International review of approaches to tackling child poverty: Slovenia

The factors and wider context for child poverty reduction in Slovenia

This chapter focuses on the trajectory of child poverty levels between 2009 and 2023, examining the key social security provisions and labour market policies that have influenced child poverty rates. It begins by exploring how the Eurozone crisis and subsequent austerity measures affected the country’s longstanding social protections, focussing on their effects on families.

Slovenia’s child poverty rates began to rise in 2010 following the global financial crisis. During this period, unemployment was rising, GDP growth was negative, and Slovenia’s budget deficit was growing.^[121] Faced with a worsening economic situation, growing public debt and fears of an EU bailout, the Slovene Government implemented various cuts to public spending in 2012 and 2013 which were to remain in place until the year after economic growth exceeded 2.5% of GDP.^[122] Among these measures were cuts to social security provisions and the means testing of previously universal family allowances. Consequently, child poverty rates continued to rise, peaking in 2014 at 14.8% - the highest level the country has seen. While child poverty rates sharply increased from 2010 to 2014, the impact was mitigated by Slovenia’s social security system, which protected the families on the lowest incomes. Lower- to middle-income families, however, lost many protections due to the temporary transition from universal to means-tested family allowances.^[123] In the mid- to late-2010s, as austerity measures began to be rolled back, the upwards trend in child poverty rates began to quickly reverse.

This chapter then explores the reversal of these austerity measures, the introduction of new policies to further reduce child poverty, and efforts to prevent future cuts to family support programmes. Since 2014, when child poverty rates had been at their highest, Slovenia has seen a significant decrease in child poverty rates. This reduction was not driven by new legislation specifically targeted at bringing down child poverty rates, rather by the reinstatement of pre-existing social protection measures that had been scaled back during the Eurozone financial crisis.

Child poverty in the post-independence period (1991 – 2009)

Following independence in 1991, Slovenia transitioned relatively smoothly into a market economy and experienced robust economic growth, characterised by growing incomes and improved living standards. ^{[124] [125]} As the economic situation improved and the welfare state developed, child poverty in Slovenia steadily declined in the years following its independence.^[126] Until 2009, rates stayed around 11%.^[127] However, the global financial crisis had a significant impact on this trajectory.

Initial effects of the Eurozone crisis (2009 – 2011)

Alongside other European countries, Slovenia’s economy was significantly hit during the Eurozone crisis from 2008 to 2015. The initial consequences of this for Slovenia were significant across a range of macroeconomic indicators, including:

• GDP growth of -7.6% in 2009, with the economy falling into a deep recession.^[128]
• unemployment rapidly grew by 33% between 2008 and 2009.^[129]
• government debt increased rapidly from 21.9% to 34.9% from 2008 to 2009.^[130]

In 2009, 11.3% of Slovenia’s population was at risk of poverty. Child poverty rates at the time were almost identical, at 11.2%.^[131] As the economic situation worsened, poverty and child poverty rates grew together. By 2011, relative poverty was 13.6% amongst the total population and 14.7% amongst children.

Although poverty levels amongst children rose slightly above that of the general population during the financial crisis, social transfers and generous unemployment protection prevented thousands more children from falling into poverty as a result of the economy’s downturn.

There were key policies that alleviated poverty in Slovenia during the initial years of the financial crisis including unemployment insurance, and family top-ups.

• Unemployment insurance: During Slovenia’s financial crisis, unemployment insurance regulation meant that the unemployed received 70% of their previous year’s salary for the first three months followed by 60% after that.
• Income support: In addition to unemployment benefits, individuals earning below the income threshold could apply for income support.
• Family top-ups: Those with children had cash transfers available to them during the crisis including child benefits, childbirth allowances, and large-family allowances. Furthermore, heavily subsidised preschool fees alleviated costs for parents of young children.

