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Nov 30, 2016

Prime Minister Viktor Orbán’s press statement after the signing of the 2017–2018 wage agreement

Budapest, November 24, 2016

I would also like to greet everyone here. I shall perhaps not deliver a speech, but I would like to respond to several of the thoughts which we have heard here, because those thoughts provide an opportunity – or rather the chance to respond gives me an opportunity – to briefly speak about the Government’s intentions.

First of all, I have been a Member of Parliament since 1990. Before we signed this agreement here, we were chatting in the ante-room, and we were wondering whether we could remember anything similar happening in the past 26 years. And we came to the conclusion that we remember feeble attempts, when several times we tried to accomplish something like this; but we never reached a comprehensive agreement extending over several years – we are talking about six years now – such as the one that we have concluded, such as we have realised this time. So bearing in mind this historical perspective, the perspective of 26 years, I would like to congratulate those who took part in the negotiations, and I would like to express my appreciation to those who made the commitment to sign this agreement, including the trade union leaders and employers’ representatives.

Ladies and Gentlemen,

Everyone says that the essence of this agreement is wages – and there is a great deal of truth in that. But I would like to remind ourselves of two facts. In order to be able to talk about wages, first we need jobs. And in order to have jobs and to be able to talk about jobs, we need a fully operational economy. Although this might sound like a funeral oration, I should just briefly recap the situation we started from six years ago. Six years ago we were not talking about wages, but about how to save the economy from financial ruin. We worked hard to create the preconditions for the chance of talking about jobs. We then succeeded in creating jobs, and this was the precondition for talking about wages today. I think it is important that we remind ourselves that the issue of higher pay is not a question of good intentions. It helps if employers have hearts – and, as far as I can see, the biological facts seem to indicate that this is the case. But fundamentally the question is not whether they have good intentions, but whether there is a competitive economy backing them up and whether we have competitive businesses. Businesses which are not competitive are unable to generate revenues, are unable to pay wages and – in particular – are unable to increase wages.

So I agree with Mr. Lakatos that the future depends on employers and employees jointly accepting that only efficient businesses are able to increase wages. Social tensions will emerge if the balance between employers and employees shifts in either direction, and if we lose sight of the ideal of efficient businesses. The Hungarian government is aware that, though we are primarily talking about wages (and between ourselves, I am personally proud that this agreement contains such a significant wage increase), at the back of our minds we know that a precondition of this wage increase is that our businesses must be competitive – they must be successful. The state is unable to give jobs to the people. That would take us back to socialism. We tried it once, and it led to utter ruin. Employers, competitive businesses, their owners and executives are the ones who can provide jobs and wages. And I believe that the talks we have just had and their outcome reflect this, because the agreement is not only about wages, but also about tax cuts. If I look at this agreement from an employer’s point of view, I could say that there has been a tax reduction in return for a wage increase. At least, the Government sees it in this light: tax cuts in return for higher wages.

Ladies and Gentlemen,

I would just like to tell you that right from the beginning, in 2010, our philosophy – which I learnt from large employers in various meetings – has been that economic policy principles are not complex economic theories, but simple facts. And ever since 1990 we have built our economic policy on the simple fact that if there is work, there is everything. If there is no work, if there are no jobs, there is nothing else worth talking about. I think we can now say that everyone in Hungary who wants to work can find employment. This is a strong statement, which I shall qualify somewhat. There are regional inequalities, it is not always easy to find a job, one cannot always find the job which one would like, for which one has spent years in education or for which one has prepared, and one may not be entirely satisfied with the job one has; but I believe that today we can dare to claim that Hungary is a country where there is employment of some kind for those who want to work. And this is a great achievement.

But now that is all in the past, and this agreement is about the future. It is no longer about how to find a job, but about work being financially worthwhile. As far as the Government is concerned, the meaning of this agreement – if we manage to accomplish it, and in this I wish both employers and employees the best of luck – is that we can now say that not only do we have jobs, but work is financially worthwhile. These figures, these interrelations, this tax cut, this wage increase all lead us to the kind of world in which Hungarians can finally say that they are in employment, they have jobs, and doing those jobs is financially worthwhile.

