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Hungary:Political and Economic Situation

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Overview Hungary

Contents

Hungary:Political, Social and Economic Background and Trends

Hungary:Historical Development

Hungary:Main Executive and Legislative Bodies

Hungary:Population: Demographic Situation, Languages and Religions

Hungary:Political and Economic Situation

Hungary:Organisation and Governance

Hungary:Fundamental Principles and National Policies

Hungary:Lifelong Learning Strategy

Hungary:Organisation of the Education System and of its Structure

Hungary:Organisation of Private Education

Hungary:National Qualifications Framework

Hungary:Administration and Governance at Central and/or Regional Level

Hungary:Administration and Governance at Local and/or Institutional Level

Hungary:Statistics on Organisation and Governance

Hungary:Funding in Education

Hungary:Early Childhood and School Education Funding

Hungary:Higher Education Funding

Hungary:Adult Education and Training Funding

Hungary:Early Childhood Education and Care

Hungary:Organisation of Programmes for Children under 2-3 years

Hungary:Teaching and Learning in Programmes for Children under 2-3 years

Hungary:Assessment in Programmes for Children under 2-3 years

Hungary:Organisation of Programmes for Children over 2-3 years

Hungary:Teaching and Learning in Programmes for Children over 2-3 years

Hungary:Assessment in Programmes for Children over 2-3 years

Hungary:Organisational Variations and Alternative Structures in Early Childhood Education and Care

Hungary:Single Structure Education (Integrated Primary and Lower Secondary Education)

Hungary:Organisation of Single Structure Education

Hungary:Teaching and Learning in Single Structure Education

Hungary:Assessment in Single Structure Education

Hungary:Organisational Variations and Alternative Structures in Single Structure Education

Hungary:Secondary and Post-Secondary Non-Tertiary Education

Hungary:Organisation of General Secondary Education

Hungary:Teaching and Learning in General Secondary Education

Hungary:Assessment in General Secondary Education

Hungary:Organisation of Vocational Secondary Education

Hungary:Teaching and Learning in Vocational Secondary Education

Hungary:Assessment in Vocational Secondary Education

Hungary:Organisation of Post-Secondary Non-Tertiary Education

Hungary:Teaching and Learning in Post-Secondary Non-Tertiary Education

Hungary:Assessment in Post-Secondary Non-Tertiary Education

Hungary:Higher Education

Hungary:Types of Higher Education Institutions

Hungary:First Cycle Programmes

Hungary:Bachelor

Hungary:Short-Cycle Higher Education

Hungary:Second Cycle Programmes

Hungary:Programmes outside the Bachelor and Master Structure

Hungary:Third Cycle (PhD) Programmes

Hungary:Adult Education and Training

Hungary:Distribution of Responsibilities

Hungary:Developments and Current Policy Priorities

Hungary:Main Providers

Hungary:Main Types of Provision

Hungary:Validation of Non-formal and Informal Learning

Hungary:Teachers and Education Staff

Hungary:Initial Education for Teachers Working in Early Childhood and School Education

Hungary:Conditions of Service for Teachers Working in Early Childhood and School Education

Hungary:Continuing Professional Development for Teachers Working in Early Childhood and School Education

Hungary:Initial Education for Academic Staff in Higher Education

Hungary:Conditions of Service for Academic Staff Working in Higher Education

Hungary:Continuing Professional Development for Academic Staff Working in Higher Education

Hungary:Initial Education for Teachers and Trainers Working in Adult Education and Training

Hungary:Conditions of Service for Teachers and Trainers Working in Adult Education and Training

Hungary:Continuing Professional Development for Teachers and Trainers Working in Adult Education and Training

Hungary:Management and Other Education Staff

Hungary:Management Staff for Early Childhood and School Education

Hungary:Staff Involved in Monitoring Educational Quality for Early Childhood and School Education

Hungary:Education Staff Responsible for Guidance in Early Childhood and School Education

Hungary:Other Education Staff or Staff Working with Schools

Hungary:Management Staff for Higher Education

Hungary:Other Education Staff or Staff Working in Higher Education

Hungary:Management Staff Working in Adult Education and Training

Hungary:Other Education Staff or Staff Working in Adult Education and Training

Hungary:Quality Assurance

Hungary:Quality Assurance in Early Childhood and School Education

Hungary:Quality Assurance in Higher Education

Hungary:Quality Assurance in Adult Education and Training

Hungary:Educational Support and Guidance

Hungary:Special Education Needs Provision within Mainstream Education

Hungary:Separate Special Education Needs Provision in Early Childhood and School Education

