Czech parental benefits get a bump next year, but duration shortens

Parents of children born from January 1, 2024 will see a significant boost in parental allowance as the total amount increases from the existing CZK 300,000 to CZK 350,000. In the case of multiple births, the allowance will further rise by CZK 75,000, reaching a total of CZK 525,000.

However, the benefit payment duration will be reduced from a maximum of four years to a maximum of three years, as regulated by the new amendment set to take effect on New Year's Day.

The decision to enhance the parental allowance comes at a time when labor offices disburse approximately 270,000 parental benefit payments each month; the average monthly amount per recipient comes to CZK 9,400 per month.

Last year, the Czech government spent a total of CZK 33.1 billion on parental benefits, and in the first ten months of this year, that number reached CZK 26.2 billion crowns.

The increase in parental allowance for the coming year is projected to add approximately CZK 400 million to the state budget, with subsequent years expecting increases in increments of CZK 2.2 billion, CZK 4 billion, and CZK 5.5 billion, respectively.

While individual coalition parties and opposition movements had differing opinions on the allowance increase, Minister of Labor Marian Jurečka emphasized that the approved form represents the maximum possible within the budget constraints. The National Economic Council advised shortening parental leave by a year due to the state's rapid indebtedness.

An earlier study by the Institute for Democracy and Economic Analysis suggested that the previous increase in parental allowance did not lead to a monthly amount rise but prolonged the drawdown period. Critics argue that the increase resulted in reduced workforce participation and working hours for mothers.

In addition to the parental allowance adjustment, parents can expect to pay more for the stay of a child under three in state-subsidized children's groups. The monthly ceiling for this payment is set to increase from CZK 4,720 to CZK 5,060 due to rising operating costs.

These policy changes aim to strike a balance between supporting families and managing the economic impact on the state budget. With the cost of living on the rise, these adjustments intend to alleviate financial pressures on parents while addressing the government's budgetary considerations.