

431644

256880

994635

52.8


21484

2704

91623

75888

115811

18.6

11.2


733049

27760

520594

732

1281403

52.7

3.6 Source: LFS

The influence of education is just the opposite of that of the number of children:

the higher educated the mother is, the more probably she is present in the labour

market even with a large family. In 2002 44% of women with not more than

primary education with one child, 31.5% of such women with two children and

11.3% with 3 or more children were employed as opposed to women with

university or collage degree with shares 72,4%, 66,5%, and 37,6%. The

unemployment of low women – given the age of their children, probably young – is

outstandingly high and does not seem to be connected to the number of children,

which leads to the conclusion that for them labour market disadvantages add up

(lack of qualification, small children).

12

Using data of the survey „Family in Transition” including relatively detailed

information on the children in the family, the relationship between the age of

children and the presence of the mother on the labour market can be examined. A

much smaller share of mothers with under school age children are employed than

mothers with as many but older children. Being absent from the labour market was

primarily made possible by using one of the maternity provisions. Typically, after

the maternity period only mothers with at least three children tend to remain

housewives out of the labour market.

The breakdown of households with children* by the m other’s labour market status and the

type of the family, 2001 4 th quarter

(%)

Type of the family

Employed Un- employed

Pensioner or unable to work

On child care

allowance, fee or child

rearing support

Housewife Studies or out of work

for an unlisted reason

Total

One child under school-age 36.0 5.1

3.0

45.2

7.8

2.9

100.0

One child in primary school 72.9 7.5 8.2 1.2 8.5 1.8 100.0 One child in secondary school 76.4 4.4 12.3 0.1 5.2 1.7 100.0 Total of families with one child 61.6 5.7 7.8 15.6 7.2 2.1 100.0 Two children under school-age 18.0 4.6 1.3 68.1 5.9 2.1 100.0 Two children in primary school 77.3 5.9 4.4 1.0 10.3 1.0 100.0 Two children in secondary school 81.2 3.2 7.0 0.0 6.9 1.8 100.0 One child under school-age, one in primary school

52.7

8.7

1.4

25.9

10.0

1.3

100.0

One child in primary school, one in secondary school

77.9 6.9 5.1 1.6 7.9 0.5 100.0

One child under school-age, one in secondary school

37.9

10.4

3.8

35.0

12.9

0.0

100.0

Total of families with two children 62.3 6.4 3.6 17.6 8.8 1.1 100.0 Three children under school-age or in primary school

19.1

3.5

0.7

61.0

14.4

1.3

100.0

Other families with three children 45.1 9.7 2.6 25.0 16.2 1.3 100.0 Total of families with three children 27.2 5.4 1.3 49.8 14.9 1.3 100.0 Families with four or more children of whom none is in secondary education

13.3

4.1

2.8

70.7

5.2

3.9

100.0

Families with four or more children of whom some are in secondary education

21.1

3.1

6.7

48.3

19.6

1.2

100.0

Total of families with four or more children

16.0 3.7 4.2 63.0 10.1 3.0 100.0

Total of families with children 57.0 5.9 5.5 21.3 8 .7 1.7 100.0 * Child concept is following: younger than 19 and not in employment Source: LFS – Family in Transition ad hoc module

13

As for the type of settlement, there is a definite dividing line between cities and

villages, which differentiates women in their labour market chances regardless of

the number of children.

To achieve at least the average Hungarian living standard, families usually need a

second earner, who most often is the mother. According to the latest data

available by the breakdown by education, in May 2002 women’s earnings on the

whole were by 15% lower than men’s; this difference, however, requires several

explanations and comments:

• After the change of the regime, the restructuring of economy has reduced the

global earnings difference between men and women. Mining, metallurgy and

some areas of machine manufacture involving hard physical work and

dominated by men today employ only a fragment of the earlier workforce. Men

having lost their jobs have either left the labour market (typically in early

retirement schemes) or have gone into less well paying sectors of the

economy.

