Rising public anger amid economic crisis in Hungary

In April 2022, Viktor Orbán secured a fourth consecutive electoral victory in Hungary. His party, Fidesz, won over 54 percent of the vote, the highest vote share by any party since the restoration of capitalism in Hungary. But a lot can change in seven months. Now, public discontent with the economic crisis is rising, and the working class and youth are beginning to take action, despite the government’s divisive demagogy.

[Main image by Ákos Dián: https://www.dianphoto.hu/]

In a press conference right after his victory, Orbán stated there was “no way” there would be austerity measures in the country. If the opposition had won, on the other hand, there would have been cuts. One of their first measures would have been to abolish the popular electricity and gas subsidy scheme. This scheme meant that, in the first quarter of 2022, Hungary had the lowest residential gas prices in the EU, while electricity prices were the second lowest among the 27 EU countries. However, as the Hungarian saying goes, much water has flowed down the Danube since then.

To understand the current crisis of the Orbán regime, we need to recall what it promised in the beginning. When Orbán was elected in 2010, he claimed he was beginning a programme of building up a national bourgeoisie. This was carried out mainly through nationalising various industries and handing them over to allies of Orbán. However, this has only been relatively successful, with only a few sectors showing a stronger share of national capital. These domestic capitalists typically have strong government connections. For example, Lőrinc Mészáros, childhood friend of Orbán and formerly a gas fitter, has become the richest person and the biggest employer in Hungary in less than 10 years.

Orbánomics had two aims. On the one hand, it attempted to strengthen national capital to make the Hungarian economy more resilient to crises. As Márton Nagy, State Secretary for Economic Development said a few months ago, the aim of increasing the share of national capital is “to ensure that the profits generated in some of these strategic sectors remain at home and are not taken out by foreign owners”. On the other hand, foreign investment was encouraged, with the expectation that this would have an upward effect on wages in the long run. However, these remain unfulfilled wishes, as the Hungarian economy has spectacularly capitulated with the intensified crisis of capitalism.

Regardless of the lofty rhetoric, the government has in the main continued the policies of its predecessors, attracting foreign investment by dismantling labour rights and providing direct subsidies to companies. Hungary has also remained a prime investment destination for the German car and South Korean battery industries.

Even before the current crisis, storm clouds were gathering. The budget deficit rose to record levels in 2020 and again in 2022, due to huge government spending to stimulate demand during the pandemic, and for campaign purposes. In the run-up to the election, the government embarked on a massive spending spree, including a pay rise for the police, introducing an additional ‘13th month’ pension payment, and a personal income tax rebate for those raising children. By the beginning of this year, government debt had reached a record high to 80.3 percent of GDP. The huge sums involved are difficult to grasp, but it is perhaps telling that, in the first four months of 2022, the budget deficit increased by the same amount as the average price of a one-room apartment in Budapest every minute and a half.

Protesters in front of Parliament on 5 October 2022 / Image: András Jámbor, Dávid Malatinszky, Facebook

The war in Ukraine has triggered a spike in energy and fuel prices. While the government imposed price controls on fuel, they cut the electricity and gas subsidy scheme. From August, households were given reduced energy tariffs so long as they consumed below the average amount. According to Habitat for Humanity's calculations, a third of gas consumers and half of electricity consumers were expected to exceed the limit set by the government. In another survey, 66 percent of respondents said they would be affected by the cut. Above average consumption, one pays seven times more for natural gas and twice as much for electricity than the reduced fee. This partial abolition of subsidies has hit small businesses badly, triggering a wave of bankruptcies. On social media, dozens of small businesses were announcing they had to close because they could not afford skyrocketing energy prices.

The government has announced a number of measures to try and deal with the crisis. In mid-September, they imposed a maximum temperature of 18 degrees in all state and public institutions, including state-owned companies and secondary schools. They have also ordered a halt to hundreds of investments and imposed a so-called payment stop until the end of the year, meaning that the entire state administration can only pay salaries. Any spending beyond this requires prior approval from the Ministry of Finance.

The Hungarian Forint also plummeted after the outbreak of war, hitting negative records month after month, falling by more than 19 percent against the euro in the year up to October 2022. There are several reasons for speculation against the forint, including the negative trade balance, Hungary's dependence on Russian gas, the growing budget deficit, the Hungarian National Bank's monetary policy and the dispute with the European Commission over the recovery funds.

