Causes of Poverty in Hungary

The latest official statistics that can be found regarding poverty in Hungary are from 2015 by the Hungarian Central Statistical Office (KSH). According to their definition of the poverty line, 35 percent of the Hungarian population were living below the poverty line in 2015. More recent statistics have not been released due to a controversy over the KSH’s definition of poverty. However, by the United Nations’ standards, 46.6 percent of Hungarians in 2014 were impoverished, living on less than $300 a month.

There are three leading causes of poverty in Hungary that persist today:

  1. The price of real estate in Hungary is high and still rising, considering the devaluation of Hungarian currency. After Sweden, Hungary has the second-fastest rising real estate prices. The average Hungarian family spends $465 a month on rent and utilities alone, leaving little remaining for other bills and necessary items. Also, rent is only affordable for the average family in cities where it is near impossible to find work. Due to the high price of real estate, the average family with two children can hardly save $30 a month.
  2. Unemployment in Hungary remains a problem, though the number of unemployed Hungarians is seemingly decreasing. The current unemployment rate in Hungary is 9.3 percent, which is an improvement compared to earlier years. However, this rate does not take into account the approximately 300,000 people who are employed but receive no employment benefits. This is due to the Hungarian Work Plan that was launched in 2011, which forces the unemployed into employment programs. These employment programs pay a maximum of $200 a month, preventing any forward mobility. Keeping in mind that Hungary ranks eighth internationally regarding work hours, the employed and unemployed alike are both on the verge of poverty.
  3. Private debt is also largely responsible for poverty in Hungary. The government of Hungary offers $39,000 in loans to families with children – which many families accept but cannot afford to pay back. There are many Hungarian families that end up in a circle of debt, in which they accumulate more and more debt they cannot afford to pay off. The rapid devaluation of Hungarian currency adds to this cycle as it has caused private debt to dramatically increase.

The Takeaway

Addressing these causes of poverty in Hungary is necessary in order to help impoverished Hungarians. Approaching these problems effectively will take reforms from the Hungarian government as well as outside assistance. The programs currently being enacted have had major effects on reducing the rates of poverty in Hungary.  Thus, these efforts should continued to be pursued by the Hungarian government and the NGOs enacting them.

Haley Hurtt

Photo: Flickr