With the improved prestige of earlier, partly artificially, undervaluated

intellectual jobs in which a relatively high rate of women work, women now are

less disadvantaged in terms of earning.

• The distribution of employed women by education is better than that of men,

because a larger share of them have secondary and even higher education.

(Though in this category more women have college than university education,

while in men the proportions are just the opposite). This, on the whole,

increases the overall average earning of women; at the same time, however,

women earn by more than the average 15% less at almost all education levels

as a result of shorter working years because of child raising and more

importantly because they are significantly under-representation in managerial

and leadership positions.

• In 2001 and 2002 two measures were taken to further reduce women’s

disadvantage in earnings. One was raising the minimum wage from HUF

14

25,500 to HUF 40,000 in 2001 and then to HUF 50,000 in 2002. As a much

larger share of women than men work in areas where the wage level is close to

the current minimum wage (commerce, catering, clothing industry, social

services), the higher minimum wage improved average earnings for women

more than for men. The second measure facilitating convergence was the pay

raise for health care and education workers by 50% in September 2002 as in

these two budget areas women are the majority (data presented here are

based on the May 2002 survey, therefore not show the effect of the latter

measure).

Average monthly gross wage of full time employees b y educational qualification and gender, 2002*

HUF

Highest educational qualification Male Female Together

Enterprises

Primary school 80666 70846 76114 Vocational school 90480 72270 85898 Vocational secondary school 119451 107419 113502 Grammar school 122631 109280 113957 College 242599 192888 221609 University 343791 273701 320828 Total 122927 105723 116248

Government

Primary school 76001 64415 66716 Vocational school 78405 74834 76358 Vocational secondary school 101752 97183 97973 Grammar school 109960 99507 101228 College 174581 133211 141478 University 220580 190911 205385 Total 144319 111258 119831

National economy total

Primary school 80186 68603 73892 Vocatioal school 89761 72788 84945 Vocational secondary school 117473 103519 109325 Grammar school 120195 105427 109678 College 218300 147964 172216 University 290846 222468 262016 Total 125900 108051 117236 * May wage and 1/12th of non regular annual payment Source: Wage Structure Survey, 2002

15

Data of classical earnings statistics are collected from enterprises and institutions.

Such surveys, thus, do not (and cannot) include any information on families. As in

Hungary couples pay taxes separately, the only source of data that allows for

inferences as to the connections between the situation of families and income is

the household statistics. According to HBS 2002 data, in two earner and childless

households the gross annual earning of women was by 10% less than that of men.

In households with one or two children the difference is 23 to 25 % while the

earning of women in households raising three or more children is by 24% lower

that that of women in childless households, and 70% of the earning of men in their

households. (As household statistics – in contrast to data from the survey of

institutions – covers part timers too, the lower earning average may partially be the

result of the higher rate of part timers in this category of women. However, the

negative correlation between the number of children and education is surely a

more significant factor.) In households with only one earner, and that one is a

woman, her earning average tends to be higher that the earning of women in two

earner households with the same number of children. A very distinct exception is

the group of households in which income earning women raise three or more

children: in 2002 their average gross earning was only by 16% higher than the

minimum wage.

Average earnings by gender in different type of hou sehold, 2002

Childless household with

Household with 1 child and with

Household with 2 children and with

Household with 3 or more children and

with 1 2 1 2 1 2 1 2

active earners active earners active earners active earners

Number of household

603 422 509 286 220 502 290 453 176 331 156 500 61 265 15 659

Number of household members

1 292 941 1 492 672 740 945 1 064 916 748 221 661 983 333 810 84 404

Number of active earners

603 422 1 018 572 220 502 580 906 176 331 313 000 61 265 31 318

of which male 321 829 524 356 134 641 288 976 144 611 158 947 58 094 15 913 of which female 281 593 494 216 85 861 291 930 31 720 154 053 3 171 15 405 Averege gross annual earning per active earners (HUF/year)