According to official data, annual inflation in October exceeded 21 percent, the highest since the 1990s, making Hungary one of the worst performers in the European Union. When you look at the price of food, however, inflation exceeded 55 percent in October. This figure is even more devastating when you consider that the government already introduced price controls on many basic foodstuffs. Next to food, energy prices have increased the most. Household energy inflation exceeded 64 percent in October.

Let there be no doubt that the ruling class and their representatives want to make the workers pay for this crisis. This intention was shown by the recent amendment to the social law. It changes the original wording of the law so that a person's social security is first and foremost the responsibility of the person themselves, then their family, then the municipality, then the church and only last of all the state.

However, the most striking example of what we can expect from the ruling class comes from László Parragh, the president of the Hungarian Chamber of Commerce and Industry, and an adviser to Orbán. He recently said that they do not support the implementation of the European minimum wage in Hungary because the country would lose its competitiveness based on cheap labour.

He also argued that the current inflationary wave is the result of the “significant” wage increases of recent years, which exceeded the growth of productivity, and that in this situation workers should show restraint and not fight for higher wages, because it would only fuel inflation. Of course it is the opposite: demands for wage rises always follow rising prices. The experience of recent months has led many workers to ask: who should pay the cost of this crisis, which they did not cause?

Rising public anger

Discontent of the workers is growing in many sectors critical to the national economy. The biggest protests are linked to the teachers.

Parents and teachers protest in front of a School District Centre in Budapest, after 24 teachers of the Karinthy Frigyes High School received warning letters for taking part in wildcat strikes / Image: Mérce

For years, education workers have been fighting for a decent living wage and better working conditions. The current crisis has of course made their situation worse.

The protests of the teachers have been given new impetus by the fact that the government, taking advantage of the COVID-19 emergency, issued a decree limiting teachers' right to strike in February. Under the restriction, students must be supervised on all working days affected by the strike. It is also compulsory to teach 50 percent of classes and 100 percent of compulsory subjects for students preparing for their final exams. As the two main teachers’ unions said in a joint statement:

“The government issued a decree which has introduced some compulsory rules which, in essence, ensure that not even the students would notice if their teachers went on strike to demand better working conditions.”

In response, teachers began to carry out wildcat strikes, while many thousands took part in legal strikes. Those involved in the wildcat strikes were sent warning letters from government-controlled school districts and several teachers were dismissed. However, led by parents and students, many school communities then marched straight to the school district headquarters to hold the district directors to account. They were not happy to see the teachers punished for exercising their basic right to strike.

On the afternoon of 5 October, school students first occupied the whole of one of Budapest's famous bridges. Later that evening, they joined a demonstration of 40,000 people in front of the Parliament. On 23 October, on the anniversary of the 1956 Revolution, 80,000 people gathered in the capital in solidarity with the teachers. On 27 October, protesters formed a 15-kilometre-long “live chain” around the inner districts of Budapest. At one point, students set up a bonfire of their teachers' warning letters and pro-government newspapers. The next national strike action of the teachers will be held on 18 November, while a mass protest is organised for 26 November in Budapest.

The movement of teachers and students is a serious threat to the government. A survey conducted in November showed 79 percent of the adult population support the teachers' protest. Even 47 percent of pro-government voters sympathise with them, which is 14 percent higher than a month ago. However, the government stresses it will only be able to raise wages if it reaches an agreement with the European Commission on the release of the 15 billion EUR pandemic recovery funds frozen due to the rule of law conditionality mechanism against Hungary.

Waste management workers express solidarity with teachers as they pass a demonstration outside a school district centre on 7 October 2022 / Image: Mérce

The government has offered a 20.8 percent increase of teachers’ wages for 2023 – in case there is an agreement with the EU – and held out the prospect for more up to 2025. Nonetheless, as the unions point out, half of the offered wage increase will be absorbed by inflation this year and half by inflation next year, so the government is effectively offering them the same pay next year if all goes well. Time will tell how the teachers' and students' protests develop, but it is clear that the government has not faced such a militant movement for a long time. If their situation is not resolved in the short term - being the most likely scenario - teachers' protests could show the way for workers in other sectors.

