Habitat: Hungary’s poor worse off after March “reforms”

August 2, 2015


Hungary’s four million poor are considerably worse off since the national government transferred certain social welfare programs to local governments in March 2015.   In many cases it does not matter how poor someone is, if they don’t tend their garden or properly clean their toilet, they receive no support for the maintenance of their household.

According to a recent study prepared by Habitat for Humanity, reforms to Hungary’s social welfare system introduced in March 2015 have primarily affected large and poor families.   The point of the change was that a number of social supports previously administered by the national government and funded in the national budget were eliminated, and the decision whether to continue them, and in what form, was entrusted to local governments.  Habitat for Humanity examined 31 settlements to determine the extent to which poor families have access to household supports and debt management subsidies. It appears that settlements in general have tightened their belts to the detriment of Hungary’s poorest.

In Habitat’s opinion, since 3200 settlements were given a free hand, Hungary became a country with 3200 different household support policies.  Prior to March the national government reduced subsidies for household maintenance.  In 2007 the government distributed HUF 130 billion (USD 650 million) of household support to poor families.  By 2012 this had decreased to HUF 20 billion (USD 90 million).

Larger households worse off

Previously, some 450,000 poor households received monthly support of HUF 3,870 (USD 14) for use primarily towards paying public utility bills.  The amount decreased over the years but was still an important supplemental income for poor families.

In March local governments were given the option of discontinuing this altogether.  Of 31 settlements chosen at random by Habitat to examine, three had completely done away with this kind of support—Gávavencsellő, Hódmezővásárhely, and Vámosatya.

In general what Habitat experienced was that, while local governments tried to continue the earlier supports, the conditions were made far more strict.   In twelve settlements the per capital income limit for qualifying for household support payments was set at between HUF 40,000 (USD 143) and 70,000 (USD 250).  True, poor families living in those settlements previously received relatively small amounts, HUF 2,500 (USD 9) on average.

A number of local governments do not differentiate between different income groups and provide the same support to everyone regardless of whether their income is near the top or approaches zero.   Where they differentiate, those earning less than HUF 30,000 (USD 107) a month, in other words the poorest, often receive less support than prior to the March reforms, whereas those earning HUF 40,000-60,000 (USD 143-214) are doing better.

Another important change is that, whereas previously the supports benefitted mostly large families, local governments often do not differentiate among different-sized households, meaning that often a family of eight receives the same amount as a single-member household.

The study cites the example of Cikó in Tolna county where every household that qualifies for a subsidy receives HUF 3,000 (USD 11).  This is one-third the amount a four-person family living on HUF 47,000 (USD 280) a month received before March.  On the other hand, single-family households earning HUF 60,000-70,000 (USD 215-250) a month receive HUF 500 (USD 1.8) more.

When presenting Habitat‘s findings Eszter Somogyi of City Research Ltd. (Városkutatás Kft.) said the change was surprising and speculated that it was politically motivated by the desire to win the votes of pensioners.

In some settlements limits are placed on what the support can be used for.  In the northern Hungarian cities of Ózd and Miskolc, and in the south-eastern city of Mezőtúr, regulations favor utility companies owned by the local government.  In this way, the entire support (capped at HUF 2,000/USD 7) goes to garbage removal.  Miskolc only supports the cost of heating between October and March.   In Ózd the money may only be used to pay for heating or the cost of renting a flat from the local government.

In many settlements one of the conditions for receiving the support is that the household spend 30 percent of its income on home maintenance and improvement.  Habitat believes such a condition is not a bad idea but that considering the average ratio in Hungary is around 25 percent, a lot of impoverished households end up being disqualified.

Are you poor?  Let’s see your toilet and your garden!

One of the “sticks” of the new system according to Habitat is that subjective decisions play a much greater role in determining who receives supports and who does not.  The government primarily justified the changes to Hungary’s social welfare system on the grounds that settlements can better decide locally who is really needy.  However, it appears that many municipalities abuse this and stipulate conditions that violate people’s rights.

Of the 31 local governments examined, six did not prescribe any conditions, with the notary, mayor, and the local authorities determining who receives how much support.  More often the support is conditioned on “plot orderliness”, a practice previously condemned by Hungary’s ombudsman for human rights.  In the Szabolcs county settlement of Ibrány, only those qualify for household support who install a chip in their dog, weed their garden, and clean the ditches in front of their houses.  In Somogy county’s Bőszénfa, keeping a garden is also a condition.   In Miskolc they also pay attention to the cleanliness of one’s toilet.  Eszter Somogyi believes one of the most astonishing conditions can be found in Miskolc and Ózd, where households deemed to be “overcrowded” are disqualified from receiving any household support.

Habitat believes this makes the poor vulnerable and conditions the support on one’s relationship with the local mayor.  Habitat is concerned that local governments will use subjective conditions to drive poor families away.

Less money to go around

Prior to March the so-called household debt management service was provided to around 10,000 people annually.   It was intended to help those who have fallen into arrears with their public utility bills, or whose utilities had been disconnected.  In addition to the financial support, individuals were given advice on how to manage their debts.  Although settlements with populations under 40,000 were not required to provide this, many smaller cities made it available.

Out of 31 settlements, only five offer this service since March.  In Miskolc (Hungary’s third-largest city) and Hódmezővásárhely the service was discontinued in March.   Where it remained, they raised the income cutoff level and decreased the amount of the support so that now the poorest have to compete with the lower middle-classes for limited resources.  Habitat believes that this makes it even more difficult for impoverished households to pay off their debts.

Local governments are allowed to provide other supports, such as social firewood, rent supports, or extraordinary heating supports.  However, out of 31 settlements, only eleven offered any of these supports.

Who is responsible for this?

It appears that, on the whole, Hungary’s poorest were adversely affected by the March changes to the country’s social welfare system.   The question is whether this is primarily the responsibility of the national government or municipal governments.

Undersecretary for social affairs Károly Czibere said earlier that a HUF 30 billion (USD 107 million) “compensation fund” was being set up to which 90 percent of settlements would have access in order to ensure that nobody is worse off.   The settlements, however, sense that their financial sources are increasingly limited.  One city notary told abcug.hu several weeks ago that they have to decrease development expenditures in order to fund social welfare payments.

The author of the study, Bence Kováts, says that, for the time being, it is difficult to decide who is right because the 2014 social welfare data has not yet been released, and for this reason they cannot determine whether the HUF 30 billion compensation fund is sufficient.  Kováts says that probably there are many settlements where the old supports remain but on a reduced level, not out of contempt for the poor but owing to a lack of resources and technical expertise, primarily in the case of the smaller settlements.

Habitat for Humanity believes the study for the most part faithfully reflects the general tendencies and warns that the situation of Hungary’s poor will considerably worsen if Prime Minister Viktor Orbán makes good on his promise to do away  with social welfare altogether by 2018.