The crisis has affected Hungarian economy and society to a considerable extent. This can be felt still and poverty is ever increasing. Policy Agenda has examined Hungary’s current situation compared to our competitors based on the figures published by OECD and the statistical office of the European Union (EUROSTAT). The figures answer the question whether the government has put every wheel in motion actually in order to mitigate social harms.
Economic crisis: reduction of social expenditures
If we compare the economic performance of the four Visegrád countries (the Czech Republic, Poland, Hungary, Slovakia) and Slovenia we can state that Hungary has fallen back the most since the start of the crisis. In consideration of the GDP in euro, Slovakia has produced a growth of 12% and Poland has produced 7% respectively. On the contrary, Hungary has lost 7.1% of the GDP. In this consideration, Slovenia is “our competitor” but the GDP reduction has not reached the level of 5.4% even there.
Such an economic situation creates constraints clearly also from the aspect of the state budget. This means that expenditures have to be tailored to reducing incomes. In accordance with the OECD survey, Hungary has been the strictest because Hungary has started to cut social expenditures back. The cabinet reduced such budget expenditures by 10% compared to the GDP between 2009 and 2013 while other countries where the economy did not recover preferred increasing them. In the Czech Republic social expenditures increased by 5% in spite of the 3.2% GDP reduction while Slovenia mentioned above increased them by 5%. Undoubtedly, they wanted to save the lower segments from the exposure of the crisis by more than it is necessary.
Ever growing poverty
In Hungary’s situation the reduction of social expenditures has brought its effects. In accordance with the Eurostat survey, in Hungary in 2013 there were 3 million 285 thousand people that were classified as poor or as being endangered by poverty. This means an increase of 17% since the crisis and it also means that one third of the population has arrived to a financial situation from where it is very difficult to come back unaided.
In spite of the economic fallback, in the Czech Republic the number of people classified into the category of endangered by poverty increased by 0.9% based on the 2012-figures and Slovenia “escaped” by a 8.6%-increase of this segment despite the important reduction of economic performance.
As a result of the increase of economic performance, the reduction rate of the social segment living in hardships is minimal in Slovakia (0.2%) while this rate is high in Poland (12%).
country | GDP change in Euro (2013/2008) | change of social expenditures (2013/2008)[1] | change of the poor or people [2]endangered by poverty (2012/2008) |
| the Czech Republic | -3,2% | +5% | +0,9% |
| Poland | +7% | -3% | -12% |
| Hungary | -7,1% | -10% | +17,5%[3] |
| Slovakia | +12% | -4% | -0,2% |
| Slovenia | -5,3% | +5% | +8,6% |
The number of the poor has grown to the number of citizens of two big towns
In Hungary, only in this government cycle, the proportion of people suffering from pauperisation has increased by 90 thousand every year on the average which means that by the end of the fourth year of this cycle, the number of people that have found themselves in a very difficult situation has equalled to the population of Debrecen and Miskolc.
The figures relating to Hungarian society are thought-provoking as well because it is already the fifth year that the number of the poor or people endangered by poverty has been increasing permanently. No such constant grievance can be observed at our competitors because there has been at least one year in every country when the number of people in difficulties has reduced for the recent years.
Social expenditures have been reorganised fundamentally in our current government cycle. It is not only the way of accessing to support that has changed but also the support sums have reduced. The transformation of the retirement system of people that have become handicapped, the actual termination of early retirement, the public employment system affecting several hundred thousands of people and the connected social system have ended up in a situation by the end of the cycle where the former lower-middle classes have to confront serious financial problems. In comparison with our competitors it can be seen as well that the economic situation does not explain such a dramatic change.