The crisis has brought contradictions to the surface in other sectors as well. The train drivers had already planned a strike in March, which they called off at the last minute because of the refugee crisis that broke out as a result of the war in Ukraine. In September, they called a strike again, which was then declared unlawful by the court on the employer's initiative. According to the President of the Railway Workers' Union, the use of coffee makers, kettles, heaters and fridges has been banned at several sites due to the energy crisis. The 18 degree temperature rule has also led to workers' clothes getting mouldy after rainy days.

Wage negotiations have also stalled at the Makó plant of German car manufacturer Continental after the company offered a below-inflation wage increase for next year. The situation at the plant became so tense between workers and the employer that when the union held a film screening in the city about the 2009 strike by Continental workers in France, the company took a series of “security measures”. Many union members were unexpectedly called in to work on Saturday evening when the screening was held. However, the employer also called in the police, notified the ministry, reinforced security and blocked the entrance to the plant with cars for that evening.

This was because, as the management publicly admitted, the screening was attended by a 76-year-old former Continental worker who had been involved in setting up a workers' council at the company's site in Clairoix, France in 2009. After the incident, the union also obtained an internal letter in which management called the unionists extremists and planned to secretly integrate employees loyal to them into the union.

Security guards outside the factory in Makó on 1 October / Image: Mérce

Workers at Volánbusz, one of the largest bus transport companies employing 18 000 workers, held a two-hour ‘warning’ strike at the end of October, which could soon be followed by a more widespread walkout if their demands are not met. The company has proposed a 5 percent pay rise this year and 10 percent next year, which would mean a massive real-terms pay cut given the 20 percent inflation rate today.

In early October, Budapest waste collectors bypassed the union and went on a wildcat strike over low wages and poor working conditions. At one point the leader of one of the unions went to the site to try to get the workers back to work or else they would be fired. The workers then responded by chanting “Go home!", pointing out that the union's job is to protect the workers' interests.

After this, the unions were forced to pledge their support for the action, but at every turn they were keen to explain - defending their position - that it was not really a wildcat strike. It was carried out, according to the union tops, only because the workers were unable to carry out their duties due to the inadequacy of the work equipment. In the end, the union reached an agreement with the municipality a few days later. However, this agreement did not include a direct wage increase, but provided one-off benefits and other concessions. This divided the workers and helped the strike to lose momentum.

Finding itself in this tricky situation, the government has attempted to divide workers against one another by using the question of abortion. They have attempted to introduce new restrictions, including forcing pregnant women to listen to the heartbeat of the unborn child before the procedure is carried out. Even before the amendment, women had to go through a complicated procedure, including two consultations, the first of which involved the family support service attempting to dissuade the woman from carrying out the abortion. The latest moves by the government provoked a demonstration of thousands of people in Budapest at the end of September. A big reason behind doing this was clearly to divert attention from the growing cost of living crisis. Rather than fighting the working class as a whole, the government attempts to divide it on questions such as this. This can then be used to cut across a unified movement.

IMT-banner (“Defend abortion rights with class struggle!”) at the protest against the new regulation on 28 September in Budapest / Image: Ákos Dián

What next?

According to a survey, only 31 percent of Hungarians feel financially secure and 39 percent have enough savings for at least one month. Only 18 percent of the population would be able to live on their savings for six months if they lost their income now. On top of this, only 15 percent said they were rather satisfied with their financial situation.

The government’s strategy of trying to distract from class divisions can only hold back the emergence of growing social tensions for so long. Use of sexist or other divisive laws and rhetoric can’t feed anyone, or warm their home. Equally, the masses are not at all attracted by what the opposition is offering; whether that is Orbánism without Orbán, or the praising of the supposed EU virtues of the rule of law and democracy. The main reason they do have some support has more to do with them representing a protest vote against Orbán, rather than them being genuinely popular. They are not perceived as offering a real alternative to the current regime.

We are facing a challenging period in which the trade unions will be put to the test and in which the instinctive demands of the working class beat their way up the agenda. Our class however will only have a chance to win if it will be able to emerge as an independent force, struggling for the interests of all working people against the rotten ruling class in all its guises..