A l a p í t v á n y
SZÁZADVÉG
FOUNDATION
FOCUSING
on
HUNGARY
2014/2
February
You are reading the
monthly bulletin of
Századvég Foundation,
Focusing on Hungary.
Political background
Through this monthly
bulletin Századvég aims
to contribute to a deeper
understanding of Hungarian
political and economic
processes.
Economy
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Focus on the Family
the government’s efforts to strengthen Hungarian families
The second Orbán government’s policies on families
– Bringing the system of support for families into line with diagnosis
of the problem
– Family-work-life balance
– Home ownership protection, household expenses
Sectoral policy
The new Hungarian electoral system, Part II:
The Act on electoral procedure
Public opinion poll
Hungarians welcome newly introduced family tax
benefits and an increased eligibility period for Child
Care Home Allowance
More on Századvég
editor: Gábor G. Fodor, political director
for comments and suggestions please contact:
Dr. Orsolya Pacsay Tomassich, director of foreign policy
at bulletin@szazadveg.hu
Századvég School of Politics Foundation
1037 Budapest, Hidegkuti Nándor utca 8–10.
Hungary
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SZÁZADVÉG FOUNDATION Focusing on Hungary
Political background
Focus on the Family
At the heart of the second Orbán government’s efforts have been
the strengthening of Hungarian families and improvement of their
situation.
The Fundamental Law
identifies the family as the
basis for continuity of the
nation and declares state
support for families and
the commitment to raise
children. At legislative
level, Act CCXI of 2011
details the framework
regulations for the support
of families, and the state’s
role in encouraging the
commitment to start and
build families. It declares, for
example, that the support
of families will always be a
factor in planning the central
budget, and that the state
shall enact measures to
reconcile the needs of work
and family. The foundation
of the second Orbán
government’s policy on the
family is recognition of the
costs of having and raising
children.
In addition to the clear symbolic stance, the Government hopes for
reinforcement of the middle class and prolonged, stable and secure
maintenance of economic growth through the simulation of domestic
consumption.
(1) This accounts for the strengthening of legislative protection for
the family.
(2) This also accounts for the development of the pillars for a new
system of redistribution which deals with the strengthening of
families as a high priority.
Among the changes that have taken place in the family support
system, the following measures should be highlighted:
Family Tax Allowance
Long-term unfavourable demographic trends and a declining
number of children have made ​​it necessary for increased state
involvement in population policy, an emblematic element of which
in the second Orbán government has become expansion of the
family tax allowances system. This reflects the universal approach of
the state in recognizing the additional costs to all parents of raising
children, while linking benefit to income that is legal and taxable.
Family Allowance
The aim of the Government in further restructuring the family
allowance system and attaching conditions to payment has been in
part to assert the obligation on parents of ensuring their children’s
school attendance. The restructuring can also be seen as a measure
seeking to establish more lifestyle stability.
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Child Home Care Allowance
The previous government reduced the period for which Child Home
Care Allowance was payable from three years to two. The present
government has once again increased this period to three years,
and at the same time has introduced a limit of 30 hours work per
week for the eligible parent, thus explicitly encouraging part-time
employment.
Child Care Fee Extra
Child Care Fee Extra is a complex of measures to combat the
abovementioned unfavourable demographic trends (especially
delaying having children), and the tendency of the family support
system to discourage employment.
The Child Care Fee Extra benefit package was introduced on 1
January 2014, and it has three components:
1. a
fter a child’s first birthday it is now possible for a parent to work
full time while claiming Child Home Care Allowance and Child
Care Fee
2. child care benefits remain in place after the birth of another child
3. s o-called graduate Child Care Fee, to which parents in full-time
tertiary education are entitled for one year
Measures encouraging young mothers to
enter employment and furthering a healthy
balance between family and work
While the EU average employment rate among 20 to 64-year-old
women is 62%, in Hungary it is only 56%. The difference is primarily
in the area of employment
​​
of mothers with young children, and in our
country the number of working women raising children is less than
half that of working women not raising children. The Government
seeks to remedy this situation with a package of measures (parttime incentives, expansion of nursery capacity, compulsory preschool attendance from the age of 3, and the various benefits of
the Workplace Protection Action Plan). The results are being felt:
employment among women is growing again for the first time in
10 years.
