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State cuts to begin with 6,000 layoffs

Cabinet Chief János Lázár has promised to reduce staff and rationalize administration. 

Noting that roughly one million people are employed by the Hungarian state, Cabinet Chief János Lázár announced on February 4 that the government planned to lay off 6,000 of them by the end of this year.
Lázár said layoffs at district and local government offices will be conducted in two phases, by July 1 of this year and January 1, 2016.
The cuts, amounting to 15% of the 36,000 workers in district offices, are part of a rationalizing effort of government offices, according to Lázár, who said in late January that the government is planning the reorganization or phasing out of more than 70 state-supported institutions and centrally financed agencies in “the spirit of reducing bureaucracy”.
For example, Lázár has said that the new institution of the “Government Window”, a one-stop office where citizens can deal with a broad range of paperwork, means that the 6,000 layoffs can be achieved in district offices without a serious impact.
According to Attila Juhász, a senior analyst at the Political Capital Institute, the changes that Lázár is talking about may not mean a huge number of layoffs – but rather a rearranging of employees.
“In the case of state institutions that might be terminated, it is expected that employees will be moved to some other state-employed position,” Juhász told the Budapest Business Journal. “The operations of the public sector will hardly go through any significant changes.”
Juhász also suggested that the layoffs being planned are more about improving the government’s image than anything. “Experience shows that cuts in bureaucracy are sometimes used by governments in an effort to show that they are interested in saving public money,” he said. “This has already happened in the past in similar actions.”

Only the beginning

But Lázár insists that he is serious, and that these cuts are only the beginning. Next up are background institutions that serve ministries and state-owned corporations, he said.
“Reducing bureaucracy is aimed at increasing the country’s competitiveness,” he said in an interview with state news agency MTI.
During an interview with state-owned all-news channel M1, Lázár said that, while the public sector accounted for some 20% of all jobs in Hungary, that ratio was 13% in Slovakia, and 10% in Austria or Germany, MTI reported.
He said that because the 3.3 million working in the private sector have to pay for the roughly one million working for the state, it seriously reduces Hungary’s competitive position. The goal of these cuts is to ensure more efficient governance, if not huge budget reductions according to Lázár, who reportedly said that money saved through layoffs will be spent on raising the salaries of those retained by 50%.
As for those who will be laid off in the first round of 6,000 cuts, Lázár said that with such low unemployment rates people could easily quit their jobs in the public sector and find employment in the private sector. He said the government will give assistance to those who are leaving, such as programs for those voluntarily quitting their jobs or incentives to employers providing jobs for former public sector employees, MTI reported.
In an interview with state-owned Kossuth radio, the cabinet chief said that cutting the number of bureaucrats was not enough. Administration costs must also be cut, and laws and regulations pertaining to the sector must be simplified, according to reports. He mentioned construction and taxation as areas where regulations are too complex, and said that the legal environment should be shaped so that easier access to European Union funds is provided, according to MTI.