Data

Govt should seriously stop spending on job creation, say employers

200-250 thousand people are missing from the labor force in Hungary according to the alliance of employers – and that is just the number of filed job adverts. The government should seriously stop spending taxpayers’ money on creating jobs because there aren’t even enough people to fill existing ones. 

Developments are postponed, assembly lines have to stop at corporations due to the severe labor shortage in Hungary. Yet, the government cannot stop its dumb quest for “creating new jobs”.

The government should be spending (if at all) on efficiency and higher added value jobs, as the current structure of the economy, putting the emphasis of being the assembly line for German carmakers and similar low added value activities is a dead end. Not only does the country compete with China, finding itself in what the economists call the middle income trap, but there isn’t even enough people to fill these expensively subsidized assembly line positions. Not to mention the unhealthy exposure to the health of the German economy and the precarious nature of such a slim margin operation.

The Orbán-government is very generous to multinational corporations. On average, Orbán spends more on luring them into the country than it costs them to pay the wages of the people they hire here. Discretionary government orders spend billions in non-refundable state subsidies to sweeten the deals with multinationals. In effect, Orbán is spending taxpayer money to buy jobs that cost more than they make – to the employees and to the taxman.

In 2016 alone, corporations (mostly German carmakers) received up to 110 thousand euros per job created. And the spending never stopped. According to data gathered from kormany.hu, index.hu created a chart about discretionary government subsidies to multinationals in Hungary.

state subsidies corporations hungary orbán

Annual government subsidies to multinationals in Hungary in billion forints Source: index.hu

And the entire insane exercise looks even more futile when we take into account that there aren’t even enough skilled Hungarians left to fill those jobs. Jobs that the taxpayers bought them at a hefty price.

The most recent development of MOL, Hungary’s energy champion is even rumored to be built with guest workers.

According to the vice president of the employers’ association, the labor shortage is even deeper than official statistics allow us to see. Employers may or may not bother to register unfilled jobs, and that is just the first hurdle before getting to know the severity of the situation. He suggested to spend on higher added value jobs, or efficiency instead (probably code for automation, where available) – but I would personally be skeptical whether a government could do such a thing.

Especially since they tend to beat the same topic decades after it becomes obsolete. I expect them to keep pushing for “job creation” for years and years to come, spend (corruptly) insane money on it, and keep campaigning with it – they haven’t conditioned the voters to want “job creation” for nothing. Reason and common sense have no place in a politician’s decisions, and thus the government will never, ever fix the problem it created.

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