OECD

Hungary rejects plans to introduce global minimum tax

Hungary will reject the introduction of a global minimum tax since such a measure would entail tax increases in the country, Péter Szijjártó, the minister of foreign affairs and trade, told MTI, after a meeting with Mathias Cormann, the incoming secretary-general of the OECD, in Paris on Tuesday.

“It has become clear over the past decade that raising taxes is a dead-end-street,” Szijjártó said, adding that “the most effective incentives for creating jobs and triggering economic growth are tax cuts”.

“Nobody has the right to intervene from abroad in Hungary’s tax policies,” Szijjártó said, insisting that defining tax brackets should remain Hungary’s sovereign right.

At the same time, he supported initiatives aimed at settling the issue of how tech giants should be taxed, arguing that these companies ought to pay taxes where they operate.

Szijjártó said it was also clear that Hungary had introduced the most successful economic response measures against the crisis caused by the pandemic, adding that it was beyond doubt that the correct economic policy was focused on tax cuts, supporting investments and saving jobs.

“All over the world, we’re seeing the pursuit of policies that are making it harder to reboot the global economy, such as the ones in favour of introducing a global minimum tax,” the minister said.

He said the concept of a global minimum tax went against the principles of the market economy and was designed to benefit countries that had not had the fiscal discipline needed to introduce low tax rates.

Szijjártó said one of the keys to Hungary’s competitiveness was that it the lowest payroll and corporate tax rates in Europe. Fiscal discipline was an important prerequisite for this, he said, adding that countries that had been less disciplined had been unable to cut taxes.

Hungary continues to favour “work over welfare”, he said, adding that the government intended to continue cutting taxes. “We won’t accept any form of international pressure or regulation that would lead to tax increases in Hungary,” he said.

At the same time, Szijjártó said it was important to find a solution regarding the taxation of tech giants, adding that they should pay their taxes in the countries they operate in.

“We shouldn’t allow tech giants to enjoy an unfair competitive advantage in the absence of international tax regulation!” he said, attributing to the OECD a key role in settling the matter in a satisfactory manner.

Szijjártó said Mathias Cormann applied a “pragmatic and sensible approach” to the matter and did not allow ideological debates to influence economic policy matters.

Szijjártó was the first official Cormann received since his election as the next OECD chief.

Read alsoHungarians under 25 will not have to pay income tax!

May 18, 2021

Hungary would put an end to cross-border tax frauds

New international tax regulations entering into effect on Monday requiring the disclosure of cross-border aggressive tax planning arrangements to tax authorities could help eliminate many international tax loopholes, a finance ministry official said.

The OECD estimates that

multinational companies have paid 100-240 billion dollars less tax per year globally with the help of tax planning strategies,

Norbert Izer, state secretary for tax affairs, told MTI.

These strategies are used to exploit the differences between international conventions and the tax rules of individual states mainly be setting up shell companies without any real operations or performing unnecessary financial operations within the corporate group to reduce tax liability, Izer said.

International cooperation is the only effective way to combat cross-border tax evasion, he said. In addition to the risk analysis carried out by Hungary’s tax and customs authority NAV, international information sharing is now also vital when it comes to catching tax dodgers, the state secretary said.

February 1, 2021

Government: Hungary among OECD states most increasing education spending

Hungary has increased spending on education puts the country in the top league of OECD member states, a government official said on Sunday, commenting on the organisation’s annual report on education published earlier in September.

Hungary boosted spending on education by 4 percent between 2012 and 2017 as against the OECD average of 1.3 percent, Bence Rétvári said, commenting on the Education at a Glance 2020 report.

Most of the growth in spending was channelled towards a 50 percent salary increase for teachers and developments in around 900 schools, Rétvári, the state secretary of education at the Ministry of Human Resources, noted.

Hungary is steadily catching up with its western European peers,

he said.

Fully 92 percent of Hungarian children between the ages of three and five go to kindergartens or schools, thanks to legislation that made attending public education mandatory from the age of three, Rétvári said. In OECD countries, that ratio is 88 percent, he said.

In Hungary,

the number of children per teacher averages 12 while in the OECD it is 14,

Rétvári said. Most countries struggle to find enough teachers, but Hungary is better on that count than many richer countries, he said.

Regarding the effects of the coronavirus pandemic on education, the report said Hungary’s classes are not overcrowded compared with other OECD countries, so the country’s protection measures should be successful if caution is exercised, he added.

September 28, 2020

UNICEF report: Hungary’s child welfare ranks 15th on EU, OECD list

Hungary ranks 15th among European Union and OECD countries in terms of child welfare, according to a UNICEF report.

The United Nations Children’s Fund reviewed national and international surveys on the welfare of children in 41 EU and OECD member states to highlight the factors influencing children’s welfare in affluent countries.

