Demographic Policies Held Hostage By Politics: The Case of Hungary

Demographic trends in Hungary (as in Poland) are showing a catastrophic picture, with low birthrates, high and growing old-age dependency ratio, and high emigration of the best educated workforce. These factors altogether put the Hungarian pension system under enormous pressure. According to expert forecasts, the pension system will be totally unsustainable in a few years’ time. In this situation, building on international best practices, policy steps to avoid a catastrophe in the pension system would be obvious: reducing pensions, involving more the private sector in the pension system, introducing more flexible workforce policies and more progressive family policies in order to help the families to create a family-life balance, and encouraging economic immigration to counterbalance the population decline. Oddly enough, we have observed just the opposite of these trends. Governmental policies in this field have been dominated by the nationalization of the private pension funds and channeling them into the state budget, raising the pensions, pushing a conservative, nativist family policy that is strengthening traditional family roles, and running a harsh xenophobic campaign against immigration – in a country where the ratio of immigrants is negligible. In short, Hungary, where more than 40% of the active voters are pensioners, is a schoolbook case of how short-term political logic can totally dominate governmental measures, and go directly against long-term policy interest. As this contradiction is unable to be kept forever, the long-term and broader European implications of the Hungarian case are being discussed.