International review of approaches to tackling child poverty: Slovenia

Assessing the role of Government intervention in child poverty reduction

This section brings together the policies and wider context discussed in previous sections to provide an assessment of how far interventions and their outcomes were designed to tackle child poverty. To do this, we assess intervention according to the following criteria:

• Direct: The intervention was the result of Government action specifically targeting reducing child poverty or maintaining it at low levels.
• Indirectly targeted: The intervention was the result of Government action targeted at improving the wellbeing of families and children, but not specifically targeted at reducing child poverty or maintaining it at low levels.
• Indirect: The intervention was the result of Government action targeted at broader aims or objectives that have a positive – if indirect – impact on reducing child poverty or maintaining it at low levels.
• Induced: Action was instigated by wider social and/or economic change, an outside body or a non-governmental organisation.

Level of Government intervention in poverty reduction factors

The interventions mentioned in the case study and their outcomes are classified as below:

Direct

• Child benefits
• Parental allowance
• Childcare allowance
• ECEC subsidisation

Indirectly targeted

• Large-family allowance
• Maternity, paternity and parental leave
• Childbirth allowance

Partial payment for loss of earnings

Indirect

• Unemployment insurance
• Income support
• ECEC free for second children
• Female employment policy

Indirectly induced

• The European Child Guarantee (EU)

Lessons for Scotland

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

1. The most significant factor impacting Slovenia’s child poverty trajectory is the country’s socialist background, which has shaped public attitudes and policymaking. This heritage has shaped present-day attitudes towards wealth inequality and redistribution in Slovenia. Generally, Slovene taxpayers have been in favour of redistributive taxes.^[157] In addition, the Slovene public are significantly less in favour of a meritocratic society than those in the UK, and are more concerned about collectivism and reducing inequality.^[158] In addition to personal income tax, individuals in Slovenia pay 22% of their salaries to social security contributions.^[159] It is these high levels of employer and employee contributions that have allowed Slovenia to build its welfare state and redistribute wealth to low-income families, prioritising those with children. When applying lessons from Slovenia to the Scottish context, it is important to consider public attitudes to redistributive taxes and meritocracy.

2. Another consideration for the Scottish Government when tackling child poverty is the trade-off that exists between vulnerable groups. Slovenia’s social security system has openly and historically prioritised the welfare of children, granting parents and families special protections under the law. As poverty rates amongst children in Slovenia have fallen, poverty rates of the over-65 population have become a growing concern. In the last decade, the over-65 poverty rate has been steadily rising, growing from 17.1% in 2014 to 19.2% in 2023.^[160] Although current levels are down since their peak in 2008 at 21.3%, 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 Scottish Government should consider which demographics may be adversely affected whilst addressing child poverty and devise an approach on how to avoid poverty rates rising amongst other groups.

3. The impact of minimum wage increases in Slovenia on child poverty is not straightforward. In 2010, collective bargaining resulted in a minimum wage increase of 22.9% overnight, making it one of the highest minimum wages in the EU – a title still held today. Due to Slovenia’s relatively equal income distribution at the time, this increase made low-skilled labour extremely expensive for firms and pushed many low-skilled workers into unemployment by not filling vacancies and adopting non-traditional forms of employment at a time when the economy was already contracting, further driving increases in unemployment. This union-led policy change had unintended adverse consequences on the labour market and did not have any immediate positive effects on child poverty rates, as one may assume. Since 1995, the aim of Slovenia’s annual minimum wage adjustments has been to reduce wealth inequality and provide the lowest earners with a living wage. However, the rapid change in 2010 ultimately worsened the economic situations for low-skilled workers. When considering wage-centred policy interventions, changes should be small and gradual, giving enough time for firms to react.

4. Although the minimum wage increase in Slovenia had an initially unintended effect on the employment of low-skilled workers, in the long run subsequent 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, provide greater job stability and income security. Ultimately, this contributes to a more resilient support system for families and reduces the risk of child poverty. By combining wage-targeted policies with broader social protections, the Scottish Government can address child poverty without increasing the unemployment rate amongst vulnerable groups.

5. Slovenia shows that policy choices can be reversed or mitigated. The Slovene Government’s decision to reverse a number of the austerity measures introduced in 2012 and 2013 were key contributors to falling child poverty over the late 2010s. In particular, allowing inflation-linked increases in social benefits, universalising the large-family allowance and reversing limits to parental leave and Early Childhood Education and Care policies were particularly significant. It is important that governments recognise and seek to reverse or mitigate, where circumstance allows, previous policy choices that may have had negative consequences. The Scottish Government has already taken this approach when seeking to tackle child poverty, in terms of often seeking to introduce policy change that mitigates the effects of UK Government policy choices on social security. The introduction of the Scottish Child Payment and the commitment to mitigate the two-child limit applied to Universal Credit ‘child element’ are policy choices the Scottish Government has made to target families.

6. A large number of the policy choices made by the Slovenian Government have not been made specifically or directly to address child poverty. Most are, in fact, pro-natalist in nature^[161] and are designed to provide adequate support for families to raise children. This is evident in policy choices such as free childcare for second 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.