The Worlds of Influence report looking into children’s mental and physical health, academic and social skills and happiness found that children are the happiest in the Netherlands, Denmark and Norway, while Chile, Bulgaria and the United States are at the bottom of the list.

Hungary ranked 13th regarding children’s life skills, 15th in mental health and 21st in physical health.

The report surveyed children’s subjective happiness. In the Netherlands, 90 percent of fifteen-year-olds said they were satisfied with their lives, while only 53 percent of Turkish children said the same. Hungary ranked 16th, with 77 percent of respondents saying they were satisfied.

Regarding suicide rates, the report found that on average 10 out of every 100,000 children between the ages of 15 and 19 commit suicide in rich countries. Those rates were lowest in Greece (1.4), Portugal (2.1) and Israel (2.2), and highest in Lithuania (18.2). Hungary (4.5) ranked 14th.

The number of overweight and obese children has grown in rich countries in recent years, with every third child now falling into that category, the report said. Hungary is 23rd on the UNICEF’s list of countries, with 28 percent of children overweight or obese.

Hungary ranked 27th regarding children’s skills in reading and maths, with Estonia, Ireland and Finland leading the list, and Bulgaria, Romania and Chile lagging behind.

Hungary took 26th place on the list ranking the countries on their economic, social and environmental factors, as well as child policies, the report said.

Read alsoUNICEF Child Friendly City title goes to Tata, Jászboldogháza

September 3, 2020

Where is Hungary’s economy headed in 2021?

Hungary’s economy has been growing steadily since 2013 at a rate of 2% to 4% per year, although the recent coronavirus crisis is likely to cause a slump in the country’s economy.

According to the Organization for Economic Co-operation and Development (OECD), Hungary has managed to contain the spread of the virus successfully, which could give the country a chance to see a sharp rebound in its economy in 2021.

This rebound could be primarily driven by pent-up demand in the country and by the progressive recovery of the euro region’s economy.

Meanwhile, Hungary also plans to continue supporting its domestic economy through expansionary policies including higher government expenditures and continued assistance to local businesses through cheap loans backed by the National Bank of Hungary.

What is driving growth for Hungary’s economy?

Hungary’s stock market (BUX) is down 22% for the year, as the country’s economy is still struggling to recover from the economic fallout caused by the virus.

Investors appear to be put off by the fact that a second wave of the virus could hamper the country’s economic recovery and, therefore, although the BUX index has rebounded off its March lows, investors are still hesitant to buy stocks at the moment.

Before the virus stroked, Hungary’s economy was on track for another good year, primarily fueled by record-low unemployment levels and higher private consumption.

These higher levels of consumption were supported by an increase in wages in the private sector, although inflation risks loomed in the backdrop during 2019.

It is important to note that the services sector accounts for the highest percentage of the country’s gross domestic product at 65% – which makes Hungary an emerging market – followed by industries, which contribute more than 30% to the nation’s economy.

Meanwhile, Hungary has managed to attract foreign investments in the past five years, with the country positioning itself at the top of the list in terms of inward foreign direct investments in the region, only behind Estonia and the Czech Republic.

Germany remains Hungary’s top export destination, which could benefit the country during its recovery, as Germany’s economy has managed to rebound quite rapidly from the coronavirus crisis, while the government has also acted swiftly to contain the spread of the virus, although fears of a second wave appear to be materializing.

Which are the main challenges for Hungary’s economy now?

Without a doubt, Hungary’s most important challenge right now is to prevent a second wave of the virus at all costs, as another wave of lockdowns could push the economy down the cliff.

Forecasts from the OECD anticipate that a second wave could push down the gross domestic product of the country by 10% or more, although the actual damage is hard to estimate as the way in which certain key export partners manage the virus situation and its corresponding economic fallout – especially Germany – could further affect Hungary’s chances of recovering.

Aside from COVID-19, Hungary also has room for improvement in terms of systemic corruption, as the country received a score of 55 on a scale of 100 in a survey from Transparency International, only preceded by Turkey, Colombia, and Mexico, all of which had scores higher than 60.

Meanwhile, an aging population also remains a challenge for Hungary, as the proportion of individuals aged 65 and above is growing in relation to their younger peers.

Is the Hungarian economy presenting an opportunity at these levels?

It can be argued that once the virus situation is behind us and European economies start to rebound of these low levels, Hungary is going to see an improvement in the demand for its goods by neighboring economies, which will then contribute to an improvement in its domestic economy – the driving force of its growth so far.

That said, investors should be patient enough to withstand the fallout that a second wave of the virus could cause in the country’s economy, although prospects of a coming vaccine should reduce the extent of the damage.