Hungary:Support Measures for Learners in Early Childhood and School Education

Hungary:Guidance and Counselling in Early Childhood and School Education

Hungary:Support Measures for Learners in Higher Education

Hungary:Guidance and Counselling in Higher Education

Hungary:Support Measures for Learners in Adult Education and Training

Hungary:Guidance and Counselling in a Lifelong Learning Approach

Hungary:Mobility and Internationalisation

Hungary:Mobility in Early Childhood and School Education

Hungary:Mobility in Higher Education

Hungary:Mobility in Adult Education and Training

Hungary:Other Dimensions of Internationalisation in Early Childhood and School Education

Hungary:Other Dimensions of Internationalisation in Higher Education

Hungary:Other Dimensions of Internationalisation in Adult Education and Training

Hungary:Bilateral Agreements and Worldwide Cooperation

Hungary:Ongoing Reforms and Policy Developments

Hungary:National Reforms in Early Childhood Education and Care

Hungary:National Reforms in School Education

Hungary:National Reforms in Vocational Education and Training and Adult Learning

Hungary:National Reforms in Higher Education

Hungary:National Reforms related to Transversal Skills and Employability

Hungary:European Perspective

Hungary:Legislation

Hungary:Institutions

Hungary:Bibliography

Hungary:Glossary


The state of the economy

The GDP of Hungary decreased by 1.3% in the second quarter of 2012 compared to the same period of the previous year. The performance of the majority of national economy branches stagnated. While the gross added value of the information and communication branches of national economy increased by 4.5%, the value of agriculture and construction decreased significantly. The expansion of the export-oriented processing industry, which was the driving force of the growth of the last two years, stopped in the previous quarter. In the first half of 2012 the performance of Hungarian economy decreased by 1% compared to the same period of the previous year.

Opportunities for economic development were strongly determined and narrowed down by the growing tension in the budgetary sphere. Primarily the increasing welfare expenditures of the past years and the over-intensive state investments in 2006 resulted in the highest budgetary deficit ever. Thus for Hungary it became an economic priority to decrease the budgetary deficit the soonest possible.

On the expenditure side of the GDP, the actual consumption of households decreased by 1.6% in the second quarter of 2012. The consumption expenditures of households that are the major elements of actual consumption fell by 0.3%. The volume of in-kind contributions received from the government decreased by 7.8%, while community consumption fell by 2.9%. As for in-kind contributions, the volume of medicine price subsidy and transport subsidy were reduced significantly. As a result of these processes, final consumption fell by 1.8% compared to the same period of the previous year and it contributed to a -1.3 percentage point change in the GDP.

The government established in May 2010 inherited a serious economic situation and needed to make significant steps to control public finances. By reducing corporate income tax and eliminating some minor taxes, they tried to support recovery and in this make Hungarian companies more competitive.

In 2010 the government aimed at reforming the Hungarian taxation system completely in order to make it the simplest and most competitive taxation system in the region. Corporate income tax was significantly reduced; also, the government decreased the number of tax types; four tax types levied on businesses were eliminated. The 16% proportionate flat personal income tax was introduced. Taking into account the temporary crisis levies, currently there are still appr. 10% fewer tax types in the taxation system than before the change in government.

Employment

In the early nineties, due to changes in ownership, transformation of sectors and regional re-arrangements, the Hungarian labour market was characterised by a dramatic drop in employment and economic activity, a sudden increase in unemployment, and the rearrangement of labour among the main sectors and occupations. However, social tensions were substantially mitigated by the social insurance systems and by the setting up and strengthening of the legal and institutional frameworks of employment policy. Employment followed the stabilisation and growth of the economy, but it did so with some delay, fluctuation and at a lower level.

The most important feature of the Hungarian labour market compared to the other member states of the EU and the OECD countries is the very low employment level and the moderate but growing unemployment and high inactivity. The employment rate is particularly low in case of people with low schooling levels, disadvantaged people, the young and the elderly. The Hungarian labour market is also characterised by regional differences and low sectoral and geographical mobility.

The impact of the economic crisis was mainly seen in the increasing rise of the unemployment rate starting in the last quarter of 2008. This tendency continued in the first half of 2009, reflected by the number of registered job seekers.

The most disadvantaged group in terms of employment is the Roma population. After the political changeover of the late 80s/early 90s, they lost their jobs in masses, as the structural change of economy affected those with the lowest qualifications. Their disadvantaged labour market situation is further aggravated by the fact that they live in communities (mostly villages) and regions that are in a disadvantaged situation concerning employment, and they often experience discrimination in the labour market. As a cumulative effect of these factors, the employment level of the Roma population is lower than the half, the unemployment rate is three to five the times higher and the rate of dependents per wage earner is three times more than those of the non- Roma population.