Ladies and Gentlemen,

I shall not repeat the figures, which you may already be familiar with, but there is a community which is not represented here, and which next year will benefit from a major tax cut. This is the community of small and medium-sized enterprises: those who are self-employed or employ a small number of people. They form a community which cannot often make their voice heard, as there is no industry association to represent them. Perhaps the Chamber plays this role instead of such an industry association, but we very rarely talk specifically about this stratum, in which there are over a hundred thousand self-employed people and small employers, who are hardly ever represented in business statistics. So I would like to remind everyone that the situation of this community – in addition to that of large employers and their employees – will improve considerably from next year. Perhaps you are familiar with the figures: they can opt into a special tax-free threshold of HUF 12 million, instead of the current HUF 6 million; and the threshold for base-line taxation will also increase. So there is a stratum whose voice is perhaps not very loud right now, but I would like them to know that we have also borne them in mind, and this agreement applies to them as well.

Ladies and Gentlemen,

With the cameras here, I would like to say one more thing to the good people of Hungary: I would like them to feel that they have reason to be proud of this agreement. This did not come about through sheer luck. It is not some international trend which suddenly caught the sails of the Hungarian economy, and the opportunity to conclude such an agreement did not emerge overnight. I would like every Hungarian to know that, over the past few years, millions and millions of Hungarians – employees and employers – have worked hard for this opportunity for wage rises. There is an underlying achievement here. This is not an agreement based on a vision, but an agreement which relies on the work we have completed in recent years. We have worked hard for it. It was not gifted by the IMF, or the European Union – and neither was it down to sheer good luck. We can thank ourselves for having come so far, and this is a reason for everyone who has worked in Hungary over the past six years to feel proud.

And finally, I would like to refer back to some of the thoughts of President Lakatos. I would like us to move forward from this agreement today, because although it applies to the next six years, now it is already, in fact, a thing of the past. President Palkovics also mentioned that the phenomenon we call the “democratic transition” is a long historical process, and our generation can only ever say that this agreement should be interpreted in the context of the democratic transition. But what is ahead of us is a much greater change than that which we have been through. We are on the verge of a technological revolution. In the modern economies – including in Hungary – there will be technological changes on a scale which will alter everything. So the agreement we have now signed can also be seen as the starting point of a new economic policy for the years ahead. We have created an opportunity for Hungary to have a chance in the battle which will take place in Europe over the next ten to fifteen years, in this contest – this great technological contest – which, as we have heard, will see businesses forced to undergo robotisation and digitalisation. This agreement creates an opportunity, but it has not yet created a chance to succeed. All it has done is keep us in the running. We shall need another agreement as well. I am not saying it will be tomorrow, and I am not even saying that it will be in this parliamentary term, but within a year or two we shall need an agreement focused on technological modernisation in Hungary, on engineering science, on the issues of digitisation and robotisation, and how the Hungarian economy and Hungarian society will adjust to this change that will soon be on our doorstep. This agreement is a sound basis for finding the right answer to the question which is here, right in front of us.

Ladies and Gentlemen,

I would therefore like to tell you that this agreement is positive and successful. Over the past twenty-six years we have not had such a moment, and fortune has not graced us with such an event. With our previous efforts we were unable to achieve the signing of such an agreement. So this is a great moment. But finally I would also like to remind you that we cannot afford to sit back and relax – or if we do, only for tonight – because tomorrow morning we shall have to start work on preparing ourselves for the changes which will shake the entire modern economy, and which will pose major challenges to us all. So our social partners will also have plenty to do over the next few years: not only in enforcing the terms of this agreement, but also in engaging in negotiations on the conditions which will enable the Hungarian economy to enter this new industrial revolution. We are relying on both employers and workers in such a major agreement on modernisation and technology.

Thank you very much.