Taken all that into consideration, Hungary’s economy at these levels – and the BUX index for that matter – present an opportunity for buy-and-hold investors who can take advantage of these low equity prices to buy into a country that has shown its ability to grow over the past few years.

August 23, 2020

OECD cuts global growth projection, which is the lowest level since 2008 financial crisis!

The Organization for Economic Cooperation and Development (OECD) on Monday cut this year’s global growth projection to 2.4 percent, the lowest level since 2008 financial crisis, warning that global economy risks further downturn unless governments take actions to limit the spread of coronavirus.

“Global growth, cooling for the past two years to a subdued level, has been dealt a nasty blow by the coronavirus … the OECD expects a sharp slowdown in world growth in early 2020,” said Laurence Boone, OECD chief economist.

In its interim economic outlook, the Paris-based think-tank lowered its forecast by 0.5 percentage points from 2.9 percent previously estimated, citing significant economic disruption from quarantines, restrictions on travel, factory closures and a sharp decline in many service sector activities.

“In a downside-risk scenario where epidemics break out in some other countries across the globe, the slowdown will be sharper and more prolonged,” she warned.

Broader contagion across the wider Asia-Pacific region and advanced economies could cut global growth to as low as 1.5 percent this year, said the OECD, warning that “the world economy is now too fragile for governments to gamble on an automatic sharp bounce-back.”

In the euro area, where the number of infection cases is increasing, growth was set at 0.8 percent, down from 1.1 percent in November.

“The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions,” said Boone.

“Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected,” she said.

The outlook suggested that flexible working should be used to preserve jobs.

Governments should implement temporary tax and budgetary measures to cushion the impact in sectors most affected by the downturn such as travel and tourism, and the automobile and electronic industries.

Hungarian banks to launch instant payments

March 2, 2020

Hungarian students scored second-worst results ever on 2018 PISA test

Hungarian students are behind Polish or Estonian students, even though their results improved a bit. All in all, Hungarian 15-year-olds are below the OECD average regarding all academic skills.

According to Index, Hungary’s results of 2018 show a slight improvement compared to the 2015 scores. Then, Hungarian students scored 470 points in reading, which rose to 476 points last year. In Maths, the rate of improvement is similar, from 477 points to 481 points. The country’s Science score also climbed to 481 points from 477. As a result, Hungarian students achieved 30th place in reading, 33rd in Mathematics, and 32nd in Science.

Hungary scored its best results in 2009, and the above-written numbers are

well below not only that but the OECD average, as well.

However, the right-wing Fidesz government that nationalised primary and secondary schools in the last few years sees that slight improvement as a verification of the effectiveness of past education reforms. On the contrary, critics say that the numbers prove a stagnation; therefore, comprehensive changes in the Hungarian education system are inevitable.

The PISA test is a triennial program measuring the academic performance (Maths, Science, reading competencies) of 15-year-old students. The 2018 papers were completed by 600,000 students from 79 countries. It should be stressed that since all countries have their educational system, the test does not measure factual knowledge, but

how students can use what they have learned at school.

Since Hungary is 20 points below its 2009 results, many say that the past 10 years of the Hungarian education system is a failure. Others argue that tests such as the PISA should not be trusted.

In 2015, László Palkovics, then state secretary for public education, said in an interview that the bad results are not proof of the government’s bad education policy. The current minister for innovation and technology added that there were two main reasons for the poor results: the lack of new teaching methods in Hungarian schools and that Hungarian institutions of education

cannot compensate for the many bad family backgrounds.

State secretary for public education Zoltán Maruzsa emphasised at today’s press conference that there are improving tendencies, and developments in public education are behind them.

Based on the 2018 results, the situation did not improve in this regard. The PISA report says that “some countries still have a long way to go in moderating between-school differences. In Argentina, Bulgaria, the Czech Republic, Hungary, Peru, the Slovak Republic and the United Arab Emirates,

a typical disadvantaged student has only a one-in-eight chance

of attending the same school as high achievers.“

Data shows, for example, that 15 pc of Hungarian 15-year-olds do not have any basic skills they will need in their later life. Meanwhile, Estonia, another country from the post-Soviet region, already surpassed Finland thanks to complex education reforms.

Looking at the global ranking, according to the 2018 data, the Chinese score is so high in all 3 skills as if the country was a different category than the other states following it (Singapore, Estonia, South-Korea, Taiwan, Canada, or even Finland). However, in China, only some developed, urban areas were surveyed.

Europe was won by Estonia

followed by Finland, Ireland, Poland, Sweden, and the United Kingdom, but Austrian, Danish, Norwegian, and German students were also in the lead.

Among the Eastern-European and post-Soviet countries, Estonia, Poland, Slovenia, Czech Republic, Latvia, and Croatia managed to perform better than Hungary. Meanwhile, Lithuania, Slovakia, Romania, and Bulgaria did worse than Hungarians.

