In Translation: Government, facing a demographic crunch, debates birth rate stimulus

Article by Margarita Papchenkova, Tatyana Lomskaya. Translation by Nick Trickett.

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The Social Block wants to extend a childbearing incentivization program that pays new months. MinFin wants to switch to targeted support. (Photo: E. Razumniy, Vedomosti)

The Government’s social block has proposed a package of measures to stimulate Russia’s declining birth rate, two Federal officials have told Vedomosti. Vice Prime Minister and Social Block leader Olga Golodets’ press secretary confirmed the move, noting the necessity of continuing current measures and the development of new ones.

After a baby boom in the 2000s, one that peaked in 2014, the birth rate began has resumed falling. Per Rosstat data, in Q1 2017 the birth rate fell 10.1 percent year-on-year. Natural population decline reached 76,100 people against 34,700 a year earlier (see graphic).

The Ministry of Labor has sent the Ministry of Finance a large list of possible measures, two of which require large budget injections, say officials. A meeting on demographics and stimulating Russia’s birth rate with President Putin took place in mid-June, which Kremlin Press Secretary Dmitry Peskov confirmed.

The Ministry of Labor has called for the continuation paying out birth incentives – the maternal capital program – until 2023, said Minister Maksim Topilin. The program was launched in 2007 and is currently authorized to run through to 2018. It costs around 400 billion rubles a year, with half state expenditures going to maternity support. Additionally, Prime Minister Dmitry Medvedev ordered extra support for women who give birth to two kids before the age of 30. MinFin is against the simultaneous extension of birth incentives through 2023 and the new incentive, notes a ministry official: “The automatic extension of the birth incentive program will actually disincentivize giving birth to two kids, since there remain few years until the program is scheduled to end.” And it’s not just a matter of significant long-term budget commitments. MinFin, as usual, doesn’t like the lack of targeted-ness and criteria for needs, he adds.

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MinFin, whose representative refused to comment, has proposed an alternative, two officials say: to extend payments of maternity benefits to 2019 and then reform the program. The Ministry, in its words, has put forward two conditions: only pay the incentives in regions where the birth rate is lower than the average in Russia through natural population loss from internal migration, and only to those families whose incomes fall below the subsistence minimum after the birth of a second child. MinFin is ready to direct the money saved to other birth rate stimulus measures, such as additional targeted payments and benefits.

Another of the Social Block’s ideas is to significantly increase the childcare allowance for women who give birth before they turn 25. A representative of the Ministry of Labor confirmed the idea to incentivize women to have their first child earlier. But a different demographic problem then arises, says an official. “There’s a risk that women won’t receive their education or acquire a profession in time before they’re 25 – and this will lead to the withdrawal of women from the labor market which, in conditions of a declining working population, will further exacerbate the labor deficit.” It’s unlikely the measure will lead to an explosion of fertility, says Tatyana Maleva, Director of The Institute for Social Analysis and Forecasting of the Russian Academy of Sciences. “This is a global trend: a woman is career-oriented.” It “will still be pennies,” Yevgeny Gontmakher, Deputy Director of The Primakov Institute for World Economy and International Relations, is convinced. “They’re talking about an increase of 200-500 rubles” (between $3-9).

Officials in the Economic and Financial Block agree: it’s necessary to understand the causes of birth rate decline before stimulating it. The drop in Russia’s birth rate is connected with demographic waves, says one of them: the baby boom of the 2000s was linked with the baby boom of the 80s. Now the children of the 90s are entering their childrearing years and in that decade, there was a birth rate collapse. The fall of the birth rate can also be connected to the growth of poverty, another federal official believes. In such a case, it may necessary to fight poverty rather than to encourage the poor to give birth.

It will still be pennies… they’re talking about an increase of 200-500 rubles.

Meanwhile, the real income of households has fallen for the fourth year running. Experts at the Higher School of Economics Policy Institute calculate that for the two years leading up to the start of 2017, incomes contracted 12%, and by 2.2% in the first four months of 2017. Over 2014-2016, the percentage of Russians living below poverty line grew to 13.5%. Even more important for the birth rate is the level of subjective poverty, notes a Federal official. On average for 2016, 40% of the Russians experienced problems purchasing food or clothing. To give birth, people need believe in the future, argues the official.

Most of all, people put off having children due to material difficulties and uncertainty about tomorrow, according to almost half of respondents in a Rosstat poll conducted in the first quarter. A little more than a third of respondents cited housing difficulties. In fourth place on the list of obstacles was a lack of men for women and lack of work for men.

It’s generally accepted that for ten years, birth incentives were effective, but the program was working a backdrop of economic growth, social stability, and a favorable demographic situation, says Tatyana Maleva. Even now, incomes are falling, social stability has been replaced with tension, and the number of mothers of reproductive age is “obscenely low.” She points out that “this is the demographic cliff that emerged in the 90s.” Gontmakher agrees, saying that in order to see an increase in the birth rate, people should see good prospects, and this depends on the general policy of the state,

Gontmakher says that the overwhelming majority of families who received a certificate for maternity benefits have not yet spent the money. Of the three possible goals – education for the child, living conditions improvements, or a co-contribution to the mother’s pension – most often the money is spent on housing. However, not every family needs it, or they choose to take a small amount in cash, he says.

Maleva advises that more beneficial measures to boost the birth rate could include, as in the rest of the world, the development of services for families with children, access to obstetrics, the construction of kindergartens and nurseries, and the development of the market for nanny services.

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