Kovács: Layoffs caused by shop law not gov't concern

Retail

“It is not the government’s duty to make estimates on how many people would be fired due to approved legislation”, government spokesperson Zoltán Kovács said today, referring to the legislation approved earlier today that prohibits retail chains that sell fast-moving consumer goods (FMCG), like food, from running a deficit for two year's straight as of 2018.

Those who support the new law say it prevents big chains from undercutting local shops for long periods of time. Those who oppose it say it prevents companies from operating the way the want to operate – or from making losses due to investments – and that it will lead to layoffs in big hypermarkets and stores run by chains like Spar and Auchan.

But Kovács said those who pass the laws are not responsible for counting potential layoffs.

"The players affected by the legislation should make these estimates," Kovács added. He also said that the new legislation applies equally to all the players in the market, although Hungarian online daily 444.hu believes that the legislation is friendly to Hungarian grocery chain CBA, whose owner is known to give generous campaing funding to the ruling Fidesz party. The legislation only regulates major chains, which make at least HUF 50 blin in revenue for two consectutive years.

“Fair FMCG shops have nothing to fear, only those who acquired gratuitous advantage in the market,” Kovács said.

As of 2018, the legislation also prohibits, the operation of supermarkets larger than 400 sqm in areas of Budapest designated as UNESCO World Heritage Sites. The Hungarian capital has two World Heritage sites: the Banks of the Danube and the Buda Castle Quarter, with an area of 451 hectares, and Andrassy út and the metro, with an area of 58 hectares and a buffer zone of 240 hectares, data from UNESCO show.

The legislation was passed with 116 voting in favor, 34 voting against and 25 abstentions, in a parliament where Hungary’s governing party Fidesz has a two thirds majority, with 116 MPs, allowing the party to pass laws, even if all other parties vote against a proposal.

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