Two-thirds Country

Income Inequality in Hungary in the Nineties

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Opinion polls in Hungary show that Hungarians are irritated not so much by the fact of income differentiation but by its scale, and the mode of enrichessement. Many hold that these days one cannot earn more than the average and stay honest. Enrichessement is not accepted as legitimate. This problem was specially considered last year by both the World Bank and the EBRD. In their opinion, given that inequalities are unavoidable, it is highly important in the interests of popular support for a stable market economy that the mechanisms for rapid enrichment should appear to be morally above board and thus acceptable to the majority. The advice given by the World Bank in connection with the reform of the Hungarian social welfare system should also be taken to heart. The World Bank maintains that money should not be withdrawn from the Hungarian health and social security systems, but that institutional reforms should ensure that these moneys are spent more efficiently.

Studies at home and abroad of income inequalities as they existed around the middle and end of 1996 show that Hungary is a two-thirds country. This is an assymetrical relationship. The income situation of two thirds of the population is deteriorating, that of one third is improving. The pyramid is not put on its head by the marked presence of the Black Market - it acounts for 30 per cent of GDP - but it improves the position of both the richest and the poorest. The huge question, whether present inequalities are merely a feature of a crisis struck period of transition, and whether a growth that has started will allow the middle class to make up the leeway, is wide open. In that case present income inequalities will continue but differentiation will be open to the median and upwards, and will be closed downwards. Deliberate social action may help to reduce the scale of pauperization, and support and protection for the poorest may be guaranteed by social programmes. The worse scenario - and many sociologists currently believe it the likely one - means that present inequalities will be frozen. This may well lead to a brake on social mobility and the petrification of the present situation.

Katalin Bossányi

is a senior journalist on the staff of Népszabadság, the largest-circulation national daily.