Social Security in Hungary: A Balance Sheet after Twelve Years

The social and political transformation in Hungary contributed to the development of a democratic political system and to the establishment of the rule of law and a market economy. The process was accompanied by a series of economic and social problems. The paper first reviews the social policy orientation of the three free consecutive governments elected since the transition. None of them has had a clear political profile: they have constituted mixed and unclear welfare regimes. None of them has sketched a clear welfare policy except perhaps the current government. In its case central redistribution is consistently biased in favour of the middle and upper strata at the expense of the poor. Instead of a consensual plan defining priorities, decisions and reforms in the last ten years have been motivated by political interests, at hoc ideas, and authoritarian rulings. The paper next shows what reform meant in the case of the different instruments and various fields of social policy, namely unemployment, health, pensions, family benefits and social assistance. It concludes that while both the inherited and the newly created systems had contributed to alleviate the shocks of the transition, yet there never was enough political will to give sufficient or adequate help to those needing it. As a consequence of the "reforms" public expenditures have been significantly reduced. The welfare gap between East and West has thereby grown. The consequence is that the country has become gravely divided, and that poverty is greater and deeper than it might have been under a different set of policies.