Czech Government proposes assessing ownership of apartments, bank accounts and cars when means testing applicants for welfare
All applicants for and recipients of money from the state for the care of children, housing and subsistence would have to document their assets and income as of mid-2025 if welfare reform is enacted. The Labor Office would take into account ownership of automobiles, real estate and savings when assessing whether a household qualifies for welfare. The planned asset test was recently presented at a press conference by Labor and Social Affairs Minister Marian Jurečka (Christian Democrats - KDU-ČSL). According to him, the measure is meant to make sure aid is better targeted and paid to those in need. Until now, means testing was only undertaken for people requesting assistance because they are in material distress. The welfare reform is supposed to replace the four different benefits which currently exist with one benefit. The bill is being discussed by the Chamber of Deputies.
“Currently means testing is just undertaken for the material distress benefit. Paradoxically, we are testing people whose incomes are the lowest. We do not test those who own property and whose incomes are higher… We will extend this innovation above and beyond applicants for aid to those in material distress. To the west of our country, means testing is common for contributions to caregiving and other matters. We want to know that this money is going where it is needed,” Jurečka said. He called means testing all applicants for welfare an “historic move” and a step forward toward the provision of targeted support.
If the reform is adopted, Labor Offices would start disbursing a single new state social aid benefit as of next July instead of the existing housing contribution, housing supplement, per-child supplement and subsistence contribution. Support should differ for households whose incomes are less than 1.43 times the existential minimum and those whose incomes are above that limit. If an applicant owns more than one piece of real estate, then to qualify for welfare he or she would be required to live in one property and sell the other within three years. If the applicant were to retain the second property, he or she would not be entitled to assistance from the state for the next three years. The Labor Office would also focus on car ownership. Each adult family member would still qualify for welfare if they own one personal vehicle. Applicants would still qualify for welfare if their savings were between CZK 200,000 and CZK 400,000 [EUR 8,000 and EUR 16,000] depending on the number of household members. However, savings involving a state contribution, such as construction savings accounts or retirement accounts, would not be included in the assessment, the minister said.
Bureaucrats would access information on the ownership of apartments, cottages, houses and summer homes from real estate registries and information on the ownership of cars from vehicle registration. Representatives of the Labor Ministry said that what would be assessed for bank accounts will be the balances, not the cash flow. Consent of the applicant to reviewing the accounts would be necessary.
“We debated the breadth of the means testing. We are heading in the direction of a fundamental move that will be simple and will not have many ramifications – that’s why we have chosen housing and cars. We will not discuss whether a person owns, for example, fields, forests, fishponds, a motorcycle collection or agricultural technology,” the minister said. He added that it will be possible to adjust the rules in the future if necessary.
Just one application would be filed and processed. The amount of the benefit would be graduated depending on income and labor market activity, and people would be able to increase the amount received through a bonus for working. The breaking point where a person loses state aid by exceeding the earnings limit by just one crown will be eliminated, Jurečka said.
The proposed rules can still be adjusted by the Chamber of Deputies. The law should be adopted by the lower house in late November and by the Senate in late January, the minister believes.
