Fico unveils second social package

PRIME minister and Smer chairman Robert Fico, at the governing party’s congress in Bratislava on May 23, unveiled the cabinet’s second social, economic and financial package comprising 15 items worth a total of €200 million.

PM Fico announced a package of social measuresPM Fico announced a package of social measures (Source: SITA)

Measures to be introduced via the second package include an increase in the minimum wage (currently at €380) closer to €400, VAT reduction applicable to selected basic foodstuffs such as meat, milk and bread to 10 percent as of next year, a cut in payments for medicines used by children and pensioners and renovations at 13 hospitals. “The cap on quarterly payments for medicines is to be cut from €42 to €25, and a cap of €8 per quarter on medicines for children up to 6 years of age will be introduced,” Fico said, as quoted by the TASR newswire. 

In an effort to bolster the support for families and regions grappling with an unemployment rate topping 20 percent, the government will also usher in a system of assistance benefits, among others, public and private investments, the building of infrastructure and employment support. The state’s allowance towards childcare for the parents of children up to 3 years of age is to be raised from €230 to €280. The maternity allowance is to be raised from 65 percent of a parent’s income to 70 percent. These measures are intended to raise the employment rate of mothers.

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The government is also set to chip in towards the trips and skiing courses of pupils and students as well as subsidise holidays for low-income families in state-owned accommodation facilities; to introduce a subsidy towards heating insulation of people’s homes and further investments aimed at increasing energy efficiency. A measure introducing a cheap bank account for everybody that will cost banks €70 million was also announced; in practical terms, this is designed to translate into one free bank account for low-income groups, while the rest of the people should be entitled to a bank account setting them back  €3 per month at most.

A batch of measures introduced in the first package last year had no unfavourable impact on the deficit or public debt, Fico opined. “It was covered from more effective tax collection and an effective fight against tax evasion,” the PM said. “It didn’t entail any rise in taxes and levies, and it didn’t make any use of revenues from sales of state assets, nor was it related to the reopening of the pension system’s second pillar. The same rules will apply to the second social package,” he concluded, according to TASR.

The Smer party is aware of society’s expectations in the year ahead of the general election and is responding to them, political analyst Michal Horsky said afterwards. The initiative is not only a serious offer to consider come the election next March, but also a gauntlet thrown to political rivals, he told TASR.

Previously a party that promoted its centrist and leftist orientation and the interests of the working population, Smer is now becoming a party that is seeking to touch everybody’s heart, said Horský.

The second social package is more rational than the first social package, analyst Ján Baránek said, adding that “it lacks support for the middle class. Unless its growth is supported, money to support the poorest part of the population – for which the measures are destined – will be lacking.” That said, he praised pro-family measures such as increasing the maternity allowance. On the other hand, he was somewhat taken aback by measures such as subsidies towards heating insulation of homes and energy investments in apartment blocks.

These measures are tailor-made to fit a group of people that the governing Smer party believes are its supporters, Freedom and Solidarity (SaS) party leader and MEP Richard Sulík reacted. Most-Híd chairman Béla Bugár weighed in by saying that the package of measures confirms that, since it took power three years ago, the government has failed to introduce systemic measures to improve people’s standards of living. According to Bugar, Smer has devoted its attention in the past three years to catering to the interests of entrepreneurs close to the party, rather than addressing problems plaguing regular people. 

Christian Democratic Movement (KDH) vice-chairman for public finances Miloš Moravčík called the package a “disappointment” for people, as the cabinet had only earmarked €200 million for it. “This is not only less than the amount of the first package, but first and foremost it's just a fraction of the increase in revenues from taxes and levies,” said Moravčík. The Smer party has already distributed one package of finances since it took power in the spring of 2012 – a total of €1.4 billion to oligarchs and sponsors, said Christian Democrat (KDH) vice-chair Pavol Zajac on May 22.

The costs of the second package could amount to €300 to 400 million, the Sme daily wrote.

“These measure concern only some groups of the population; and it is questionable whether people won’t be worse off after these packages are scrapped,” analyst Martin Reguli of the F.A. Hayek Foundation in Slovakia told Sme. He continued to say that government collects money from the self-employed, medium and small businesses and re-distributes it to the less productive citizens, trying to garner political plus-points in the process.  

A third package of measures is slated for early 2016.

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