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Basic income initiative criticised as a threat to the budget

January 11th, 2014

The number one business daily condemns the Hungarian branch of an international initiative which has proposed a guaranteed and unconditional “basic income” for all European citizens as ”campaign-flavoured”.

A Hungarian team has joined a pan-European movement which demands that EU member countries should give all their citizens subsistence level revenue, regardless of their economic performance. In their report they propose a monthly sum of 25 thousand Forints per child, 50 thousand per adult and 75 thousand for pregnant women.

In an unsigned analysis, Napi Gazdaság calculates that their idea, if enacted, would increase public expenditures by over one third, or one quarter, in the event that all existing welfare subsidies were to be terminated and replaced by the new scheme. The author suspects that the proposal is not entirely independent from the electoral campaign already underway, although the date of the next election is still to be announced by President Áder. In fact, the idea of a guaranteed basic revenue for all was readily embraced in November last year by former Socialist House Speaker Katalin Szili, who will run for a seat in Parliament as chairman of her new splinter party, while in December the Socialist Party tabled a motion proposing a parliamentary debate on the issue. Quoting economist Zoltán Pogátsa, Napi Gazdaság argues that a guaranteed subsistence level income would involve an increase in the minimum wage and by implication also the average wage, as otherwise there would be no incentive to take certain jobs. Sudden wage hikes, on the other hand, would harm Hungary’s competitiveness and thus jeopardize economic recovery.

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