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social issues & initiatives | Hungary | by Kathrin Lauer | 2009-03
Everyone has something to saySocial or neo-liberal? In Hungary, the economic crisis in politics is giving rise to discussions about cutting back on social expenditure. However, unlike in the west, countries such as Hungary have long been struggling with very high deficits, due to a lack of reforms since the turn of the century. The path to prosperity has encountered obstacles and now and again a sense of nostalgia arises, although this dies down in everyday life, as does the constant desire for better times.The concrete wall is three times the height of a man and seems to be infinitely long. It is five kilometres to Kazincbarcika, and along the whole route there is nothing to the left of the main road but this grey wall. Steam from the heating plants rises from behind it. It is the site of the Borsodchem factory, Hungary’s biggest manufacturer of plastics. A Communist colossus built in 1962, it is the biggest employer in this impoverished region of northern Hungary, where coal mining and the steel industry once flourished. Today, unemployment is at about 20 per cent, three times higher than the average. Finally, the gate to the factory appears. Here the union official Irén Pataki Eördögh is waiting. It is an almost conspiratorial meeting, because it linked to the fact that the union is trying to prevent 550 out of a total of 2,000 employees from being made redundant at the factory. This motherly woman with copper-red hair, in her mid-fifties, does not want the factory management to know that she is talking to a journalist. That is what the crisis is like in Hungary. The motorcar industry in western Europe, which was previously buying 80 per cent of the foam plastic produced by Borsodchem, is no longer a definite customer. Even as late as 2006 it had seemed as if a golden age was about to start here. At that time, the investment company Premira, with its four company headquarters, including one on the offshore island of Guernsey in the English Channel, had bought up 89 per cent of the shares of Borsodchem. It was planned to double the production capacity by as early as 2009. Staff training seminars were organised for that purpose in Kazincbarcika, and these courses are continuing even now. Yet what will become of all that in the face of the global crisis?It still seems as if not too many Hungarians are asking themselves this question. The big shops are just as full as before. The weekly journal Elet és Irodalom (‘Life and Literature’) recently devoted a leading article to this lack of concern. In it the author Gusztáv Megyesi described his astonishment upon hearing about an experience in a store for electrical equipment. A retired couple wanted to buy a flat screen television and approached the salesperson in charge. Their worried question was: "Does it matter if we do not have the receipts with us for the paid gas and electricity bills t?" That would namely be the condition for taking out a loan, but because this loan is for less than 600 euro it does not matter. One does not need any proof of creditworthiness for such a purchase. The even more tormenting question was: "Will the screen also fit between the two cupboards in our living-room? Or should we measure again?" It is only two months ago that Hungary was saved from bankruptcy. In November 2008 the International Monetary Fund (IMF), the European Central Bank (ECB) and the EU put together a loan package of 20 thousand million euro for Hungary. After all, the country has been struggling with a very high deficit, due to lack of reforms since the turn of the century. It has too many unprofitable government institutions, social expenses that are too high and badly distributed, too many pensioners and illegal workers. Of ten million Hungarians, only two million are employed. The evidently uninterrupted consumer intoxication could be due to the fact that Hungary has still not experienced any very large bankruptcies as a consequence of the crisis – something that might have had a shock effect. Nonetheless, all over the country, companies are reducing staff, usually on a scale of several hundred a time. Apart from those immediately affected, the signs seem to be invisible to all but the experts. The Ministry of Labour announced in January 20,000 newly unemployed people as a result of the crisis. Before the crisis the total figure for the country was 337,000. Hungary’s second-largest employer, Bosch, is closing one of its four Hungarian works, namely the factory in Kecskemet that produces CD players for cars. Paradoxically enough, it is exactly the same place where Daimler intends to settle. The German car manufacturers are planning what will probably be the largest single investment since the collapse of communism 20 years ago. Right in the middle of the present crisis, Daimler has bought up 430 hectares of land, and is seeking to recruit staff from the higher classes of schools in Kecskemeter. It needs 2,000 employees to manufacture Mercedes cars here, starting in 2012. However, there is a long way to go until then. The first thing on the agenda is job cuts. The US company Flextronics has made 400 workers redundant at its factory in Tab, near Lake Balaton. Rumours are circulating that the factory – the only large employer in the region – will close completely. In Debrecen, in north-eastern Hungary, Sellaton is shutting down and making 99 employees redundant. Founded 102 years ago, it is the only manufacturer of Thonet furniture in Hungary. The main customer from the USA, who up until now has always bought the classic slender beech bentwood chairs, has terminated its contract. In Györ, the flagship