Photographer: Bartek Sadowski/Bloomberg

Why the New Poland Offers Handouts for Kids That Exceed Norway's

  • Child welfare payouts to cost half as much as national defense
  • Poles selling some freedoms for financial comfort, mayor says

Poland’s new rulers have outraged their biggest benefactors, stifled opponents and threatened foreign investors -- all while keeping their supporters happy with promises of unprecedented largesse.

QuickTake Poland’s Populist Turn

Welcome to the country’s latest post-communist incarnation: The right-wing Law & Justice party is moving at breakneck speed to upend the status quo with the European Union and impose a new social compact that mixes Scandinavian generosity with a touch of Kremlin imperiousness.

The largest test of this political pivot comes in a few weeks with a child-subsidy program that’s more generous than oil-rich Norway’s. The handouts will lift an average family of five’s income by a quarter. The goal is to narrow a yawning wealth gap and reverse what is projected to be one of the steepest population declines in Europe. Critics of the initiative, which will cost almost half as much as national defense and endanger crucial funding from Brussels, call it a populist ploy to distract voters from a nationalistic agenda.

“People come to city hall almost every day to ask about the money that Law & Justice has promised,” Robert Biedron, the independent mayor of Slupsk in northwest Poland, said by phone. “They appear to be willing to sell some of their freedoms for more financial comfort.”

‘Painful Inequality’

It’s a deal worth making for millions of Poles who are still earning just a fraction of what their Norwegian and German counterparts do even after two decades of uninterrupted annual growth and 100 billion euros ($109 billion) of EU aid.

Mariusz Kosowski, 31, said the 2,500 zloty ($625) he brings home every month from his job at a warehouse 100 kilometers southwest of Warsaw isn’t enough to provide for his wife and three young boys, so she has to work part time for the extra 1,000 zloty they need just to scrape by. 

But that will all change when the government starts paying families 500 zloty a month for every child born after their first. For the Kosowskis, that will mean an income boost of about a third, making the difference between having a small financial cushion and none at all. Norway pays a similar amount, but average incomes there are five times higher -- almost $5,000 a month.

“This is going to be a serious financial injection for my family,” Kosowski said, praising Law & Justice for being the first party “to force people on the top” to think about the plight of everyone down below. “The inequality in this country is so painful, how did the other parties not see it?”

Twin Brothers

Law & Justice, founded by former premier Jaroslaw Kaczynski and his late twin Lech, a former president, returned to power after eight years with pledges to stand up for ordinary Poles and redefine the nation’s role within the EU. The parliamentary majority it won in October was the first by any party since communism ended in 1989.

Buoyed by expected economic growth of 3.5 percent both this year and next, the party has already increased the minimum wage and plans to introduce minimum hourly pay for part-time workers, raise the threshold for tax-free income and cut the retirement age.

At the same time, Law & Justice has tightened its grip on the constitutional court, state media and the secret services, prompting EU authorities to open a probe into the “rule of law.” Standard & Poor’s cut the country’s debt rating for the first time, citing a dangerous weakening of “checks and balances.”

The zloty has weakened 3.2 percent against the euro since Law & Justice took over, the most of any currency in eastern Europe after Russia’s ruble. Warsaw-listed stocks dropped 13 percent in the period, compared with an 8.4 percent decline in the MSCI emerging market equity index.

Ryszard Petru, leader of the pro-market Nowoczesna party, is urging people to take to the streets of Warsaw on March 12 to pressure Law & Justice to “respect Poland’s constitution,” adding to anti-government rallies in the capital and in Gdansk that have been attended by tens of thousands of Poles.

Still, the latest TNS poll shows support for the party at 40 percent, one point more than it earned in the last election and five points greater than the combined total for its two main opponents, Civic Platform, which ruled for the previous eight years, and Nowoczesna.

Winning Bid

And it’s not just welfare and wages that the party is betting big on.

Prime Minister Beata Szydlo’s government last month announced plans to invest 1 trillion zloty, an amount equal to almost half of Poland’s gross domestic product, into manufacturing and innovation over the next several years to help the country of 39 million people catch up with wealthier EU members. 

Almost half of that sum is projected to come from the EU, with the rest from state companies, debt markets and higher taxes on banks and retailers and, possibly, the general public, a move fraught with potential political peril.

The European Commission has already said that the new child payouts alone will help push Poland’s budget deficit to 3.4 percent of GDP next year from an estimated 2.8 percent this year. This would breach the EU’s 3 percent cap and jeopardize billions of euros in funding from the 28-member bloc.

But none of that will stand in the way of Law & Justice’s zealous efforts to chart a new path for the country through the power of the purse, according to Andrzej Rychard, a sociologist at the Polish Academy of Sciences.

“Neither the opposition nor the European Union, itself plagued with a sluggish economy and the immigration crisis, can outbid the offer that Law & Justice has put on the table for Polish voters,” Rychard said.

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