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Orbán’s initiative to boost employment

July 4th, 2012

Commentators on the right, the left and in the centre all agree that the new 10-point “employment protection” programme is a step in the right direction, but the latter warn that costs are not covered by planned adjustments to the budget.

PM Viktor Orbán announced a new programme in Parliament on July 2nd, with ten proposed measures to ease the tax burden on employment for the under 25s, the over 55s, mothers returning from maternity leave, the long-term unemployed and unskilled labourers. In addition, the package includes several measures to simplify and reduce tax burdens on SMEs in Hungary. The programme is to be financed by extending the new levy on financial transactions to those of the National Bank and the Treasury, as well as by using part of the budget reserves, in the hope that the measures will result in an extra increase in GDP.

In Népszava, Miklós Bonta mocks the triumphant tone of Orbán’s speech and believes the new package has been devised in order to mend the negative consequences of the government’s mistaken economic policies. He recalls however that similar measures were indeed promised by Fidesz in its electoral programme. If they come true, the government will be moving in the right direction, he admits, but “there is no free lunch”, and Hungary will spend its budget reserves to cover the bill.

In the centrist financial news and analysis portal, Portfolio.hu, leading columnist István Madár welcomes the new measures, although he suggests that they are in fact a correction of the previous misguided policy, which was based on the hope of economic growth due to the introduction of the flat rate of income tax. Madár warns that while the new measures are costly, the expectation that they will induce economic growth might be another instance of wishful thinking. If the measures fail, Hungary will fall back into the vicious cycle of election year-budgets, he warns.

In Magyar Nemzet, Anna Szabó argues that this new programme comes two years late, because the state machinery and the national budget “had to be propped up” first and “we had waited too long” and in vain for economic recovery in Europe. The individual measures target the most vulnerable groups in the labour market, she explains. Unemployment figures have not improved perceptibly, so it is high time to remind the government of its promise to leave no one behind. The cost of the new programme is comparable to the sum of the fine the EU imposed for malpractice on Barclay’s, she remarks, adding that in order to make worth their while, „the measures will have to succeed in making the business environment more predictable and transparent“.

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