Jan 04, 2018 - Zoltán Kovács

People need work not welfare checks to escape poverty

When the Orbán Government entered office in 2010, the prime minister said that Hungary would offer employment over welfare checks. Critics quickly denounced it as inhumane. Seven years on, 741 thousand more Hungarians have jobs. Tens of thousands that suffered from long-term unemployment have rejoined the active labor force, reclaiming their dignity and self-respect, and it has helped many out of poverty.

Minister of State for Social Affairs and Inclusion Károly Czibere announced in December the latest data on poverty and unemployment. While the unemployment rate has been cut nearly in half, according to the Central Statistical Office, the number living in poverty has also declined.

The data reinforce the point that, if given the chance, people return to work. And those latest numbers show that Prime Minister Orbán’s vision for a workfare society has helped lift Hungarians out of poverty.

The number of people living in poverty in Hungary has dropped by 800 thousand since the end of 2012. That puts it below the level it was at prior to the financial crisis in 2008. Hungary’s deprivation index showed similar trends – access to goods in Hungary has improved as well.

The central front in the government’s effort to build a workfare society has been job creation and the public work program. Other programs have contributed as well, like the measures to cut utility costs to reduce household expenses and the conversion of foreign currency-denominated loans to HUF to reduce private debt.

In fact, the government allocates approximately 4.7 percent of GDP each year to reduce poverty.

The unemployment rate has reached another record-low: 4 percent. Putting that in context, the jobless rate before 2010 had reached well above 11 percent. Over the last seven years, more than 700 thousand workplaces have been created.

Employment in the 20-64 age group, which is the target group of the EU 2020 strategy employment goals, has gone up by 1.5 percentage points to 73.8 percent. Péter Cseresnyés, state secretary responsible for Labor Market and Training, said the government will meet the European Union target value of 75 percent by 2020. Meanwhile, the Hungarian numbers are already well above the European Union average of 70-71 percent.

While job creation is important, Prime Minister Orbán also argues that work must be made worthwhile by offering a decent real wage. The government has cut personal income tax and taxes related to work and the six-year wage agreement made last year has significantly increased the minimum wage for workers and skilled workers. Public employment is a quick step up for those who want to get back into the job market.

Critics continue to cite poverty as an issue, and it’s true there is still much work to be done, particularly building from the depths of the post-2008 financial crisis. But the numbers on employment and poverty are clearly showing a positive trend.