„We have not yet reached the level of the most unequal countries, but we are moving towards it” – Zsuzsa Ferge, best-known Hungarian sociologist said in an interview with the Hungarian daily newspaper Nepszava.1 The ruling party FIDESZ incites and exploits hatred against refugees, the poor and gypsies. The government is sharply opposed to the idea of basic income and basic social care.
A hate-based society built in Hungary
According to European Union statistics, poverty is decreasing and the risk of exclusion has fallen below the EU average in Hungary in 2018. But the EU uses the official income distribution as a starting point, calling a certain proportion of people living below the average poor. Hungary`s situation is specific. Hungary is among those countries where we cannot talk about the top 10,000, but the top 1 or 0.1 per cent. A few thousand people account for a huge proportion of the total wealth in Hungary, even half or more. After them comes a widening gap so that the bottom fifty to sixty percent, or five to six million people, have practically nothing. The number of people living in extreme poverty – and here the gypsies are very strongly represented – is rising, and they are forced to take on low-paid, uninsured, illegal jobs. There are a lot of cases where the work is done and then the contractor does not pay them a single HUF. If you look around the country, you can see how the poorer people have been pushed or displaced from the cities to the villages, to places where there is no work, no school, no transport. Poverty goes village by village. If you think about all this, and also about how prejudice against immigrants, and against gypsies, has been terribly reinforced – with the help of the government – you can say that a hate-based society has emerged. Taking all this into account, Zsuzsa Ferge would not dare to say that poverty has decreased, but she would say that inequalities have increased to an unusual extent. Hungary is not yet at the level of the most unequal countries, but it is getting there. This is compounded by a further serious breach of social inclusion, with the division of Hungary’s citizens by the ruling FIDESZ party into national and non-national. It is a crime to divide a society in this way.
Income inequality in Hungary has not decreased since 2010, according to a recent analysis of GKI Economic Research Company – the most vulnerable are becoming more and more distant from the rest. Despite economic growth, the concentration of incomes among the Hungarian population has remained virtually unchanged over the past ten years, according to the Hungarian Central Statistical Office (KSH). Households in the bottom decile had only 3 percent of income, and those in the bottom 30 percent had 14 percent.
In the Black Booklet of System Change2 Péter Farkas, economist and researcher convincingly proves that those in the bottom decile receive HUF 200,000 (approx. USD 700) per year, and those in the top decile receive HUF 700,000 (approx. USD 2456) in state financial support. This is scandalous.
Economic growth over the past decade, government family support measures and EU support programmes had led to expectations that the gap would narrow. This has not been the case, according to an analysis by GKI3. Rather, the data suggest that income gaps have only been preserved. In reality, the situation is even worse, as the incomes of the fastest-growing strata are only partially included in the statistics (e.g. they are realised abroad).
This also means that even at the peak of economic growth more than two million Hungarian citizens had an income below the minimum subsistence level of HUF 101,000 (about USD 355) per month (or HUF 81,000 = USD 285 per person per month for families with one child).
According to Policy Agenda4, in Hungary in 2017, 25% of households were living off on an income that was not reaching the subsistence minimum level. These households are larger in number, than those living above the subsistence minimum level, so 30% of the Hungarian society lives in households that do not have the income to cover the subsistence minimum level.
While wages have risen by almost 100 percent in nominal terms since 2010, pensions have increased by only 33 percent and social benefits have risen almost nothing. This is mainly because most of them are tied to the current minimum pension, which has remained unchanged at HUF 28,500 (USD 100) since 2010. This means that the most vulnerable, pensioners and those in need of social benefits, are being pushed further and further away from the rest. They are the main losers in the vision of a „work-based society”, with most of them sliding down the income ladder after forty-fifty years of work, says GKI.