Slovenia's strong social safety net helped limit the increase in child poverty^[132] despite unemployment more than doubling between 2008 and 2013. During this period, child poverty rose by only 3.1 percentage points.^[133] From 2009 to 2010, the number of people receiving unemployment insurance nearly doubled, from 28,821 to 55,310.^[134] Even with this significant rise in unemployment, child poverty increased by just 1.4 percentage points, demonstrating the effectiveness of Slovenia’s child poverty interventions in preventing further hardship. Slovenia’s generous cash transfers protected families on the lowest incomes, who are generally the people most at risk during recessionary periods. However, when means-tested austerity measures came into place, children from lower- to middle-income families saw their economic situations worsen.^[135]

Austerity measures (2012 and 2013)

In 2012 and 2013, as the economic situation grew worse, Slovenia’s GDP continued to show a negative growth rate of -2.92% and -0.82% respectively,^[136] falling back into a recession following a brief period of positive economic growth.^[137] In this same period, unemployment was reaching historically high levels. By 2013, unemployment peaked at 10.1% and government debt was almost equivalent to 70% of GDP.^[138] Early elections were called in 2011, which saw a right-wing majority government enter parliament. By 2012, the European Commission was applying pressure on the Slovenian Government to reduce public debt through ‘credible and durable fiscal consolidation’.^[139]

Throughout 2012 and 2013, the level of social transfers available to families changed when the newly-elected right-wing party controversially enacted austerity measures, resulting in wage cuts, increased taxes, and decreases in social provisions and family allowances.^[140] The austerity measures were a part of the Public Finance Balance Act (2012) and the Act on Emergency Measures in the Field of Labour Market and Parental Care (2013).

Slovenia’s socialist background means that there is an emphasis on wealth redistribution when faced with growing inequality. This means that, even through austerity measures, the cuts to family allowances specifically aimed to still support those on the lowest incomes by targeting middle-income families. These changes included:

• In 2012, paternity and parental leave compensation fell from 100% of an individual’s salary to 90%. The ceiling on parental and paternity leave benefits was also lowered from 2.5 times the average monthly wage to 2 times. In 2013, the same wage caps were added for maternity leave.
• Parents earning above 64% of the minimum salary were no longer entitled to child benefits. Before the austerity measures, this benefit was available to anyone below Slovenia’s average salary, which - due to the country’s flat wage distribution - was most parents. The cash value of the child benefit 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 only available to families earning below 65% of the average monthly wage.
• The 50% ECEC subsidy for children aged three and over was removed, and free ECEC provision for younger children was replaced with an effective 70% subsidisation.
• Annual inflation-adjusting of family benefits was stopped.

Although these fiscal consolidation measures had little impact on most of the families already experiencing poverty, they worsened the conditions for the lower- to middle-income households who were just above the 64% threshold.^[141]

The years following the cuts to social security and family allowances saw child poverty rates continue to rise. In 2012, the poverty rate amongst children was 13.5%. By 2014, this had risen to 14.8%, the highest child poverty rate the country had ever seen. The rise in child poverty rates was mostly due to the worsening economic state of Slovenia, but it was likely exacerbated by austerity measures. Across the EU, fiscal consolidation following the Eurozone crisis was associated with an increase in severe material deprivation.^[142] Reductions in social security benefits and family allowances temporarily cut out lower- to middle-income families. Many families in Slovenia avoid poverty due to the country’s welfare system. In Slovenia, social transfers have more than twice the capacity to lift children out of poverty compared to other post-Yugoslavia countries.^[143] The means testing of family allowances removed this safety net for families just above the income threshold, risking more families with children experiencing poverty. It was not until these austerity measures were walked back that the upwards trend in child poverty seen throughout the financial crisis began to reverse.

Reversal of austerity measures (2015 – 2019)

After another early election and the formation of a broadly centre-left coalition government in 2014, action was taken to reverse the austerity measures and cuts to family allowances. This began from 2015 with the amendments to the Act on the Enforcement of Rights to Public Funds and the Claim Enforcement and Security Act.

The amendments to the Claim Enforcement and Security Act prohibited successive governments from confiscating social assistance benefits in cash, income supplement, child benefit and similar benefits.^[144] This means that individuals' social welfare payments cannot be reduced if a government wishes to tighten fiscal policy, ensuring that these benefits remain fully available for their intended purpose of supporting those in need.

The amendments to the Act on the Enforcement of Rights to Public Funds also added stipulations to when the remaining austerity cuts could be undone. The cuts to social assistance were to be undone the year after GDP growth exceeded 2.5% and the employment rate of 20- to 64-year-olds exceeded 1.3%. As a result of Slovenia’s improving economic situation, these conditions were fulfilled by 2017. Therefore, certain policy choices were made, including:

• By 2019, the ban on inflation-adjusting social benefits had been lifted.
• The limit on maternity leave benefits was reversed, and paternity and parental leave compensation reverted back to 100% of earnings in 2019.^[145]
• Large-family allowances and childbirth grants were no longer means-tested and, by 2018, a childbirth grant had been received for each child born.
• Free childcare fees for second children were reinstated in 2021 via an amendment to the Kindergarten Act.^[146]

Not all cuts to family allowances were reversed, however. Child benefits have remained based on fixed euro amounts, as opposed to a percentage of Slovenia’s average wage as was previously the case. The 50% childcare subsidy for children aged three and over was never reinstated.