999219 1053855 914630 964931 1011473 984131 980816 918365

of which male earners

1010975 1109721 950272 1089916 1042900 1124786 996042 1071756

of which female earners

985783 994581 858739 841210 868198 839007 701878 759915

Source: HBS (Household Budget Survey), 2002

16

3. Child related benefits In Hungary, cash and other supports to raise children constitute a system made up

of several elements. These elements as well as their relative weight and

importance are the result of a complex social bargaining process, and depend on

the system of preferences of the political line currently in power. In this chapter the

most important changes over the pas 6 to 8 years in this field are reviewed,

categorising supports by their being directly addressed for children or the mother

(parents). Apart from the social security system, the social system too includes

several elements that influence the situation of families, yet to overview them is

out of the scope of this presentation.

Of family supports, the family allowance is the most significant one in terms of

the number of recipients. In 2002 1223 thousands families received the family

allowance for 2011 thousands children. Until 1996 this regular cash benefit was an

entitlement for all children under 16, and for those under 19 in full time education.

As a part of the economic and financial stabilisation program (the Bokros

package), however, as of April 1996 the family allowance for families with one or

two children became means tested while with three or more children the amount

was independent of the per head income of the family. In May 1998 – before the

elections that year – the amount of the family allowance was raised and the

number of income categories differentiating the amount was reduced from three to

two. In May 1998 the left wing coalition was replaced by a right wing coalition

government. One of its first acts was to restore family allowance as an entitlement

(besides restoring the child care fee, to be discussed later) but the amount of the

allowance remained the same throughout the four years of office. (The only

exception was the family allowance for seriously disabled children, raised by 40%

in January 2001.)

After the elections in 2002 the nominal value of the family allowance was raised. In

addition, as of 2002, in September a schooling aid, the equivalent of the amount of

the one-month family allowance, „tops” the family allowance.

17

The family allowance and the subsistence level in s elected years

Type of household As of January 1995

As of April 1996*

As of May 1998*

As of January 1999

2001

As of September

2002

Family allowance HUF/month/child

Family with one child Two parents 2750 1100-2750 1900, 3800 3800 3800 4600 Single parent 3250 1300-3250 2500, 4500 4500 4500 5400 Family with two children

Two parents 3250 1300-3250 2300,4700 4700 4700 5600 Single parent 3750 1500-3750 2700,5400 5400 5400 6500 Family with three or more children

Two parents 3750 3750 5900 5900 5900 7100 Single parent 3950 3950 6300 6300 6300 7600 Family with long term seriously disabled child

5100 5100 7500 7500 10500 12600

Subsistence level HUF/month/household

1 adult with 1 child 27 118 31 794 43 895 48 444 64 781 71 128 1 adult with 2 children

35 335 41 428 57 196 63 124 84 411 92 682

2 adults with 1 child 39 444 46 246 63 847 70 464 94 226 103 459 2 adults with 2 children

47 662 55 880 77 149 85 144 113 857 125 013

2 adults with 3 children

54 236 63 588 87 790 96 888 129 561 142 256

2 adults with 4 children

60 810 71 295 98 431 108 632 145 266 159 500

*/ As of April 1996 the amount of family allowance for families with one and two children was differentiated by three income categories while as of May 1998 by two. Between April 1996 and December 1998 high income families with one or two children were not eligible for the family allowance.

The amount of the family allowance remained the same between 1999 and 2002

which means that with the moderate though not negligible inflation rate (10% in

1990; 9.8% in 2000; and 9.1% in 2001) its real value gradually declined. This was

in conjunction with the system of preferences of the government to emphasise the

importance of self-sustenance instead of mitigating social inequality. This

philosophy was expressed in the tax allowance for children , introduced in 1999.

