SOCIAL WATCH HUNGARY 2017 REPORT – DRAFT

The National Council for Sustainable Development (NCSD) and the Hungarian Society of Conservationists (HSC) organized a conference entitled „Implementation of Sustainable Development Goals in Hungary” on 7th February in 2017 in the Hungarian Parliamentⁱ, where more than 400 people attended.

The aim of the conference was to examine what tasks Hungary is facing in the implementation of Sustanaible Development Goals (SDGs) of the UN 2030 Agenda, including the eradication of poverty, reduction of hunger, increase of knowledge, conservation of biodiversity and mitigation of climate change.

Gábor Bartus, Secretary of the NCSD pointed out that the long hoped catching up to the West at the beginning of the system change has not been realized and the household consumption is still stagnating. The human, social and economic capital could not be substantially developed, while educational, demographic and debt crisis has shaken Hungary. According to Bartus a permanent sustainability crisis lies behind these processes.ⁱⁱ However, social cooperation, concrete government action plan based on facts make it possible to move forward. He declared: „to meet the SDGs is the precondition of strengthening our nation and keep up its position on the regional, European and global level.” According to Bartus a number of good examples of implementation of the principle of the SDGs are embedded in the Hungarian Basic Law, e.g. a national debt limit, a coherent set of policies aimed at stopping the population decline or measures to support a healthy lifestyle (daily physical education in elementary and secondary schools, canteen reform, reducing smoking). But he was not speaking about the poverty.

Zsolt V. Németh, Secretary of State of the Ministry of Agriculture boasted: „to meet the UN Framework SDG 15 unprecedented level of financial resources is available in Hungary for the preservation of natural values, to stop the loss of biodiversity and for the improvement of the environmental conditions. In the period between 2007 and 2013 nearly HUF 2300 billion (appr. USD 7.7 billion) were spent to support environmental and nature conservation investments and until the end of 2020 further HUF 2800 billion (about USD 9.4 billion) will be available in the framework of the EU operative and other thematic programmes.”ⁱⁱⁱ

István Farkas, President of the HSC said that the SDGs will not be met if we do not change our way of life significantly, because the developed countries remarkably overuse the resources of the planet. The standard of living of the third world and even of the Central European countries cannot catch up to the one of the developed countries. Farkas stressed the need for a radical transformation of our socio-economic regulators, such as the current global free trade policy or the EU’s Common Agricultural Policy. He mentioned also some contradictions, e.g. Mercedes in Hungary pays only 0.12 percent corporate income tax, so despite its billions in profits made last year, only HUF 23 million (USD 77 thousand!) paid to the Hungarian budget. There is a need to enforce ethical principles in all fields of our life and in government policies as well. He is on the opinion that the localization should be highlighted in the developments, i.e. the local communities should decide on the natural resources.^iv

Apart from a short period of the last 25 years, the Hungarian governments essentially followed neo-liberal economic policies. This policy was based by reformist economists of the early seventies who turned against the constraints of the centrally planned economy with a maximum rigidity of radicalism. After the system change – starting with the privatisation – the practice still prevails even today. One of the most interesting lessons learned from the past 25 years is that even the so called socialist governments were much less socialists. The predatory privatisation ruined both the industry and the agriculture. Half of the GDP and about three fourth of the industrial export are now produced by foreigners owned companies, while only one third of the labour force employed in these industries. This means a high productivity, however, 1.5 million people lost their jobs in the early 1990s. The output of agriculture is about 25 percent less than before. By 2015 Hungary`s foreign debt was more than 3 times higher than in 1990.

An immense differentiation in income and wealth has developed. Only one third of the population was a winner of the system change, while, on the other end, another third fell in extreme poverty. According to sociological investigations two hundred thousand children suffer from hunger and receive to eat mostly at schools. Recently, several movements have arisen against certain government decisions and organised demonstrations (e.g. teachers, or healthcare workers). In February 2015 a group of unemployed organised a hunger march from the northern industrial town of Miskolc to Budapest to hand over their demand to the parliament.

The majority of the governments has not had either a clear social policy, or clear ideas about the social goals, least of all about how to respond to the basic needs of the people and to reduce social inequalities.

Just after 2010 it was the currently ruling right-wing coalition government of FIDESZ and Christian Democrats that broke with this confused tradition: it has the most coherent, a well-to-follow programme of legislation to restructure the society. This, however, contradicts almost everything we have ever known about the European social model.