December 4, 2019

U.S. sanction threat for France’s digital tax “unacceptable”

Washington’s threat to impose additional tariffs on French goods in retaliation for Paris’ digital tax is “simply unacceptable”, said French Minister of Economy Bruno Le Maire on Tuesday.

“The proposed U.S. sanctions are simply unacceptable. French taxation on the digital giants aims to restore fiscal justice. It does not only target U.S. companies but also Chinese or European companies,” said the French minister in a tweet.

“A digital taxation project at the international level is on the table of the OECD (Organization for Economic Co-operation and Development). France said yes to this project. We are waiting for the American response. If the United States says no, it means that they do not respect the commitment made at the end of August to the G7,” he added.

Read alsoU.S. restores metal tariffs on Brazil, Argentina, prompting wide concern

The United States on Monday threatened to impose tariffs of up to 100 percent on 2.4 billion U.S. dollars of French goods in retaliation for a digital services tax it says is discriminatory.

French wine and cheese are on the list of goods that could be targeted.
France insists that its 3-percent digital tax is necessary to make internet giants pay their fair share of taxes. It targets companies with total annual revenues of at least 750 million euros (834 million U.S. dollars) globally and 25 million euros in France.

The United States initiated its Section 301 investigation into France’s planned tax on digital services on July 10, accusing the French government of “unfairly targeting the tax at certain U.S.-based technology companies.”

Read alsoEU protects Hungarian wines of Tokaj from Chinese replicas in the future

December 3, 2019

Awful! Hungarian teachers among the least well-paid people in Europe

According to the OECD, teachers in Hungary, Slovakia and the Czech Republic (as well as Poland) are among the least well-paid on the European continent. Moreover, statistics also revealed that these people also have the less income in all developed economies in the world.

Kafkadesk.org reported that Hungarian teachers are the third lowest-paid in Europe, receiving an annual salary of 20,900 EUR for teachers of the upper secondary levels with 15 years experience, and 13,000 EUR for primary teachers at the beginning of their career.

The Czech Republic (4th lowest, with annual gross pay of 21,900 EUR for experienced upper-secondary teachers) and Poland (6th lowest, 23,600 EUR per year) are also at the bottom end of the ranking.

Daily News Hungary reported about several severe problems regarding the educational system of Hungary and in particular the incredible shortage of teachers. Many schools are looking for IT, English, German, Mathematics, and History teachers, while others lack professors of Physics, Geography, Biology, Chemistry, Science, Drawing, clarinet, flute, and physical education.

The most problematic point of this shortage is that in many institutions the lack of teachers is only found out one week before the school starts. For more detailed information about this phenomenon, CLICK HERE.

Many Hungarian political parties raised their voice against this problem. The opposition Democratic Coalition (DK) has said that an “increasingly pressing shortage of teachers” poses a fundamental threat to the whole of Hungary’s education system.

CLICK HERE to read more

Salary is not just a threating point for teachers in Hungary but many middle-classed citizens all across the country. The middle class is shrinking all over the world because of the cheap Chinese workforce, robots, and computers. 80 pc of the people belonging to the Hungarian middle class do not have enough salary to make it until the end of the month.

READ MORE HERE

September 18, 2019

Almost nobody wants to work as a nursery school teacher in Hungary

The Hungarian nursery school system lacks almost 1,000 teachers on the one hand, and there is no second line. On the other hand, Hungarian teachers performed well in an OECD survey showing that they are professionally above the average but rarely use modern teaching techniques probably because most of them are already above 40.

840 open positions

According to eduline.hu, a Hungarian news outlet specialised on education, it is tough to find a nursery school teacher in Hungary today. Attiláné Verba, leader of their trade union, said that, based on estimates,

in 5 years’ time one-third of the kindergarten teachers will retire

or abandon their career and there is no second line in the academies.

Based on the data of Közigállás, a website collecting open positions in the public sector, currently there are 840 unfilled kindergarten teacher positions in Hungary and not only in the rural areas but also in cities and Budapest.

“If a colleague retires or changes career, we have to ask our acquaintances whether they are interested in filling the open position. Before, this was not typical” – said Attiláné Verba. Therefore, there are districts in Budapest that

offer extra money for their nursery school teachers

and in most places, kindergarten teachers have to work longer hours.

Mrs Verba added that most of their teachers are already old and most of them retire after working 40 years; however, those who feel the energy and motivation in themselves can continue to work even as pensioners. But, according to her, this cannot be a solution even though it can temporarily ease the labour shortage in the sector. In such cases, pensioners work part-time or in the afternoon shift.

Without a proper wage rise a solution is unimaginable

Of course, many go abroad after receiving their degree or try to find a totally different job where they can get 3-4 times more money – said Mrs Verba. This is not surprising since even nursery school teachers with more than 10 years of experience

get less than 600 EUR per month.

