View More View Less
Open access

We compare the pre- and post-2010 Hungarian political regimes through the lens of pension policies. We label the pre-2010 regime as democratic populist because it was characterized by fiscally irresponsible policies, yet it maintained the system of checks and balances and the rule of law. In contrast, we call the post-2010 regime authoritarian populist as it has employed authoritarian political techniques while maintained popular legitimation through regular elections. To substantiate the difference between the two periods from an economic viewpoint, we compare pre- and post-2010 pension policies to find important differences as well as surprising similarities. In particular, we analysed the following five policy aspects: (a) reform and partial privatization of the government-run pension system, (b) policies on the statutory (normal) and the effective (average) pension age, (c) indexation, (d) progression in benefits calculations and progressivity in the personal income tax, and (e) contribution rates. Based on ideological preferences, we argue that one would expect the pension system to become financially more sustainable but less redistributive after 2010 in comparison to the preceding period. Yet, we find that although pro-poor redistribution through the pension system has indeed been curtailed, fiscal sustainability has not improved due to the erratic policies.

If the inline PDF is not rendering correctly, you can download the PDF file here.

  • Augusztinovics, M.Gál, R. I.Matits, Á.Máté, L.Simonovits, A.Stahl, J. (2002): The Hungarian Pension System before and after the 1998 Reform. In: Fultz, E. (ed.): Pension Reform in Central and Eastern Europe, Vol. 12, Geneva: International Labour Office, pp. 2593.

    • Search Google Scholar
    • Export Citation
  • Augusztinovics, M.Köllő, J. (2009): Decreased Employment and Pensions. The Case of Hungary. In: Holzmann, R.MacKellar, L.Repansek, J. (eds): Pension Reform in Southeastern Europe. Linking to Labor and Financial Market Reform. Washington, D.C.: World Bank, pp. 89104.

    • Search Google Scholar
    • Export Citation
  • Augusztinovics, M.Martos, B. (1994): Pension System: Calculations and Conclusions. Acta Oeconomica, 48 (12): 119160.

  • Ádám, Z. (2018): Authoritarian Populism at Work: A Political Transaction Cost Approach with Reference to Viktor Orbán's Hungary. UCL Centre for Comparative Studies of Emerging Economies (CCSEE), Working Paper Series, No. 2.

    • Search Google Scholar
    • Export Citation
  • Ádám, Z.Simonovits, A. (2017): From Democratic to Authoritarian Populism. Comparing Pre-and-Post-2010 Hungarian Pension Policies. Budapest: IE-CERS-HAS Working Paper, No. 31.

    • Search Google Scholar
    • Export Citation
  • Bajkó, A.Maknics, A.Tóth, K.Vékás, P. (2015): On the Sustainability of the Hungarian Pension System (in Hungarian). Közgazdasági Szemle, 62 (December): 12291257.

    • Search Google Scholar
    • Export Citation
  • Barr, N.Diamond, P. (2008): Reforming Pensions: Principles and Policy Choices. Oxford: Oxford University Press.

  • Benczes, I. (2011): Market Reform and Fiscal Laxity in Communist and Post-Communist Hungary. A Path-Dependent Approach. International Journal of Emerging Markets, 6(2): 118131.

    • Search Google Scholar
    • Export Citation
  • Bozóki, A. (2015): Broken Democracy, Predatory State and Nationalist Populism. In: Krasztev, P.Til, J. von (eds): The Hungarian Patient: Social Opposition to an Illiberal Democracy. Budapest: CEU Press, pp. 336.

    • Search Google Scholar
    • Export Citation
  • Brubaker, R. (2017): Between Nationalism and Civilizationism: The European Populist Moment in Comparative Perspective. Ethnic and Racial Studies, 40(8): 11911226.

    • Search Google Scholar
    • Export Citation
  • Casey, B. H. (2014): From Pension Funds to Piggy Banks: (Perverse) Consequences of the Stability and Growth Pact since the Crisis. International Social Security Review, 67(1): 2748.

    • Search Google Scholar
    • Export Citation
  • CRCB (2016): Competitive Intensity and Corruption Risks. Statistical Analysis of Hungarian Public Procurement – 2009–2015. Data and Descriptive Statistics. Budapest: Corruption Research Center.