With the sweeping victory in 2010 the government was given the possibility to enact fundamental changes to Hungary’s constitution and legislation as a whole. The changes had important legal consequences, such as the reduction of the retirement age of judges, or the creation of a new media-supervising authority, while others had symbolic importance, such as modifying the country’s official name to Hungary (omitting the word “Republic”) and defining the concept of family, which is discriminatory against individuals with different sexual orientations. Many of these changes were added to the Basic Law (formerly called Constitution), which has been amended several times.

The government’s legislative measures, such as a new media law and a new constitution were heavily criticised by EU circles and the Venice Commission. During PM Orbán’s first appearance in the European Parliament he already had to face harsh criticism over his government’s acts. These „attacks” initiated a change in his rhetoric towards Brussels, which became more and more critical.

The change in Orbán’s rhetoric first manifested itself on 15 March 2012, when he emphasized that Hungary insists on national sovereignty and does not need „unsolicited assistance of foreigners”. Comparing the EU to the former Soviet dominance, he stated that for his country „freedom means that we decide about the laws governing our own lives, we decide what is important and what is not”. Since then Orbán has used a harsh tone towards Brussels many times.^v

Since the beginning of January 2015, Orbán has started to adapt a hostile rhetoric towards immigrants as well and he has repeatedly claimed that Hungary belongs to the Hungarians and will not welcome everybody who wants to settle down in the country. Orbán’s referendum on EU migrant quotas on 2nd October 2016 was an open challenge to Brussels. Though his referendum failed to meet the required turnout threshold, but it remains a worrisome message of hostility towards the EU. The motivation behind FIDESZ’s extreme right turn and the key to Orbán’s success might also lie in the fact that he manages to engage more and more right-wing voters. Another, even more dangerous scenario may also possibly develop, namely a closer cooperation than ever between FIDESZ and the far right Jobbik party.

In 2015 Hungary was a major entry point into the EU for migrants coming from the Middle East, so it had become a transit point for migrants looking to settle in Western Europe. The Orbán government reacted to the influx of migrants by building a razor bled wire fence of 110 miles long on its border with Serbia, so thousands of migrants waited at the border, hoping to make it into the EU—while others found ways to breach the fence. The fences have drastically reduced the number of migrants able to pass through Hungary on their way to Germany and other destinations in Western Europe.

On 28 March 2017 a new Hungarian legislation to complement the fences built on the borders with Sebia and Croatia entered into force allowing the detention of asylum seekers in border container camps.^vi Civil society groups and international organizations including ECHR question whether the transit zones at the Southern border of Hungary are not detention centers and that the Orbán government violates non-detention rules of asylum applicants.

„While in the measures of the Orbán government neo-conservative elements, i. e. the creation of hierarchy, anti-poor, anti-unemployed attitude, overemphasis of worthiness and strengthening of sanctions also appear, in its economic policy many neoliberal elements are present as well”– says Zsuzsa Ferge, a prominent Hungarian Sociologist.^vii

Since 2010 the coherence of the FIDESZ government`s policies has been secured by only one element, namely that the power and the disposition over the natural resources are dominated by a single central authority. In order to exercise this central will much better and on more and more areas of life, severe autonomy restrictions were implemented in local governments, universities and many other institutions.

Apparently the process of impoverishment in old age has aggravated, because on the one hand the pensions can no longer follow the wages, on the other hand there are fewer people in the labour market to acquire the time required for retirement.

„Early retirement is discontinued, the disability pension is abolished, only invalidity benefits are provided, which are much smaller amount. If you cannot find a job over 55 years of age, everything is slowly eliminated, no retirement will be given”– says Ferge.

In many places the public works help the younger generation to improve a bit its everyday situation. According to the statistics public employees get a job seven months per year on a monthly average earning HUF 60-70 thousand (about USD 230) instead of HUF 85,000 (USD 290) official net minimum wage, or HUF 28,500 (USD 90) as an unemployment benefit or a social aid of HUF 22,800 (USD 75). And that size of difference in these families means quite a lot.^viii

The big question is whether the public works are real job and give the employees any security. It seems that the public works are really only an obstacle to return to the labour market, it is just a false solution for increasing employment.