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Economy
The second Orbán government’s policies on families
Background to the low
birth rate: in addition
to tendencies common
to developed countries,
specific factors in Hungary
are reduced motivation to
start families for economic
reasons, low fertility rates
among unmarried women,
and low employment rates
among women.
Data interpreted with Eurostat statistical methodology reveals that
the Hungarian government will spend almost 3.1% of GDP on
financial support for families, compared with an average of 2.2%
across the 28 Member States of the EU. The reason for this high
rate of spending is that Hungary’s demographic trends are uniquely
unfavourable, with population in virtually constant decline for more
than thirty years. In 2011 the total fertility rate was 1.23, which is the
lowest in the EU.
In addition to the many factors prevalent in the developed world
(e.g. postponing having children, reductions in the number of those
marrying and increased divorce rates, or increased intervals between
the birth of children), there are also reasons for Hungary’s low birth
rate which are peculiar to the country: of those planning to have
children, only 40% succeed in doing so (in the Netherlands this
figure is 75%). Although from country to country there are variations
in the link between the fertility rate and the number of children
born outside marriage, in Hungary it is clear that the fertility rate of
married women is twice that of unmarried women. For this reason
government policy in Hungary is focusing on popularisation of more
stable forms of relationship.
Moreover, research in Hungary shows that women in the middleincome bracket are least inclined to have children, and that those
who are already parents show an above-average reluctance to have
more children on financial grounds. International experience shows
that fertility indicators are higher in those European countries in
which more women are in employment, and in which the state offers
targeted support in improving the balance been work and family life.
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SZÁZADVÉG FOUNDATION Focusing on Hungary
Bringing the system of support for families
into line with diagnosis of the problem
In recognition of the above, the following conclusions need to be
reflected in government policy on families: the employment levels
of Hungarian women – which are extremely low by international
standards – need to be raised, and women need assistance in
balancing work and family responsibilities. In addition, special
assistance should be provided for middle-class families, because
statistically they are the least likely to plan on having children;
in this respect financial assistance may be effective, particularly in
encouraging families to have additional children. In the last three
years the following such measures have been implemented:
Legislative changes:
…… Provision was included in the Fundamental Law for state support
for families and the raising of children, and it also declared
marriage and parent-child relationships as the foundation for the
family. This is a symbolic action, which does not discriminate
against those choosing other forms of partnership. The
Constitution nevertheless identifies support for the commitment
to raise children as a responsibility of the state.
…… The framework rules for support for families and the state’s role
in promoting the commitment to have children are formalised
in the cardinal Act on the Protection of Families (2011), which
can only be amended by a two-thirds majority in Parliament;
this symbolises the nature of policy objectives on families which
extend across government terms in office.
…… In the summer of 2013, violence between cohabitants became
a separate offence under the Penal Code, which had been
long-awaited by civil society organisations and international
organisations.
Financial support:
…… From January 2014 the family tax allowance system – which
had been restructured and extended with effect from 1 January
2011 – was expanded further. Family Tax Allowance is now
applicable to statutory contributions as well as to personal
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SZÁZADVÉG FOUNDATION Focusing on Hungary
income tax; this favours lower-income earners, who could not
previously take full advantage of the allowance. Thanks to the
allowances it is expected that in 2014 around HUF 230–240
billion will remain with families.
…… The period for which Child Home Care Allowance may be
claimed has also been increased by this government from two to
three years. The amount of Child Home Care Allowance is fixed
at the same level as the minimum state retirement pension: i.e.
currently HUF 28,500 per month.
…… As was the case previously, the Child Home Care Allowance is
supplemented by other forms of benefit. The most significant of
these is the Child Care Fee, which seeks to compensate women
in work prior to giving birth for loss of income while on maternity
leave. The fee is payable for two years, and its level per day is
70% of the woman’s average daily income over the year prior to
claiming it. During the period around childbirth a similar amount
of support is available, known as Pregnancy and Confinement
Benefit.