    • Search Google Scholar
    • Export Citation
  • Czeglédi, T.Simonovits, A.Szabó, E.Tir, M. (2017): What is Wrong with the Hungarian Pension Rules? Acta Oeconomica, 67(3): 359387.

    • Search Google Scholar
    • Export Citation
  • Dekkers, G.Desmet, R.Rézmovits, Á.Sundberg, O.Táth, K. (2015): On Using Dynamic Microsimulation Models to Asses the Consequences of the AWG Projections and Hypotheses on Pension Adequacy: Simulation Results for Belgium, Sweden and Hungary. Brussels – Budapest: ONYF. mikroszimulacio.onyf.hu=goo.gl/U28Wka.

    • Search Google Scholar
    • Export Citation
  • Disney, R. (2004): Are Contributions to Public Pension Programmes a Tax on Employment? Economic Policy, 19(39): 267311.

  • Domonkos, S.Simonovits, A. (2017): Pension Reforms in EU11 Countries: An Evaluation of Post-Socialist Pension Policies. International Social Security Review, 70: 109128.

    • Search Google Scholar
    • Export Citation
  • Dornbusch, R.Edwards, S. (1989): Macroeconomic Populism in Latin America. Working Paper, No. 2986. Cambridge, MA: National Bureau of Economic Research.

    • Search Google Scholar
    • Export Citation
  • Drahokoupil, J.Domonkos, S. (2012): Averting the Funding-Gap Crisis: East European Pension Reforms since 2008. Global Social Policy, 12(3): 283299.

    • Search Google Scholar
    • Export Citation
  • EBRD (1999): Transition Report 1999. Ten Years of Transition. London: European Bank for Reconstruction and Development.

  • Fazekas, K.Varga, J. (eds) (2015): The Hungarian Labor Market 2015. Budapest, IE-CERS-HAS.

  • Finchelstein, F. (2014): Returning Populism to History. Constellations, 21(4): 467482.

  • Freedom House (2016): Nations in Transit. Hungary Report. Washington, D.C.

  • Freudenberg, Ch.Berki, T.Reiff, Á. (2016): A Long-Term Evaluation of Recent Hungarian Reforms. Working Paper, No. 2. Budapest: Magyar Nemzeti Bank.

    • Search Google Scholar
    • Export Citation
  • Gál, R. I.Iwasaki, I.Széman, Zs.(eds) (2008): Assessing Intergenerational Equity: An Interdisciplinary Study of Aging and Pension Reform in Hungary. Budapest: Akadémiai Kiadó.

    • Search Google Scholar
    • Export Citation
  • Granseth, E.Keck, W.Nagl, W.Simonovits, A.Tir, M. (2016): Negative Correlation between Retirement Age and Contribution Length? Budapest: IE-CERS-HAS Working Paper, No. 33.

    • Search Google Scholar
    • Export Citation
  • Guardiancich, I. (2008): How not to Implement: Hungarian Pension Reform in an Institutional Perspective. Warsaw: TIGER Working Paper, No. 110.

    • Search Google Scholar
    • Export Citation
  • Halmai, G. (2017): National(ist) Constitutional Identity? Hungary's Road to Abuse Constitutional Pluralism. Florence: European University Institute, EUI-LAW Working Paper, No. 8.

    • Search Google Scholar
    • Export Citation
  • Hirose, K. (ed.) (2011): Pension Reform in Central and Eastern Europe in Times of Crisis, Austerity and Beyond. Budapest: ILO.

  • Holtzer, P. (ed.) (2010): Report of the Pension and Old-Age Round Table on Its Activities between March 2007 and November 2009. Budapest: Government of the Republic of Hungary.

    • Search Google Scholar
    • Export Citation
  • Kornai, J. (1995): Eliminating the Shortage Economy. A General Analysis and Examination of the Developments in Hungary. Economics of Transition, 3(1): 13–37 and 3(2): 149 –168.

    • Search Google Scholar
    • Export Citation
  • Kornai, J. (1996a): Paying the Bill for Goulash-Communism: Hungarian Development and Macro Stabilization in Political-Economy Perspective. Social Research, 63(4): 9431040.