If parents (child supporting adults) had any taxable income (and were eligible for

the family allowance) the following amounts of tax allowance was available in each

fiscal year:

18

HUF/Year

1999 2000 2001-2002 For one child 20400 26400 36000 For two children per child 20400 26400 48000 For three or more children per child

27600 36000 120000

The allowance, however, is available only for households whose tax payments are

large enough to make them eligible. For instance, the increased allowance in 2001

for households with three or more children has provided a financial benefit only for

a very little share of large families. According to statistics of the tax authority, in

2000 only 79% of the allowance was actually claimed. According to a HCSO study

conducted in late 2001, 66.4% of families could claim the full amount of the

allowance, 15.6% part of it while about 18% none of it at all, even though parents

could split the allowance. In contrast to the family allowance, the amount of the tax

allowance was raised more than the inflation rate in 2000 and 2001.

The third pillar of supports for children was the supplementary family allowance ,

a means tested provision. For instance, in 2000 some 800 thousand children were

eligible (one third of those receiving the family allowance) for this support of HUF

3.4 thousand per month.

The elections in April 2002 brought about shifts of emphasis in the provisions

system. Although the main pillars (including the tax allowance) have remained in

place, the principle of means testing has received once again a greater emphasis.

In this spirit, the family allowance has been raised, a 13th month family allowance

(schooling aid) has been introduced, and school books have been made free for

households receiving the supplementary family allowance, single parent families

and large families.

On the whole, according to expert estimates* the real value of various cash

provisions for children in 1996 amounted to 40% of what it was in 1990; 43% in

1998; and 53% in 2000. Even though the child-care provisions system did not

* Dr. István Baranyai: The family and social costs of raising children (Statisztikai Szemle /Statistics Bulletin/ 2003/7. p:542-559)

19

become fairer between 1998 and 2000 from the point of view of children, this kind

of expenditure of society have started to grow again after a continuous decline.

The system of maternity provisions in Hungary again is composed of several

elements with some of them being entitlements and some are tied to meeting

eligibility criteria. Apart from the transitory period of the Bokros package, the last

major change in the system was implemented in 1993 with the Social Act

introducing, inter alia, the child care support. The current system includes the

following elements:

Type of the provision

Eligibility criteria Period Amount Employment

Pregnancy and childbirth aid (maternity leave)

Those women are eligible who have been insured for at least 180 days up to the child’s birth

168 days 70% of the average daily earning

Not permitted

Child care fee*/ The same as the pregnancy and child birth aid but can be taken by the father if he is insured.

After the period of the pregnancy and child birth aid up to the child’s age of 2.

70% of the average daily earning with a ceiling tied to the minimum wage. (In 2002 HUF 83 thousand)

Not permitted

Child care allowance **/

An entitlement, can be claimed by the father too

Up to the child’s age of 3

The current minimum old age pension (In 2002 HUF 20100)

Not more than four hours a day or unlimited hours at home

Child care benefit Parent with three or more children

Up to the youngest child’s age of 8 (Except if the eldest meanwhile turns 18)

The current minimum old age pension (In 2002 HUF 20100)

Not more than four hours a day or unlimited hours at home

*/ Cancelled between April 1996 and 31st December 1998.

**/ This provision existed between April 1996 and 31st December 1998 as means tested.

Note: As of 2002, the child care allowance can be taken by grandparents, too. For sick child it is available up to the age of

14.

Experts cited in relation with the family allowance calculations estimate that

maternity provisions in 1996 amounted to 47% of the 1990 level, the percentage

remaining the same in 1998, while in 2000, with the reintroduction of the child care

fee, the level of maternity provisions went up to 57% of the 1990 level.

In addition to cash provisions, child raising is helped by a broad social provisions

system, of which two thirds are educational, 10% health care, and about one

quarter is so called other social provisions (nursery, kindergarten, school meals,

students’ hostel, subsidised transportation). Experts estimate that in 2000 46% of

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the total costs of raising a child was born by parents while 14% was covered by

cash social provisions and 40% by in kind provisions. In 1998 the respective

shares in the same order were 48.1%, 10.6%, and 41.3%.

In relation with the employment of women – and in conjunction with this the well-

being of families – the existence or lack of institutions for the day care of children

is of primary importance. In Hungary the system of child care institutions had been

developed according to the needs of the (nearly) full employment of women, and is

still more developed than in the majority of (maybe all) EU countries. The various

types of institutions, of course, are not used to the same degree.

