TWURD WP #7 URBAN DEVELOPMENT DIVISION TRANSPORTATION, WATER, AND URBAN DEVELOPMENT DEPARTMENT ENVIRONMENTALLY SUSTAINABLE DEVELOPMENT THE WORLD BANK .. Hungary in the 1980s: A Historical Review of Social Policy and Urban Level Interventions July 1993 WORKING PAPER The TWURD Working Papers present preliminary research findings and are intended for internal review and discussion. The views and interpretations in these Working Papers are those of the author(s) and should not be attributed to the World Bank, to its affiliated organizations or to any individual acting on their behalf. O 1993 The World Bank Washington, D.C. All Rights Reserved First Printing July 1993 This is a document published informaRy by the World Bank. Jn order that the information contaiued in it can be presented with the leastpossible delay, the typescript has not been prepared in accordance with the procedures appropriate to formally printed texts, and the World Bank acceptsno responsibility for errors. The World Bank does not accept responsibility for the views expressed herein, which are those of the author and should not be attributed to the World Bank or to its affiliated organixations. The findiis, interpretations, and conclusions are results of research supported by dte Bank; they do not necessarily represent offkial policy of the Bank. The designationemployed. the presentation of material, and any maps used in the document are purely for the convenience of the reader and do not imply the expression of any opinion whatsoever on the part of the World Bank or its affiliates concerning the legal statusof any country, territory, city, area, or of its authorities, or concerning the delimitations of its boundaries or national affiiation. This paper waspm-paredby Julii Sxalai and Maria Nemenyi of the Jnstituteof Sociology, Hungarian Academy of Sciences, and Roxa Makotmen, consultant to the Urban Development Division. THE WOBLD BANK HUNGARY IN THE 1980s: A HISTORICAL BEVIEW OF SOCIAL POUCY AND URBAN LNEL INTERVENTlONS WORKING PAPER TABLE OF CONTENTS INTRODUCTION V I. RECENTDEVELOPMENTSIN SOCIAL POLICY AND THE URBAN POOR 1 Trendsin Povertyin Hungary 1 RecentDevelopmentsin HungarianSocietyandthe Impacton SocialPolicy 3 II. SECTORALINITIATIVES CURRENTLY BEING DESIGNEDOR UNDERTAKEN IN THE CITY OF BUDAPEST 14 InstitutionalStructure 14 SectoralPoliciesandPrograms 16 Housing 16 Housingconditions 16 Housingfinance 17 The rentalsector 18 CurrentPolicyInitiatives 19 Education 20 Theeducationsystemwithin Hungary 20 Preschools 22 Primaryschools 22 Current PolicyInitiativesin Education 23 Health 24 Overallhealthstatus 24 Healthcareinfrastructure 25 Healthcarefinancing 26 Current PolicyInitiativesin Health 26 SocialSecurity 28 SocialAssistance 30 Overall Conclusion 32 REFERENCES 34 TABLES 40 INTRODUCTION This socialpolicy paper was written collaborativelyby World Bank and local consultantsduring JanuarythroughApril 1992. It is oneof a numberof economicandsocial policybackgroundpaperswritten aspart of theresearchprojecton "Urban PovertyandSocial Policyin theContextof Adjustment".TheUrbanDevelopmentDivision of theWorld Bankis undertakingthis researchproject, with casestudiesin Budapest,Guayaquil,Lusaka,andMetro Manila. This researchproject is concernedwith the copingstrategiesof urban low-income householdsin thepastdecade.Its purposeis to identifythecapacityof householdsto respond to the conditionscreatedby macro-economicchangeand policy reform. Understanding householdcopingstrategieshasimportantimplicationsnotonlyfor thedesignof specificpoverty alleviationstrategiesbut also for the formulation of coherentsocialpolicy consistentwith economicreform. In thisresearchprojectsocialpolicyisdefinedholisticallyandinclusively.Its broad objectiveis the developmentof a just, equaland prosperoussociety. Its concern is more equitablewealthdistributionandpovertyreductionthroughtheactiveparticipationof different socialgroupsin the satisfactionof boththeir economicandsocialrights. This definitionmeans that not only is it concernedwith sectorsusuallydefinedas`social',suchasEducation,Health, SocialWelfare and SocialSecurity, but also includessectorsmore commonlyidentified as `economic',suchasEmployment,or `infrastructure'suchasHousing,Water, Transportation InfrastructureandServices,andElectricity. This socialpolicy reviewpaper,which usesbothBankandothersources,hastwo purposes.First, to betterunderstandrecentdevelopmentsintheareaof socialpolicy, it presents anoverviewof themajorsocio-politicalandeconomicchangesthathavetakenplacein Hungary duringthepastlo-15 yearswith emphasisonthecausesandmanifestationsof poverty. Second, it examinesthefactorsthathaveledto significantchangesin