Hungary – Economy Protection Action Plan

In Hungary, the second phase of measures to protect the economy is currently being implemented. The outbreak of the coronavirus has a significant impact on the global economy, and subsequent plans to deal with the crisis in individual countries. The Ministry of Innovation and Technology of Hungary in cooperation with other divisions has developed a plan of the anti-crisis shield. The aim of the measures taken is to save existing jobs and create new ones, strengthen priority sectors, provide financing for business and protect families and pensioners. The amount of funds used in the crisis management plan will be over HUF 9,000 billion. What measures are planned to save the Hungarian labor market, and what have already been implemented? How do the introduced solutions differ from the Polish anti-crisis shield?

 

The second phase of the Economy Protection Action Plan is being launched. The aim of immediate and medium-term (until the end of 2022) measures is to create as many jobs as the coronavirus destroys. 5 main areas were defined in the Economy Protection Action Plan and  the value of measures in these fields will exceed HUF 9 000 billion between 2020 and 2022. Main areas of the program: preserving and creating jobs, strengthening of priority sectors, providing funding for businesses and protections of families and pensioners.

 

400 billion HUF will be allocated for preserving jobs. For subvention of employment costs, the Workplace Protection Wage Subsidies Program will be launched (70% of the lost net wage will be paid by the State instead of the employer). Hungary will also launch a Special Workplace Protection Wage Subsidies Program for employees working in engineering R&D positions (40% wage subsidy). An information webpage for entreprises will be established, where entrepreneurs can be provided with assistance to manage their challenges.

The social contribution tax will be decreased by 2 percentage points from July 1, 2020 and the deadline of the annual reports and tax returns is postponed to September 30. VAT refunds will be accelerated. The submission of an electronic copy of the sick leave documents is enabled during the state of danger.

 

The area of job creation covers, among others: exemption from the obligation of taking foreign language exams for those students that do not have a language certificate, launching an any-purpose student loan in the higher education, digitalisation and design distance learning trainings for the renewal of the economy, development of universities. Supporting programs enabling the technology shift and increasing the energy efficiency of entreprises and also developing the sectors of the future (e.g. Artificial Intelligence, hydrogen-based industry, space industry) will be launched. Unique domestic and foreign investments will be supported in order to enable the creation of numerous high wage jobs.

 

Equally important part of saving the economy is strengthening the priority sectors, the most influenced by coronavirus, for example tourism. The tourism taxes will be reduced, subventions for the renovation of accommodations will be provided, especially for countryside accommodations and baths. Hungary will also launch a program stimulating domestic travels.

The development of creative industry is also crucial, supporting the production of new Hungarian films and series, aid scheme for design industry SMEs, and from 2021 the establishment of the Creative Media Center.

To support health industry, the increase of the proportion of products manufactured by Hungarian health industry companies is facilitated. They plan to establish the Health Industry Innovation Agency and from 2021 to establish a vaccine factory in cooperation with the University of Debrecen.

Between the programs for food industry and agriculture we can find a national program of Crisis Management for Food Economy, an investment program and the launching of R&D and innovation projects. They support a higher proportion of domestic products in Hungarian  public catering and domestic stores.

When it comes to the construction industry, the building regulations and institutional system will be simplified and streamlined. A support program for technology change in the construction industry and knowledge transfer will be launched, as well as supporting the renewal of the construction industry from a quality assurance point of view and supporting the domestic modern and sustainable building materials industry.

The last of the priority sectors is transport and logistics. Road and rail developments will be continued and also renewing the domestic system of public transport.

 

In order to provide measures for financing the businesses, Hungary decided to create preferential loan and capital resources for businesses. Some of the new credit and guarantee programs: Széchenyi Job Retention Credit, Eximbank Compensation Credit Program, MFB Competitiveness Credit Program. They are launching a Property Protection Capital Fund against hostile acquisitions, f.e. SME support and lifeline for strategically important companies in difficulty.

 

The last area of the rescue plan is protection of families and pensioners. Between the solutions we can find reintroducing the 13th month pension, allowing a parent raising a chronically ill or severely disabled child to be entitled to a higher amount of family allowance or providing tax and contribution relief to nurseries and their employees. Nursery and kindergarten supervision services are provided during the state of danger. People entitled to GYED, GYES or GYET (childcare support) during the declared state of danger don’t need to worry, the given benefit will be paid for the entire duration of the state of danger.

The presentation was prepared by the Ministry of Innovation and Technology of Hungary. It was made available to the Economic Forum by the Wacław Felczak Polish-Hungarian Cooperation Institute.