Nurseries, taking care of children aged 0 to 3, are primarily used by higher income

women, and most typically after the period of the child care fee. Since the

introduction of the child care allowance, mothers tend to spend the whole period

up to the child’s age of 3 at home (also, recipients of the child care allowance or

fee cannot use the nursery; children whose mother receives any of the maternity

provisions can be placed in kindergarten only part time, except for the last year

which is a preparatory year for school.) Currently out of 100 10 children aged 0 to

3 go to nurseries. Over the past decade about half of nurseries have been closed.

Although the potential need for nurseries has declined due to the radical drop in

births, the exploitation of nurseries is greater that in the early 1990s. Generally,

nurseries exist only in bigger towns or cities, therefore women in villages cannot

put their children in a nursery even if they wanted to.

Nearly 90% of kindergarten age children attend kindergarten (only the so called

preparatory year right before compulsory primary school is compulsory). Although

the demand for and supply of kindergartens not always meet in terms of location,

and municipal kindergartens cannot meet the special needs of women working in

irregular schedules (as opposed to kindergartens run earlier by employers and

mostly closed as a result of cuts in operation costs in the 1990s), there is not a

significant discrepancy between demand and supply. Parents pay only for the

meals in the kindergarten, and as of 2003 families in bad financial situation

(recipients of the supplementary family allowance) are exempted from paying the

21

fee. (Families with three or more children had paid only half of the fee before too,

or at some places the costs were paid by the municipality.)

Over half of primary school children have meals at the school and spend the

afternoons in the school, and their share is higher in the lower four grades. On the

whole, as opposed to several more developed European countries, the lack of day

care institutions for children is not a real hindrance to women’s employment.

According to a reasearch*/ conducted in late 2001, in nearly half of the households

raising children under 10 all of the children under 10 were in a child-care

institution, and in 12.4% of the households some of the children under 10 attended

kindergarten or afternoon school. A very small share of families not or only

partially using a child-care institution, and typically households living in villages,

reported that the reason for it was the lack of available institutions.

The breakdown of households with children under 10 not or only partially using child-care institutions by the reason of not using them, 2001 4th quarter

Reason Villages Towns and cities Budapest Total

No possibility 9.0 2.5 - 5.1 Too expensive 14.4 12.1 10.3 12.9 Found another solution 76.6 85.4 89.7 82.0 Total 100.0 100.0 100.0 100.0

Source: LFS ad hoc module Family in Transition

A good part of households not using a child-care institution, however, provide

children a low stimulating environment and bad financial situation – exactly the

circumstances that would require the compensatory influence of child-care

institutions.

*/ Family in Transition, KSH-UNDP 2002.

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4. The relative income position of households with children

The international literature offers two approaches to identify households’

unfavourable financial situation:

• If there is a national threshold level (subsistence level), those living under this

threshold can be regarded poor;

• As the above approach cannot be made uniform, for the purpose of

international comparison usually those are regarded poor who have less

income than a certain percentage (50 or 60 percent) of some kind of mean.

Besides these two approaches to measurement, which involve the inaccuracy of

reported incomes and limited availability of data sources, there is a method which

specifies poverty by a complex system of variables. The most important source of

information for examining poverty based on income distribution is the Household

Budget Survey, the largest and oldest regular survey of HCSO as well as of the

country. HBS was started in 1949 but comparability is limited even within smaller

time spans due to changes in methodology. In this annual survey some ten

thousand families (0.25% of all Hungarian households) report on their incomes

and consumption and on some characteristics related to their assets and housing

conditions. One of the specialities of the survey is that it underestimates incomes.

In some items concealment is significant, and most probably a larger share of

lower income households participate than their actual share in all households.