Slovenia’s economic recovery and subsequent reversal of austerity measures had a significant impact on child poverty. By 2015, two years after their introduction and as they began to be phased out, the rising trend in child poverty started to decline. In just one year, between 2015 and 2016, child poverty rates fell by 2.3 percentage points^[147]. This decline continued as social benefits were progressively reinstated. Before social transfers, the child poverty rate was at 23.8% in 2016.^[148] After social transfers, it was 11.9%.^[149] This illustrates the fact that Slovenia’s reductions in child poverty rates were largely a result of restoring previous welfare provisions, rather than implementing new, proactive child poverty reduction strategies. The improvements were mainly due to economic recovery and the reinstatement of pre-existing social security mechanisms which the country had had in place since independence.

Although child poverty rates rose between 2008 and 2014, social transfers played an important role in protecting many children from poverty, with data showing that without these social transfers, the at-risk-of-poverty rate would have been substantially higher. For instance, if social benefits were excluded from income calculations, the 2008 at-risk-of-poverty rate would have nearly doubled to 23.0%.^[150] Furthermore, in 2013, 14.7% of children in Slovenia were at risk of poverty after social transfers.^[151] However, when excluding social transfers, this figure rose to over a quarter (26.8%) of children in Slovenia.^[152]

This illustrates that the reduction in child poverty following Slovenia’s recessionary period was largely due to existing welfare policies being restored rather than new government initiatives aimed specifically at combating child poverty. In essence, the country was simply returning to its baseline welfare policies after a period of economic decline and fiscal consolidation. The pre-established social protection system, some of which predates Slovenia and has its origins in socialist Yugoslavia, functioned as a passive intervention mechanism, automatically providing support to families in need and preventing them from falling into poverty. This approach ensured that assistance was available without the need for additional strategic policy changes during the crisis.

Most recent history as a European nation (2023 onwards)

As a member of the European Union, Slovenia must adhere to various EU standards and directives surrounding child poverty. This includes aligning national policies with EU objectives to ensure the well-being of children. In return, Slovenia benefits from EU funding designed to support social initiatives, including €665 million via the European Social Fund Plus (ESF+) for the 2021-2027 period.^[153] The ESF+ invests in initiatives that promote employment, social inclusion, and education. It is also used to fund anti-poverty projects and purchase food packages for groups at risk of poverty.

The European Child Guarantee (ECG) is an EU initiative aimed at reducing the at-risk-of-poverty-and-social-exclusion rate by providing children with essential services, including free healthcare, education, childcare, housing and nutrition. The initiative addresses these challenges through the implementation of national and European action plans. Funding for Slovenia’s Child Guarantee National Action Plan comes partly from the ESF+ and partly from the Slovenia state budget. EU funding includes the European Cohesion Policy 2021-2027 Recovery and Resilience Facility, and the European Regional Development Fund.^[154]

Slovenia published its National Action Plan in 2023, which outlined the measures Slovenia plans to prevent child poverty and social exclusion amongst children by 2030.^[155] The key actions include, but are not limited, to:

• Early Years Education and Care: Reducing preschool fees
• Education: Increasing educational attainment amongst Roma children and improving access to extracurricular activities
• Healthcare: Upgrading care services and improving mental health amongst children
• Nutrition: Improving nutrition quality, raising awareness on healthy nutrition, restricting the marketing of unhealthy foods
• Housing: Providing additional housing units under the ‘Housing First’ system – a recovery-oriented support model aimed at ending homelessness^[156]
• Children in Alternative Care: Promoting deinstitutionalisation strategies and upgrading the professional support for foster carers
• Other: Strengthening safeguarding factors in families, establishing a systemic form of accommodation for unaccompanied minors, increasing social inclusion programmes for vulnerable children and families

As this is a relatively new policy, the effects on child poverty are yet to be seen. However, Slovenia’s National Action Plan piggybacks onto the country’s robust pre-existing social security system which has proven beneficial to families and children throughout Slovenia’s history.