From a welfare-based society to a work-based society
The politicians in the governing party FIDESZ are proclaiming that Hungary has gone from a welfare-based society to a work-based society. They mean that in a work-based society those people who do not work should not eat. The essence of PM Viktor Orbán`s work-based society is that it does not matter what you do. Work for little money with little rights. The constant changes to the Labour Code are taking more and more rights away from workers, the trade unions are weakened, while the demand for decent work is emerging across Europe. In both conditions and rights. these two trends are in conflict. The first is represented by the more rights-honouring, liberal, left-wing section of society, i. e. the leftist political parties. The other wants to preserve tradition, essentially on the basis of a feudal hierarchy. Not rights, but favours. With the loss of autonomy, the weakening of rights, the denial of a minimum subsistence, Hungary is unique in post-crisis and post-Covid Europe.
Major government project to create a family-friendly country
The ruling Fidesz party favours only the privileged families, for whom the government is really a friend. The majority of the families is not involved. There is a perverse redistribution, i.e. those who already have a lot, get more. Normally, in economics and by definition, centralised redistribution means that the government uses its means of reducing inequality, such as taxes, to reduce income inequality or to give universal access to something that many people in the market would not be able to buy, and spend on health care, schools. In Hungary the biblical principle (Matthew 13:12), namely „Whoever has will be given more, and he will have abundance. Whoever does not have, even what he has will be taken away from him.” is perfectly applied.
Out of the family policy measures introduced by the Hungarian government the family housing allowance (CSOK) or the car allowance for large families are great, but only those who have the money can use them. Tax credits are also a great invention, but if you pay little tax, you cannot use them. Meanwhile, down below, there has been devastation of a kind that is rare by international standards. It is a real Hungaricum that tax has to be paid from the first penny. All normative income supplements and benefits have been abolished. There is no longer a normative housing subsidy, a subsidy that can be claimed and legally given. The only way to get benefits is to go to the local goverrnment and beg. In exceptional cases they will find some help – if the mayor likes it. If not, you get nothing. There is also no debt management service, when you already know that many people cannot pay back their loans. If what is now being planned is implemented, with the nationalisation of local government rented housing and higher rents, the housing situation, especially for the poor, will become particularly difficult. An increase in the number of people losing their homes is to be expected.
Free child feeding in kindergartens and in primary schools is a real help from the Orbán government, but we would like to see what the children are getting, and under what conditions they are eating. Meals are part of the social norms, and whether they eat with a spoon from an aluminium plate or with a knife and fork from porcelain is heaven and earth. There are two reasons why Katalin Novák, Hungarian Minister for family affairs says she has seen so much beauty in several disagvantaged municipalities. She reported on how people living in poverty can find a way out of poverty thanks to various local programmes and government measures. One is that she was taken to a place where everything is really fine. The other is more common in an authoritarian government: she does not talk about reality. Poverty as a word has been taboo before (i. e. during the time of state socialism).
Hungarian families are calling for an increase in the family allowance, which has remained unchanged for fourteen years, while the Fidesz government says they receive so much other help and benefits that it is no longer necessary. The families are right. Since the amount has not changed, prices have gone up at least one and a half times, so it is not holding up in real terms. When the family allowance started, it was 30 to 40 percent of the average wage for two children; today it is five percent of the average gross wage. So it has virtually zero value. But everything else that families receive (such as tax credits or the social security system) does not help the poor, it does not go to them. The family allowance was originally introduced by the French. One of its aims was to encourage couples to start a family, or at least not to discourage them from having children. It had a demographic function, but also a welfare function.
