Thousands of workers affected: Hungarian government orders mass cost-cutting at state-owned companies
The Hungarian government has issued a sweeping directive requiring most state-owned enterprises to immediately cut their personnel-related expenses by at least 5% compared to the same period last year. The move, now in effect, is part of a broader austerity push officially linked to “wartime inflation” and “regional armed conflicts.” However, critics argue it’s yet another round of harsh budget cuts targeting workers while politically favoured institutions remain untouched.
Thousands of state workers affected
According to the government decree, released Monday night in the official gazette Magyar Közlöny, all state-owned companies, except for 30 exempted entities, must reduce their salary and staffing costs. The mandate doesn’t specify whether the savings must come from layoffs, wage cuts, or other measures, leaving companies to figure out how to comply.
The deadline is tight: firms must transfer the calculated savings to the central budget by 15 December. Failure to do so will result in a punitive double payment in 2026, G7 writes.
To make matters more difficult, companies are barred from taking loans to cover the required transfer.
Estimates suggest the move could immediately impact over 10,000 employees across dozens of affected companies, including Magyar Közút (Hungarian Public Roads), Szerencsejáték Plc. (National Lottery), and the NISZ government IT company. The directive also affects several institutions employing hundreds, such as the National Toll Payment Services, the Hungarian Development Bank, and the Lechner Knowledge Centre.
Political favourites exempt
While the majority of state-owned companies must comply with the cuts, 30 entities have been granted full exemption. These include strategic service providers such as MÁV (Hungarian Railways), Magyar Posta (Hungarian Post), and the MVM energy group, which together employ tens of thousands. Also spared are the Hungarian National Bank, the National Waterworks, and even the publisher of Nemzeti Sport, the government-aligned daily sports newspaper.
The list of exempted companies has grown compared to a similar decree last year, expanding to include entities under the Hungarian Prison Service, the publisher of Nemzeti Sport, and the operator of the Hungarian Radio Art Group. The broadening exemption list has raised eyebrows, especially as many of these companies are closely linked to politically sensitive or strategic government messaging, according to 24.hu.
Government defends cuts amid criticism
Opposition figures and analysts accuse the Orbán government of pursuing austerity while shielding its allies. Péter Magyar, head of the Tisza Party and biggest challenger of PM Orbán, wrote on Facebook that the government is “creating chaos and sowing division externally while pushing through brutal austerity at home, all while continuing large-scale corruption.”
Austerity in disguise?
Though framed as a wartime necessity, critics argue the measure is another example of uneven governance, tightening the belt for state workers while preserving perks and resources for politically convenient entities. With the December deadline approaching, the pressure is now on state companies to find quick and significant savings, without triggering public backlash or service disruptions.
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