Hungary pays couples to have babies: Does it work?

0:00If you were offered tens of thousands of dollars in interest-free loans and subsidies in exchange for having children, would you do it? A tempting offer. Well, that is the offer the government of Hungary has been making in an effort to confront the country's chronic underpopulation. After taking power 16 years ago, the country's then-Prime Minister, the ultra-conservative Viktor Orban, introduced a slate of aggressive policies to encourage more people to have babies, because Hungary's population was shrinking. And it's not just Hungary. Fertility rates have been falling around the world for years now.

0:40And plenty of countries have been trying policies similar to Hungary's. But do any of them actually work? Or are declining fertility rates an inescapable symptom of being a developed nation in the 21st century?

0:58From the BBC, I'm Tristan Redman in London. And I'm Asma Khalid in Washington, D.C. And today on The Global Story, why are people having fewer babies? And, well, anything, make them have more.

1:17Stephanie Hegarty, so great to have you back on the show. Great to be back. Thanks for having me. Yeah, it's a pleasure. I wasn't on with you last time, so thanks. It's really nice to be able to speak. So to get into this story about fertility rates and demographic changes, Asma and I brought back friend of the show, Stephanie Hegarty, the BBC's global population correspondent. Now, Stephanie's been reporting this story on the ground in Hungary. And I began by showing Stephanie and Asma a very interesting photo that I encountered. It's of a Hungarian government billboard, and it features a beautiful couple looking quite cosy together.

1:54And in Hungarian, the billboard reads, support for young married expectant parents action plan for family protection. But it's not so much what's written on the billboard that interested me. Now, this is a question for both of you, Asma and Stephanie. It's a test, yes. Do you recognize the couple in the picture? No. Asma? No. I mean, they looked a bit like that for a second. There was that meme off that you saw that went around everywhere.

2:26Stephanie Hegarty:Yeah. Do you know that meme where it's like... The guy who's checking out some of the girls. Yes, yeah, yeah. Am I right, Tristan? Very good, Asma. Are these a meme guy? Really? That is some good meme knowledge. What do they call this guy again? There's a name for him. They're called distracted boyfriend or guy looking at another girl. So for listeners, this is the famous meme that you're likely to have seen a lot on social media where there's a couple walking down the road and the guy in the couple is turning around and checking out another woman in a red top who's just walked past. Now, so what we're seeing in the Hungarian billboard is actually not the girl that the guy is checking out, but his actual girlfriend.

3:04Yeah, I was wondering which girl. Yeah, yeah, let's go back to that for a sec. Sitting on a sofa and they're having a cuddly moment and they're looking very happy and they're promoting why it's good to have kids in Hungary. So my question to both of you, given that this couple are arguably the couple on planet Earth who maybe have famously some tension in their relationship, do you think you would advise them to have a family together?

3:30Stephanie Hegarty:Maybe they've been through a lot of therapy and worked through their issues. Who knows? Who am I to judge? Exactly. That was some very good fence sitting there, Asma. Well done. Well, this takes us to the main meat and veg of what we're here to talk about today. Attempts by the Hungarian government to get people to have more babies. Now, Hungary is a particular example of a country in the developed world. There are many which have declining birth rates. But Hungary is a particularly intriguing case study, and you've been reporting on it, Stephanie. Why is Hungary so interesting in this story? So I went to Hungary because, not only because they have this fascinating example of what happens when you try to throw a lot of money at this issue of fertility decline, but also because the BBC World Service is launching a new Hungarian service.

4:25Stephanie Hegarty:So a platform in Hungarian for a Hungarian audience that will look at news, politics, but also society and culture. So Hungary in 2010, when Viktor Orban came into power, he embarked on these really ambitious pronatalist policies. So policies to convince people to have more children. And he threw a huge amount of money at the problem, probably arguably more than any other country in the world. It was four to five percent of GDP, billions every year. And it was a whole array of policies to try and convince people to have babies. And there is an upfront payment, which is quite a lot of money that couples can get.

5:00Stephanie Hegarty:It's about thirty five thousand dollars that couples can get when they promise to have children and they have to have them within the next five years. Then there's tax breaks that increase with every child that you have. There's really generous maternity pay. You can take three years off work and still get paid if you decide to go back to work early. Three years off work. Yeah, that would be stunning for Americans, I imagine. Yes. You're lucky if you get five months, and that's extraordinarily generous. Then you can also get mortgage subsidies, subsidies to help renovate your home, to buy a bigger car.

