Russia launches cash incentives to boost birth rate

By on 15/03/2018
New children born to poor Russian families will attract subsidies (Photo by Adam Jones adamjones.freeservers.com)

The Russian government has launched a new set of initiatives designed to boost the country’s birth rate, offering cash rewards and mortgage subsidies to poor families in a bid to reverse a steady population decline.

Families earning less than 1.5 times the ‘minimum subsistence level’ – a key poverty measure – are to receive 10-11,000 rubles (US$175-190) per month until their first child reaches 18 months of age. With the minimum subsistence level varying between 9000 and 18,000 rubles – it is set at the regional level to reflect the different costs of living – the subsidy represents a major boost to the incomes of poor families in their child’s first months.

Two counts too

For families having their second or subsequent child, the government has announced the extension of its Maternity Capital programme. Originally launched in 2008 with a ten-year lifespan, the scheme is now to be continued for poor families – who will receive a one-off payment of 300,000 rubles (US$5200) for children born or adopted until the end of 2021.

In addition, poor families with more than one child will be eligible for subsidies against their mortgage payments. Second children will entitle their parents to subsidies lasting three years, and third children for five years, as long as their mortgage interest rate is above 6%: the average bank rate is 11-12%.

Difficult demographics

Originally announced in December, the initiatives are intended to reverse a steady decline which has seen the country’s population fall from 149m in 1991 to 140m today, whilst the median age has risen from 33 to 39.

Last September, state news agency RIA Novosti reported, economy minister Maksim Oreshkin called Russia’s demographic situation “one of the most difficult in the world,” adding that in the next five to six years “we are going to lose approximately 800,000 working-age people from the demographic structure every year.”

Speaking at Sberbank’s Corporate University on September 25, Oreshkin blamed the recession and political tumult that followed the collapse of Communism in 1989. “The lowest birthrate in the country was reached in 1999, and these people are now 18 years old; they are entering the work force. This generation is very small,” he said, warning that the working age population is expected to shrink by 4.8m by 2025.

Cash for kids

In 2016, according to government data provider Rosstat, Russian families gave birth to 740,000 first-born children and 760,000 second children. In the next five years, given the country’s ageing population, those numbers are expected to fall by 5-10% per year on current trends.

The government anticipates that 100-200,000 of those children will be eligible for cash payments under the new programmes, with the Ministry of Construction predicting that about 500,000 families will benefit from mortgage subsidies over the next five years.

About Anastasya Manuilova

Anastasya Manuilova is an economics reporter for the Russian newspaper Kommersant, covering welfare, labour markets, demographic change and the pharmaceutical industry

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