thesocialpolicyframeworkwithin the country and assessesthe extentto which sectoralinitiativesaffect the urbanpoor. This includesanexaminationof relevantinitiativesthathavebeenidentifiedasdirectlyor indirectly targetedto assistin `poverty alleviation'andconsequentlyare intendedto contributeto urban poverty reduction. Thepaperis dividedinto two parts.PartOneprovidesanoverviewof recentsocio- political andeconomicfactorsthat haveled to changesin the institutionalframework within which socialpolicy is implemented.PartTwo is concernedwith sectoralinitiativescurrently beingdesignedor undertakenby theCentralConstituencyin Budapest.Wheredatais available, an assessmentis madeof the extentto which theseinitiativesassisturbanpoor communities, householdsandindividualsto meettheir needs. Trends in Poverty in Hungary 1.1 Thissectionexaminesthecausesandmanifestationsof povertyduringthepasttwo decadesin Hungary.It presentsabrief analysisof the trendsin povertyandthe causesfor the increasein socialinequalitiesduringthe 1980s.' 1.2 Presentknowledgeabouttheextentof andtrendsin povertyin Hungaryis limited. Until recently,acknowledgingtheexistenceof povertywasconsidereda "taboo" of thesocialist ideologyandpoliticsandevenmentionof its existencewasregardedasa "dissidentaction". As a consequence,until recently, collectionof data on the numberof peopleliving below the subsistenceminimumwasnot undertakenandeventheminimalevelswere not calculatedfor decades.The first "official" minima levelswere computedby the Central StatisticalOffice (CSO) in 1984, with publisheddata only availablesince 1988. Therefore, the description presentedbelowwill inevitablybe sketchy,especiallywith regardto the changesof the extent of povertyover time. 1.3 The total numberof the poor in 1987was estimatedto be between1.1 and 1.8 million or betweenlo-17 percentof the total population.Table1presentsdataon the number of personsliving below the subsistenceminima level for specific years. The calculations presentedaremadefrom dataobtainedfrom two sources,namelyannualincomeandbiannual householdsurveys.Theresultsfrom theincomesurveysshowthatbetween1977and1987,the numberof personsliving belowthe minimumincreasedby 100,000representinga 1 percent increasein theratio of thepoor asapercentageof thetotal population.Thetrendin povertyis lessclearfrom the biannualhouseholdsurveydatafor the 1978-87period, thougha tendency of anincreasecanbeevidenced.Thisdatasuggeststhattheratio of thepoorwashighestaround the middleof the 1980sanddecreasedto 1980levelsby 1987. 1.4 In termsof thecharacteristicsof thepoor, thedatarevealthatthepercentageof the total populationliving belowthe subsistenceminimumhasnot changedsubstantiallyover the decade.However, the incidenceof poverty in householdswith activeearnershasmarginally increasedwhilein inactivehouseholdsit hasdecreased.Therisk of povertywasmarkedlyhigher in inactivehouseholdsin thefirst half of the 198Os,but duringthe latterpart of theperiodthis trend was reversed.Therewas a 3 percentincreasein the ratio of the poor amongactive households,while the risk of povertydroppedby about10percentin pensioners'households. One of the factors contributingto this reversalis the significantincreasein the numberof pensionersobtainingsignificantlyhigherpensionsduringthisperiod.Therealpoor, therefore, were thosewho retired somelo-15 yearsagowith very low pensionsandwho havelost their purchasingpowerduringthe recentyearsof high inflation. 1. Parts of this section are based on a paper written by one of the authors. See: Julia Smlai, "Poverty in Hungary During the Period of Economic Crisis." Manuscript, 1990. 2 1.5 Tables2 and3 presentdataon the internal composition of the socialstrataof the poor from variousaspectsandrelatethe structureof povertyto thegeneraloneof the society. As severalanalyseshaveindicated,*incomedifferencesaccordingto theoccupationof thehead and/ortheothermembersof thehouseholdseemto diminishgraduallyin theHungariansociety. Theyaresubstituted,however,by otherdividingfactorssuchasthelife cycleof the family, the household'sparticiIjationin secondaryeconomyactivitiesandthe functioningof intra-family resourceredistributionnetworks. 1.6 The mostmarkedinequalitiesappearin the ratio of earnersto dependentsin the household.This fundamentaltendencyhas beenan important characteristicof the income distributionof the state-dominatedsocietyof the lastdecades.However, what is new aboutit is its shiftfrom a relativelyhigh proportion of elderly adult dependentstoward children. 