Therefore, some cities try to pay the extra money, give premiums, offer accommodation or even tillable land. However, Mrs Verba says that, even though this helps, it is not a solution for the problem and in the long run it is unimaginable that somebody will remain in the sector because of such factors.

Rumour has it that the government would like to reduce training time for kindergarten teachers to ease their shortage. However, Mrs Verba said that they reject such plans because 18-19-year-old people are very young to work in a position requiring such responsibilities. According to her, the government should sit down and speak with them regarding the problems. Furthermore, she thinks that

without a proper wage rise a real solution is unimaginable

and the government should reduce the length of the traineeship instead of the training.

Hungarian teachers are old but professionally very good

According to Magyar Nemzet, a recent OECD survey mapping the pedagogical methods of the teachers in 48 countries found that Hungarian teachers teaching in grades 5-8 feel more prepared, discipline learners less often and make their students practise more than the OECD-average.

However, results show that Hungarian teachers are old,

their average age is 47.6

while the OECD mean is 44. Furthermore, the age pyramid of the teachers is much better in neighbouring countries or in the Czech Republic, too. 79 pc of the Hungarian teachers are female while the OECD average is just 68 pc. Among the leaders of schools, the rate of the genders is more balanced: 63 pc of them are women, which is more than the 47 pc international average.

Professionally, the

Hungarian teachers are above the OECD average

in every estimated factor. They scored the lowest points in using modern technologies in their education and teaching in a multicultural environment. However, they are above the OECD mean even in these two factors.

According to the survey, the Hungarian teachers work 39.1 hours per week, which equals the international average. Their Japanese colleagues work the most extended hours, 55 per week while the Argentinian and Brazilian teachers only 30.

June 27, 2019

Hungarian foreign minister urges preparation for ‘new era’

Péter Szijjártó, Hungary’s minister of foreign affairs and trade, addressing an OECD meeting of ministers responsible for digital innovation on Thursday, said: “We must prepare ourselves for the new era rather than protecting ourselves from it”.

At the Organisation for Co-operation and Economic Development meeting in Paris, Szijjártó, noting that vast changes were afoot in the global economy, said the ability of national economies to thrive in this new era depended on their use of new technologies.

This is especially true of smaller countries with limited natural resources, he added.

On the subject of government responsibility, Szijjártó said updating secondary and higher education so that students are competitive on the job market was of key importance.

A workforce equipped with complex knowledge will push wages up, he said, noting that this process was already under way in Hungary. But Szijjártó said governments had a duty to keep wage growth under control so as to avoid their country becoming less attractive to investors.

The minister highlighted the importance of continuously easing tax burdens on businesses making high value-added products using state-of-the-art technologies, arguing that doing so would allow those firms to save money and invest it in projects that make use of digital technologies.

Szijjártó said central and eastern European countries, with their low tax rates, were setting a good example in this respect.

He said that instead of concentrating on job creation, governments should now shift their focus to developing existing jobs, arguing that digitalisation, robot technology and automatisation required fewer, albeit higher-skilled jobs. This was why, he said, the Hungarian government was supporting the further training of company employees, so that they would be ready to meet the challenges of the new era.

May 23, 2019

OECD forecasts Hungarian economic growth of 3.9 pc this year

The OECD has stuck to its forecast of Hungarian economic growth of 3.9 percent this year.

The projection in the Organisation for Economic Cooperation and Development‘s biannual forecast released on Tuesday is below the government’s 4 percent target. The OECD reckons growth will be 3 percent next year.

Private consumption remains strong, helped by rising real incomes and high consumer confidence coupled with supportive macroeconomic policies, the report said.

Investment growth is “buoyant”, supported by EU funding, housing subsidy schemes and expanding production capacity, it added.

Hungary’s “strong recovery is an opportunity to introduce measures to improve fiscal sustainability, reduce old-age poverty and address access challenges in the pension and health system”, the OECD said. “Bolstering domestic SMEs should focus on improving business regulation, facilitating their integration into regional and national supply chains, and upgrading skills,” the report added.

Commenting on the report, Gábor Gion, state secretary for financial policy affairs, said the OECD’s forecast confirmed that

Hungary was one of the most dynamically growing European Union member states.

The document highlights the favourable effects of the government’s economic policy, including wage increases thanks to a six-year wage agreement and home subsidies which boost domestic demand, he added. The OECD’s forecast of 3.9 percent is close to the government target and Hungary’s growth will exceed the average growth of OECD members, as well as the EU average, Gion said.

