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Hungary: Developing childcare services to help parents back to work

According to a recent Eurobarometer survey, Hungarians are among the Europeans who struggle the most to find the right balance between work and family life. Although benefit payments to families are higher than the EU average, low employment rates make economic conditions difficult for families. At 1.3 children per woman in 2012, the Hungarian fertility rate was one of the lowest in Europe. Developing childcare services and new labour market incentives to help parents return to work is part of the government’s strategy to tackle these issues.

Few mothers with children under six in employment

The Hungarian government continues to make significant efforts in helping the reconciliation of work and family life.

Mainly, there are two different ways of supporting families with young children: the first one is providing an adequate number of child-care facilities to enable mothers to return to work just a relatively short time – a couple of months – after childbirth. The other direction is followed especially by those countries in which there are not enough child-care institutions and places available, and because of that they have to provide financial subsidies for a much longer period in order to support parents who are forced to stay at home with their children for years. And, of course, a lot of policies exist that provide sort of a mix of the two directions mentioned above.

Hungary follows predominantly the second conception because of the lack of sufficient child-care places: in 2014, less than one from every six children (16%) below the age of three can be accommodated in a child-care institution. However, even this was a significant step forward compared to 2010, when this ratio was only 12%. In the past four years since 2010, the total number of places in crèches and similar institutions (daycare centres) have increased with almost 9,000 to a total number of above 46,300 places; this was a significant growth of almost 25%. This improvement is a substantial help for mothers in providing places for their children while going back to work, but we have to admit that we are still quite far from an optimal level, and also from the 33% Barcelona target for 2010. (According to Eurostat data, around 8% of children under three were enrolled in formal childcare, compared to 28% in the EU in 2012.). These are the main reasons for the Hungarian family supporting system to provide considerable financial subsidies for mothers until their children reach the age of three.

Fortunately, in the case of kindergartens available for children above the age of three, the situation is much better, for – from the perspective of the whole country level – almost all of those children can be accommodated in these institutions (there may be problems only in some regions). (According to Eurostat data, around 75% of children over the age of three were enrolled in formal childcare, compared to 83% in the EU in 2012.)

These characteristics are also visible from the low levels of employment for mothers with children under the age of six – just 35.1% in 2013 compared to the EU average of 59%, although it should be noted that this rate was even lower, only 33.3% in 2010. (Hungarian fathers of children in this age group also work less than the EU average, but the difference is not so remarkable: 80.9% versus 85.2%.) The rate of part-time work is also considerably low (15.2%) amongst women in this group, according to the average level of 39.8% of the 28 member countries, though this rate increased with almost one-third from its former level of 10.6% in 2010. For all women (childless and with children across various age groups), the part-time working amounts to 9.3%, compared to the 32.7% EU average. According to a Eurobarometer survey on family life, 72% of Hungarians put a high priority on obtaining easier access to part-time work, the highest percentage in the EU. However, in the case of mothers with children between the age of 6 and 11, the employment level is quite the same as the EU average (69% and 69.4%, respectively), according to Eurostat data sources. Thus, we can point out that while notable hindrances still exist, Hungary managed to achieve a significant progression in this field; however, we have to remark that the wage differences between women and men, e.g. the gender pay gap had increased in the past two years, from 17.6% in 2010 to 20.1% in 2012, which exceeds the EU average of 16.5% (2012 data).

Since January 2013 employers of mothers with small children had the right to a social contribution subsidy. However, this subsidy is no longer available, since very few employers required that (mainly because of its relatively small amount). An employer who wishes to employ a mother just ending her maternity leave or in receipt of childcare allowance, does not have to pay the 28.5-percent national insurance contribution until a maximum monthly gross wage limit of 100,000 HUF (approx. 330 EUR) in the first two years of employment, and has to pay just 12.5% instead of the full amount even in the third year. In 2013, employers required this subsidy for about 33,000 workers with small children, and in 2014 this number is expected to grow even further (approx. 39,000 employees). In addition to this, from January 2014 the duration of the subsidy has been increased by two years (one year with full, and one with partial tax exemption) in the case of parents with three or more children. These measures will hopefully increase the willingness of enterprises to employ parents with young children.

From July 2012, the new Labour Code of Hungary contains an obligation for all employers in the private sector to allow mothers returning to employment after maternity leave to work part-time until their children reach the age of three. This obligation has already been introduced to the public sector since January 2010. With this measure, the government plans to make part-time employment more popular amongst employers and workers alike.

It is also essential in helping mothers being able to return to their workplace to get the fathers taking greater part in the rearing of their children. To this end, the government made the extra paid leave of 2 days per child per year (to a maximum of 7 days per year) eligible also for fathers, not just for mothers as earlier.

In addition, since December 2002, fathers can take an extra five days off work after the birth of their child, in parallel with maternity leave, paid for by the employer, who is then refunded by the state. In the case of newborn twins, since 2012 fathers get seven days instead of five.
Another important provision of the government in the field of the reconciliation of work and family life was the package of measures called “GYED Extra” which had been introduced since the 1st of January, 2014. This package contained a bunch of complex measures intended to foster livebirths, including that since that date, parents are no longer prohibited to work while receiving family allowances like the child-care allowance (called “GYES” in Hungarian) and the parental benefit (called “GYED” in Hungarian, hence the name of the whole package) after the first birthday of their child. (Before that, employment was completely forbidden while receiving the GYED, and only part-time work was possible during the GYES.) This measure was a very important step forward in stimulating parents with young children to return to their workplaces in an earlier period; statistics show that in the second quarter of 2014 the number of women working while receiving child-care benefits increased by about 12,500, which means a growth of no less than 37 percent compared to the same period of 2013. It is also important to note that these women are working mostly in full-time employment.

