Minister Gulyás: Brussels is attacking Hungary’s 13th-month pensions

The 13th-month pension remains an important part of the Hungarian pension system, and the government is committed to increasing the purchasing power of pensions and protecting pensioners, head of the Prime Minister’s Office Gergely Gulyás said at a government press briefing on Thursday.

Gulyás said “one of the most important proposals” at Wednesday’s government meeting was on the situation of retirees. In the past 15 years, the average pension has grown to nearly 250,000 forints (EUR 615) from around 100,000 forints, he said. Gulyás said the 13th-month pension and was being constantly attacked “by the opposition in the hands of Brussels”. “The Tisza party’s experts are also calling for changes to it, and Brussels has obliged Hungary to get the OECD to prepare a study. The OECD suggested that the 13th-month pension be curbed and reformed,” he said.

The government will not comply with those requests, and the 13th-month pension will remain an important part of the Hungarian pensions system, Gulyás said, adding that the 13th-month pension will be transferred on Feb 12, costing the budget 550 billion forints this year. The government is also helping pensioners by extending its rural home renovation scheme to include them, he said, with pensioners able to access government funding for half of the costs of renovation, up to 6 million forints, and a low-interest loan for the rest of the costs, he said.

Regarding the rehabilitation of a brownfield area in Budapest’s 14th district, for which the government and the Budapest municipality have conflicting plans, Gulyás said the government acknowledges the pre-emption rights of Budapest Kozmuvek Nonprofit (BKM) over Rákosrendező, adding that the relevant government decree will be issued later on Thursday. BKM, a company owned by the Budapest municipality, has exercised its pre-emption rights over the brownfield area in Budapest’s 14th district, Gergely Gulyás said. The government has studied the declaration to clarify how the international agreement relates to the civil law agreement concerning the area, he said.

BKM has declared it will take on all duties that would have fallen on the investor-developer from the United Arab Emirates, Gulyás said. “In view of that, the government acknowledges the pre-emption rights.” The city’s administration and BKM will be mandated to pay for the area under the terms and conditions of the agreement and will be liable for the clean-up for 25 billion forints (EUR 61.5m), half the value of the sales price, he added.

Regarding the government’s 21-point economic action plan, Gulyás said that the first results were already visible. The recently introduced loan for employees has already received 9,000 applications, with the average amount requested being around 3.9 million forints, he said. Some 2,000 loans have already been paid, while 5,400 applications are being processed, he said. Rural home renovation subsidy requests have come to a total of 2 billion forints so far, he added.

Some 1,885 small and medium-sized enterprises have submitted applications for the government’s new 48 billion forint support scheme, Gulyás said, adding that the requests amounted to 137 billion. Another 100 billion forint scheme designed to support the investments and competitiveness of SMEs has received more than 1,800 registrations, he said.

Government spokeswoman Eszter Vitályos said, in line with the agreements signed last year, the raised minimum wages for workers and skilled employees are scheduled to be paid in the coming days. The raises affect some 1 million people, she added. According to the 3-year wage agreement, the minimum wages will increase by 40 percent in total, including a 9 percent raise to 290,000 forints this year, she said. Some 143,000 teachers are receiving wages increased by 21.2 percent on average this year, after a wage hike of 32.2 percent last year, she added.

State investments with a value of close to 100 billion forints have been completed in recent weeks, Vitályos said. These included kindergarten, school and creche constructions and renovations as well as transport and regional developments. She also highlighted the inauguration of the National Film Institute’s new studio complex in Fot.

Regarding the Rákosrendező brownfield site, Gulyás said that by exercising its pre-emption rights, the capital and the company owned by it had taken the place of the buyer, so the capital now enjoyed the rights arising from the contract but also bore related obligations.

This also means that the city must clean up the area, the minister said, adding that in the contract the Arab investor undertook to clean up the area for up to half of the purchase price, which is around 25 billion forints. Citing professional estimates, he said the area could be cleaned up for roughly this amount.

Commenting on what may be built at the site, he said the government would try to reach an agreement with the city if building regulations needed to be changed, and if this was not necessary, “then the city will do what it wants with its own property”. On the fact that another company also has a pre-emption right, Gulyás said this was only a theoretical possibility because a small company could not pay the purchase price.

He said the UAE side had been informed late on Wednesday of the situation arising from Budapest exercising its pre-emption right, so they would not find out from the press. Gulyás noted that it had been said repeatedly that the capital was the country’s richest municipality. Yet even though the city was close to bankruptcy, according to a State Audit Office report, apparently it could still afford to buy the land for 50 billion forints. He indicated that the government approved the payment of the purchase price as it represented a long-term liability.

Gulyás said Rákosrendező was Budapest’s largest completely neglected area. Gulyás wished the capital “good luck” in proving that the area was in the right place in their hands, but indicated that he was unsure whether what happened was good for Budapest or the country. Answering another question, he insisted that the government had not “let go” of the investment, but “this is how a constitutional state works”: someone had exercised their pre-emption rights, and “democracy has a price”.

The minister received a number of questions about the case of the Japanese woman who died in a house fire in the capital at the end of January, suspected of murder by her ex-husband. He was asked whether legislation might be needed in connection with the case, considering that the woman had previously asked for help from the police several times but was turned down.