…… In addition to Child Home Care Allowance and the Child Care
Fee, there is a flat rate benefit for women who attend prenatal
care sessions on at least four occasions; this amounts to 225%
of the minimum state retirement pension.
2013
Child Home Care Allowance (Child Care Fee
could not be claimed):
HUF 26,650
Family Allowance:
HUF 12,200
Salary:
HUF 90,000
Total net monthly income: HUF 127,850
2014
Child Care Fee:
Family Allowance:
Salary:
Total net monthly income:
HUF 105,000
HUF 12,200
HUF 90,000
HUF 207,200
The above measures aid those who wish to stay at home for an
extended period to care for children, but they do nothing to boost
chronically low employment levels among women. (In Hungary
36.2% of women with children under 6 are in work, compared
with an EU average of 60.3%.) For this reason the Government
introduced the Child Care Fee Extra (effective from 1 January 2014):
among its provisions are encouragement of work alongside raising
children, reduction of restrictions on working when receiving Child
Home Care Allowance and Child Care Fee, and a commitment to
remove from the system administrative barriers which had previously
prevented the claiming of certain combinations of benefit. According
to plans, the introduction of the construction will cost HUF
18.5 billion. The changes comprise the following five points:
1. In addition to claiming Child Home Care Allowance and the Child
Care Fee, it is possible for a mother to enter employment after
her child’s first birthday (Child Care Fee Extra). For the mother of
an 18-month child who is entitled to HUF 105,000 in maternity
benefit and HUF 12,000 in Family Allowance, and who wants to
work for HUF 90,000 a month (for 4 hours a day), her net monthly
incomes in 2013 and 2014 would be the following:
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SZÁZADVÉG FOUNDATION Focusing on Hungary
2013
Child Care Fee on birth of first child:
0 (no entitlement)
Pregnancy and Confinement Benefit on
birth of second child: HUF 125,000
Family Allowance: HUF 26,600
Total net monthly income: HUF 151,600
2014
Child Care Fee on birth of first child:
HUF 105,000
Pregnancy and Confinement Benefit on
birth of second child: HUF 125,000
Family Allowance: HUF 26,000
Total net monthly income: HUF 256,600
2. If she has another child, her existing benefits remain; the previous
system unjustly made claiming full support conditional on a
minimum time gap between the birth of children. The following is
an example of the change:
3. G
raduate Child Care Fee is being introduced, according to
which parents in full-time tertiary-level education are entitled to
Child Care Fee for one year. The goal is to incentivise the middle
classes to have more children.
4. N
ew tax credits are now available to those employing women
with three or more young children. Next year the tax holiday on
statutory contributions after such employees will be extended
from two years to three, and the “félszochós” allowance will be
for two years instead of one for women with three or more young
children. Thus credits available to employers will increase from
HUF 858,000 to HUF 1,374,000.
5. In 2010, the Government restructured Family Allowance (which
accounts for about 60% of benefits) as support for the raising and
education of children. Family Allowance is a non-means-tested
benefit seeking to recognise the costs of raising children in later
years, and it is available up until the end of compulsory education
or the age of twenty – whichever is the sooner. After the change
of government in 2010, Parliament linked access to family
support to children’s school attendance. This means that Family
Allowance will be suspended if a child misses more than 50 hours
of compulsory schooling. Following introduction of this measure
there was a dramatic improvement in school attendance rates.
Family-work-life balance
Increasing employment among women is a government priority,
which Parliament has sought to promote through various measures.
Principal among these is the Job Protection Action Plan, which uses
payroll tax relief to encourage employers to employ or retain women
returning from maternity leave, untrained workers and the long-term
unemployed. Employment among women is currently at its highest
for several years, and by the end of 2012 it stood at 1.8 million in the
15-64 age group.
The Government seeks to promote atypical forms of employment,
especially part-time employment, through state regulation and
incentives. To this end, in 2011 the legislature adopted the Part7
SZÁZADVÉG FOUNDATION Focusing on Hungary
time Work Allowance, which encourages part-time employment
through reduced payroll taxes.