1.7 Table2 shows,that while therehasbeena modestdecreasein the proportion of activeearnersin the populationbetween1977and1987,there is a markedincreasein their proportionamongthepoor. Theoppositeistruefor thechangesin theproportionof pensioners, anda paralleldecreasecharacterizestheshareof adultdependents(mainlyun-employed,aged housewives).Further,oneof themostsignificantchangesoverthelasttenyearsis theincreased proportionof familiesof urbanactiveearnersamongthoseliving in poverty. While thetypical poorof the 1970scamefrom arural setting,wasrelativelyold, livedaloneor with a spouseon pensionor welfare, the typical poor of the 1980slives in urbanactivefamilies, is relatively young,andraisesseveralchildren. 1.8 The most shockingdevelopmentduring this period is the rapid increasein the proportion of children amongthe poor, while their ratio in the total populationhas been practicallyunchanged.It is an importantindicatorthat approximatelytwo out of every five individualsliving in povertyinthelateeightiesarechildren;roughlyone-thirdof themareunder the ageof 6. Further, therisk of droppingbelowthepovertylineis relativelyhigherfor urban childrenas comparedto the total populationat 28 percentin the caseof urban childrenas opposedto theaveragerisk whichis around15-16percent(seeTable3). Ruralchildrenarealso at risk thoughtheir indicesare somewhatlower than thoseof their urban counterparts.As indicatedin Table3, anothergroupwhichfacesseriousrisksof droppingbelowthesubsistence level are urban householdsreceivingchild care benefits.In 1987,40 percent of all urban householdsreceivingthesetypesof benefitslived belowthe subsistencelevel. 1.9 Anotherchangeduringthis period,is that in additionto the "traditional" poverty of familieswith severalchildren,the incidenceof povertyhasincreasedamongfamiliesraising onechild. While theratio of childrenin activehouseholdswith onechild hasdecreasedon the average,the oppositehashappenedin thecaseof poor families.Theratio of childrenof small families,mostlywith two activeearners,hasslightlyincreasedamongthepoor, from 24to 25 2. See, for example, the introductory summaries to the reports of the annual Income Surveys. 3 percentbetween1977and1987,while it hasdecreasedsignificantly,from 34 to 17percentin the populationof all activefamilies.In short, findingson the compositionof poverty showa markedshift toward theover-representationof youngurbanfamilieswith children.3 1.10 Therisk of droppingbelowthesubsistenceminimumfor thesefamilieshasincreased for severalreasons.The first factor is the rise in unemployment. Though the increasein unemploymentwasonly recognizedaroundtheturn of 1990in Hungary,the 1990Censusdata indicatethat unemploymentwasalreadyquite substantialduring 1989.While the numberof registered unemployedwasaround30,000atthattime,self-reported unemploymenthadreached 110,000.4Men andwomenhavehadto facethe new statusof beingunemployedat different rates.Thehighestratio is indicatedin thecaseof menaged20-25who arepossiblyin the life- cycleof their marriageandraisingtheir first children.Sincetheir spousesareusuallyat home receivingchildcaregrantsor fees,theycannotcompensatethelossof employmentandincome. Thesevery youngfamiliesappearto losetheir mainincome-earningactivity at a higher-than- averagerate facingserious(anduntil now, statutorilyuncompensated) absolute poverty. 1.11 Secondly,recentprice increaseshavedisproportionatelyhit young families with children.Regularreportsof theCentralStatisticsOffice (CSO)indicatethatfor the lastperiod between1987and1990,while the increaseof priceswas211percentin caseof familieswith only adult members,the respectiveratio was 225 percentfor families with three or more children. RecentDevelopmentsin Hungarian Societyand the Impact on SocialPolicy 1.12 This sectionwill presentan accountof the most important socio-politicaland economicchangesthat havereshapedthe Hungariansocietyduringthe last lo-15 years,with specialemphasisonthesignificantchangesin thecausesandmanifestationsof povertydiscussed earlier.Thesectionwill alsopresentananalysisof theeconomic,politicalandsocialfactorsthat haveledto markedshiftsin theinstitutionalstructurewithinwhichsocialprogramsandservices areadministered,andtheconflictsthathaveemergedbetweenthepartiallydivergentprocesses of "unintended"socialand"intended"institutionalrestructuring.Theseconflictshaveresulted in the reinterpretationof the functionsof majorareasof socialpolicy, i.e., the redefinitionof socialsecurity,newinitiativesin education,reformsin housingpolicy andhealthcareandhave alsoproducedan increasingnumberof thoseleft without any socialprotection. The major purposeis to cometo a betterunderstandingof boththe causesof the recentdevelopmentin Hungariansocialpolicy andthe impactof the recentinstitutionalchangeson the urbanpoor. This pictureis ratherunclearandcontroversial. 