GKI: Why is Hungary increasingly separated from the EU average in terms of living standards?

By: Trademagazin Date: 2023. 09. 06. 12:55

Hungarian economic policy hopes to quickly catch up with the more developed member states of the EU in the coming years. To this end, it has set the goal of doubling the nominal GDP and reaching 85-90% of the EU level of development by 2030. Since Hungary’s labor reserves are largely exhausted, and our other resources (energy, raw materials, etc.) are small, the achievement of the goal could be primarily based on the improvement of productivity.

Improved productivity would allow higher wage increases, while prices would rise moderately. And these two would improve the purchasing power of the population, would provide a basis for a real increase in pensions through higher tax revenues, so overall, a lasting improvement in the standard of living could be achieved. In the following, we will present the results of the economic policy after 2009 in the development of productivity from an international perspective.

Between 2009 and 2022, productivity (change in the volume of added value per employee) improved at the lowest rate in Hungary compared to the V4 countries and Romania in the government-oversubsidized manufacturing industry (+30%, compared to +42% in Romania or +94% in Slovakia). with). This is also a deplorable performance because the otherwise very productive German manufacturing industry was also able to increase this indicator by 35%. The lagging behind industry is also noticeable (23%, here the Czech indicator is only 21%, while that of the others exceeds the Hungarian one (e.g. Germany’s 31%). For comparison: in contrast to the 28% growth in Hungary, Romania’s 101% , but Germany also achieved a 34% improvement (it is true, the Slovakian indicator worsened: -2%). The financial sector, on the other hand, performed well: the domestic indicator of 46% exceeds the German (+19%) and Slovak ( +17%), but the share of Poland (+92%) and Czech (+78%) is not enough