Researches have found that poverty has grown since the beginning of the government term. The Policy Agenda examined how the government had reacted to the social crisis. The draft budget 2014 shows that the state will spend over 200 billion forints less on social expenses than four years ago.
Shorter Funds for Social Expenditures
The sums spent by the state on the institutional system, monetary allowances and funds transferred to the local government are reckoned among the social expenses financed from the budget. Nevertheless old-age pension expenditures are not included here, whereas they are counted among the welfare, social security items since the latter is not associated with a special circumstance of life (such as the changed working ability) or poverty, but it is an allowance due to everyone after a certain time span spent in employment or work.
According to the calculations made by the Policy Agenda the government intends to spend 2,000 billion forints from the budget-2014 on social expenditures. This sum is expected to remain as much as budgeted, for not a single motion for amendment was put forward by the governmental party representatives in this field. That is the Fidesz-KDNP parliamentary group did not take the initiative to increase the social allowances.
To make the changes of social expenditure, which occurred in this respect during the government term, comparable we looked at the fact figures of the budget-2010. This was the first budget that the current government itself could have formed to fit to its intentions, although by interim alterations. In 2010, the state still spent 2.260 thousand billion forints on social expenditure. It was 260 billion forints more than the present one.
The decline is even bigger than that if these figures are compared to the budget spending. In 2014, 11.8% out of altogether 16.9 thousand billion forint spending is anticipated to be consumed by social expenditure, while in 2010 this rate was 16.1%.
Family Subsidies for Everyone
One of the most controversial social allowances is the subsidy paid to families. With these subsidies the state is backing families with children by contributing uniformly to cover costs of child rearing regardless of income and property status.
To such purposes the government will spend 582 billion forints next year, which is basically equal to the spending on the same purpose in 2010 (586 billion forints). The same amount of contribution will be paid to the absolute winners of the flat rate income tax system, if rearing a child, and also to those who have lost their jobs.
Government Economizes on those with Changed Working Ability
In addition to the allowances paid to families there are three further groups of social allowances. Poverty related subsidies amount to the most (611 billion forints). Different types of social assistances are included here for instance the one provided for school catering or another one paid for the local governments’ programmes to support the elderly. Furthermore, the workfare programme also belongs to this group, for its permanent effect on the labour force market is negligible, and in principle it was established for those with very low family income.
Next year, the government will spend 150 billion forints more on poverty related expenditure, than in 2010, owing to the 183 billion forints having been devoted to the workfare programme. Nevertheless, as drawn up by the Policy Agenda in its analysis before, these workfare programmes are extremely expensive due to the organisation costs, and because of the flat rate income taxation system which also entails high expenses on taxes and contributions.
The cabinet is expected to spend 266 billion forints on social allowances reacting to the changes on the labour force market, which is 344 billion forints less than four years ago. The allowances paid before pension age, the official remunerations, the benefits paid to the miners and the support paid to job-seekers also belong to this group. The reason for the radical cut back is that the cabinet abolished the early retirement.
The government economizes also on the allowances paid related to sicknesses and changed work ability. Next year, 537 billion forints are budgeted to be spent on disability benefits, allowances for the physically disabled, attendance allowance, the employment of those with changed working ability, allowances for the handicapped, on the indigent health care programme and on sickness benefits. This is 44 billion forints less than in 2010.
During the past four years the government has rearranged the magnitude of social expenditures fundamentally. Based on the utilised sums and the logic of the measures, those people who are compelled to live with some permanent sickness and often with the changed working ability following from the sickness receive support only when they are in need due to their income status. In such cases, only the opportunity to work in the workfare programme is ensured for them. Another drastic change is that early retirement was abolished, the financial effect of which, in fact, is evolving now.