Background information

Under government decree 485/2020 (10 November 2020) businesses hard-hit by the COVID-19 pandemic can receive state support. In a different measure also targeting the catering sector and detailed in government decree 498/2020 (13 November 2020), value-added-tax (VAT) on home deliveries of food was reduced from 27% to 5% in order to allow catering businesses to lower their prices, inducing more demand during the pandemic.

Content of measure

Businesses conducting the following economic activities (at least 30% of revenue came from that activity in the previous 6 months) are eligible: NACE 5610, NACE 5621, NACE 5630, NACE 5914, NACE 8230, NACE 8551, NACE 9001, NACE 9002, NACE 9004, NACE 9102, NACE 9104, NACE 9311, NACE 9312, NACE 9313, NACE 9319, NACE 9321, NACE 9604, NACE 9329.

The sectoral subsidy is equal to 50% of a full-time or part time employee’s wages, up to an amount equivalent to 150% of the minimum wage (currently pre-tax HUF 241,500 or €680). The measure applies for the single month of November 2020. During this time the employer must pay full wages, but is exempt from payroll taxes. The employee must still be in full employment with the company on 30 November, 2020 and their work contract cannot be terminated before 31 December 2020.

Businesses are eligible if at least 30% of their revenue in the six months preceding 11 November came from one of the selected ailing sectors: catering or recreation and provided they have no public debts. Applications are received by the government office ( kormányhivatal ) closest to the employee’s work address from 11 November – 11 December 2020. In a related measure also targeting the catering sector, the government accepted professional associations' requests to reduce VAT on home deliveries of food from 27% to 5% (as was the case for food served in restaurants) until February 2021.

Use of measure

By 28 November 2020 some 10,000 employees were registered for the support, in a total value of HUF 1 billion (€2.78 million). In the end a total of 180,900 employees applied for subsidy in a value of HUF 91.3 (€253.6 million). The average amount requested in applications was HUF 505,000 (€1,403) per employee. Some 21% of applications came from Budapest, and more than 49% of them were from the catering and recreation industry.

Research carried out by the Hungarian Caterers' Guild ( Magyar Vendéglátók Ipartestülete - MVI) suggested that 40% of the outlets that had switched their activities to home deliveries in the spring wave of the pandemic are deciding to shut down in the second wave (autumn 2020). Another survey by the MKIK economic research institute found that the proportion of businesses with no financial reserves is especially high in catering (71%) and accommodation services (62%). It was estimated that the catering sector shred 30,000 jobs since the outbreak of COVID-19.

By April 2021, as the measure was extended several times, altogether 166,300 employees at 27,000 companies received the subsidy, according to the ministry. On 1 June 2021, the uptake of the measure was calculated at HUF 87.5 billion (€243 million), with most of the 30,000 applications coming from Budapest, two-thirds of them from micro and small companies. More than 49% came from catering and accommodation sectors and 26% from commerce and car repairs, according to data from the relevant ministry.

Target groups

Workers	Businesses	Citizens
Applies to all workers	Sector specific set of companies	Does not apply to citizens

Actors and funding

Actors	Funding
National government Company / Companies	Employer European Funds National funds

Social partners

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

	Trade unions	Employers' organisations
Role	Informed	No involvement
Form	Not applicable	Not applicable

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

• Only trade unions
• Main level of involvement: Sectoral or branch level

Involvement

The Association of Hungarian Hotels and Restaurants (MSZÉSZ) had previously proposed to the government that it should plan at least six months ahead with its support schemes, but this has not happened. Sectoral trade unions had also proposed that a subsidy of at least six months should be extended to the ailing sector, but the government did not respond. However, MVI had proposed the VAT reduction on home deliveries in a proposal dated 10 November 2021 and signed by five other sectoral associations, which had been granted. The other organisations were: Hungarian Bocuse d'Or Academy, Hungarian Gastronomic Association ( Magyar Nemzeti Gasztronómiai Szövetség - MNGSZ, The Association of Hungarian Hotels and Restaurants (_Magyar Szállodák és Éttermek Szövetsége - MSZÉSZ), Pannon Gastronomic Academy (Pannon Gasztronómiai Akadémia - PGA), and the National Organisation of Employers in Catering and Tourism ( Vendéglátó és Idegenforgalmi Munkaadók Országos Szövetsége - VIMOSZ).

Views and reactions

The Head of the Hungarian Caterers’ Guild (MVI) said the sectoral subsidy was “better than nothing, but it is not much”. (...) For a subsidy lasting only 30 days, the applicant must send in five sets of documents. The administrative burden is just much too high. In addition, one needs to be free of all public debt on the day of applying, but this is just impossible in the sector right now," the caterers’ association representative said.

Sectors and occupations

This case is not occupation-specific.

Sources

• 10 November 2020: Government decree 485/2020 (English)
• 11 November 2020: MVI proposes temporary 5pc VAT on deliveries (turizmus.com)
• 17 November 2020: Wage support programme launched (www.kormanyhivatal.hu)
• 07 December 2020: Caterers' organisations on sectoral wage subsidy
• 22 December 2020: Govt decrees 637-645
• 22 December 2020: Orbans pre-Christmas economic package unveiled
• 07 April 2021: Ministry: HUF 62bn was paid in sectoral wage support (koronavirus.gov.hu)
• 01 June 2021: 10,000 could be helped by extended workforce support programme (koronavirus.gov.hu)