Today`s family policy measures declared aim, namely to encourage families to have children, does not fulfil this function. Let us look at housing. It is probably typical of all Scandinavian countries that when a baby is born, someone from the municipality knocks on the door and says, hello, dear family, we see that there are five of you living in two rooms, please allow us to offer you a bigger flat. The fact that a larger family needs a larger apartment and that some kind of assistance is needed for this is recognised by many countries. In Hungary, this is solved with a loan. Count István Széchenyi Hungarian reformer and writer (1791-1860) says in his famous book „Credit” that it can be a motor for development in the economy. But if you force families to take it out because they have no other option, and you couple a secure repayment obligation with an uncertain livelihood, it can be a dead end. Hungary is one of the few countries where there is no housing minimum, and the loss of a better home for those with children is not replaced by a worse one. When Katalin Gönczöl, as ombudsman in the second half of the `90s, wanted to introduce this, it was vetoed by the government of the day. All what was possible that the state should provide cover in the event of danger to life. Since then, an even stricter law has been in force. For example, homeless people are not allowed to sleep in public places, except in a few places. And the government do not do shelters. If there is no shelter, and you are not allowed to sleep in public places, does the homeless person have to learn to fly? And abroad, you see blankets being put out in public spaces because they know there is homelessness, but not enough shelter. Here, in Hungary even the blankets we have are taken away. It is evil, it is inhuman. This is the arrogance of those in power towards those who have failed (i. e. towards the loosers of system change). And they even say: „everyone is worth as much as they have”. That is why many people are terribly prejudiced against the poor, against gypsies, against minorities. Those in power think the poor do not want to work, and they spend money badly. There may be some truth in prejudice, of course, but if we just pay a little attention we can understand why it happens: „bad” spending means, for example, that for once the poor buy themselves something they enjoy rather than something they need, like crisps instead of bread. And work is undertaken if it is not offensive, if it is decent and if it pays. If there is no work, then money is needed, and in many cases not welfare, but the so-called social minimum would be a must.
Curtailing academic autonomy, nationalisation of public properties
According to the Fundamental Law, Hungary ensures the conditions for fair economic competition, combats abuses of dominant positions and protects consumers’ rights. The essence of capitalism has always been that property is stable because it is the basis of a secure market. Now we are seeing nationalisation and a good part of that property going to the kissers of Fidesz government. What is not nationalised, the autonomy of the institution is reduced, and this is linked to a hatred of knowledge. The only aim is to leave as little as possible that has autonomy independent of government. This is what the complex system of chancelleries imposed on universities. In addition the researh institutes have been taken away from the Hungarian Academy of Sciences and subjected to a pulic authority, namely to Eötvös Lóránd Research Network (ELKH), which has started to raid the institutions handed over to it. There is a debate about the Centre for Economic and Regional Studies, which is to be attached to the Home Office. The Institute of Historical Sciences was scientifically neutral, but now it is joined by the Institute for Hungarian Studies, which is „organised to restore the national self-esteem and self-respect of the troubled Hungarians”.
The appreciation, or rather the lack of appreciation of knowledge is also evident from the fact that there is little effort to reduce the inequality of opportunity for children, and Hungary has the largest disparities in the social composition of schools in Europe as a whole. Segregation has become legal, whereas it was previously forbidden. The number of people admitted to secondary school or university is shrinking. And all this is happening in the 21st century, supposedly the century of knowledge. Knowledge is essentially questioning, doubting. We ask why this is so. And then you can ask why the government does something one way or another. And we know that it is not appropriate to pester this government with questions. The Jewish Passover holiday has a script in which questions play a major role. In it there is a phrase like this: „the dumbest is the one who cannot even ask questions”. The government’s goal is to make people know as little as possible and ask as few questions as possible. An anti-knowledge, anti-autonomy, hate-based society has developed in Hungary.
There are so many problems that welfare states, including Hungary, will have to find solutions to them in the coming decades, and the crown virus epidemic has only precipitated the social crisis that is inevitable. The problems of making social security and pension systems sustainable, of the poor state of health and long-term care systems, or of poverty in old age, are weighing ever more heavily on ageing societies. Not to mention even longer-term goals such as improving the quality of life of pensioners. What awaits those in Hungary who are about to join the over-65 age group – something many people did not think about until the epidemic. Hungarian economic and financial news portal Pénzcentrum has now looked into what the elderly and middle-aged can expect in the future.
The problems affecting the now retired and soon to be retired age group have been present and the situation has been getting worse year by year. This process has long been the subject of a search for solutions, but mainly on a sub-area by sub-area basis: the big picture is rarely discussed. Yet these are interlinked issues, as the impoverishment of the elderly and their overall health interact – the more they spend on medicines and health care, the poorer they are, the less healthy they eat and the less money they can spend on their health. In the same way, depression in old age is also linked to, for example, lack of social care, and so on.
It is a general phenomenon that, as capitalist societies age, the capacity to care is gradually exhausted. In her study, sociologist Andrea Gyarmati5 explains the main factors behind the rapid increase in the need for care resulting from demographic change. The statistics she uses show that the over-65 age group is already facing significant problems, which will become more acute in the future.