May 21, 2019

Shocking! over 2/3s of Hungarians overweight or obese

Shocking statistics have been revealed about the health and well-being of Hungarians. According to data by the Organisation for Economic Co-operation and Development (OECD), Hungary is the most obese nation in Europe, and based on an article by Magyar Hírlap, Hungarians are so far down the road that dieting or exercising is not even an option anymore, only surgical operations can help.

According to Index, in Hungary, there are about 250 thousand people battling with morbid obesity. Unfortunately, exercise or dieting cannot help reverse their situation at this point; their only hope is surgery. Even though since the 2000s, the number of obese and overweight people stopped increasing, more and more people belong to the morbidly obese category.

According to Magyar Hírlap, someone is considered overweight if their BMI (Body Mass Index) is above 25 and obese if their BMI is above 30. The morbidly obese category starts at a BMI of 40.

The acting president of the Hungarian Society for the Study of Obesity, Eszter Halmy, drew attention to how,

in Europe, people consume 500 calories more every day than 40 years ago.

Add to this the fact that they work over five hours a day at their desks, and 42% of them do no exercise. The data is suddenly not surprising at all.

Halmy emphasised that the interaction between genetics and nature led to obesity becoming a worldwide problem. In her words,

“It is genetics that loads the gun, but nature pulls the trigger.”

When it comes to Hungary, over 2/3s of the population is overweight or obese. The good news is that in the last eight years, the proportion of adults with obesity or excess weight did not increase; however, it is an alarming fact that more and more of them are entering the morbidly obese category.

These new statistics are a major cause for concern, and we must find a way to battle obesity.

Featured image: Pixabay / Illustrations

Hungary vs Romania – where are more couch potatoes?

May 19, 2019

Hungarian middle class: salary not enough until the end of the month

The middle class is shrinking all over the world because of the cheap Chinese workforce, robots and computers. 80 pc of the people belonging to the Hungarian middle class do not have enough salary to make it until the end of the month.

More and more people are part of the lower income group of the societies

According to an OECD report on the current situation of the middle class, globalisation, automation and increasing inequalities put an end to the extension of this group almost everywhere in the world. And since the middle class was the motor of global development with a direct correlation between economic progression and the strength of this group, this is very bad news regarding the future – szeretlekmagyarorszag.hu reported.

“The investment of the middle class in education, health and housing, their support for good quality public services, their intolerance of corruption, and their trust in others and in democratic institutions are the very foundations of inclusive growth” – the report says.

In fact, the report considers households earnings between 75% and 200% of the median national income as the middle class. And according to the OECD, the problem is that the share of people in

middle-income households in developed countries fell from 64% in the mid-1980s to only 61% by the mid-2010s.

In the United States, Israel, Germany, Canada, Finland or Sweden, the above-mentioned average global decline was even greater. For example, in the United States, just over 50% of the population is middle class, much smaller than most other developed countries. The share of the middle class grew in only two countries in the last three decades: France and Ireland. This is because of the costs of education or health care did not grow considerably there. Nevertheless, the living standards of the French middle class are showing decreasing trends.

Hungary: 78.5 pc do not have enough money until the end of the month

In Hungary, the situation is very much alike. Compared to the European OECD countries, Hungary precedes only Greece and Lithuania in this regard. Furthermore, 78.5 pc of the people belonging to the middle class in Hungary said that their income was scarcely enough until the end of the month.

As for the reasons, OECD names rising income inequalities. Over the past 30 years, median incomes in OECD countries increased a third less than the average income of the richest 10 pc. Meanwhile,

costs grew faster than inflation.

For example, middle-class people spent 32% of their budgets on housing in 2015, compared to 25% in 1985. Therefore, it is not surprising that the total income of the middle class was about four times that of the upper ten households in 1985. However, thirty years later, this difference fell to less than three.

As a result, today’s younger people are having problems achieving their middle-class status. According to the OECD report, one out of seven people belonging to the middle class fall back to the lower income group in every four years.

Fear and anger

While 70 pc of the baby boomer generation after WWII was part of this social group in their 20s, this rate is only 64 pc in the case of generation X, the report says. Furthermore, one in six current middle-income jobs faces

a high risk of automation.

Therefore, middle-class people become frustrated and direct their anger towards the political leadership enabling, for example, Donald Trump to win the American presidential elections.

OECD Secretary-General Angel Gurría said that governments should help people and promote middle-class living standards. The report also offers some possible solutions on this global problem like lowering taxes on the middle class and increasing them on the wealthy, developing more affordable housing, helping young adults build wealth, containing the cost of education, child care and health, and improving workers’ skills and training.

May 3, 2019

Hungary: lots of people drink and smoke, but at least suicide rates have dropped

Hungary does not fare well compared to other countries on the list made by the Organisation for Economic Cooperation and Development (OECD). A worrying number of people still drink and smoke in the country, causing Hungary to end up in a less-than-preferable position on the list when it comes to the state of health and well-being. However, the good news is that fewer Hungarians seem to commit suicide than in previous years.