5:28Stephanie Hegarty:They also increased the number of childcare places across the country quite dramatically. So there was a really wide range of help, and a lot of it financial for young couples once they promised and once they delivered on that promise to have more kids. Are these policies available across the board, regardless of your income, regardless of your marital status? even? No, these policies were designed only for married couples, only for heterosexual couples, and designed in such a way that they're only available to people in the formal job market, and the informal job market is just under 15%, so pretty big in Hungary.

6:04Stephanie Hegarty:And they're also tied to income. So the richer you are, the better you're going to fare in all of this. So all of these were initiatives by Viktor Orban, and he was quite upfront when announcing this, and his government was quite upfront, that the objective was to have Hungarian babies. We are living in times when there are fewer and fewer children born in Europe. Rather than supplement the population with immigrants. For the West, the answer to that challenge is immigration. For every missing child, there should be one coming in, and then the numbers will be fined. Fertility is declining in most of Western Europe, in the US, but our populations on the whole continue to grow, partly because of immigration.

6:47But we do not need numbers. We need Hungarian children.

6:53Stephanie Hegarty:Viktor Orban was very clear. He said from the off, we want to get our replacement rate back to the level where we can naturally replace our population ourselves without having to bring people in from abroad. Stephanie, when we look at government initiatives to boost having babies, This is happening in the context of a number of countries seeing fertility rates decline. Here in the United States, for example, the fertility rate is 1.6 births per woman. We've heard a lot about the need for people to have a certain number of children in order to keep the population at a steady rate, to replace the population.

7:28What does that mean?

7:29Stephanie Hegarty:So if we want to keep the population stable, forget immigration or out-migration, if you just want to keep the population among the people who are already in the country stable, every couple needs to have 2.1 children over the course of their lifetime. The two is obvious, that's to replace the mom and to replace the dad. And the 0.1 is for those who might die early or die early in childhood. So that is the kind of golden number 2.1. When your fertility rate is at 2.1, your population will be stable, irregardless of immigration or emigration. Okay, so this is an issue which is affecting large swathes of the developed world.

8:08How did Hungary get into this situation in the first place?

8:13Stephanie Hegarty:So a lot of countries in Eastern Europe after the fall of the Soviet Union saw a lot of emigration and their fertility rates declined because economies were struggling and a lot of young people were leaving. So Hungary, like a lot of other countries in the region, ended up with really low fertility rates, it also had a declining population because so many people were leaving. Well, can we talk a sec about Viktor Orban? How do his political views as a kind of well-known hard right political leader in Europe play into all of this and inform his views on population growth? So this was 2010. It was just around the time that we were starting to see a huge amount of immigrants come into Europe as a result of the Arab Spring and the war in Syria.

9:00Stephanie Hegarty:So this all informed his policy over the next 16 years. And he was very clear. We want Hungarian babies. Hungary thinks differently. We are not willing to offset our population decline with immigrants. So it was definitely a right wing message, a far right message in some respects. But it was also very, my sense is, you know, from being hungry two weeks ago is that it is quite a popular sentiment. These are things which are deeply, deeply personal for families. What did the families that you met with in Hungary tell you about these policies and how they're affecting them? So we spoke to one very happy family of five, seven, sorry, five children.

9:44Stephanie Hegarty:They said the policies have been really helpful in them building their family. and they were taking advantage of almost all of them. The dad is Matei Grundy. He's eligible for lots of tax breaks that increase with each child. And the mom, Aggie, she doesn't work at the moment, but if she does go back to work, because she has more than two children, she doesn't have to pay any income tax at all. That used to be, yeah. I mean, it used to be for families of four or more, and now it's for two or more. So any woman with more than two children below a certain age will pay no income tax at all. Five children, though, you mentioned.

10:20Stephanie Hegarty:Wow. What's the age gap? Under nine. What they told us is they have five at the moment. So, yeah, they were really, they spoke glowingly about the policies. And they said that in their neighborhood, they've noticed that big families with four or five kids are quite common. That doesn't really seem to be borne out by the statistics. But that's a kind of wealthy, suburban neighborhood of Budapest. And they're exactly the kind of people that I think Orban and his party were targeting with these policies. But we spoke to several other families. So a couple in the city who have one child, so far in plan to have two, and they did take advantage of some of these as well.

