Background information

This wage support scheme was introduced by government decree 105/2020 (IV. 10.) with a view to preventing layoffs due to the COVID-19 crisis, but an upgraded version came out just two weeks later (29 April), which relaxed some of the rules to raise uptake. In the upgrade the government encouraged employers to combine the wage support programme with other COVID-19 measures, such as the Széchenyi Card Programme’s loan option for 9 months’ worth of wages, or the working time banking measures.

The scheme follows the German example of Kurzarbeit, but it is of a much smaller scale with a lot of narrowing criteria the applicant must fulfill. The support can be extended from 1 May 2020 for three months. The amount of the income support will be transferred directly from the state to the employee while the reduced wage will be paid by the employer.

Eligible businesses are those shedding 30-50% of working time of employees compared with their pre-COVID situation, in other words who can prove that their employee workload has fallen by more than 50% (75% in the upgraded version of the scheme) and are working towards the 'interests of the national economy'.

Content of measure

Criteria for eligibility are the following:

• the employer must agree to keep headcount level until the end of the year in order to be considered for the subsidy
• the shortened work contract may not drop below 4 hours per day (2 hours in the upgraded version)
• employers must organise a training for the employee in 30% of the hours that have been cut from working time and pay wages for this time as well (Upgrade: The hours spent in training are by agreement between employer and employee and is only an option, not compulsory, if working time was cut by less than 50%. Trainings can be held within two years of the working time reduction.)
• Upgrade: temporary workers, employees working remotely and those employed in a working time banking system are also eligible

For every employee that is considered for layoff the state agrees to pay 70% of the part of the salary that was lost due to the working time reduction. Only the part of salaries up to HUF 214,300 net (twice the minimum wage - €612 as of 15 April) per month receive the income supplement, earnings after that threshold are not subsidised.

The government calculated that on average a monthly HUF 64,500 (€186.4) per employee would be paid out, so the total cost for 3 months could be HUF 193.6 billion (€559.54m) according to government calculations). On 6 May, the Finance Minister said that HUF 200 billion (€578m) coming from EU funding will be used towards payouts in the Kurzarbeit wage support programme. This suggests that uptake may have been slightly higher than anticipated. Applications opened on 16 April 2020. Applications must be filed to the public employment services where they are reviewed. However, there are alternatives: if fired, employees get unemployment benefits for three months, they can stay at home on unpaid leave, or if citing the COVID-19 situation as a vis maior is accepted, employees get no wages for down-time. The government ended the ‘state of danger’ introduced for the COVID-19 pandemic on 19 June 2020 (decree 58/2020, Section 30, par 66). The wage support programme continues for two months, with 31 August 2020 set as the last date when applications for support can be filed (decree 290/2020) and support can be extended by the end of the year only.

Use of measure

Based on estimations, some 500,000 workers could benefit from this new scheme. The government said on 16 June 2020 that to date 'more than 13,000 companies' availed of the support, retaining some 170,000 jobs. On 26 August, a state secretary at the Ministry for Innovation noted that the application deadline of 31 August for the wage support is drawing to a close and that 226,000 employees had applied for it. The LIGA trade union confederation has called for an extension of the scheme, at least in some of the sectors most affected.

The Hungarian employer federation MGYOSZ, the National Association of Entrepreneurs and Employers (VOSZ) and the Hungarian Chamber of Commerce and Industry (MKIK) welcomed the scheme and said most of their proposals as employers' representatives had been heard. They had been consulted before the new scheme was announced.

Some criticisms have been raised regarding this new scheme, namely that it comes much too late, five weeks after Hungary announced a state of emergency on 11 March 2020. Some analysts estimated that tens of thousands of jobs were lost before the measure was announced.

The trade union confederation LIGA said the government should do more as it does not help the thousands who had already been laid off. Trade union VDSZ lamented that the scheme does not offer job protection. Trade unions were merely informed of the developments at the tripartite VKF which meets weekly since the start of the crisis, but their proposals were not genuinely taken under advisement, said trade union confederation MASZSZ.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Public employment service	Employer European Funds National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Unknown

Sources

• 07 April 2020: Employers' organisations welcome Orban plan (magyarnemzet.hu)
• 09 April 2020: According to the unions, thousands lose their jobs every day and the government is taking delaying measures (merce.hu)
• 10 April 2020: How will the Hungarian Kurzarbeit work? (www.portfolio.hu)
• 14 April 2020: Further crisis management measures needed (www.liganet.hu)
• 16 April 2020: Government decree 105/2020 (IV. 10.) – modified 29 April (njt.hu)
• 20 April 2020: Expanding the Hungarian wage subsidy scheme (www.portfolio.hu)
• 06 May 2020: Finance Minister Mihály Varga's big announcement: EU funding coming (www.penzcentrum.hu)
• 28 May 2020: Tens of thousands of jobs lost on support coming late (g7.hu)
• 16 June 2020: Act LVIII 58/2020 on the state of pandemic emergency (njt.hu)
• 16 June 2020: More than 13,000 companies applied for wage support so far (ado.hu)
• 17 June 2020: Government decree 290/2020 (VI.17.) (njt.hu)
• 26 August 2020: No more Kurzarbeit - Unions' proposals (infostart.hu)
• 14 April 2022: Emergency state: deviating from labour code (ado.hu)