In case anyone out there thinks this website is too harsh in its coverage of Hungary and its various problems, just get a load of this doozy of a story put out by Bloomberg News earlier today. Entitled “Hungarians Shun Work, Favor Welfare During Recession” it’s a gloves-off look at the country’s dismally low level of workforce participation, using as one eye-popping example the frustrations of contract manufacturer Flextronics in finding warm bodies to work in one of its local factories, despite the current record-high unemployment:
Of the 1,400 people the local employment office sent to the Flextronics plant in the city of Zalaegerszeg, 225 kilometers (140 miles) southwest of Budapest, 249 showed up, said Mark Hetenyi, the Chief Financial Officer at the local unit of the company that supplies customers including Apple Inc. and Hewlett-Packard Co. Several made deliberate mistakes in a competency test, preferring to stay on welfare, he said.
Nothing much to add to this, other than hats off to Hetenyi and Bloomberg reporter Zoltán Simon for not pulling punches, and that we might suggest both start making it a habit to check under their cars before starting them.
What? No comments from the “foreigners just want to screw us” fans? Interestingly enough, I just went through similar experience in the past 6 months, with an added fun fact: unemployed recent grads not showing up for interviews because they’re enjoying summer/xmas/ski vacations
OK Erik, but before you get too excited about this gloves off review, it focusses on resting the blame on lazy Hungarians rather than, as per usual examining what may be the root cause of this issue. Here are my thoughts:
1. In the passage ““If we want to pinpoint the one factor that most restrains growth and hampers Hungary’s competitiveness, it has to be the low employment rate,” Finance Minister Peter Oszko said in a telephone interview yesterday.” I would recommend the finance minister focussing on the cause and not the symptoms, as well as the authors of the article.
2. “The average net monthly salary for a worker at a computer manufacturing plant in Hungary is about 93,000 forint ($497), according to the statistics office.”, now why is that Mr Peter Oszko? Could it be that in the UK, the equivalent annual salary is TAX FREE, yes you heard it right TAX FREE. Here, this net salary has been subject to 29% total reductions. And you can keep adding the % points as the wage increases. Does this incentivise the population to work?
cont…..
3. “The government also cut income and payroll taxes.”. Really? And did they forget to mention the super gross? This is exactly what the Hungarian government is hoping will be reported with these new tax changes, i.e. just the headline tax % figures. Well let me tell you some facts:
In 2009 earning 130000 brutto/month netted you 93515HUF/month
In 2010 earning 130000 brutto/month netted you 94933HUF/month
A whopping 1418HUF/month better off. Don’t spend it all at once!
With inflation at about 5-6% (official, we all know it is probably closer to 10 in reality) this tax cut, is, well, quite frankly, utter bullshit.
4. Yep, there is an element of laziness, however, with an absense of significant return for a lot of hard work due to low wages and rediculous taxes, the “human nature” factor will kick in and say “what the fuck am I slaving away for when I can earn 2/3′s of that living off state benefits and doing the odd cash in hand job”. But the answer is not to cut state benefits, the answer is to reduce taxes, i.e. the pull of working rather than the mysery of not. Of course, it might be a cold day in hell before any Hungarian government works that out.
So, whereas I agree with the sentiment of this article, it’s propensity to leave out some important facts looses it’s and the authors credibility and just turns it into a biased moan.
Par for the coarse really!
@JD: I think the piece makes it pretty clear that the root cause of the problem(s) are perverse incentives, as opposed to any congenital aversion to work. If I had one complaint about the article, and other such pieces, it is how they tend to radically understate the size and importance of the informal/black sector. Way, WAY more Hungarians are actually working on any given day than the official stats suggest.
I think JD’s reference to “cash in hand jobs” hits the nail on the head. I think we can agree that a huge percentage of these “unemployed” people are gainfully employed much of the time, working for tax-free cash, and then collecting their welfare cheques at the same time.
Moving to a “proper” full-time job means no welfare cheque, and tax taken off your salary… so in all probability – less take-home pay.
As for the recent-grads-being-away thing, Andre, what’s your point here? It’s surely quite normal to go skiing at Christmas or to take a holiday during the summer (especially if Mummy & Daddy pay). Just arrange an interview when they’re available! If I had a holiday booked and someone invited me for an interview, there’s no way in hell I’d cancel it.
Hi Erik
Yep I agree that the article highlights a problem, however, it lacks any real clarity of causality and elightening detail and rather biases itself with statements that attempt to draw the reader into uneducated conclusions (sorry is that just journalism per se?).
And yes I agree that there is also no real reference to the black market. Due to the high cost of living here and high taxes, there is an essential requirement for the black market just for people to survive.
