The Ministry of Labor and Social Affairs (Ministerstvo práce a sociálních věcí – MPSV) is currently working on the most significant reform of the social benefits system in the last 30 years. The aim of the reform is to considerably simplify the current system, which includes several identically or similarly focused state social security benefits (dávky státní sociální podpory) and assistance in material need benefits (pomoc v hmotné nouzi). The reform is also supposed to prevent misuse of benefits by individuals in a favorable financial situation. When could the reform be expected?
State Social Security & Assistance in Material Need Benefits
The state social support system is regulated by Act No. 117/1995 Coll., on state social support, as amended. According to this law, the following benefits are provided: child allowance, parental allowance, housing allowance, birth grants, and funeral grants.
Assistance in material need is mainly regulated by Act No. 111/2006 Coll., on assistance in material need, as amended, and Act No. 110/2006 Coll., on the living and subsistence minimum, as amended. Assistance in material need benefits include allowance for living (příspěvek na živobytí), supplement for housing (doplatek na bydlení), and extraordinary immediate assistance (mimořádná okamžitá pomoc).
4in1 Benefit
The child allowance, housing allowance, supplement for housing, and allowance for living represent the four most used income-tested benefits (příjmově testované dávky, i.e., benefits provided depending on applicants’ income), and the planned reform intends to merge these benefits into one, defined by an entirely new law. This would provide comprehensive support to families in difficult life situations, who currently already often apply for a combination of several different benefits. The components of the benefit would ensure basic living, help with paying housing costs, education and care for children, as well as a work bonus. The benefit could be processed online in the MPSV’s Jenda Client Zone, with one of the already known conditions for its granting being the monitoring of children's school attendance.
Work Bonus
The work bonus would appreciate the efforts of clients to work or look for new jobs. According to the MPSV, this would also eliminate the so-called breakpoints (body zlomu) – these mean that a person can no longer receive benefits if their income exceeds a legally given limit. In practice, according to a MPSV’s model case, the work bonus could work as follows: A woman from Ostrava has housing costs of 13,000 CZK and an income of 20,000 CZK. She currently receives 7,940 CZK from the state. After the system reform, she would receive a work bonus of 472 CZK because she works, and thus a total of 8,412 CZK. The bonus is conceived as a percentage of earnings from work activity, which would decrease with increasing income.
When Could the Reform Become Effective?
The Ministry of Labor and Social Affairs plans to present the specific legal wording of the amendment and details for providing the new benefit, such as the income limit or the form of the so-called property test (majetkový test), in March. The changes could then come into effect from 2025. We will carefully monitor the developments around the planned reform and inform you about any news in one of our future articles.
