Covid-19 Workers archive: Hungary
On May 1st the official number of confirmed Covid-19 cases in Hungary is 2863, which is 0.029% of the total population. So far, officially 323 people died as a result of the virus: the mortality rate is 11.28%, whereas the global average is 7.16%. Total tests per thousand people is 7.5, which is well below the average of developed countries.
The first official case of Covid-19 in Hungary was registered on 4 March, and from 11 March the Hungarian government declared a state of emergency. Several restrictions were introduced, including travel restrictions, and closures of shops, services and schools. Restrictions have started to be eased from the last days of April
Like in all affected countries, as a result of partial lockdown, economic and social problems started to mount. According to the Hungarian Central Statistical Office, 50.000 people lost their jobs in March, in the first few weeks of the crisis. In a recent survey among trade union members 45% of the respondents reported a decrease in their financial situation, and 41% feared to lose their jobs, which is a sign of a potentially massive wave of impoverishment to come, which is not yet visible from official statistics.
While the Hungarian state’s responses were manifold, most of them were criticized by various groups, including workers and trade unions, private companies and international media outlets. The reactions can be divided into four main domains: political-administrative measures, fiscal measures, monetary measures (carried out by the central bank) and social measures.
Political-administrative measures: The most well known and most widely criticised governmental measure was the so called “rule by decree” bill, which gives power to the government to pass regulations without the approval of the Parliament. While this law is symbolic of the authoritarian governance model that PM Viktor Orbán has been following for a decade now, in reality it does not expand significantly the power of the governing parties, which already had a constitutional majority in parliament. The main rationale of this move was to sideline the MPs of the governmental coalition, who showed the first signs of dissent in a decade at the beginning of the crisis, lobbying for stricter lockdown measures. A much more significant step has been the beginning of military oversight of certain key companies: based on the emergency situation declared in March, there is already a company (Kartonpack Nyrt.) which was taken over by oligarchs close to the government. According to analysts, the crisis can be used by the government to pursue its plans of nationalization in certain key sectors of the economy (mainly banking and retail).
Fiscal measures: In April the government introduced different fiscal stimulus packages in several waves. As it turned out, the introduction of these packages was highly influenced by key foreign economic players, mainly from Germany. While according to the governmental rhetoric the fiscal stimuli (allegedly worth of ca. 18% of the national GDP, but spent throughout the next three years) aim at easing the burden on private actors, in reality most of the measures help only the larger multinationals – mainly in manufacturing – and the politically loyal national bourgeoise. Smaller companies and workers remain exposed to the detrimental effects of the coming economic downturn. Most of the analysts denounced the measures as being too late, too small in size, and negligent towards the interests of workers. Part of these packages was a politically motivated reorganization of money flows within the state administration: the budget of oppositional parties, municipalities (some of the largest ones led by oppositional politicians, such as in the case of the capital, Budapest) and universities were cut. While the fiscal effect of these steps is minimal, they can further the already visible trends of power concentration and centralization. A very telling example is that taxes payed by Samsung operating a plant in a smaller city (Göd) next to Budapest were rechannelled from the city’s budget to the budget of the county. While the city is led by an oppositional politician, the governance of the county is in the hands of Fidesz, the governing party. Justified by “the interest of the national economy”, Fidesz took away one third of the city’s annual budget with this move. As a result of these politically and socially highly polarizing measures, several trade unions and companies articulated harsh critiques in the recent weeks.
Monetary measures: Similarly to other countries on the peripheries of Europe, the Budapest stock market, along with the value of the national currency, was in a freefall for a few days at the beginning of the crisis. Since the National Bank of Hungary (NBH) had one of the loosest monetary policy regimes in the region, it did not have such a wide space of manoeuvring with conventional monetary tools to stop this freefall. The base rate remained 0.9% ever since the crisis started. However, through a series of non-conventional measures, market volatility could be eased by the end of April. First, the NBH has started to provide supposedly unlimited, long-term, cheap liquidity for commercial banks (since 25 March already in a value of 2bn EUR of this loan was issued). Some of this liquidity was channelled into buying newly issued government bonds, thus indirectly financing the state with freshly printed money. While this move questions in essence the (neo)liberal principle of an independent central bank, other macroeconomic steps (e.g. allegedly not letting the state deficit to run beyond 2.9% whatever it takes) signal that key elements of neoliberal policies are still central. Second, a moratorium on debt payments was introduced by the NBH for households and companies alike. While this step was praised by most of the analysts as a wise short-term emergency measure, in the long-run it will contribute to the increase of outstanding debt volume, since debt relief measures are not (and most probably will not be) on the table. Third, NBH launched a new credit program worth of ca. 4.3 bn EUR available for SMEs and large enterprises alike. While this credit channel has favourable conditions (fixed and maximized interest rates at 2,5% for a long period), increasing credit penetration in the society will hardly be able to mitigate the economic hardships of this coming crisis.
Social measures: Similarly to the last decade, the Hungarian government follows a radical workfarist agenda, ruling out to provide any type of widely available welfare benefits. The governmental rhetoric states on the one hand that governmental help will be available only for those who work, and on the other hand that everyone will get a job, if not through the job market, then through the state. However, this rhetoric has not been translated into concrete measures so far, and the question remains whether a workfarist regime can continued in times of massive layouts and radically changing labor market conditions. What is sure is that irrespectively of the crisis, unemployment benefit regulations will remain the strictest one within the EU (low benefits available only for 3 months after losing your job). At the same time, NGOs and social workers reported from all over Hungary that the negative effects of the crisis can reach a critical level in the most deprived regions of Hungary very soom. Hundreds of thousands of poor households in rural Hungary, many of them being Roma and thus suffering from various forms of stigmatization, have no savings, and most probably they will face unimaginable challenges throughout the coming months. According to a recent study, one third of poor children cannot access education, since schools were shut down and classes were moved online. Tens of thousands of families do not have access to electricity, not to mention the lack of necessary digital tools.
All in all, the Covid-crisis in Hungary has not yet triggered any surprising governmental responses. The main visible trends are the ones that have been at the core of the right-wing regime in the recent decade; the main difference is that there is a larger space for manoeuvring in some respects. It is very likely that the economic power of politically loyal local oligarchs will increase, especially in the sectors of banking and retail. Most probably the sectors of tourism, agriculture, real estate, energy and public utilities, – where local oligarchs have already gained significant powers – will benefit the most from the fiscal stimuli packages, along with manufacturing in general, and automotive industry in particular, where large multinationals hold key positions, supported by the neoliberal facet of Viktor Orbán’s authoritarian regime. It is very probable that workers’ rights will erode further through continuing flexibilization. Already increasing social polarization will most probably skyrocket as a result of the workfarist and exclusionary class politics of Fidesz. The domains of healthcare and education are already at the edge of collapse, given the ever-decreasing fiscal support, and the governments unwillingness to invest in these areas. Harsh critiques are already formulated by workers from these fields, and large segments of the society see these areas as the most problematic dimensions of the right-wing regime. At the same time, there are different bottom-up groups organizing along the principles of solidarity and mutual help, such as the newly formed coalition of Solidarity Action Group, formed by dozens of progressive organizations.
This article is part of our COVID-19 workers archive. We are collecting short summaries of the policies takes in different countries that affect workers and the unemployed, as well as the collective actions – strikes, protests, and mobilisations to demand better health and social protection and to fight for economic justice. If you want to add to the information in a specific country, to help with translation, or contribute with resources, please send us an email at email@example.com. The archive is also available in Bulgarian.
See the whole COVID-19 Workers arcive.