Hungary pays couples who pledge to have babies

Newlyweds Gabor and Zsuzsi have big plans. It doesn't take a detective - like Gabor - to see that Zsuzsi will become a mother any day now. "We are expecting a little girl," Gabor announced from the living room sofa in their rented flat, adding that he will carry on with his police work, while Zsuzsi raises the child at home.

"We immediately applied after we heard about the scheme on the radio last January, and were specifically interested in the '10 + 10 deal,'" Gabor added, referring to the "full CSOK" 10 million forints (32,250 euro) grant and 10 million forint low-interest loan deal that the Hungarian government is offering to married couples aged under 40 who commit to raising three children or more. 

Within months of hearing about the deal, a new Hungarian was on the way. However, after a bureaucratic struggle involving "10 application forms," Gabor and Zsuzsi gave up. "The stipulation that we had to provide the 20 million forints up front and be reimbursed later was just not realistic," explained the police officer, who requested DW not use his real name.

Last year the Hungarian state paid out 81.5 billion forints to some 34,500 families through the CSOK scheme.

However, some have begun questioning whether CSOK is addressing Hungary's demographic crisis or simply boosting its GDP figures. The outflow of young and educated Hungarians since Viktor Orban returned to power in 2010, coupled with 26 years of declining birthrates, has started to cause problems. Around half of the firms in Hungary struggle to fill vacancies, according to a report by ManpowerGroup, placing the country's skills shortage among the most acute in the EU, after Romania, Bulgaria and Greece. Moreover, Hungary has Europe's worst intergenerational social mobility rate, a recent study found. Demographics experts fear CSOK may further cement these social divides.

Similarities to communist family policies

Government spokesman Zoltan Kovacs shrugged off Hungary's wide economic disparity gap as just "one element," and pointed to the larger context of new social and family policies: "CSOK is going to boost the Hungarian building industry, and it helps Hungarians reach their desire for their own home," he told DW.

That latter point is disputed by Dorottya Szikra, a sociology professor and researcher at the Hungarian Academy of Sciences (MTA): "CSOK is absolutely for the middle class, people who already own property." She underlined that CSOK applicants must put up their own money.

Szikra noted that earlier state housing assistance schemes had been eliminated to make way for CSOK, meaning that people struggling to maintain their homes now receive little or no assistance from the state. "Demographic experts say family and population policies need a longer-term, more designed and complex program," she added.

"With CSOK, Orban wants to promote those who work and diminish the other parts of the welfare state," Szikra said. "I see similarities in family policies between the [long-term communist leader Janos] Kadar regime. The difference is that [Kadar] had a more complex population policy program, which also included housing policy. Today's family policies are less coordinated."

According to Balazs Kapitany, deputy director of the Hungarian Demographic Research Institute: "CSOK may help middle class families with three children, but it will not have a significant demographic effect."

How to get more babies?

Another "full CSOK" applicant is Zoltan Kalmar, chief sales officer at ingatlan.com, Hungary's largest property website, and a father of two. "We are building a twin house with another family, at a combined cost of 220 million forints," he told DW. "But actually CSOK is a bad thing for me, because construction workers' fees have gone up by 20 percent," he said, adding that property prices had risen by more than 30 percent in the last year.

Kalmar also pointed to the risks involved in taking advantage of CSOK. "We are planning to have a third child, but if - for whatever reason - we don't, we'll have to repay it at a much higher interest rate after 10 years." He was, however, upbeat about CSOK's potential demographic impact: "In my opinion a lot of people with two children are thinking 'Let's have another one - why not?'"

If anyone fits the profile of the citizen that the Hungarian government wants to keep within the borders, it is surely Mate Losonczi. A trilingual engineering graduate who married his high-school sweetheart, he has two young children and commutes from Szeged to the vast tire factory of multi-national firm Intercontinental in nearby Mako. Losonczi and his wife applied for one of the "mini-CSOK" schemes that offers families smaller sums for a small step up the housing market.

"We nearly gave up at one point, but finally we got it," he told DW, after explaining his and his wife's odyssey thorough CSOK's labyrinthine application process. The 1.6 million forints (5,158 euros) have enabled them to move across Szeged to a larger flat. 

"I think CSOK is really good for the middle class: You can buy a house if you don't already own one," he said. "I know people in Szeged with their own downtown flat, who thought: 'Why not buy a plot and build a new house and rent out the old flat?'" he told DW.

"We know what the government wants: more Hungarians, because we are getting older and older and pensions are becoming a big problem, but you can see that it doesn't really work. In Germany or in the UK people earn much more money, and babies aren't being born there either," Losonczi added.

Demographics expert Kapitany echoed this sentiment: "If we knew the answer to the demographic position we would do it. Population policy is very complicated and can have a bigger impact in non-democracies - and Hungary is still a democracy."