The regional inequalities between regions, even among towns and villages are growing rapidly since the system change. Primarily in the north-east and south-western part of Hungary, and not only in small villages, but in major regions, where no jobs are available, no access to transport and public services. Social mobility is slowing down, there is almost no way out of this trap. The prejudice against Gypsies has grown into a never seen height.

Although the share of the Hungarian population at risk or social exclusion has been declining in the last years (according to EUROSTAT from 34.8 percent in 2013 to 26.3 percent in 2016) a part of the population lives in deep misery. However, the persistent at risk poverty rate was 7.9 percent in 2016, which is much smaller than the EU average. The severe material deprivation rate has been also declining since 2013 from 27.8 percent to 16.2 percent in 2016, but it is still the double of EU average. „The situation is so destitute that destroys the lives of children for long term. This state of the country is economically, politically, culturally and socially a disaster in the long run” – says Ferge^ix exaggeratedly.

Citing Eurostat data, the Social Report 2016^x (SR2016) found that in comparison with an EU average of 17.2 percent, 14.6 percent of Hungary’s population live below the poverty line. However, Hungary is less competitive when it comes to international comparisons of the material deprivation rate. Altogether 44 percent of the Hungarian population cannot afford basic resources, compared with an EU average of 19.5 percent. Only Romania and Bulgaria have worse material deprivation indicators than Hungary. However, in the last years there were a decline in the number of people who cannot afford heating or are late with paying their utility bills, State Secretary for Social Affairs Károly Czibere said, who attributed the improvement to government measures such as the utility bill-cut scheme and foreign-currency mortgage bailouts.

The SR2016 gives an account on improving labour market situation but also highlights risks of misinterpreting data on public works. It is underlined that the Hungarian economy appears to be dual, with a well-functioning sector dominated by multinationals, while domestic industries and SME-s showing signs of struggle.

Other papers in the SR2016 warn about increased corruption risks and a very weak competition in public procurements – with structural funds being at higher than average risk. Chapters on social structure highlight that income and wealth inequality is at a relatively modest level, but the average living standard is at a low level, there is a narrow and weak middle class and a large deprived segment of the society. For the first time the report includes estimates of the Hungarian wealth distribution. The chapters on health, education and social policy systems explore urgent needs for reform to tackle large health inequality by education subgroups and also to strengthen policies to alleviate intergenerational transmission of disadvantages.

The Hungarian society „as a whole” falls into the poorer half of European society. No more than roughly one-third of Hungarians can compete with their European peers in terms of living standards, educational attainment level, lifestyle, open-mindedness, tolerance and foreign language skills.

According to the Central Statistics Office of Hungary in November 2016–January 2017, the number of employed people was 4,401 thousand. Out of them 4,075 thousand worked in the domestic primary labour market, the number of public workers was 208 thousand and 117 thousand people worked at local units abroad. Unofficial estimations put the number of people working abroad between 300 to 500 thousand.

In 2015 the Hungarian healthcare spending per capita on purchasing power parity was EUR 1,371 (half of the EU-28 average). The share of total healthcare expenditure was 7.1 percent of the GDP, well below the 9.9 percent EU-28 average. While the economic crisis has had no significant impact on the real value of healthcare spending for the majority of EU countries, Hungary`s spending in real terms fell again after the downturn in 2007-2009, and it still did not reach the 2005 base year level.^xi

Despite the fact that Hungary’s macroeconomic indicators in 2015 were encouraging, public finances improved and employment numbers went up, but problems facing the education and public health-care sectors have yet to be addressed. The SR2016 concluded that social advancement in Hungary requires institutional reforms and an economic environment that promotes competition, innovation and value creation.

Budapest, 29 March 2017.

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*Matyas Benyik is the Chairman of the civil society organisation called ATTAC Hungary, which is a national chapter of the international ATTAC movement for democratic control of financial markets and their institutions. Prior to holding this position he worked for decades in different Hungarian foreign trading companies and was posted twice as a commercial attaché to the foreign service in Turkey and Syria. His career has been closley connected to practical foreign trade deals since the end of the 1970s. Being an economist and a social scientist, a qualified international economic expert, he is specialized in trade policy issues and economic integrations. He participated in several national and international campaigns against GATS and WTO, as well as antiwar, antifascist, anti-poverty issues.