I suppose the statistic they are unknowingly reporting on which does have economic importance in terms of tax revenue is the % of indivuduals paying income tax. Definitely not the same as unemployment figures, in Hungary anyway.
Even people working full time here need a “second income” if they want to enjoy just a little bit of luxury.
The majority of work I have had done for me in the last 10 years – (re)building the house, repairing anything including my car, cutting wood, whatever you can think of, has been done “on the side”, usually evenings or on a weekend.
Some times a “szerellö” even asks: Do you want a receipt including Áfa ?
And of course when I buy wine, palinka honey eggs etc. from my neighbours, this is all “tax-free”.
It would be ridiculous for people to pay tax on everything …
The tax system is flawed and needs a complete overhaul. No further comment needed.
Age groups: (Hungary)
20-35 Most want to, or do, work abroad
35-55 Given up the ghost and are happy to collect welfare cheques and do some “moonlighting” -work on the side for cash in hand.
If you expect more foreign investors to come here
and create jobs when a large majority of the workshy want to dictate terms- forget it!
Lazy bastards and a corrupt and inefficient government supply the fodder upon which we graze
and in return vent our indignation on a daily basis.
I think this is an unfair and unfounded assessment. Rather have a look at these comments posted by Hungarians and expats alike, this will give you a more accurate view of how and why people feel the way they do. Bloomburg news should apologise and discipline that traitor and moron Zoltan Simon
comments can be seen on this link at evertiq.com
http://www.evertiq.com/news/15735#comment
some of the comments
Hire and fire reputation December 16, 2009
Flextronics Hungary has a reputation of being a hire and fire company. When they had an excellent skills set, what did they do when the economic crisis hit? They cut all the so called non essential staff instead of investing in the aquired skills and riding out the crisis and looking after them. They could well afford it as the corporation had in excess od $1 billion in the bank, cash!!!!. So in essence why would anyone want to rejoin such a ruthless company and be screwed a second or third time
What do you mean re-employ December 16, 2009
I was laid off by Flextronics at the beginning of this year, they know how to contact me and even when I applied for positions advertised by them they never even had the decency to acknowledge my application or contact me, so how can they say there is a shortage
they laid off 1400 back in feb/mar this year, people have good memory
It shows how bad the offers must have been if they were not interested in employment
Points well made Pete Bee.
Even if the article highlighted some issues it was
poorly detailed and written with a bias that is
somewhat insulting.
I am not sure what the writers intended to achieve
but they have come across as very amateur.
The sad part is that there is a story here,
Bloomberg just left it to a bunch of doughnuts of
Hungarian origin who thought they were smart, to
report.
Check out the photo page on this article entitled
“Peter Oszko, Hungary’s finance minister, pauses during an interview at the finance ministry”
A pause or a moment of sycophantically encouraged vanity? What a wonderful lighting moment.
These authors are obviously keen to puff out their chests with their connections and at the same time deflect attention away from the root cause of this issue.
Sorry Erik, this article doesn’t bite, it rather kisses arse.
Pete Bee, maybe they didn’t want you back?
Just so the outside world get the right perspective about Hungarians, I was paid off by Flextronics Hungary early last year. I only got 3 months of unemployment benifits because I was a first time worker, worked for a total of 9 months at Flextronics. My monthly unemployment was a measly 30K ft. After deductiopns for medical insurance I only got our 20K per month, less than 80 euros, so comeon tell me I would rather sit at home for 80 euros a month rather than work and clear 360 euros monthly, only a retad would assume the 1st. Even though Flextronics have my contact details, I was never contacted by them or any of their agencies. I would take a new job tomorrow if I got an offer even for the minimum wage of 320 euros a month. Someone, please offer me a job. KJ
To BILLY WASP, read the article properly, it was not me who applied for jobs and got no response, THUS YOUR COMMENT(MAYBE THEY DONT’T WANT YOU BACK) this is a copy and paste from Evertiq.com of comments by some other folks, I wouldnt reapply for jobs at Flextronics as I’m not interested in being screwed again. READ THE FULL ARTICLE PROPERLY!!!!!
Ex employee Flextronics KJ, I expect your experience is not unique to Flextronics or indeed other companies either inside or outside of Hungary.
It’s just a bit disingenuous that Flextronics bitch about it.
I wish you luck in finding new employment.
To be honest, it would be nice if the article’s authors gave an opportunity to publically respond to their masterpiece.
I know we are digging the usual “grave” for ourselves concerning the “Flextronics” and employment situation.
Ex-employees might have grievances and Flextronics might not be the “ideal” employer.
However, the fact is that many Hungarians are happy to receive the small amount of welfare benefit and do some supplementary work on the side “tax free”.
