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Practical concerns abound over gov’t plans to legalize menial labor

A plan by the Hungarian government to make menial labor basically tax free, transparent and legal is seen by experts and stakeholders as an unrealistic ambition.

Prime Minister Viktor Orbán declared that people who pay others do smaller household chores like cleaning and gardening should not be persecuted by the authorities. Not that the tax office APEH would have devoted much of its efforts to investigating these cases of tax evasion or would have had any chance of success for that matter anyway.

Apart from those working as registered employees of cleaning companies or work with contracts tidying offices, an undermined but significant number of Hungarians and immigrants (legal and otherwise) make a living out of taking care of the homes of people who can afford these kinds of services. Payment is invariably in cash and is never registered. If inspectors were to show up for some reason the obvious excuse is that the cleaning lady is a friend or relative “helping out”, and that’s as far as the story goes.

The government’s planned new regulation would oblige those employing household helpers to send a text message for registration and pay a lump sum of HUF 1,000 a month to the state. Seems simple and cheap. However, save for a suddenly found urge to go by the book, there is no incentive for anyone to do even this much.

Which is why experts and unnamed employers of cleaning ladies agreed when asked by the Origo news portal that the measure is essentially pointless. For starters, it is unlikely that APEH would even try to crack down on unregistered workers, seeing that it is an uphill struggle. “Tax inspectors cannot simply enter private homes and even if they caught someone red-handed, they could not determine how long they have been reemployed illegally or the extent of the penalties they could levy,” Iván Vadász, deputy chairman of the Hungarian tax consultants told the site.

The LIGA labor union group is also urging the government to abandon what they call the “servant bill”. While in other parts of the world governments are exactly striving to end these sorts of arrangements whereby employees do not have any social security coverage, the proposed law would actually encourage many Hungarians into this direction, the group believes.

LIGA finds that the law would in no way contribute to making the economy more transparent, it would hurt smaller businesses, it would not bring notable revenues for the treasury and would deprive a larger number of people of rights contained in employment laws. (BBJ)