Hungary spends 5% of GDP on birth incentives, yet fertility drops to 1.36

Hungary spends 5% of GDP on birth incentives, yet fertility drops to 1.36

In the first half of this year, 37,898 children were born in Hungary, a 9.7% decrease compared to the same period last year. The fertility rate stood at 1.36 babies per woman, the lowest figure in a decade, according to the state statistical service KSH. The country dedicates 5% of its GDP to direct family policies, an investment unmatched in its region, yet births are plummeting. In June alone, there were 6,040 births, 17% fewer than in June 2023 and a record monthly low.

The Orbán model: from 1.23 to 1.59 and back to 1.36

Hungary's pro-natalist support system began with Viktor Orbán's rise to power, when the index was 1.23 children per woman. In 2020, the rate rose to 1.59, but in recent years it declined, stabilizing around 1.5. However, in the first half of this year, it plunged to 1.36. The range of incentives is comprehensive and more generous than ever: from the last month of pregnancy until the child is six months old, the mother receives her full average income; at birth, parents can receive a maternity subsidy of €167; from six months to two years, mothers receive 70% of their average income, up to a maximum of 140% of the minimum wage; from two to three years, the subsidy is about €78; and until age 18, a family allowance of nearly €60 is paid.

This is supplemented by tax benefits—partial family deductions for each child, total deductions for mothers with four or more children, and tax exemptions up to average income for mothers under 30—and various loans: the so-called "Baby Waiting Loan" (€30,000 free and available for any purpose) and preferential housing loans (up to €39,000 for one child, €76,000 for two, and €126,000 for three). The State also subsidizes part of these loans and student loans when a child is born, as well as car purchases for large families, home renovations, and private nurseries.

Why aren't subsidies working? Demographers' diagnosis

Wolfgang Lutz, founding director of the Wittgenstein Centre for Demography and Global Human Capital in Vienna, argues that Orbán's family policy is failing because it focused on accelerating births among women who already intended to have children at some point in their lives. Many current subsidies have not encouraged lower-income families to have more children, and the elimination of income tax barely benefits self-employed workers. A similar pattern is observed in France—the European country with the highest fertility rate, though only 1.7 children per woman—in Spain (1.16), Austria (1.6), or Italy (1.24).

The news carries a biased tone, and some argue that seasonal data does not indicate a trend: the average has moved from 1.23 to 1.5, and it will take longer to see. But the drop in the first half is hard to ignore. In everyday life, financial barriers such as rising housing prices prevail for Hungarians, along with changes in labor dynamics, with more women enjoying professional careers, delaying motherhood, or even renouncing it.

The political anchor of natality and anti-immigration discourse

Increasing birth rates is a fundamental political anchor for right-wing governments, allowing them to solidify their stance as self-proclaimed protectors of traditional family values while offering an anti-immigration platform. Hungary is particularly sensitive to immigration, which Orbán claims repeatedly harms the country's cultural fabric. Starting in 2025, immigrants from non-EU countries must pass an exam on Hungarian history and culture to become residents. "We don't need numbers, we need Hungarian children," Orbán said in his 2019 State of the Nation address while rolling out birth incentives.

The contrast between rhetoric and data has sparked debate. Some argue the problem is economic, not ideological: wealth is distributed as poorly as births, and the Hungarian middle class is insufficient. Either wealth is expanded to more layers of the population, or people are imported. There is no other option. They may be more religious or traditional, but they are not fools. Others point to feminism and cultural change explaining the decline across Europe, but in Hungary there is no communist feminism, so that excuse doesn't fit. A third group notes that sensible people do not repeat their grandparents' lives: they don't consider having more than two children, and the current generation isn't even trying for the first due to job instability.

The Spanish case and European comparison

Birth rates have plummeted across Europe since 2020. ELbichito, inflation, wars. Some see deliberate intent, though without proof. In Spain, the cited rate is 1.16 children per woman, although some claim the real figure is even lower. The comparison with Hungary is inevitable: 1.36 versus 1.16. Some argue that 1.5 is already triple the Spanish rate and that in 20 years we will again discuss Hungary versus Spain. Others recall that Central Europe is also struggling with this issue: even deeply Catholic Poland will likely have a lower fertility rate this year than hedonistic Spain, hovering around 1.10.

The cases of the Faroe Islands, Monaco, and Gibraltar, with the highest rates, show that the rich still have children while workers cannot afford them. In Andorra, the lowest on the list, inhabitants are certainly not poor. Luxembourg is also low. The conclusion many draw is that money is not the determining factor: people don't have children because they don't want to. The quality of life, leisure, and comfort of potential parents weigh more than any subsidy.

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With these disparities, Europe's most generous family policy has not prevented Hungary from recording its lowest fertility rate in a decade. The unsettling fact is not the decline itself, but that it occurs precisely where the most investment has been made to prevent it.