If the government with its heinous tax system further deters the workshy from getting employment- so be it! Whose fault is that?
Hungary has deep, deep, problems and they need to be sorted- and very soon.
Job creation programs, a fairer and more “workable” tax system, education aimed at producing graduates that have the skills that industry needs,tax collection methods overhauled,
more responsible government at all levels, and a mammoth effort to stamp out corruption.
These are just some of the issues that need to be to be addressed before any real progress can be made.
(In-fighting and bickering among ourselves does not help.)
OK QC, so what did you have in mind?
I think the point here is that if these amateurs that get access to global Bloomberg web-space were a little more educated and a little less biased and sensational, they might be able to use this as a small vehicle for positive change as opposed to sucking up to MP’s and diverting blame from the real offenders of these problems (all those you mention).
I hope those doughnut authors read this thread, they might learn something.
In my opinion many of you and Bloomberg are bloody well right. As internet provider, webeditor, designers we were not able to attract skilled antena-szerelõk, joomla editors, php programmers, translators, agents for selling and installing free telephony, TV and internet connections in Hungary over 1 year now.
In our opinion 99,9 % just hates to work for foreign companies. Suspicious as they are that those robbing, steeling “creeps’ getting rich, getting all the loot and disappear with it to the Bahama’s.?
Dirkovision. It is the money that disappears to the Bahama’s via politicians manipulative skills.
Don’t forget also that Simor Andras, Magyar National Bank Governor had all his cash stashed away in Cyprus until someone blew the whistle on him!
All joking aside. My friend is a website builder and also helps with new digital TV installation
etc. He is literally “snowed under” with work.
Perhaps their is and underlying message here for the unemployed?
Some magyar pay over 50% in taxes. People pay over 52% tax rate in New York. This cant continue. Many millions of Americans choose to collect unemployment versus working for it. Now over half the work-force in the US works for the government! Magyarorszag needs one Mayor and a few hundred Officials. Thats it. Even the magyar ujved demand to be paid in cash!
This is the key sentence: “The transition to a
market economy left many unskilled workers,
including a large portion of the Gipsy minority
known as Roma, without a job.”
UNSKILLED!!! LARGE PORTION OF THE GIPSY
MINORITY!!!
Why are most of the gipsies unskilled? Because
they don’t want to sit in the school and study.
Easier to make 4-5 kids and live on welfare.
Children grow up and never see their parents go to
work.
Thanks to this “reporter” foreigners think
Hungarians= gipsies. Mr “reporter”, do you live in
Hungary? I think the correct title of this article
would be ” Hungarian Gipsies just a bunch of work-
hating welfare cases”.
@salk1 I agree about the tax, although my total deductions tend to be closer to about 56%. The problem in Hungary, in my opinion, is that the transition into the highest tax rate is set at such a low level that anyone on a livable wage is in the top tax bracket.
Believe me, and I have done the comparison, excluding public transport and property prices, the cost of living in Hungary is equivalent if not more expensive than the UK. As I mentioned, the tax in the UK is significantly less due to the wage banding and the salaries, on average, significantly more.
@Kopa28, I am not sure I would go quite as far with the renaming of the article but yes, the authors are diverting some of the attention/blame to the usual scapegoats, the Roma. I’m not even going down that thread since it is a total diversion to the real issue as it always has been.
I am probably one of the last people to get upset over critisism of Hungary, but this article is, for the most part, just rubbish.
But thanks to Erik for bringing this to our attention.
two sides of the story…
If its anything like Tesco, they want to higher a large number of
people who work just a few hour shifts so they dont get full
coverage/benefits, etc. – as well as the lowest pay they can give.
[min. wage in Hungary is a joke compared to cost of living... at
least US compared to their cost of living is more realistic.]
Add that in there families, etc. that need supporting and gas
bills that go up as high as a min. wage job [in Jan] and how are
people to eat… its not worth their effort.
Take the editors of whoever wrote and published this article –
throw them in a town outside of budapest and into the east part
of Hungary and let them get a taste of real Hungarian life.
All I see, as a foreigner here, are people working their butts
off… 2 jobs, etc. and still cannot provide for there family.
Why doesnt someone come along and interview them?
Easy to be a critic from ones desk while living across the pond
in the comfort of their luxury apt., etc. and try to apply what
they see happening around them to the Hungarians.
Ironically it seems its the gypsies who have this issue, though it
is disservice to generalize any group. I only mention this as part
of the issues the Hungarians I know have with gypsies is that
they do what this article said.
So does the article need to clarify that the population was a
majority of gypsies? Or that they just go in and rip people off
which is really the case with western [and even Hungarian
companies as well]