The government's reform of the child benefit scheme will extend eligibility to a larger number of households and address long-standing issues within the current system. However, for many families already receiving support, the financial gains amount to only a few euros per month, according to figures examined against household spending data in Cyprus.
Based on the most recent Household Budget Survey, the additional support offered under the revised scheme remains small compared with the day-to-day costs faced by families, particularly those on lower incomes.
Small increases for low-income families
For families with an annual income of up to €22,000, the reform provides for a 10% increase in child benefit payments.
In practice, a family with one child will see its annual benefit rise from approximately €600 to €660, representing an increase of €60 per year, or €5 per month.
For families with two children, the annual benefit will increase from around €1,438 to €1,580, equivalent to approximately €142 more per year, or €12 per month.
For three children, the increase amounts to roughly €400 annually, or €33 per month, while a family with four children will receive about €840 more per year, equivalent to around €70 per month.
The report notes that even this highest increase applies to a six-member household living on a total annual income of less than €22,000.
Lower increases in the second income band
For households with annual incomes between €22,000 and €44,000, the increase is limited to 5%.
Under this category, a family with one child would receive approximately €27 more per year, while a family with two children would gain around €66 annually.
Comparison with household spending
The scale of the increases becomes more apparent when compared with average household expenditure in Cyprus.
According to the 2023 Household Budget Survey published by the Statistical Service, a couple with one child under 16 spends an average of €50,532 per year, or around €4,211 per month.
For a couple with two children, average expenditure rises to €53,565 annually, or €4,464 per month.
Households with three or more children recorded average annual expenditure of €50,007.
While these figures reflect total household spending rather than the specific cost of raising a child, they illustrate the economic context in which monthly increases of €5, €12 or €33 will be received.
The survey also recorded average annual household expenditure of €43,263, representing an increase of 38.6% compared with the previous Household Budget Survey conducted in 2015-16.
Impact on large families
The report notes that larger families receive greater increases as the number of children rises.
However, the additional €70 per month available to a family with four children must be considered alongside the financial demands faced by a six-member household with an annual income below €22,000.
While the increase is not insignificant, the report argues that it is unlikely to substantially alter a family's overall financial position, particularly as costs rise with the number and age of children.
Wider eligibility seen as key reform
The most significant aspect of the reform is the expansion of the income thresholds used to determine eligibility.
For a family with one child, the income limit will increase from €49,000 to €69,000.
For families with two children, the threshold will rise from €59,000 to €74,000, while the new limits will reach €90,000 for three children and €100,000 for four children.
The reform also seeks to address what the report describes as a long-standing distortion in the system, under which a relatively small increase in income could result in the complete loss of entitlement.
Under the revised framework, benefits will be reduced gradually to 50% and subsequently 25%, creating a more gradual transition for families whose incomes exceed the main eligibility thresholds.
The expansion of eligibility may also provide access to related support measures, including subsidies for preschool tuition fees.
Focus shifts from increases to coverage
According to the report, the principal benefit of the reform lies in the expansion of the scheme's coverage rather than the size of the payment increases.
While more families are expected to qualify for support, those already receiving child benefit, particularly households raising children on incomes below €22,000 per year, are likely to see only limited changes in their monthly budgets.
