One year after, practically to the day, that the whole territory of Hungary was decreed to be under lockdown in order to slow the spread of COVID-19 by the Government Decree no. 71/2020 (III. 27.), the economic consequences of the pandemic are evident today in Hungary.
Effects on employment
The virus caused a great decline of employment rates in some sectors, in particular, in the mining (30% of the personnel was laid off), oil-refining and the clothing and leather industry (14% of the workers lost their jobs).
According to the Hungarian Central Statistical Office, 22 thousand people lost their position in the automotive industry, while 35 thousand in the logistics sector.
Unsurprisingly, some sectors largely unaffected or even in some way, driven by the crisis, have seen a great increase in their workforce, namely the pharmaceutical industry, where the employment rate has increased by more than 30%. In the scientific field, a 10% increase has occurred.
Wage subsidies in 2020
During the pandemic, the Hungarian Government has been trying its best to help companies and thus encouraging them not to resort to redundancies. To support this approach, wage subsidies were offered to maintain existing positions (about HUF 35 billion), or to create new posts (HUF 57 billion).
About HUF 17 billion has been granted in the research and development field, namely, to maintain existing jobs.
In addition to the above-mentioned aid, the Hungarian State and municipalities have released some commercial leaseholders from their obligation to pay their rent during the period from February 1 to June 30, 2021.
If these lessees have already paid in full or part of their rents, then the amount will be credited back to them. This rent exemption is aimed primarily at the sectors most affected by COVID-19, such as catering, culture (cinemas, museums), sports activities, entertainment and recreation industry, as well as hotels and campsites.
It should be noted that this exemption from rent was not granted to individuals renting State- or municipally owned properties. However, their rents cannot be increased for 90 days after the end of the state of emergency. In addition, rents can be reduced on the proposal of the lessee or the landlord who freely sets the percentage of the reduction.
Financial aid in 2021
Furthermore, in some sectors particularly affected by the health crisis, such as tourism, catering, the entertainment and culture industry, event planning services and sports, further wage subsidies have been offered for the first quarter of 2021. Some tax reductions have also been extended until the end of March 2021. In these sectors, the payment of social security contributions has been suspended, as well as the payment of the lump-sum tax for microenterprises (in Hungarian: “KATA”).
Finally, it is worth noting that currently, job seekers can only be eligible for unemployment benefits for the 3 months following the loss of their employment. Even though compared to other European countries, the duration of the payment of these benefits is surprisingly short, to this day, the Hungarian government does not seem to be considering any extension of these rights.
In France, these rights have been extended until 30 June 2021. The difference between the two countries is therefore striking.