About a week ago, I encountered an article in Népszava reporting on the first unemployment figures of the year. I must say that I found the article confusing because the journalist who wrote it was rather vague when comparing figures. In a way, I don’t blame him because the data that is available is sketchy.
The first problem is that the Orbán government loathes transparency and does its very best to conceal economic data, especially if they reflect badly on the government. To me, it is unacceptable that important data, like the size of the unemployed labor force, are released only quarterly. In the United States, initial jobless claims are reported weekly, with a one-week delay; continuing claims have a two-week delay. The nonfarm payrolls number and the unemployment rate, based on separate surveys, come out once a month.
That critical Hungarian data are released only quarterly is by itself a disgrace, but this time, for unexplained reasons, the unemployment figures came out three weeks late. Thus, it was only on April 20 that economists and the interested public learned for the first time about the unemployment situation during the first three months of 2020. And here we are, on June 2, still relying on April information. The numbers released said very little about the situation after the shuttering of the economy in mid-March. Statisticians and economists believe that, by the end of April, the number of unemployed was at least 300,000 in a labor force of approximately 4.5 million.
Tamás Katona, former chairman of KSH, the Central Statistical Office, is highly skeptical about the accuracy of the data released so far on the economy. The first thing we must keep in mind is that the figures published on April 20 didn’t come from KSH but from the Nemzeti Foglalkoztatási Szolgálat (National Employment Service/NFSZ), whose figures were based on the number of people who turned to them for the meager three-month unemployment insurance. Further compromising the data, people who are seeking unemployment insurance from NFSZ can now initiate their claim only by telephone; a personal meeting will take place at some later date. Therefore, there is a high likelihood that the NFSZ data are unreliable.
According to Katona’s calculations, the April 20th data indicated that unemployment grew by 26% overall, but in the middle regions of Transdanubia that number was 42% and in Győr-Moson-Sopron County it was 190.7%. He estimated the number of unemployed workers at between 400,000 and 450,000, which translates into an unemployment rate of 9%-10%. Of the estimated 400,000 people, 73,000 became unemployed in April. Therefore, by the end of May the situation most likely only worsened. But, as Katona reminded us, we must wait another month, until the end of June if we are lucky, before we receive any new data. The 400,000 figure, by the way, doesn’t include approximately 100,000 individual entrepreneurs who have been affected.
Public works will not solve the problem
So, although we still lack hard data, the situation is very serious, and it is likely “to explode” later when the three months of unemployment insurance runs out. So far, the Orbán government has shown no intention of extending it for a longer period of time. In most EU member states, there is a cushion of nine months of unemployment insurance. Cutting off aid so quickly can have dreadful consequences in a country where wages are low and three-quarters of households have no reserve.
Speaking of wages, it is worth noting that the statistics on wages must also be handled with great care because KSH includes only wages that either are paid out of the central budget or are paid to workers at companies with more than five employees. Using this limited data set, KSH came up with an average salary of 360,000 ft/month. KSH promised to improve the method of calculating wages, but nothing has changed. According to Katona, if all wage earners were included in the calculation, the average gross income would be more like 230,000 forints a month.
Tamás Katona, in his most recent interview with Hírklikk, spent considerable time on the social consequences of the recession, for which many Hungarians are unprepared and which the government doesn’t take seriously. Katona predicted that by mid-June in the areas inhabited by the poorest, mostly Roma, population, people could be starving unless some help is given. But one doesn’t have to go to northeastern Hungary to read about the despair that has already begun to set in. In today’s Index there is an article with the title “Nowadays I wake up with the thought that I have to survive this day.” Yet, so far Viktor Orbán has offered only public works and the army as job opportunities for the unemployed. The plan is to raise the number of public works employees from 90,000 to 200,000. This sub-minimum-wage program was helpful for the poor, uneducated village folks, but it is certainly not a viable alternative for educated, middle class people. As far as the army is concerned, the government is thinking of special introductory training that would pay 161,000 forints a month. These alleged remedies for the economic problems facing many Hungarians fall far short of what is necessary. But unless Orbán starts to worry that he may suffer politically from pouring money into football stadiums instead of supporting the unemployed, he will be disinclined to do more.