Increasing numbers of older people, decreasing numbers of young people
It is no news to anyone that the problem of demographic ageing is affecting Hungary in the same way as most other EU countries. One in five of the 9 769 526 people living in Hungary is over 65, a proportion that is rising year on year in relation to the population as a whole. While in 2001, only 15.1 percent of the population was aged 65 or over, by 2020 this figure had risen to 19.9 percent. By 2021, more than a fifth of the population could be over 65.
The rate of increase is also on the rise: from 2001 to 2012, the annual growth rate was between 0.1 and 0.2 percentage points, but from 2013 it started to rise more dramatically, and from 2019 to 2020 we saw an increase of more than half a percentage point. It is projected that by 2070, the proportion of people aged 65 and over will reach 29%, or around 2.7 million!
The number and proportion of people aged over 80, i.e. the very old, is also growing: in 1990, 260,000 people belonged to this age group, while in 2016 it was 412,000, according to the KSH. Of course, this is not only a major burden on the pension system – because fewer and fewer active workers are “supporting” the elderly – but also on the social care network and health care system. And the unfortunate effects of the Minister of Welfare and Health Anna Ratko`s era led to a baby boom in the ’50s, becaause then Hungary banned abortion and taxed individuals without children. These population will only “ripen”over the next ten years.
High ageing also means that health has already deteriorated: in 2016, 74% of people aged 65 and over, or roughly 1.3 million people, were living with some kind of physical limitation, so it is fair to say that, according to current statistics, seven out of ten people cannot maintain their health into old age.
- Is a pension catastrophe near?
The growing proportion of the population aged over 65 also means that the old-age dependency ratio is rising. While it was 24.2% in Hungary in 2010, it has risen to 30.3% by 2020. And the rate of increase is accelerating, as is the proportion of the population aged 65 and over.
It is estimated that within 80 years this ratio could be as high as 56%, which means that by 2100 there could be 56 older people for every 100 people of working age in Hungary. In the EU, the ratio will be slightly higher: 57%. The increase is likely to be most significant between 2030 and 2060, when the old-age dependency ratio in Hungary will increase by almost 20 percent. In other words, for every hundred people of working age, there will be almost twenty more elderly people in the course of a few decades. After all, we only have ten years until 2030 to prepare for a drastic ageing of society.
Situation in Hungary`s Roma segregates 6
With the headlines dominated by epidemiological data and news of the vaccine rollout, there is not much light on how marginalized groups are affected by the pandemic. Hungary’s segregated Roma communities living below the poverty line are at a disadvantage in multiple aspects.
The housing quality in Roma estates is dismal; households are overcrowded, allowing the virus to spread like wildfire in these closed communities. In many places, there is no city water or sewage system.
- On average, people living in these communities have poorer health due to their social circumstances; they live shorter lives than the majority society, smoking, alcoholism, and obesity are more prevalent, while they have worse access to healthcare.
- Poor education, a lack of information, and a mistrust of the healthcare system make these communities fertile grounds for misinformation and conspiracy theories, creating negative attitudes towards vaccination. If someone does want to get vaccinated, they have little access to information on how and where they can do so.
- Many lost their jobs due to the pandemic, a majority of students were left out of digital education, which only increased the existing inequalities.
It is no accident that the European Commission called attention to their situation in a statement published on International Roma Day:
“We must do everything possible to address not only the current crisis affecting them but also to bring real change on the ground.”
In a recent report by Reuters, Aladár Horváth, the Chairman of the Roma Parliamentary Association, said that people in the ghettoes do not have money for medication, and even basic hygiene conditions are sometimes lacking. According to what he heard, the coronavirus tore through Roma communities in small towns, Budapest, and the estates as well. „Our people are dropping like flies,” said the Roma rights advocate who recently lost his 35-year-old nephew.
According to statistics, there are 1,300 segregates inhabited mainly by Roma people in Hungary. The population of these segregated communities is around 200,000 people, 2.8 per cent of Hungary’s population.
Remark: The above HSW 2021 Report was sent to the Social Watch Secretariat on 14 June 2021.