Hungary’s nationalized textbook industry goes from profits to losses

July 5, 2015

textbooks

In 2013, the Hungarian government nationalized the country’s textbook industry and created a new state-owned, non-profit company for the purpose of publishing and distributing textbooks, the Könyvtárellátó Nonprofit Kft., or Kelló for short.

The government justified the decision to put scores of publishers out of business by arguing that it would result in considerable cost savings and promised that any profits realized would be distributed to its underfunded schools.

In 2013 Kelló made HUF 259 million, despite failing to deliver some 38,000 textbooks in time for the start of the school year.  Of this, HUF 115 million was reportedly distributed to schools.

As is the case with most state-owned companies, the profits created an opportunity for patronage.  After making HUF 259 million (USD 1.1 million) the state-owned company went on to lose HUF 140 million (USD 500,000) in 2014.  It attributes the loss to a dramatic fall-off in sales (HUF 800 million/USD 3 million!) but did not explain how this could happen from one year to the next.

Contributing to Kelló‘s problems was a sharp increase in employment costs–from HUF 356 million in 2013 to HUF 600 million in 2014. The company explains this increase by saying it has hired more people and set up new “regional Kelló Infocenters”.

It is worth pointing out that Kelló’s managers receive monthly salaries in excess of HUF 2 million.

(It appears that distributing HUF 800 million fewer books in 2014 required a significant increase in the number of overpaid managers overseeing the company’s operations-ed.).

Referenced in this article:

Negyedmilliárdos nyereségből 140 milliós veszteséget csinált egy év alatt a Kelló, 444.hu; 3 July 2015.