Thus, in HBS the share of lower income households may seem greater than

reality. An even bigger obstacle to use HBS for examining poverty is the size of

the sample. For instance, to examine the poverty risk of households with many

children in villages on the basis of HBS is not possible because there are only

some 100 to 150 households in this category. Despite these concerns, poverty

researches in the near past have used HBS data, or even smaller surveys

conducted by market organisations (for instance a TÁRKI panel survey of about

2000 households).

In Hungary, poverty has been researched for a quarter of a century though

findings earlier were not widely published. Since the early 1980s, threshold values

have been more or less regularly published (The methodology of subsistence level

23

calculations is in the appendix.) Subsistence level calculations are based on HBS

data with subsistence level set at the income of households who consume food in

a given value. (Consumption of food in terms of calories and total value is adjusted

to age, and the cheaper is preferred in similar types of food.) The subsistence

level calculated for the various categories of households is primarily used as a

threshold in the provision of supports. (In Hungary, however, the most frequently

use threshold value for this purpose is the minimum old age pension in the given

year rather than the subsistence level.) Owing to methodological problems of the

household survey listed above, estimates of the share of households living under

the subsistence level in the various social strata must be very conservative. Using

the projected data of the 1996 income survey, at the end of 2000 the following

estimates were made on the risks of living under the subsistence level:

Risk of living under the subsistence level

Number of dependent children aged 19 or

younger

Variables of households

none 1 2 3 or more

Active households Single person household 1.0 - - 1.0 Single parent household - 1.8 1.9 3.3 Other active households - Unemployed, on child care allowance, dependent head of household

2.4 3.7 3.2 4.1

- Pensioner head of household 1.6 2.5 2.6 2.2 Active head of household, 1 active earner 1.5 2.7 2.9 3.2 Active head of household, 2 or more active earners 1.0 1.3 1.9 2.6 Pensioner households Single person household in which - Pensioner is 70 or over 1.9 - - - - Pensioner is under 70A 1.7 - - - Single pensioner raising a child - 3.1 2.0 4.4 Other (non pensioner) inactive households Single person household 3.0 - - - Single parent household - 4.3 3.7 3.3 Other inactive households 3.6 4.0 4.2 4.2

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As shown, if the risk of two earner childless households to come under the

subsistence level is 1, that risk of a similar household with three or more children

is 2.6 times as great. With the greater number of children and having no active

earner in the household, there is a higher risk of poverty.

According to the inflated data of the 2002 HBS, 87.9% of children aged 0 – 14

lived in households with an active earner, but 17.1% of them in households with 3

or more children which poses a greater risks. Almost half of the 204 thousand

children under 15 living in inactive households lived in large families.

Not unrelated to this data, 28% of children under 15 live in households with a net

income amounting to 60% of the median income*/. Taking the number of children

living under the threshold value 100%, 14.4% of them lived in large households

with an active earner, and 42.1% in households without an active earner. These

percentages support what has been found about the risks of poverty in the section

on the subsistence level.

The poverty risk of children aged 0 – 14 by the typ e of households, 2002

1 2 3 or more Type of household

children All

house-holds with

children

Number of children under 15 in the household (1000) Active household 523.9 697.7 251.6 1473.2 Inactive household 45.7 63.1 94.7 203.5 Total of households 569.6 760.8 346.3 1676.7

Of them, the number of children in households with an income amounting to 60% of the median income (1000 )

Active household 42.9 88.0 43.6 174.5 Inactive household 19.6 35.4 71.7 126.7 Total of households 62.5 123.4 115.3 301.2 The share of children living under the income thres hold in all children in the same types of

household (%)

Active household 8.2 12.6 17.3 11.8 Inactive household 43.0 56.1 75.7 62.3 Total of households 11.0 16.2 33.3 18.0 **/ Children turning 14 in that year Source: HBS 2002

*/ To calculate the percentage of those living under the threshold of the median income, the so called domestic equivalent consumption scale was used. (see: The method of calculating the subsistence level)

25

In the larger part of poor households raising children under 15 there are no

employed members, and even in active earner households with the growing

number of children the probability that the wife works decreases. (The third child

seems to be a sharp line as the employment rate of women with one or two

children does not differ significantly from that of childless women.) The high

poverty risk of large families, thus, is connected to the lack of a second earner. An

vice versa, only a very small share of households in which the mother is an active

earner (or receives a benefit based on earlier earnings) qualify as poor. The lack

of an (second) earner is not counterbalanced by social and family support

provisions. (It is sufficient to cite that in 2002 the total of the child care allowance

or the child care support and the family allowance for 3 children was less than

HUF 50,000, the minimum wage.)