of the Hungarian boom of the 1990s, Audi has announced it will be taking a break "together with the locations of the German parent company", as the official statement goes. The words "crisis" or "a decline in orders" evidently cannot be admitted publicly by anyone there. We are sitting in Kazincbarcika, in front of the factory gates of Borsodchem, in a hotel fitted-out with glittering marble. The union leader Erdögh has brought five workers with her. All of them want to get a word in, but also want to remain anonymous – including the 33-year-old man in a training suit who is worried about the loan on his 50-square metre apartment, in which he lives with his wife and their six-months-old son. He is just completing a further training course. It is still unclear whether or not he, too, will be fired. Together with his wife, who also works for Borsodchem, he has an income of 200,000 Florints. That is now around 660 euro, although only a year ago, before the national currency went into a tailspin, it was worth 800euro. It is such a pity that the loan that he – like most Hungarians – has taken out in order to buy his house is in Swiss francs. As a result of devaluation, his debts at the bank have increased by 20 per cent. Last year, 80 per cent of the loans in Hungary were issued in the form of foreign currency, because of the fact that the interest was lower than on loans in the national currency. In Budapest’s neo-Gothic parliament, Prime Minster Ferenc Gyurcsany is trying to fight the crisis with a slight redistribution of the tax burdens. It seems as if the socialist Gyurcsany – who has been highly unpopular ever since his notorious ‘lies speech’ in 2006 – does not dare to do anything more than that. Since last spring, when the Liberals left the coalition, Gyurcsany has no longer had a secure majority in parliament. He wants to lower taxes for businesses and saddle the citizens with higher income tax and value added tax. Slight cuts are to be made to the allowances for mothers, which to date have been extremely generous. Until now, every mother has received 70 per cent of her income for two years after childbirth. This was independent of whether she had a husband and regardless of whether he had an income or not. The prerequisite was solely that she had been employed for at least six months. Now the idea is to extend this minimum period of employment to one year. Many Hungarian experts, including the Confederation of Industry and Lajos Bokros, Hungary’s most radical reformer to date, regard all this as insufficient. In the mid-90s, when he was Minister of Finance, the economist Bokros restructured Hungary’s budget. His unpopular measures were the reason why the Socialists lost the elections in 1998. Now, Bokros would like to see social expenditure reduced by 20 per cent and radically uneconomical schools and hospitals closed. "That would mean war", was Gyurcsany’s response. However, there are also thinkers in Hungary for whom Gyurcsany’s plans go too far. We met one of them in his apartment not far from the Central European University (CEU) in Budapest, where he teaches philosophy. Professor Gáspár Miklós Tamás, whose open-minded thinking frequently involves the whole country in a debate, receives us in his study-cum-bedroom. The walls are full of books, thick volumes lie on the table and under the chairs. There is an organised chaos in this scholar’s room. In the middle of it, Tamás draws on a pipe, his beard concealing his facial expressions. He fled from Romania’s National Communism in the mid-1970s, leaving Transylvania for Hungary. In 1980, he lost his job as a professor of philosophy in Budapest because he had criticised Marxism in front of his students. He became one of the leading figures of the liberal opposition and a co-instigator of the fall of communism in Hungary. Today he is once again a leftist and despairs at the declared neo-liberalism of the socialist Gyurcsany. He is convinced of the fact that social cuts will primarily burden the politically passive Hungarian middle-classes and eventually make them rebel. Tamás calls himself a Marxist, although a return to times before the political change would be no solution for him at all. His basic position is that there was no Communist economic system in eastern Europe before 1989, but rather "state capitalism". The means of production and revenue did not belong to the people but to the state. At any rate, in the present crisis, he believes that a neo-Keynesian approach would be appropriate. The British economist John Maynard Keynes (1883-1946), one of the fathers of the social market economy, became famous after the crisis of 1929 for his plea, at that time revolutionary, for state subsidisation of purchasing power in order to strengthen the economy. Tamás says that many Hungarians, regardless of their actual present-day political options, still mourn the materially carefree times of ‘goulash Communism’. In Kazincbarcika there is ambivalence. Yes, before 1989, a pepper had only cost one forint and there were hardly any homeless people. Nevertheless, according to the union official Eördögh, "there is no need to shed any tears for socialism." Kathrin Lauer was born in Bucharest in 1964 and emigrated to the Federal Republic of Germany in 1980. She studied modern history and Romance languages and literature in Bonn and Paris. Since 1994 she has worked as a freelance journalist for the Deutsche Presse Agentur (dpa), the “Süddeutsche Zeitung” and the “Standard”, among others. The central themes of her work are Romania and Hungary. Kathrin Lauer travels between Budapest and Bucharest, with a domicile in both cities. related articles» Back to report |
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