The largest economic development program in Hungary’s history begins on 1 January 2015. “When we really want something we can succeed,” Prime Minister Viktor Orbán said at the birthday celebration
of the Hungarian family company Jüllich Glass in Székesfehérvár this month.
Ádám Jüllich founded the company in 1984 as a “work community” according to the law at that time – with a base capital of HUF 10,000. Today Jüllich Glass is one of the 5,000 Hungarian companies with revenue in the billions. Orbán would like to create over 10,000 medium-sized domestic companies that are able to export and can build into a force in the national economy; at a time when in this globalised world not only companies but whole countries are threatened by devastating storms that can pull them down into the abyss any time.
Prime minister wants sturdy Hungarian capital
The prime minister sees himself as an economic patriot when he wishes for sturdy Hungarian capital. The reorganisation of public finances, the stabilised state budget, a new tax system that supports the manufacturing sector and the creation of workplaces, the reform of the labour code and the debt consolidation of cities and towns all serve this goal.
“Hungary’s fundamental interests dictate that the companies founded by Hungarian people should grow, and investments should be initiated in order that their value increases and more and more people are able to get work,” Orbán summed up.
In return for the political support, the Hungarian companies should help to ensure that the goal of attaining five million workplaces will be realised. The government will make available enormous amounts of money for developing the economy, coming from the increased EU funding that will be received during the next budget cycle from 2014 to 2020.
The first tenders in the value of HUF 120 billion will be announced this month. Only one third of this money will be used to decrease the unemployment among young people. Before 2020 however, a lot more money will be used to integrate about 340,000 youngsters and young adults on the job market. HUF 8.5 billion will be offered for the technical modernisation of small and medium enterprises, and another HUF 4 billion to support young people willing to become self-employed.
In the budget cycle from 2007 to 2013 enormous amounts were flowing out under the direct control of the Prime Minister’s Office: In September HUF 165 billion was distributed, the third-highest monthly amount this year. The payments of EU funds since the beginning of the year reached HUF 1,230 billion (around EUR 4 billion). Looking at these amounts, the ambitious goal to reach a total HUF 2,000 billion by year-end still seems quite far away.
Goal: 75% employment rate
Critics say the process of allocating the funds coming from Brussels is not efficient enough. The Ministry of National Economy does not agree: with the help of the euro billions they want to achieve a 75% employment rate and a spending of 1.8% of gross domestic product on research and development by 2020. In the next seven years the Hungarian economy can spend up to HUF 12,000 billion, which they have to supplement with 15% own sources, as is the usual process.
In any case it will be exciting to see what turn the government – further strengthened – will take after the municipal elections on Sunday. Orbán has already announced that “restrictions” are not part of the economic policy practised by his government. (We did not doubt that at all.)
He envisions a society based on work – in fact his government managed to create so many thousands of workplaces only through creating miserably paid public job opportunities, which far outweighed the few tens of thousands of new jobs that opened in the free economy.
Orbán also notes the success in the fight against inflation on the list of his achievements, although the policy of utility cost-cutting is not a guarantee for price stability, even if we disregard its effects on energy efficiency. In addition, Europe is currently in a phase of deflation, so we cannot say that Hungary has achieved a miracle.
Experts believe that Orbán will also deal with the reform of the healthcare system and will modernise vocational training within the educational system. Within the last four years the national economy managed, according to the Prime Minister, to climb up from the cellar of Europe to the ground floor, but we cannot be sure yet if it will be strong enough to climb the steps to the higher floors.