In Hungary, part-time employment is far below the European Union average, and the geographical mobility of the workforce is low, though the number of daily commuters has increased recently. The rate of unregistered employment in Hungary is estimated to be 15-20 per cent, which is high compared to the EU average. Several steps were taken to reduce it in the past 2-3 years.

In May to July 2012 the number of employees was 3 908 000; this is 76 000 more than a year ago. The number of employees thereby reached the pre-crisis level. The employment indices of women have improved to a greater extent. In May to July 2012, 2 068 000 of the male population aged between 15 and 64 were employed; this is 14 000 more than in the same period of 2011. Thus, the employment rate of men grew by 1.2 percentage points to 62.8%. From the female population aged between 15 and 64, 1 803 000 were employed in the period examined; this is 56 000 more than between May and July 2011. The employment rate of women rose by 2.0 percentage points to 52.7%.

The generally low number of employees between the age of 15 and 24 decreased to 211 000, and their employment rate fell by 0.4 percentage point compared to the previous year to 18.2%. However, the number and ratio of employees aged between 25 and 54, who are in their best working period, as well as the number and ratio of older groups aged between 55 and 64 increased. Their rate within this age group grew to 75.2% and 37.6% by 1.9 and 1.5 percentage points, respectively.

Although the number of employees rose by 75 000 in one year, more than 30 000 people from this increase were employed in public works programmes. The increase in employees is not related to the dynamics of economy, as it can be seen from the GDP statistics revealing recession.

Reduction in the taxes that are most likely to distort economic decisions and therefore curb economic growth (personal income tax, corporate income tax) resulted in a sudden decrease in state revenues. However, these measures encourage employment and long-term economic growth. In order to alleviate current budgetary problems, the government has introduced significant measures to cut costs, e.g. by modifying the remuneration system in public administration (e.g. eliminating bonuses), cutting costs and improving efficiency at state-owned companies (under the supervision of a new holding company) and the revision of outsourced activities. The reform of the pension system launched in the second phase already resulted in a significant one-off revenue in 2011. Part of the HUF 3000 billion private pension fund served to reduce state debt. As a result, the central budget debt fell from HUF 21 116.5 billion to HUF 19 577.9 billion in the period between May and July of last year. The debt rose to HUF 20 955.5 billion by the end of the year, mostly due to unfavourable changes in currency rates. At that time the total debt-to-GDP ratio was at 82.6%. The debt level in September 2012 was HUF 20 544 billion.

The contributions paid to the social security pillar support the balance of the state pension scheme, while the increasing payment of pensions jeopardise it on the long term.

In 2010, in addition to cost-cutting measures and the pension scheme reform, the introduction of temporary crisis taxes had the most significant and immediate financial impact. These were levied on the sectors which were the most successful in surviving the financial and economic crisis; in this way their ability to survive burdens is relatively high, therefore burdening them with extra tax does not have an impact on the long-term growth rate of the economy. Contrary to original plans, crises taxes were not abolished in 2012 but are continued to be collected. The government expects to collect appr. HUF 200 billion in crisis tax revenues in 2013 and 2014. According to the review published on the Parliament’s website , the special tax of financial institutions amounting to HUF 187 billion in 2011 would not be eliminated completely from 2012, but it would rather be halved in the next three years.

The Hungarian government has adopted the programme entitled “Next Step: Széll Kálmán Plan 2.0.” As a consequence of the first and second Széll Kálmán Plans, the deficit targets of 2.5% of GDP for 2012 and 2.2% of GDP for 2013 can be safely attained, and as a result central government debt will continue to decline. In 2012 the first Széll Kálmán Plan aimed for a fiscal adjustment of HUF 550 billion, while the measures in the Széll Kálmán Plan 2.0 target additional fiscal adjustments totalling HUF 150 billion in 2012. In 2013 the government plans to further improve the situation of the state budget by about HUF 600 billion through the Széll Kálmán Plan 2.0.

The government created and implemented in 2011 a comprehensive programme, which reduces the financial vulnerability of households with foreign currency loans and the risks to financial stability originating therefrom.

The government continues to seek funding from the Structural Funds and the Cohesion Fund. Its development policy focuses on supporting businesses and creating social conditions necessary for economic growth. The government established its development policy in line with EU co-financed programmes by partly restructuring them.