Julia Scharle, 33, has received substantial support from Hungary’s family subsidy programs. She and her husband benefited from over €80,000 in grants and loans, including €6,000 to purchase a new Renault Scenic minivan to accommodate their three children. They also received a €25,000 loan after the birth of their second child in 2019, with the loan’s interest being reduced with each additional child. Although a fourth child would have completely forgiven the loan, medical advice prevented them from pursuing this option.
Scharle believes these funds provide vital security for families, asserting that while it’s not the state’s direct responsibility, it is in the state’s long-term interest to encourage childbearing.
Under the right-wing populist government of Viktor Orbán, Hungary has implemented some of the most generous family support programs worldwide. These include tax breaks that increase with the number of children—mothers of four or more are exempt from personal income tax—and other financial incentives. Hungary’s total family subsidy expenditure exceeds 5% of its GDP, more than double its defense budget.
Globally, these subsidies have attracted attention, particularly as many developed nations grapple with declining birth rates that threaten their economic futures. JD Vance, a former U.S. Senate candidate and ally of former President Donald Trump, has praised Hungary’s policies. He has suggested that similar approaches could promote family formation in the U.S.
Despite these generous measures, Hungary’s birth rates have not significantly improved. The COVID-19 pandemic and economic crisis have contributed to a stabilization of birth rates. From a low of 1.23 children per woman in 2011, Hungary’s fertility rate increased to 1.59 in 2020 but has since plateaued around 1.5. In the first half of this year, the fertility rate fell to 1.36, the lowest in a decade. In June, births reached a record low of around 6,000 per month, roughly half the number from a generation ago.
Researchers attribute the limited success of these programs to their lack of focus on financially struggling families. Wolfgang Lutz, director of the Wittgenstein Centre for Demography and Global Human Capital, noted that previous increases in fertility were primarily due to changes in the timing of births rather than a genuine rise in birth rates.
Hungary continues to encourage higher birth rates within traditional family structures, but this has proven more effective at shifting the timing of childbirth rather than reversing the overall trend. As many countries experience even sharper declines in birth rates than anticipated, global scrutiny of such policies intensifies. Fertility rates have dropped from 5.3 children per woman in the 1960s to 2.3 today, with over half of all countries now below the 2.1 births per woman needed to sustain population levels without immigration.
In Hungary, there is growing skepticism about the fairness and effectiveness of the subsidy programs, which seem to benefit the middle class disproportionately. Agnes, a mother of three and a hairdresser, described the system as unfair. Her limited income makes it difficult for her to benefit from the subsidies designed for higher earners.
Demographer Balázs Kapitány reported that the subsidies have widened the gap between wealthy and poorer families, creating a system that disproportionately benefits the affluent. This inequality, though unintended, appears to be a side effect of the program.
Despite this, Orbán’s government remains committed to expanding these policies. Orbán has proposed extending lifetime income tax immunity to mothers of three or more children, potentially increasing the cost of the exemption significantly.
Orbán, who opposes mass immigration and promotes a “traditional” family model, has made family support a cornerstone of his policies. His government has invested over €10 billion in these programs since 2019, with noticeable effects on housing construction and renovations. However, the ruling Fidesz party’s hope to foster a more affluent and loyal middle class has had mixed results. While urban, educated youth have benefited, the party’s typical voter base has become older, more rural, and less educated.
Resistance to the program’s ideology, which emphasizes the “traditional” family and childbirth as a primary goal, has also grown. Critics argue that the policies objectify women and fail to consider the broader implications for children born under such incentives. Anna Melocco, a journalist who chose not to have children, criticized the program for treating women as mere vessels for reproduction.
As Hungary continues to navigate its demographic challenges, the effectiveness and fairness of its family subsidies remain hotly debated.