26

The poverty risk of children aged 0 – 14 in single parent and in two parent households, 2002

1 2 3 and more Type of household

children

Total of house-holds with

children

The number of children under 15 in the household (1 000)

Active, single parent family 39.2 29.2 4.3 72.6 Active, two parent family 484.8 668.5 247.3 1400.6 Inactive, single parent family 9.7 13.8 9.6 33.1 Inactive, two parent family 36.1 49.3 85.1 170.5 Total of households 569.8 760.8 346.3 1676.8

Of them, the number of children in households with an income amounting to 60% of the median income (1000)

Active, single parent family 4.8 4.4 1.4 10.6 Active, two parent family 38.1 83.6 42.2 163.9 Inactive, single parent family 3.8 6.3 6.1 16.2 Inactive, two parent family 15.9 29.1 65.6 110.6 Total of households 62.6 123.4 115.3 301.0

The share of children living under the income thres hold in all children in the same types of

household (%)

Active, single parent family 1.2 15.0 32.5 14.6 Active, two parent family 7.9 12.5 17.1 11.7 Inactive, single parent family 39.2 45.7 63.5 48.9 Inactive, two parent family 44.0 59.0 77.1 64.9 Total of households 11.0 16.2 33.3 18.0 Source: HBS, 2002

25% of children under 15 living in single parent households are hit by children

poverty, which is an only slightly greater percentage than the average. This is due

to the fact that in most cases single parents work.

27

5. Mothers’ employability and wage in the future

Earlier chapters have already addressed the relationship between women’s labour

market status and reproduction. The increasing employment rate of young, school

leaving generations of women is in conjunction with their having children at an

ever later age. To stop the decrease in the number of births and curbing the

unfavourable demographic trend is a crucial issue. The current left wing

government has established a so called „Demographical Government Committee”

in charge of researching the problem and developing complex solutions. One of

the most important questions for the future is whether the large generations of the

baby boom in the 1970s have only postponed having children or have altogether

renounced of having part of the theoretically possible children. Apart from cash

support from the state, their decision to have children can be facilitated through a

number of other measures and circumstances.

.

• A child-friendly attitude adopted by employers, too. Currently the opposite is

true: employers are counter-interested in employing mothers with young

children. Having children is often postponed exactly because of the fear of

loosing one’s job. Most young women can see negative examples in their

environment and try to postpone coming in a similar situation as late as

possible. A special feature of women’s employment in Hungary is that very few

of them can work in schedules that help harmonize work place and family

duties. Telework, and other activities that can be done at home, have not

spread yet. In 2003 a government program was launched to popularise working

at home, designed to make employers interested in creating telework jobs.

(Plans, however, are modest: in 2004 about one thousand telework jobs are

expected to be created as a result of the program.) Part time employment,

again, is relatively rare. According to a labour force survey in 2002, only about

8% of all employed women worked part time. While employers’ incentives

could be increased through taxation, the government has only refrained from

increasing the health care fund contribution, the most discriminative type of

wage tax, rather than to cancel it altogether. As in the current economic

situation it is hard to loose the tiniest amount of tax payments, it is uncertain

whether tax rules will favourably change in the future. According to results of

28

various surveys, a lot more women would prefer (or think more advantageous)

part time jobs than currently work in such schedules. A critical issue is,

however, earnings. The Hungarian family model is fundamentally a two-earner

one, which means that the earnings of both parents from full time jobs are

needed to maintain an average living standard. It is then a questions whether

as many women would really choose part time if possible as many said so in a

statistical survey.

