Hole in the plan


Ever since the second Fidesz government won the 2010 elections, the master plan driving its term in office was to create a society that embraces solidarity, but doesn’t run on welfare. Officials famously discussed ambitious goals like creating no less than one million new jobs over the course of a decade.

The past has already seen steps that increased the number of people on the workforce market, like demanding community labor from former welfare recipients, and even accepting the political losses from taking away the early retirement options for emergency responders.

But, even with the resulting 3.5 million Hungarians at work, that still means that the other 6.5 are not, because they are retired, are disabled, are still in school, or worst of all, active-aged and unemployed.

More importantly, the private sector, the companies that have the option to invest and develop, are almost completely on the defensive. The tax authority’s figures show that the number of employees in the private sector is stalled at 2.6 million with only minor changes. While there may be some solace to be gained from the knowledge that the market has bottomed out with nowhere left to descend, there is still no great hope of it moving on up, even though 2013 is a year the government says it expects the economy to return to growth.

In terms of the available options, the government is trying to bolster its arsenal. There is the aim of funneling as much of the remaining European Union development funds as possible into the economy, while the new, “supportive” management of the National Bank of Hungary is also getting involved.

The MNB thinks that if its newly announced measures are fully successful, they can add 0.7% to economic growth. It is unclear whether success would double the latest growth projections to 1.4%, or if the Economy Ministry is also basing its own forecast on the central bank program.

What the government still hasn’t been able to do, and doesn’t seem intent on doing either, is to restore trust towards the country. Sectoral taxes that are still around despite earlier promises they would be gone by now are a bane to new developments, corporate planning and hence any hope that businesses could have any interest in expanding the payroll.

There are problems not only in terms of quantity but also in quality, with the skilled becoming all the more ready to leave the country and, despite central rhetoric, there is no guarantee they might return.

If the master plan is to ever become reality, the government must realize that defiant rhetoric against any and every international organization that objects to Hungarian practices won’t suffice. It will take all those foreign companies present in Hungary to play their part, and not through taxation only, but by running successful businesses in the country that could genuinely allow them to contribute to the economy.

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