11:01Stephanie Hegarty:But they said it didn't actually affect how many children they were going to have. And I think this is the more common experience that people will, of course, take advantage of the essentially free money that they're entitled to. but that it may not really affect their intentions when it comes to having kids. Do you mean that they were intending to have kids anyway and that the government subsidies were just a bonus on top of that? Exactly, yeah. Well, you've also been speaking to a family that's really been struggling to have kids. What did they tell you? So when these loans came out about five years ago, you had to promise to have your first child within the next five years, or you would be liable for penalty interest.

11:48Stephanie Hegarty:And we spoke to this young couple, Barbara and Levi, who have been trying, doing everything in their power to have a child. And, you know, as soon as they figured out they couldn't conceive naturally, things got really, really complicated for them. They have managed in that time to fit in three rounds of IVF. And when we first met them... Through the loan money, presumably? Yeah, I mean, some of the IVF is sponsored by the Hungarian government. But of course, you know, as with many government schemes, there's a lot of delays. You have to do it in certain government facilities. And those are often far away, you know, hard for people to get to.

12:22Stephanie Hegarty:And yeah, the facility that they used, it was 45 minutes from their house. So Barbara said it was always hard to get off work, that her bosses were understanding. but it was just a nightmare to fit all of this in because she had to go to those particular clinics. So they'd had to do quite a few things on the private, privately just to speed things up. So it was all very, very bureaucratic and difficult and is huge. I mean, Barbara had a stack of paperwork that she's been gathering over the years, not only to make sure she does everything by the book so that she can show the government how hard she's tried to have a child.

13:00Stephanie Hegarty:But also to make sure that if it doesn't happen, that they're not on the hoof for these huge payments. So when we first met them, it was just the night before they were going back for a blood test. They'd done an embryo transfer 10 days before and it was their third time. So they were obviously incredibly anxious. Anxious not just about whether they might be pregnant or not, but also So, you know, this loan is still hanging over them. What's going to happen if they don't get good news? And, yeah, we were with them the following day where sadly they found out that she wasn't pregnant. That was their third attempt at IVF.

13:42Stephanie Hegarty:They may have to go through five rounds to prove that they tried hard enough so that they don't have to pay this penalty interest. And it's a lot of money. their repayments could quadruple to almost an amount equivalent to Levi, he's a chef, to his salary. Well, we should emphasize that Viktor Orban was just very recently voted out of office and he's been replaced by a new prime minister called Peter Magyar. Do we know if Magyar intends to pursue the same policies that Orban instituted? It's likely that he will. The policies are popular. In the campaign trail, they said that they, on the whole, would.

14:16Stephanie Hegarty:But at the moment, they've told us that they're reviewing the policies and that they're going to announce their plan soon. But the new government has also said that they're looking at ways to help people who couldn't have the children that they promised they would. I mean, having kids and trying to have kids can at least be, for some people, an incredibly stressful experience. I can't get my head around what it must be like adding that extra layer of stress around loans into the bargain. I mean, how do they feel about all of this? Yeah, I mean, Barbara said it was a huge cloud kind of hanging over her and definitely adding a whole layer of anxiety to an already intensely anxious experience and process.

14:57Stephanie Hegarty:Barbara said she's just not sure she can do another two rounds. It's been so, so difficult.

15:17Well, do these incentives ever work, Stephanie? I'm sitting here talking to you from Paris. Now, France has believed itself to be underpopulated since the 17th century. And they've been trying these kind of incentive packages. It's a long time. They've been trying incentive packages almost all of that time. They exist to this day. And France, you know, if France had the fertility rate that it's supposed to have, it would have something like a population of 150 million people. It's way, way short of that. Like, do these things ever work? What do you mean by supposed to have? If France had the same population growth that Britain has, for example, it would be around 150 million in population.

16:02As it is, it has a population of almost the same size as Britain's, give or take. But given the size of the country, it should be much, much larger. and they've tried very hard to incentivize people to have children, not just over the last decade, but over literally centuries. And there's no evidence that that's worked. But does it ever work?