Life and death

According to HVG, the report entitled “Society at a Glance” starts off with good news: Hungary is among the countries where suicide rates have dropped drastically. So, unlike in the past few years, Hungary is not in the lead when it comes to suicide rates, even though it is still a major problem in OECD countries. In 2016, 152 thousand people took their own life. The lowest suicide rate can be found in countries like Turkey, Greece, Israel and South Africa, while Latvia, Lithuania, Russia, Slovenia and Korea are leading the list with the most suicides committed. An important detail to mention is that men are three times more likely to commit suicide than women, especially in Iceland and Poland, while over-70s are also more likely to end their lives than the younger generation.

This tendency can be observed in Hungary, too, which is in 11th place from the back.

In terms of life expectancy, the overall OECD average is 80.6 years, 10 years more than in 1970. People live the longest in Japan, Spain and Switzerland. Hungary is not doing too well on this list, just like most other Central European countries. Very few people reach 80 here, and men are less likely to live till 75. This puts the country at the end of the list.

Overall, life satisfaction in Hungary increased in the last ten years, according to the OECD report. However, it is still well below the average life satisfaction observed in OECD countries.

Smoking and alcohol

Unfortunately, smoking and drinking are a vice for many Hungarians, and these are often the cause of premature death. In the world, 18% of people smoke on average. This is much higher in Hungary at 25%, which is actually one of the worst results according to the report, along with Turkey and Greece.

When it comes to drinking, Hungarian adults’ alcohol consumption has decreased since 2000 and is at about 8 litres per year, which is lower than the overall 8.8-litre average.

Balaton Sound festival 2018 — *Photo: www.balatonsound.com /Rockstar Photographers*

The most amount of alcohol is consumed by the French, Lithuanians and Czechs – their annual average is 11.5 litres.

However, there are some worrying tendencies observed when it comes to the Hungarian youth. In OECD countries, every 8th 15-year-old admitted smoking one cigarette per week. In Hungary, 20% of 15-year-olds smoke, a rate much higher than the average. The same goes for drinking: one in five 15-year-olds admitted having been drunk twice already, while this is 35% for Hungarians.

Drinking in Hungary – a how-to guide

March 29, 2019

Analysits show critical predictions in Hungarian pension and healthcare system

OECD has made a deep analysis of Hungary’s economic developments and setbacks in the recent couple of years. In this article a thorough summary of pension, medical care and strategic issues have been listed by the ideas and the conclusions of OECD. Unfortunately, we cannot be satisfied with the current conditions, there is a lot of work yet to be done in the Hungarian systems that might conclude in a greater overall welfare.

OECD (Organisation for Economic Cooperation and Development, is the scientific ‘club’ of developed market economies. They do not loan money to anyone, instead they make analysis, statistics and reports of a country, even suggest some problem-solving initiatives. According to Index.hu, Hungary was analysed by OECD in 180 pages. In these 180 pages, besides general economic overview, their analyses concentrated on the Hungarian pension and healthcare system.

Before we get into details, it worths knowing that OECD experts deserve praise for their research methods and deep explanations in the studies. At the end of each sections there are suggestions made by OECD, but there are also are comparisons with the previous recommendation from May 2016.

PENSION SYSTEM

The pension system part of the OECD report explains how unnecessarily complicated the Hungarian pension formula is; it suggests simplification. They suggest that there should be no different pension funds by different ages of the employee, instead there should be a standard 2%.

Instead of the current situation, pension age limit is needed to be flexible, as in the other parts of the world. The flexible pension includes that a tired-of-work employee, aged 62-66, should/could retire half (working half of the working hours and thus receiving half of the pension). After that, above 66 years, one can fully retire and get pensions. OECD study also says that Hungarian pension cleft between sexes is one of the lowest in OECD countries, only 10%, while it is 45% in Germany.

The report warns everybody that the aging population has a dramatic impact on the Hungarian pension system. In the year 2070, there will be double more pensioners per employee, than today.

Surprisingly though, ratio of average pension (net) / average income (gross) has decreased from 40% to 33%, the same ratio in Poland fell down to shocking 22% from 52%. Authors of the report also believe that the age limit will be increased in the next years, due to the increase of life expectancy at birth.

HEALTHCARE SYSTEM

According to OECD, medical care must be focused on outpatient treatment and prevention in the first place and not hospital-centred care, like now.

Hungary is in the ‘top’ of the most unhealthy nations in Europe, unfortunately, thanks to our unhealthy lifestyle, smoking, drinking, obesity, and the overall lack of exercise. Healthcare system is not doing well because of these, and also the bad usage of healthcare resources.

