International review of approaches to tackling child poverty: Slovenia

Executive Summary

Slovenia has had low levels of child poverty since declaring independence from Yugoslavia in 1991, notwithstanding a spike after the 2009 Eurozone crisis when it peaked at 15%. This makes it an interesting case study because it has been able to rapidly achieve a post-austerity return to lower levels of child poverty. A key theme of Slovenia’s approach is that it has historically adopted a preventative, rather than reactive, approach to tackling child poverty, as evidenced through its robust social security system and labour market policies.

Source: Eurostat, At-risk-of-poverty rate by age (ilc_li02), Slovenia

The rise in poverty rates was largely due to the Eurozone crisis which caused negative economic growth, a rapid rise in unemployment, and growing public debt. The government of the time responded with cuts in social security transfers and family allowances in an attempt to reduce public spending. Reductions in child poverty were later achieved largely due to Slovenia’s improving economic situation and the undoing of previous austerity measures which had negatively affected families.

Taking the social security system first, the key shift in approach triggered by the Eurozone crisis was a change from near-universal social security and family allowances to hyper-targeted, means-tested benefits in 2012 and 2013. The cuts to family allowances specifically targeted middle-income families, with those on lower incomes largely unaffected by the changes. The measures included:

• Parents earning above 64% of the minimum salary were no longer entitled to child benefits. Before the austerity measures, this benefit had been available to anyone below Slovenia’s average salary, which - due to the country’s flat wage distribution – had been most parents. The value of the cash transfer was also cut by 10% for those earning more than 42% of the average wage.
• The previously universal childbirth and large-family allowances became means-tested and were no longer available to families earning above 64% of the average monthly wage.
• The 50% childcare subsidy for children aged three and over was removed, and free childcare provision for younger children was replaced with an effective 70% subsidisation.
• Annual inflation-adjusting of family benefits was stopped.

These cuts to family allowances were the first of their kind since Slovenia’s independence and, as a result, child poverty increased rapidly, and political tensions rose. By 2019, most austerity measures had been reversed and child poverty rates returned to below pre-crisis levels.^[1] However, child benefit remains means-tested, though thresholds are closer to average earnings. For example, to be eligible for child benefits today, parents must have net earnings of below €1,293 per month on average.^[2] Currently, average net monthly earnings in Slovenia are €1,526.^[3] These high thresholds mean that most families can claim some form of child benefit. In 2023, more than 80% of Slovene children were entitled to child benefits.^[4]

The austerity measures did not only affect family allowances, but they also impacted the wider social security system, including state pensions. As a result, overall poverty rates rose alongside child poverty rates during the financial crisis. Since the crisis, as family allowances have been reinstated, poverty amongst children has reduced whereas over-65s have witnessed a steady increase. Poverty rates are now highest amongst over-65s, with 47.9% of households comprised of one adult over 65 being at risk of poverty in 2023.^[5] Poverty rates amongst single parents with dependent children in Slovenia are significantly higher than poverty rates amongst households with two adults with dependent children, at 28.8% and 7.7% respectively in 2024.^[6] Households without dependent children are also much more likely to be at risk of poverty, with 18% of them being at risk of poverty in 2024, compared to 8.9% of households with dependent children.^[7]

From a labour market perspective, Slovenia has one of the highest minimum wages in the European Union (EU), set at €1,278 per month.^[8] However, this was not always the case. Wages in Slovenia are determined by collective bargaining. Notably, in 2010, wages in Slovenia rose by 22.9% in just one year due to pressures from trade unions to adjust wages in line with the rising cost of living. It was introduced with the aim of reducing wage inequality and providing the lowest earners with a living wage.^[9] However, in practice the rapid minimum wage increase resulted in higher rates of unemployment amongst lower-skilled workers; and did not have any positive impact on child poverty rates.

Compared to the global average of 55%,^[10] Slovenia has a relatively high level of female labour force participation. Male labour force participation has consistently exceeded female participation, however, staying above 70% and currently sitting at 80%. Slovenia’s female labour force participation rate currently sits at 73% and has remained above 60% since 1990.^{[11] [12]} Slovenia’s high female labour force participation is largely a result of labour market policies, such as generous maternity leave benefits and subsidised preschools, that encourage women to enter the workforce, even when they have young children.^[13] The main barriers that keep women’s workforce participation below men’s are family obligations and a lack of formal connections.^[14]

Social security contributions include parental insurance, funded by both employers and employees, each contributing 0.1% of the employee's gross income, which underpins a generous system of parental leave. In addition to parental insurance, families in Slovenia benefit from various family allowances. These include child benefits, parental allowances, large-family allowances, parental leave compensation and childbirth grants. Unlike parental insurance, family allowances are largely funded by taxation and thus come out of the state budget.

Considering the historical and contextual factors that have impacted Slovenia’s child poverty trajectory, several lessons for Scotland emerge:

• The most significant factor impacting Slovenia’s child poverty trajectory is the country’s socialist background, which has shaped public attitudes and policymaking. Individuals and firms in Slovenia make significant social security contributions which have allowed Slovenia to redistribute wealth to low-income families with children. When applying lessons to the Scottish context, it is important to consider public attitudes to redistributive taxes and meritocracy.
• Slovenia’s social security system prioritises children. As child poverty rates have fallen, poverty rates of the over-65 population have become a growing concern. Child poverty rates and over-65 poverty rates have been moving apart fairly consistently since 2014. It is important to recognise the trade-off that exists when prioritising the economic wellbeing of a specific group whilst working with a limited pool of resources.
• The impact of minimum wage increases in Slovenia on child poverty is not straightforward. In 2010, Slovenia’s minimum wage increased by 22.9%. This made low-skilled labour extremely expensive and pushed these workers into unemployment. The rapid change in the minimum wage ultimately worsened the economic situation for low-skilled workers. When considering wage-centred policy interventions in Scotland, we recommend that changes should be small and gradual, giving enough time for firms to react.
• Following the minimum wage increase, corrective policies helped to further develop Slovenia’s labour market protections. For individuals with dependent children, these worker protections, coupled with pre-existing parental rights in the workplace, contributed to a more resilient support system for Slovene families. By combining wage-targeted policies with broader social protections, the Scottish Government can address child poverty without increasing the unemployment rate amongst vulnerable groups.
• The Slovenian Government’s reversal of the austerity measures introduced in 2012 and 2013 were key contributors to reducing the child poverty rate. It is important that governments seek to reverse or mitigate previous policy choices that may have had negative consequences. The Scottish Government has already taken this approach by seeking to mitigate the effects of UK Government policy choices on social security. For example, the Scottish Government introduced the Scottish Child Payment and committed to mitigate the two-child limit applied to Universal Credit’s ‘child element.’
• A large number of the policy choices made by the Slovenian Government have not been specifically or directly introduced to address child poverty. Most are pro-natalist in nature^[15] and designed to provide adequate support for families to raise children. However, this is not to say that there is not a positive secondary impact on child poverty. When setting policy, it is important to consider how wider objectives and aims can often have the most significant impact on addressing the drivers of child poverty.