16:25Stephanie Hegarty:Some would argue that they did work in Hungary, that they did help to boost fertility rate over a short period, and that maybe there are a certain section of the population who really would like to have more children, but can't because of finances. But the limits of these policies shows that that section of the population is probably quite small. Most people, if they want to have a large family, they will do their best to do it, whatever their circumstances. Many people just don't. Stephanie, you've explained that falling fertility rates are not distinct to Hungary. This is a trend we've seen in a number of other countries.

17:04And I want to know if other nations are looking, if other governments are looking at what Hungary has done. Are they trying to replicate this? Are they taking on other incentive programs of their own, trying to encourage people to make more babies?

17:18Stephanie Hegarty:I think governments will be looking at this, but there will be very few that will be willing to spend this much money, 4 % to 5 % of GDP. South Korea has been trying for a long time to boost fertility rates with upfront payments and childcare subsidies and large amounts of money given to couples if they have a child. The South Korean government offers parents upfront payments of about$30 ,000 per child when the child is born and then help every month, as well as vouchers to help them pay for childcare and various other incentives. So there is quite a package available to Korean parents when they do have children.

17:53Stephanie Hegarty:But it hasn't made any dint really on the fertility rate. The fertility rate has just continued to drop, actually. It has one of the lowest fertility rates, right, in the world, I was thinking? Yes, it has the lowest fertility rate in the world. And it did when they started these programs as well, but it just continued to slide. So I think in a certain sense, it shows the limits of trying to give people money to convince them to have babies. And it just shows how complex that decision is. It certainly seems to help some people. You know, there are demographers who will argue in the past few years, South Korea's fertility rate, it went down to 0.7.

18:30Stephanie Hegarty:That's the lowest in the world and the lowest that the world has ever seen. But it's back up to 0.8 this year. So some people will argue, well, that is the positive effect of all of these policies. And others will argue, well, no, I think they just hit rock bottom and it's just fluctuating. Why is their fertility rate so low, Stephanie? So there are many different theories, lots of different issues in South Korea, really. The cost of living is very high. The cost of parenting is very high. And that's for a few things that are unique to that region. One is education. So they have this intense cram school culture where parents have to pay for their children to go to school after school to have all of this tutoring.

19:13Stephanie Hegarty:And that's all very expensive. It's highly competitive, highly competitive education. seen highly competitive workplace. So you have a dynamic where people are expected to work very late. And when a couple gets married and has kids, the expectation is the man will continue to work late and the woman will not. The effect of that is twofold. One, that women feel like they end up doing a lot of the domestic work and the childcare, as well as having to hold down a job. And they have to do that on their own. And the theory is that that's not a very attractive prospect for young Korean women anymore.

19:47Stephanie Hegarty:The other thing is that the effect is it creates a lot of discrimination in the workplace. So young women, when they get to the age of getting married and having kids, their bosses start to discriminate against them in the workplace. They're just not expected to be as competitive as men. And so the theory there is that young women are saying, no, I'm not going to get married. I'm not going to have children because I don't want to send my boss the message that I'm not competitive enough. So yeah, that competitive work culture is just not conducive to family life in any way. You mentioned specifically what was going on in South Korea, but broadly this is happening in so many countries.

20:29Do we have a sense of why?

20:32Stephanie Hegarty:The big why, why it's been happening since the 1950s, I suppose, in many places, is that we have access to really reliable contraception. And that's come along with a huge boom in female education and women entering the workforce. So we now have economies in most parts of the world where both parents do have to work. But in the past five years, since the pandemic, we've seen this rapid fertility decline. And that's likely to do with all of the uncertainty that we've seen since the pandemic. So fertility rates did drop during COVID. And that's quite common that when we have crises and we have instability and people aren't sure about the future and people are scared, they naturally think it's not the best time to have a child.

21:20Stephanie Hegarty:We then had the Ukraine war and the inflation issues that are also global trends. We now have the war in Iran and inflation again. And then these much bigger patterns of instability and insecurity, like a very toxic political environment, social media that is creating a lot more conflict in society. You know, all of these macro patterns contribute to just a feeling of instability, climate change, AI now. I think there are lots of indicators that people are just not feeling as safe or stable about the state of the world. If all the measures that a country like Hungary has thrown at this problem in the last decade and a half haven't entirely worked, are there any tactics that high-level demographers would say, look, you need to try this, this is going to work?