The completely new Labour Code came into force in 2013, which
aims to create a fundamentally flexible labour market. It has
been made compulsory for an employer to continue to employ
a part-time worker with a young child up until that child’s third
birthday upon request from the parent. From 2012 parents have
been entitled to four days leave per child (instead of the previous
two days), and fathers continue to be eligible for this. In terms of
protection against dismissal, however, the new Labour Code is
less favourable for parents returning to work from parental leave:
dismissal notice for such workers will no longer be three years,
but only extends until return from parental leave.
Within the New Széchenyi Plan, between 2010 and 2014
the Government has allocated HUF 28 billion to creating new
nurseries (for children under 3) and to modernising existing
facilities. By the end of 2014 around 6,000 new places will have
been created in the nursery system.
Home ownership protection, household
expenses
In 2011 the Government introduced its new home creation
programme, which has two main elements: a non-repayable grant
(a revival of an earlier measure) and a home loan on favourable
terms which is denominated in local currency.
In addition to the grant – which can only be used to build or buy a
newly-built property – in 2012 the Government devoted
HUF 119 billion to the grant scheme, mortgage interest relief and
support for building societies.
Housing problems not only affect young couples, however,
but also those families who took out foreign-exchange-linked
mortgages in ever larger numbers after support for traditional
mortgages started to be reduced in 2004. In order to help
families in default or with payment difficulties, the Government
has developed several support constructions. These include:
moratoria on evictions; exchange-rate caps for such mortgages;
the option for the state to purchase a property scheduled for
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In Hungary the problem of
utility arrears is one that
threatens many households’
access to basic services,
such as heating and water.
In response, the Government
has decided to enact
reductions in the cost of
these services in a number
of rounds. The reductions
apply to gas, district heating,
electricity and refuse
collection. Since 1 January
2014, transaction charges
may not be levied on bank
cash withdrawals of up to
HUF 150,000.
repossession and sale, and its lease back to the original mortgagee.
A new rescue package for foreign-exchange mortgagees is now
under development.
Effects
In 2012 the total fertility rate rose to 1.34%, which is a welcome
improvement, though still extremely low. The number of new
marriages reached a low point in 2010, but has since risen slightly.
While such family policy measures can achieve their goals over the
long term, the mechanisms at play are not easy to observe. Policy
on families will influence people’s inclination to have children if they
feel its effect, and this effect will be more pronounced for negative
developments. A good example of this was the so-called “Bokros
Package” in 1995, which cut back on benefits in family policy,
making them means-tested. The effect of this was a large fall in
the fertility rate among those with secondary and tertiary education
qualifications. In the light of this experience, and with the intention
of separating family policy from social policy, the Government
recognises the costs of having and raising children that all families
with children have to bear.
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SZÁZADVÉG FOUNDATION Focusing on Hungary
Sectoral policy
The new Hungarian electoral system IV
Electoral bodies
The new Act on electoral
procedure (of 2013) does
not contain significant
changes either in the system
of electoral committees
and electoral offices,
or in that for review of
results and procedure.
The task of independent
election committees
has not changed; the
independence of the
National Election Committee
from the executive has been
significantly increased,
however. This greater
independence from the
executive is also apparent in
the newly-formed National
Election Office. The changes
in the appeals system clearly
strengthen legal certainty
and simplify exercise of the
right of appeal.
Tasks related to elections are shared by central and local bodies,
decision-making boards and administrative organisations. There
are two types of election body in Hungary: election committees and
election offices. The independence of such bodies has been clearly
prescribed by the 2013 Act on electoral procedure.
Electoral committees are independent, subject only to the law.
Their most important task is ensuring the fairness and legality of
elections, confirmation of results and – where necessary – redress
of abuses. The various types of committee – at national and local
levels – have not changed in essence. The most important change
has been in giving more independence to the National Election
Committee. Instead of 5 members this now has 7 members, who
are no longer nominated by the Minister of the Interior, but the
President of Hungary – who occupies a politically neutral position.
The Committee’s members are elected by Parliament for terms of
nine years, and their body’s independent status is now similar to that
of others such as the Constitutional Court and the Curia (Supreme
Court).
