Czech Govt Agency for Social Inclusion expert says the working middle class is growing poorer, protection for the poorest is failing
The middle class in the Czech Republic is growing poor. Despite low unemployment and wage growth, the number of people drawing the per-child contribution and housing welfare benefits is increasing.
Instruments to protect the poorest of the poor are also failing. According to Lucie Trlifajová, an expert from the Czech Government Agency for Social Inclusion, those are the results of an analysis of its Index on Social Exclusion.
The Agency has been compiling the index since 2016. It is based on the number and proportion of people drawing welfare benefits for housing and subsistence, people under collections proceedings, the long-term unemployed, and those who drop out of compulsory schooling early and never complete the ninth grade of primary education.
“The working middle class in the Czech Republic is growing poor. Deterioration in their situation is usually associated with the growth of unemployment, but in recent years that has not been the case. The Czech Republic has long had the lowest unemployment rate in the EU. However, it has experienced the greatest decline in real wages. The number of people drawing housing contribution benefits is growing… The highest increase in the number of those drawing such benefits is not in the regions where it typically happens. The number is rapidly growing in the ring around Prague,” said Trlifajová.
According to the findings of the index, the number of welfare recipients is also rising in other big cities. According to Barbora Halířová, the Agency’s expert on the debt issue, the biggest growth in the number of people under collections proceedings was in the Central Bohemian Region.
“In the field, we have been surprised to see members of the lower middle class, people with university educations, start coming to the advice centers,” Halířová said. High inflation, costlier energy and the collapse of real earnings are all projected into the index’s results, as are changes to the way welfare support is provided
The rules for housing benefits have been adjusted so that the amounts disbursed are higher. Households whose incomes are 3.4 times the living minimum are now eligible for the per-child welfare contribution; previously just households whose incomes were 2.7 times the minimum were eligible.
“The number of people entitled to the per-child contribution should have fallen when the living minimum was not valorized and wages grew. Instead, for more people it became more worthwhile to go to the Labor Office and request welfare,” said Trlifajová.
The Agency expert said a new group of welfare recipients is coming into being whose situations need to be understood and who need to be worked with on that basis. She believes this also implies a burden for local authorities.
While the number of households drawing the housing contribution and the per-child contribution has risen, the number of those receiving aid to those in material distress is not growing. “This demonstrates that protection for the poorest of the poor doesn’t work. If the middle class is collapsing, the poorest of the poor are certainly collapsing as well,” noted Trlifajová.
The living minimum is used to designate entitlement to welfare, the calculation of some benefits, or the establishment of what assets held by debtors cannot be subjected to collections. Per person, the living minimum is currently CZK 4,860 [EUR 190].
The living minimum was raised most recently in January 2023, when it was raised by 5.2 % from CZK 4,620 [EUR 180]. According to Trlifajová, the protective function of the living minimum as the amount needed for basic survival is declining and the instruments to protect the poorest of the poor have long failed.
The expert pointed to the real decline in the value of that amount of money. According to her, taking inflation into account, the living minimum last year should have been CZK 7,082 [EUR 280].
The authors of the index differentiate municipalities into four groups, assessed at 0 points for localities without difficulties, up to a maximum of 30 points for the localities with the biggest problems. The highest degree of exclusion, evaluated as between 12 and 30 points, was scored by 241 municipalities last year, 50 more than the year before.
Last year the Agency listed 3,393 municipalities as bearing no such load or being under minimal strain, 212 fewer than the year before.