Gratuities are also a huge drawback of the Hungarian healthcare system, since they do not make any help in the financial development in the health care system at all.

However, the number of hospital beds per thousand citizens are still really high. OECD average hospital beds / 1000 people is 4, Hungarians though have 7 beds per every thousand citizens. However, Austria and the Czech Republic have even more hospital beds.

OECD ON STRATEGIC ISSUES

The report praises Hungarian economy’s current successfulness, be it rapid GDP growth, close to full employment rate, and the significant growth in consumption. At the same time, the study marks that Hungary is behind the other Visegrád countries in these indexes, also behind the EU and other OECD countries, when compared with them. Analists also oppose the procycle budget policies, meaning that in wealthy years the Hungarian government does not make savings to the not wealthy years.

The report underlines the harmful consequences of the labour market shortage, and harmful effects of inflation, in case of the forint’s weakening.

Besides problems regards corruption, the OECD report also emphasises the effects of inefficient heating methods, especially in poor areas.

February 10, 2019

OECD: Hungary economy “prospering” but risks remain

The Organisation for Economic Co-operation and Development (OECD) acknowledged Hungary’s strong GDP growth, but warned that the economy faces risks such as a labour shortage in a country survey published on Thursday.

Hungary’s economy is “prospering”, OECD said in the report, citing strong domestic demand supported by income gains as well as dynamic business and housing investments, declining unemployment, and broad-based wage increases.

Productivity growth has accelerated, but remains “well below” real wage growth and the rate in the decade before the global financial crisis, it added.

The OECD earlier projected Hungary’s GDP growth would reach 3.9 percent in 2019 and 3.3 percent in 2020.

Outlining external and domestic risks, the report noted Hungary’s vulnerability to the escalation of international trade disputes and their impact on exports, particularly exports of the automotive sector. Continued high wage growth could erode cost competitiveness and unhinge inflation expectations, requiring abrupt policy change, it said. On the other hand, stronger-than-expected productivity gains would bolster the economy’s capability to absorb rapid wage gains, the OECD added.

Hungary continues to attract large inflows of foreign direct investment (FDI), but these have mostly benefited the western and central regions of the country, the OECD said, adding that upskilling, mobility and strong regional growth are needed for securing equitable growth.

Hungary’s ageing population will weigh on public finances and create challenges for service provisions, the OECD said.

It recommended completing the ongoing increase of the statutory retirement age to 65 by 2022, and link it to gains in life expectancy in the period thereafter.

The OECD said Hungary’s fiscal policy has become “pro-cyclical” and recommended tighter policy to avoid overheating in the economy.

It also faulted the government for continuing to rely on social security contributions, while the structural deficit widens and the tax wedge remains high. It recommended lowering the tax wedge and increasing reliance on consumption taxes.

It urged a move towards a single VAT rate and the phasing out of reduced rates for tourism services.

The OECD also recommended extending the duration of unemployment benefits and providing support for geographical mobility to improve labour allocation. Building more creches and enhancing incentives for mothers to participate in the labour market, would also add more Hungarians to the workforce as well as support gender equality, it added.

The OECD acknowledged measures introduced to address problems of corruption, but said corruption perceptions “remain high” and recommended the establishment of a dedicated anti-corruption agency.

January 31, 2019

Number of suicides down 35 pc since 2010, says Hungarian government

The number of suicides has fallen by 35 percent in Hungary since 2010, state secretary of the ministry of human resources Bence Rétvári told MTI.

Rétvári attributed this partly to the development of the health care system, which has become more efficient at recognising and managing high-risk cases, and partly to economic recovery, which reduces the number of people facing hopelessness.

More than 2,490 people took their own lives in 2010,Rétvári said, but this figure fell to just over 1,630 in 2017.

The biggest fall took place among people aged between 40 and 49 years, which classifies as outstanding by international standards as well, he added.

Rétvári said the pace of decrease well exceeds both the average of OECD states and that of the Visegrad Four countries.

With the economic recovery that started in 2010, growing employment, rising wages and the improving financial position of families, Hungarians now have a better outlook for the future, which has a positive impact on the number of suicides, the state secretary said.

This is also shown by the fact that according to figures from Eurostat, the ratio of those at risk of poverty or social exclusion has fallen significantly in all types of households compared to 2010,Rétvári said, noting that greater financial and social security also helps prevent situations leading to suicide.

THE HUNGARIAN ‘SUICIDE SONG’: GLOOMY SUNDAY

Many say that Hungarian folk songs are more melancholic and even sometimes sadder than the similar songs of other nations. Even though I do not share this opinion there was a song which was associated with 19 deaths and therefore, e.g. BBC banned its broadcast. This song is Rezső Seres’s Gloomy Sunday, the most well-known Hungarian song in the world, read more HERE.

December 17, 2018