• Availability of day care for children is fundamental for mothers to be able to

work. Undeniably, the system of child-care institutions developed in the era of

women’s full employment is still able to largely meet needs. Over the past

decade or decade and a half, however, this system has been cut and reduced.

Because of the close down of kindergartens, current less numerous

generations are in large groups (occasionally as large as groups of thirty)

which was typical for earlier, large generations and which does not offer the

possibility of person-tailored development. In terms of location the mostly

several decade old institutions often do not match the age distribution of the

population. (For instance, high-rise housing estates once inhabited typically by

young families, have aged and the majority of institutions for children are not

needed by the people there any more. In contrast, mushrooming suburban

family-house neighbourhoods are constructed without child-care facilities and

parents can use kindergartens only by spending a significant amount of time

for travelling.) While with the general availability of the child care allowance

nurseries are not used on a mass scale, one can find it difficult to find a nursery

for a child under 3 (or older but not yet fit for kindergarten). Again, it does not

help harmonise family and work place duties that many kindergartens and day

care institutions offer professional care only from 8 a.m. to 4 p.m.

Child-care institutions, of course, accept only healthy children. Yet it is exactly

the sickness of children and mothers’ staying home with them, which is the

main cause of discrimination in their employment. In getting and keeping a job,

thus, it is highly important what kind of help from the family, primarily from

grandparents, a mother with young children can have. While theoretically there

is the possibility of paid help, it is affordable only for a narrow group of high

income women.

29

• Employment of women with young children, however, is basically determined

by the economy and the state of the labour market rather than the above

described factors. If there is a shortage in labour, employers will be forced to

consider their employee’s duties outside the workplace. If there is an

oversupply, labour valued low for some reason (inexperienced, unskilled,

Gypsy, elderly, mothers with young children) will be disadvantaged.

Hungarian employment prospects – in contradiction with official opinion of

dutiful optimism - in my view are not too good. The clothing industry, a major

employer of women in the past lost a considerable number of jobs in 2002 and

the first half of 2003 as foreign owners facing difficulties in sales have closed

down plants or relocated production to lower labour cost countries (the

Ukraine, Rumania and mainly the Far East). A similar process has been going

on in the electronics assembly business, again employing a great number of

women. Commerce, too, is over the spectacular boom: there seems to be no

more place for chains of shop and shopping malls in the country, and due to

increased motorisation small retail turnover has been continuously declining. In

the area of the state dominated health care and education, the government has

made its plans of cuts in staff public in recent days, causing the potential loss

of at least 20 to 30 thousand (women’s) jobs. New jobs for women can be

created in the area of social care, which, however, is a limited possibility given

solvent demand. In the medium run, it appears, there are only chances to

preserve, or to slightly increase the current level of employment of women. As

women with small children are typically young, two trends in the labour market

need to be noted. The retirement age for women will be increased to 62 years

by the end of the decade (Remember: until the mid 1990s it was 55 years and

then gradually increased). That is why the number of retirement from the labour

market is smaller than what would be expected from the age distribution. With

the current demand for labour, this „crowding” makes it harder for the younger

generations to find jobs (or to go back to the labour market after staying at

home with young children). Since the 1990s, participation in higher education

has soared. Nevertheless, the educational structure and the labour market

demand are not fully in harmony. An increasing number of young people

(among them young women too) are not able to find jobs matching their

education and must compromise with much lower qualification work.

30

• Among employment policy guidelines, the removal (reduction) of gender

inequality in earnings is a priority. Central government measures in the past

years have managed to reduce women’s disadvantage in earnings – even if it

was not their specific purpose. To our knowledge, no similar or comparable

measures concerning earnings are expected. Forecasts, however, are hard to

make as new governments every four years tend to make ad hoc actions in

order to increase their popularity. Assuming a normal economic development,

current male-female earning ratios are expected to be preserved in the long

run.

hungary: mother’s employment and children poverty report.pdf · in the first quarter of 2001, in...

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