TÁRKI: Poverty in Hungary decreased between 2012 and 2014

May 15, 2015

 public workersTárki: 5.4% of working-age Hungarians performed some kind of public work in 2013-2014

Poverty in Hungary decreased from 26% to 23% between 2012 and 2014 thanks to public work schemes and other large-scale efforts on the part of the government to improve living standards, according to TÁRKI, which has employed the same methodology since 1992 to research the income and employment of the Hungarian population as well as the structure of its expenditures.

The methodology involves collecting data on some 2000 households based on questions posed to household members over the age of 16.  In this way the pollster is able to collect data about the entire household based on information obtained from competent household members.

In accordance with the European Union’s Europe 2020 strategy, in November 2011 the government adopted the National Societal Action Strategy (NTFS) whose objective is to decrease the number of Europeans living in poverty or conditions of material deprivation and social exclusion.  Among other things, it contains medium-term strategies for the social and employment market integration of Hungary’s estimated 800,000 Roma.

The TÁRKI Household Monitor report issued this month is based on data collected between 1 October 2013 and 30 September 2014.  From a sample set of 5089 households, they were able to conclude interviews with 2011 households containing 4420 individuals, 3908 of which were over the age of 16.  Of those, 3541 unique questionnaires were completed.

According to the pollster, the TÁRKI Household Monitor is “suitable for deriving conclusions about the entire population” despite being based on a relatively small sample,

The main findings of the report are the following:

•Relatively fast economic growth, practically non-existent inflation, and an increase in real earnings have resulted in a significant improvement in the macro environment.   Between 2012 and 2014 there was a significant (16 percent) increase in real earnings which helped close the gap between rich and poor. The share of total income of the bottom ten percent of households increased from 2.6 percent to 3.0 percent.  However the share of the top 10 percent also increased, although on a smaller scale.

•In 2014 16.6% of the population of Hungary (1.6-1.7 million people) lived in poverty, meaning that the net income of the household did not exceed HUF 78,000 a month.  In this regard, no significant improvement took place between 2012 and 2014.  TÁRKI claims that household poverty was in line with the EU average in 2014 as it was in 2012.

•After a dramatic increase between 2007 and 2012, poverty decreased over the course of 2013 and 2014 from 26 percent to 23 percent.  However, during this period the likelihood of families with three or more children, people over the age of 65, and households with only one wage earner or led by a single female parent living in poverty increased significantly.  By contrast, household poverty decreased in the case of households with three or more children in which adults other than the parents also live, as well as in the case of two-adult households with one child.

•The incidence of poverty is highest in households led by those completing only eight years of education, single-parent households, and families with many children, Roma households, those living with household members who are inactive or unemployed, or those living in households with only one wage earner.

•For every one hundred individuals living in poverty, 34 are children and 13 are pensioners.  One-third of those living in poverty live in households led by an inactive or unemployed individual.  Another third live in households where the head of the household is the only household member employed.  Out of every one hundred living in poverty, 5 live in the capital Budapest.  The rest live in the cities, towns, and villages, more or less evenly distributed.

•The percentage of Hungarians living in conditions of serious material deprivation decreased from 37 percent to 28 percent between 2012 and 2014. During this time the percent of those living in households with very low work intensity decreased from 15 percent to 9 percent.  As a result of this the proportion of those living in poverty or social exclusion significantly decreased from around 40 percent between 2009 and 2012 to 35 percent in 2014.

•Of the deprivation indicators, there was improvement in the case of loans, and arrears in connection with household utility bills, as well as in inadequate heating of houses.  There are also indications that the situation of the lower middle class and middle classes improved and that their material and financial vulnerability decreased.

•If somebody becomes a public worker in a household where no other members are employed, there is an improvement in work intensity, but the additional income is not enough for the household to escape poverty.

•Real consumption increased 3-4 percent between 2012 and 2014.  In 2014 Hungarian households spent HUF 155,000 a month on average, amounting to HUF 80,000 per person, which, according to the OECD scale amounts to per capita consumption of HUF 91,000.

•There is an inverse correlation between per capital consumption and household size.  The larger the household, the lower the consumption per member.

•Of those interviewed, 5.7 percent of work-age individuals performed public work during the previous 12 months.  During the previous 12 months. 9.1 percent of the people lived in households affected by public work.

•In the case of households affected by public work, roughly two-thirds of income is from work, of which public work accounted for 12 percent.  Half of the income arising from public work went to the poorest one-fifth of the population and 37 percent to the second poorest one-fifth of the population.  The largest proportion of those performing public work have little education and live in small towns and villages in northern Hungary.

•Only four in ten Hungarian households have any kind of financial or material savings.  However, four-fifths of Hungarian households own property.  Two out of ten households owe money to banks or utility providers.

•Of the top fifth of households, roughly three-quarters have some financial wealth.  In the case of the poorest fifth, only every fifth household has some kind of savings.  Mounting household utility arrears contribute to the fact that some 7 percent of Hungarian households are vulnerable.

•Households with debt spend a good one quarter of their income on debt service, which in autumn 2014 amounted to HUF 55,000 per month.

•Segmentation depends on savings, material status, and type of housing.  Which segment households fall into is influenced by level of education, cultural capital, and economic activity.  According to other studies Hungarian society differs from other European societies in that there is a larger proportion of those lacking technical training and not actively working or looking for work.  The consequence of this unique situation is that the middle classes forming the basis for civil democracy were not able to strengthen after the system change.

•Of those surveyed over the age of 16, 2.4 percent had either worked or studied abroad during the previous 12 months.  Based on data collected, it is primarily young men with higher qualifications or as entrepreneurs or skilled laborers, especially in Austria or Germany, characteristically in rented flats.  Those studying abroad are mostly youth who prefer Austria or the United Kingdom.