UNICEF calls for increasing the coverage and adequacy of financial assistance programmes, including child allowance

Belgrade, 24 May 2023 - As part of the long-term cooperation between the Association of Economists of Serbia and UNICEF, the Poverty projections based on the potential impact of conflict in Ukraine, with a particular focus on children report was presented today to eminent economists.  

The long-term crisis caused by the war in Ukraine has made it difficult for Serbia to recover from the impact of the COVID-19 pandemic. The increase in food and energy prices caused by the war directly affected the most vulnerable population of Serbia, according to an analysis conducted for UNICEF by a team from the United Nations University - Institute for Economic and Social Research in Innovation and Technology in Maastricht. 

The report emphasizes that the Ukrainian crisis will worsen the situation of already impoverished families with children. Also, Serbia is among the top ten countries in Europe with the lowest level of income equality. The Gini coefficient for income was 33.3 in 2021. In other words, the richest 20 percent of the population had six times the income of the poorest 20 percent. In addition, in Serbia, children are more likely to live in poverty than adults. 

“Due to the crisis in Ukraine, a slow-down of economic growth is expected. This puts pressure on household income and consumption, particularly of poor families with children, potentially worsening a situation that was already far from ideal. In 2020, 10.6% of children in Serbia lived below the country’s absolute poverty line of 12,695 dinars per month. Child poverty figures are expected to have further increased. Even in the most modest scenario, child poverty in 2022 is expected to have increased to 13.8%. This means an additional 28,000 children living below the absolute poverty line. 

Poverty experienced in childhood has particularly severe effects on children’s development and work prospects. Individual impact is huge but neglecting children fails to build the human resources needed for sustained economic prosperity of the country. We recommend the Government considers comprehensive social policy measures and budgets to respond to the situation. Both an increase in coverage and the adequacy of financial assistance programmes, including child allowance, are needed in order to meet the needs of children,” said Deyana Kostadinova, UNICEF Representative in Serbia. 

The expansion of existing social protection programmes could mitigate the short-term effects of the crisis in Ukraine on the most vulnerable population in Serbia. 

“The report presented by Prof. Dr. Franziska Gassman, provides a wealth of data for future government policy making. It emphasizes the urgent need to horizontally expand the existing social protection programs in order to mitigate the short-term effects of the Ukrainian crisis on the most vulnerable population of Serbia and so that Serbia can overcome the challenges of aging, low productivity and inequality. Estimates predict that by 2030, about 30 percent of new participants in the labor market in Serbia will be from vulnerable and minority groups. That is why it is necessary to provide support for growth and progress to children living in poverty," said Aleksandar Vlahovic, President of the Association of Serbian Economists. 

The conclusion from the presentation is that it is not a matter of choice between economic development and social policy because, for long-term economic growth, it is necessary to implement effective social policies. 

Recommendations: 

• As a result of the ongoing global crisis, a large subset of the population in Serbia will probably not be able to afford the cost of living, and income growth will not be able to keep pace with the cost of living. 

• Additional efforts should be made to respond to the long-term poverty of vulnerable groups, including children, which has been exacerbated by recent crises, with additional budget allocations for programmes targeting poverty (child allowance, financial social assistance). 

• Targeting financial assistance in case of future emergency situations would enable more effective and efficient spending and help reduce inequality in Serbia. Children are an important target group in such scenarios. 

• One-off cash transfers can provide protection during crises but are expensive for taxpayers (2.9% of GDP in 2020 and 2021) and do not contribute to economic growth, so should be a last resort. 

• Greater efforts to engage Roma communities in formal employment and education can help reduce vulnerability and inequality. 

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• Executive Summary of the Development of povery projections based on the potential impact of conflict in Ukraine report can be seen on this link
• The entire Development of povery projections based on the potential impact of conflict in Ukraine report can be seen on this link