Foundation Institute for market economics (IME) has published a study of the structure and dynamics of the main mechanisms for social assistance. Both the programs financed from the state budget through the Ministry of Labor and Social Policy and selected insurance payments through the state social insurance are considered.
Total public spending through the programs under review increased by 27% from 2015 to 2019, but as a share of GDP decreased slightly from 1.9% in 2015 to 1.8% in 2019. To some extent, this is expected with the high economic growth, employment and growth in wages and pensions. However, the dynamics of the scope of the programs, the number of beneficiaries and the amount of benefits and allowances paid are extremely uneven.
Despite the extremely favorable economic indicators, a significant proportion of households continue to be at risk of poverty and suffering from severe material deprivation.
The benefit for raising a child up to 2 years of age has been increased by only 12%. For family benefits for children, the amount of monthly benefits for the entire period, including 2020, increases by only between 6% and 14% and all other benefits for families with children remain unchanged.
The amount of the guaranteed minimum income, which determines both the scope and the amount of social assistance, has increased by 15%, and at the same time the monthly amount of benefits has increased by nearly 38%. The average amount of assistance for children with permanent disabilities has practically doubled, and the reform of financial support for people with disabilities has also led to a significant one-off increase in costs. The monthly allowances for these children are provided without an income criterion, which makes the assistance inaccurately targeted in view of the material condition of the households. The number of assisted children is about 26 thousand, remaining relatively constant over the past five years. At the same time, due to the significant increase in the amount of aid after 2017, the total costs in 2019 are almost twice as high as those realized in 2015.
In a favorable environment of increasing employment, the expected gradual expansion of the scope of the insurance program is also observed. The amount of compensation for raising a child up to 2 years is relatively lagging behind – from 92% of the minimum wage in 2015 it drops to 68% in 2019.
As labor market indicators continue to deteriorate, an increasing number of vulnerable groups in the labor force do not have access to benefits and need to be supported by other social assistance programs, which, however, currently provide significantly lower incomes.
Expenditure on support for families with children decreased by 6% in nominal terms, and is now below 46% compared to about 61% in 2015.
Expenditures aimed at the integration of people with disabilities have almost doubled, with their share doubling from 20.7% in 2015 to 40.3% in 2019.
The criteria used to receive monthly benefits, as well as the amount of the guaranteed minimum income set by the government, lead to the targeting of the assistance to an extremely narrow circle of people in the worst financial situation. The annual costs are only BGN 28 million.
It can be argued that at the current parameters the program does not provide adequate support to the target group to which it is aimed. At the same time, due to the highly restrictive eligibility criteria for potential recipients, its scope is significantly narrower and “misses” a large share of households in poverty, including those with the lowest incomes.
According to data from the NSI survey on income and living conditions (SILC) for 2019, only 10.7% of households with two adults and one child are below the poverty line; in households with two adults and two children the relative share is 16.9%. At the same time, the share of the poor in a household with one adult and two or more children is 41.4%, and in two adults and three or more children – 62.3%.
There is a continuing trend of increasing social spending in programs with a wide range and target groups, which are defined by various criteria of poverty risk, income and needs of assisted households. Aid for children, people with disabilities and heating are becoming major programs.
At the moment, the approach of directing budget funds to programs with a very wide scope prevails, instead of making efforts to create precisely targeted instruments, which, however, provide adequate support to those who really need it.
Source: NGO portal