This Is Not Solidarity! Hungary Has Wasted A Decade

It is highly regrettable that Hungary slumped into this state in the interpretation of social solidarity," said Lajos Bokros, Chief Operating Officer/Professor of the Central European University (CEU), at a conference on Monday.

Speaking at the event, organised by the Hungarian Business Leaders Forum (HBLF) and the International Centre for Economic Growth (ICEG) in Budapest, Bokros said economic woes in Hungary were so profound that no economic programme, even if it was launched immediately, could speed up growth substantially enough before 2010. This means the first decade of the new millennium has been virtually lost with regard to economic growth. What everyone should focus on from now on is that it does not repeat in the second, Bokros emphasised.

Hungary needs to overhaul its public sector, primarily because the quality of public goods and services is declining and the inefficient production of public goods keep overstraining the public sector, Bokros said.

Access to state welfare services is far from being equal, the number of the unemployable is growing and we spend at least five times as much on elected local government bodies than what is normal in countries of a similar stage of development, Bokros added.

He said the citizens' direct self-contribution to the financing of state welfare services should be raised and control in the system should also be made stricter. Stimulation of households for larger savings should also be increased, Bokros emphasised.

Education

Bokros urged the implementation of “extremely tough" requirements in teacher training and a limitation both in the number and capacity of public and higher education institutions.

He said no more than 200 students should be allowed to enroll in 8-grade schools, adding that one third of schools in Hungary are not up to this "standard".

Even amidst fears and public uproar about the closing of some schools, this is something that needs to be done so that the quality of education can improve and the students will have better chances in life later on, Bokros added.

There are currently 73 institutions in higher education in Hungary and the accreditation committee has six more applications on its table right now, he noted. Bokros said, however, that there is no need for further institutions. Moreover, there should not be more than 40 of them or preferably less.

With regard to the pension system, Bokros made two - not unknown - proposals. Firstly, he suggested implementing a pension system with individual accounts even in the state pillar so that citizens can see how big a pension they would be entitled to. Secondly, he argued against the subjective right to receive pension. He urged politicians to finally acknowledge that pension is not a social benefit and the two things should be treated separately.

With regard to the government's plans to overhaul the health care system, Bokros said the quality of health care could be improved only if private insurance funds competed for the money of patients, and in order to achieve this institutions providing health care services need to compete for the money of private insurance funds.

He said the biggest problem with the current health insurance fund is that private investors could acquire only minority stakes in the would-be regional funds so there would be serious hindrances to competition creation.

In order to increase self-contribution and to force higher-quality health care services, every citizen older than 18 (the retired included) should pay a fixed HUF 10,000 monthly contribution, which would cover social security expenditures and would also pay for the services to be provided by insurance funds that would be established with majority private capital after the reform is completed."

Source: Portfolio Online Financial Journal