A wide range of family benefits

Spending on family benefits amounted to 2.7% of Hungary’s GDP in 2012, compared to the 2.2% for the EU as a whole. In general, there are two types of financial subsidies for parents with children: the subsidies that are only eligible for parents being employed, and those allowances (generally with smaller amounts) that are eligible for all parents irrespective of their employment status.

Parents who satisfy social insurance contribution conditions (at least 365 days of employment within the last two years) are entitled to parental leave up to the child's third birthday. In the first 24 weeks following childbirth, the mother is eligible for maternity benefit (called TGYÁS), which is equal to 70% of average gross earnings. After this period, until the second birthday of their child, parents can be eligible for parental benefit (called GYED) amounting also to 70% of their earnings but with an upper limit not exceeding 142,200 forints per month (about €470).

In addition to these allowances which only parents with employment are eligible for, there are other types of child-care subsidies that every parent are entitled to. The monthly family allowance for one child is 12,200 forints (about €40), 13,300 forints (about €43) per child for two children and 16,000 forints (about €52) per child for three or more children. This support is available until the child is beyond school age (e.g. about 18 years of age).

The amount of the child home care allowance for parents or grandparents caring for children under three (called GYES) and a child allowance for parents of three or more children with the youngest between three and eight years old (called GYET), both equal to the minimum old-age pension of 28,500 forints (about €92). In case of twins, the age limit for the receipt of GYES is school age and, in the case of disabled children, it is ten years. From 2011, the amount of GYES in case of multiple births is multiplied by the number of children born. Another favourable measure is that since 2011 parents who adopt children are also eligible for GYES.

After the child’s first birthday, a parent in receipt of the allowance may use a crèche or other type of daycare for children without time restrictions. Grandparents can use the crèche only after the child’s third birthday and only for a maximum of five hours per day. From September 2015, parents will be obliged to take their children to nursery from the age of three until they reach school age (currently it is obligatory only from the age of five).

In order to encourage families to make long-term savings for their children, each baby born after 1 January 2006 is entitled to receive a so-called ‘baby bond’. The baby bond is for every baby and is a one-off payment of 42,500 forints (around €152) which must be deposited on a bank account until the child is 18. If parents make a further payment into this account, the state tops it up with 20% of additional deposit, up to a maximum of 12,000 forints (about €43) In case of a child in foster care, the state pays in the maximum top-up amount.

In addition, both parents are eligible to an extra two days of paid leave per child each year (to a maximum of seven days per year). Before 2012, only one of the parents—usually the mother—was eligible for this extra paid leave, but it was extended to both parents in 2012.

From January 2012, a new so-called fundamental act (Act CCXI of 2011 on the Protection of Families) has been implemented with the aim of introducing stability to the present system of benefits, subsidies and allowances available for families with children. This Act can only be modified or overruled with a majority of 67% or more of the votes in Parliament, so it guarantees stability and predictability to families, and the hope is that this will encourage them to have more children.

Emphasis on developing daycare for young children

The situation about the childcare institutions has already been detailed above; regarding children aged three to six, as we have also mentioned in this document, the situation is much better: 75% of children of that age group were actually enrolled in formal childcare (the Barcelona target is 90%, and the EU average was 83% in 2012). In pre-school facilities, classes are free, as well as care to prevent the emergence of dyslexia and regular healthcare checks. Parents have to pay for meals but children living in poor families or in families with three or more children are given food for free. Since 2011, children have received free meals in all primary school classes.

The proportion of children at risk of poverty is at 43% in 2013, while the EU average in that year was 27.6%. According to 2012 data, it was estimated that some 15% of children live in jobless households, compared to 11.1% in the EU. As part of efforts to alleviate child poverty, free or discounted meals in crèches, nursery schools and in the first seven grades of primary schools are provided to children from low-income families. In certain cases, children can also get their school textbooks free of charge.

Family-friendly workplace award

Since 2000, Hungary has had a family-friendly workplace award to give recognition to companies and institutions that have introduced measures facilitating a better work-life balance among employees. Part of the government’s thinking behind this idea is to create best practice models that other companies can learn from. The Hungarian government revised the scheme and published a new edition of it in 2011.

The competition takes place every year and is run by the Ministry of Human Resources. The award is worth 22,700,000 forints (about €75,000) in 2014. The categories have been revised and now include small, medium and large enterprises and government bodies. Companies need to apply in order to be considered for the award. In 2014 the authorities received around 400 valid applications, from which 40 were selected for the award. The winners of the competition can use the ‘Family-friendly Workplace’ logo for a year which increases their visibility and status. They are also are entitled to a non-refundable grant of between 200,000 (€650) and 600,000 forints (€1,950).

Family-friendly workplace award

Since 2000, Hungary has had a family-friendly workplace award to give recognition to companies and institutions that have introduced measures facilitating a better work-life balance among employees. Part of the government’s thinking behind this idea is to create best practice models that other companies can learn from. The Hungarian government revised the scheme and published a new edition of it in 2011.

The competition takes place every year and is run by the Ministry of National Resources. The award is worth 20,000,000 forints (about €70,000) since 2011. The categories have been revised and now include small, medium and large enterprises and government bodies. Companies need to apply in order to be considered for the award. In 2011 the authorities received around 65 valid applications, from which 18 were selected for the award at the end of 2011. The winners of the competition can use the ‘Family-friendly Workplace’ logo for a year which increases their visibility and status. They are also are entitled to a non-refundable grant of between 1,000,000 (€3,600) and 2,500,000 forints (€8,900).

As a result of the success of the 2011 award, the Hungarian government plans to continue it into 2012 as well.