Will basic income ever become a reality in Hungary?

Dialogue Hungary’s recently published paper is a detailed scheme for providing a basic income for everyone from children to pensioners, and it would cost around EUR 9.5 billion for the Hungarian government.

The discussion paper by Dialogue for Hungary (Párbeszéd Magyarországért) and the party’s Progressive Hungary Foundation, entitled Basic income 2021: Toward safety, was presented on 7 October, the World Day for Decent Work.

The paper presents a scheme for basic income in Hungary, an especially timely programme now as “tens of thousands of people lose their job or get reduced salaries due to the coronavirus pandemic”, writes 24.

In short, the paper suggests a basic income of EUR 140 (HUF 50,000) per month for children, EUR 420 for pregnant women, at least EUR 700 for workers, and EUR 280 for inactive adults.

Inactive adults include students, pensioners, job seekers, and recipients of other forms of allowance. Workers are further categorised based on their salary: for those with a salary below gross EUR 280, the basic income should be EUR 280, the experts say.

In the case of salaries between EUR 140 and EUR 560, the basic income would be calculated with the following formula: EUR 140 + (560 – gross salary) / 2. For salaries above EUR 560, the formula is (EUR 1,430 – gross salary) / 5.

The authors argue that the introduction of basic income, other than providing citizens with the necessary amount to meet their basic needs, would improve workers’ bargaining power which, through a spiral effect, could further increase average earnings.

According to the authors, the introduction of basic income would cost EUR 9.5 billion in 2021 for the government, an amount they believe is within the budget.

In the study, they also drew up a list of things the government is “unnecessarily” spending money on: these include the Paks II nuclear project, propaganda spending, and public procurement. Another factor they believe would help implement the programme is that the introduction of basic income could lead to an increase in household savings and tax revenues.

The authors estimate that the new policy would benefit the seven lower deciles, nearly 70% of households, and highlight that certain groups may not feel the positive effects of such a policy: those with a pension above EUR 280 and childless adults with an income above EUR 1,430.

As written in the discussion paper, Dialogue for Hungary is a long-time supporter of the concept of basic income. The Foundation first drafted the scheme in 2015, when basic income was exactly half of the currently proposed figures. In 2019, the estimated basic income for Hungary was EUR 285. The scheme for 2021 is available in Hungarian here.

Read alsoSalary report reveals a shocking gap between Budapest and Hungary’s eastern regions

Source: 24.hu