The system of election offices, which carry our administrative
tasks, has not changed significantly as a result of the new Act on
electoral procedure. The main tasks of election offices remain the
preparation and logistical management of elections, information,
training, secretarial and technical matters related to elections. An
election office works alongside every election committee, except the
vote-counting committee and foreign representations. The leaders
of election offices are typically notaries, and leading up to elections
their staff are local government employees.
Prior to the new Act, the body responsible for central administration
of elections was the old National Election Office, which operated
as a department within the Ministry of Public Administration and
Justice, and before that the Ministry of the Interior. The new National
Election Office operates as an autonomous public administration
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body, completely independent from the executive. Its director is
nominated by the Prime Minister and appointed for a nine-year term
by the President of Hungary; strict rules on conflict of interest apply
to the post.
The review system
The new Act has not significantly amended the structure of
review procedures. As under the previous system, there are three
procedures: complaint, appeal and judicial review. A complaint
may be lodged with regard to violation of electoral rules by those
affected, or anybody with voting rights. This complaint will be
decided on by the relevant election committee at local or national
level, depending on the nature of the election.
Decisions by election committees may be appealed by the original
complainant(s), and appeals are judged by the body which is one
level higher than that which made the disputed decision. Within
the electoral procedure system it is not possible to make a second
appeal or to appeal the decision of the National Election Committee;
in such cases the appellant – which can only be the natural or legal
person directly affected – must turn to the courts. The latter option
is applicable for parliamentary elections, in which case the court of
appeal is the Curia (Supreme Court). This change in the appeals
system clearly aids consistency in application of the law, and thereby
increases legal certainty.
For each of the three review processes the complaint or appeal must
be lodged (in electronic form, if desired) within three days, and the
relevant body must make a decision within three days of receipt of
the application.
Hungary’s new Fundamental Law of 2011 created the possibility
for a so-called “constitutional complaint”, which is an important
guarantee in the election process. This allows persons and
organizations to contest individual judicial decisions which they think
infringe their rights as guaranteed by the Constitution, including
those related to elections.
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Public opinion poll
Hungarians welcome newly introduced family tax
benefits and an extended maternity leave
Do you tend to agree or disagree with the introduction of family tax relief? (%)
21 7
Completely disagree
Tend to disagree
33
Tend to agree
Completely agree
57
Don't know / No response
Do you tend to agree or disagree with the eligibility period for Child Care Home
Allowance being increased from 2 years to 3 years? (%)
2 5
Completely disagree
Tend to disagree
32
Tend to agree
Completely agree
61
The survey was conducted through telephone interviews using the
CATI method. Sample size: 1000 adult respondents. Sampling error:
+/- 3.2%. Date: 2013 october 28-29
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Századvég Foundation
Századvég School of Politics Foundation was established in 1993,
as an articulation of the spirit of the young generation that actively
participated in Hungary’s democratic transition. It began life as a
forum for social and economic thinking, publishing first journals and
then books aiming to present the values of Hungary’s progression
and analyzing Europe’s patterns of development. As an intellectual
community, Szazadvég’s founding generation has played an important
role in the transformation of our country to a market economy and a
democratic state under the rule of law.
Our mission is
to develop and promote new policy ideas which assist in the
creation of public service-shaping agendas, supporting programs for
a stronger society and a more dynamic economy. The authority and
reliability of our research is our greatest asset.
Our goals are
…… to participate in the process of future policy makers’ education and
training at the highest professional levels
…… to contribute to the spread of democratic political culture, stability
and sustainable development
…… to assist civil society in self-organization and efficient representation
…… to support new directions for research in the social and political
sciences
…… to further the education of minorities beyond the country’s borders
and young researchers’ activities through scholarships
…… to promote public awareness and understanding of issues recently
in the spotlight
Our activities
Producing independent and rigorous analysis of regional and countryspecific challenges and formulating strategy ideas aimed at decisionmakers and policy-shapers on how these could best be tackled.
Conducting research and analysing the political, social and economic
changes in the country. Main research fields include macroeconomics,
election studies, political campaign research, political risk analysis and
forecast
Conducting expert level dialogue, organizing conferences
Publishing books, papers, journals and surveys
Media appearances: in print, on radio and television
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