    • Search Google Scholar
    • Export Citation
  • Kornai, J. (1996b): Hardening of the Budget Constraint under the Post-Socialist System. Japan and the World Economy, 8: 135151.

  • Kornai, J. (2015): Hungary's U-turn: Retreating from Democracy. Journal of Democracy, 26(3): 3448. Full version: http://www.kornai-janos.hu.

    • Search Google Scholar
    • Export Citation
  • Kriesi, H.Pappas, T. S. (eds) (2015): European Populism in the Shadow of the Great Recession. Colchester, UK: ECPR Press.

  • Magyar, B. (2016): The Postcommunist Mafia State: The Case of Hungary. Budapest: CEU Press.

  • Magyar, B.Vásárhelyi, J. (eds) (2017): Twenty- Five Sides of a Postcommunist Mafia State. Budapest: CEU Press.

  • Mudde, C. (2004): The Populist Zeitgeist. Government and Opposition, 39(4): 541563.

  • Mudde, C.Kaltwasser, C. R. (2017): Populism: A Very Short Introduction. Oxford and New York: Oxford University Press.

  • Mulligan, C. B.Gil, R.Sala-i-Martini, X. (2004): Do Democracies Have Different Public Policies than Nondemocracies? Journal of Economic Perspectives, 18(1): 5174.

    • Search Google Scholar
    • Export Citation
  • Müller, J. W. (2016): What is Populism? Philadelphia: University of Pennsylvania Press.

  • Oblath, G. (2016): Economic Policy and Macroeconomic Developments in Hungary, 2010–2015. Seminar Proceedings, 143. Warsaw: Case.

  • ONYF (20122016): ONYF Statistical Yearbook, 2011– 2015 (in Hungarian). Budapest: Central Administration of National Pension Insurance (CANPI).

    • Search Google Scholar
    • Export Citation
  • Pirro, A. L. P. (2015): The Populist Radical Right in Central and Eastern Europe. London: Routledge.

  • Sachs, J. (1989): Social Conflict and Populist Policies in Latin America. National Bureau of Economic Research Working Paper, No. 2897. Cambridge, MA.

    • Search Google Scholar
    • Export Citation
  • Simonovits, A. (1999): The New Hungarian Pension System and its Problems. In: Müller, K.Ryll, A.Wagener, H. J. (eds): Transformation of Socials Security: Pensions in Central-Eastern Europe. Heidelberg: Physica, pp. 211230.

    • Search Google Scholar
    • Export Citation
  • Simonovits, A. (2011): The Mandatory Private Pension Pillar in Hungary: An Obituary. International Social Security Review, 64(3): 8198.

    • Search Google Scholar
    • Export Citation
  • Simonovits, A. (2018): The Best Indexation of Public Pensions: The Point System. Budapest: IE-CERS-HAS WorkingPaper, No. 15.

  • Simonovits, A. (2019): The Boomerang of Female40: Seniority Pensions in Hungary, 2011–2018 (accepted in European Journal of Social Security).

    • Search Google Scholar
    • Export Citation
  • Szikra, D. (2014): Democracy and Welfare in Hard Times: The Social Policy of the Orbán Government in Hungary between 2010 and 2014. Journal of European Social Policy, 24(5): 486500.

    • Search Google Scholar
    • Export Citation
  • Tóth, G. A.(ed.) (2011): Constitution for a Disunited Nation. On Hungary's 2011 Fundamental Law. Budapest: CEU Press.

  • Vanhuysse, P. (2006): Divide and Pacify: Strategic Social Policy and Political Protest in Post-Communist Democracy. Budapest: CEU Press.

    • Search Google Scholar
    • Export Citation
  • Vörös, I. (2015): Hungary's Constitutional Evolution during the Last 25 Years. Südosteuropa, 63(2): 173200.

  • World Bank (1994): Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth (Policy Research Report). Oxford: Oxford University Press.

    • Search Google Scholar
    • Export Citation
  • World Bank (2006): Pension Reforms and the Development of Pension Systems: An Evaluation of World Bank Assistance. Washington, D.C.: Independent Evaluation Group.

    • Search Google Scholar
    • Export Citation