3. The higher-than-average rate of women on child care grant is an indirect sign of the "age" (i.e. the early life cycle) of the family. 4. See: Preliminary Findings of the Census, 1990; CSO, Budapest, 1991. 4 1.13 The increaseof poverty andits shift toward the urbansegmentsof the societyas discussedearlier,cannotbeexplainedexclusivelyby thenecessaryandunavoidableadjustments made by Hungary in its move towards a market-orientedeconomy.The origins of these processescanbefoundin thecountry'ssocialisthistoryin whichmassivepre-wartime poverty was neverreally abolishedbut rather significantlytransformed.In fact, the socialistway of productionincorporatedthepermanentmaintenanceof povertyby keepinglargesocialgroups in deprivedpositionsin thelabormarketthroughcompulsoryfull employmentwhich wasbased neither on economicnecessities,nor on individualchoicesand rights, but on the political principlesof totalitariancontrol.Thiswaythetruecharacterof povertywas"hidden"for along time, andits recentblatantmanifestationis duemore to the weakeningof totalitariancontrol over the societyratherthanto newprocessesrelatedto market-orientedreforms. 1.14 Therecentdiscoveryof povertyhascreatedakindof socio-political"shock" during thetime of theabolishmentof theauthoritarianparty-state.Povertyat presentis to beregarded as a political rather than a mere economicissuein Hungary. Onecan statein an historical retrospect, which is convincinglydemonstratedby a great number of surveysin housing, income, living conditionsetc., that the slowly emergingmarket forces from the late 1960s onwardhave,in fact, workedtowardthemitigation,thoughobviouslynot afull elimination,of all theconflictsandtensionsaroundpoverty.Therefore,the "free" marketcannotbeblamedfor the suddenappearanceof thephenomenonof poverty. Thiscanalsoexplainwhy thedilemma of "market" versus the "state" seemsto be misunderstood,artificial and false in the contemporarytransformationof the institutionsof Hungariansocialpolicy. 1.15 For thesakeof betterunderstandingtherelevantalternativesavailableto Hungarians duringtheperiodof transition,theprocessesthathelpedthemorefortunategroupsof thesociety to expandandintensifytheir informal networksof socialprotectionin oppositionto the state mustalsobetakeninto account.At present,themajordividinglinescanbefoundbetweenthose who havegraduallydevelopedefficientwaysof self-protectionagainstfull subordinationto the stateandthosewho haveremaineddependenton it. Theformer groupseemsto haveaccessto alternativestrategiesfor defendingitselfagainstimpoverishmentamidthedifficult circumstances of chroniceconomiccrisis,whereasthelatteroftenfindsitself inhopelesssituations.Thelatter's defenselessnessis mainly dueto the fact that it hastraditionallybeenexcludedor, at best, vaguelylinked to the non-institutionalizedservices,benefitsand supportivenetworksof the informalsociety.At thesametimetheinformalwaysof socialself-protectionof the"fortunate" majority have not yet beenextendedand transformedto the universallyaccessiblepublic institutions.Thus, ironically, the collapseof the all-embracingparty-statehasleft behindan institutionalvacuumafter thedisappearanceof its coercion-based"protection". 1.16 It is alsoworth notingthat theformal servicesof statesocialpolicy havenot yet proceededto rid themselvesof their authoritariancharacteras they are still regardedas the representativesof control insteadof rights, authorityinsteadof choice,defenselessnessinstead of protection.Their genuinesocialandpoliticalrestructuringhasnotyet begunasfundamental lawson guaranteedsocialrights, on the socialresponsibilitiesof the centralandof the local 5 states.Basiclegalregulationsof socialsecurity,of educationandhealthhavenot yet evenbeen addressedby the newly electedparliament,while the old rules do not and cannot work. Thereforethesocialpolicyof recentyearsduringthetransitionperiodcanbecharacterizedby confusion,uncertaintiesandgrowingsocialtensionsonthepartof thosewhodonot haveaccess to anyalternativeforms of self-protection.Thissituationcannotbeexplainedbymereeconomic factors asit is mainlya matterof thepresentstateof politicalstruggle.The withdrawalof the totalitarianstatehasnotyetbeenreplacedby thedemocraticinstitutionsof awell-developedcivil society.Instead,onecanobservethesymptomsof socialdisintegration,leadingto the creation of a "secondsociety". 1.17 The analysisstartswith a brief presentationon the causesfor the erosionof the state-socialistorder and someof its consequencesin the main areasof socialpolicy. The discussionanalyzeshow thedisintegrationof thesocialistsystemhasbeeninterrelatedwith the creation,reproductionandhidingof poverty, andhow thecollapseof the weakened"socialist" institutionsof power wasfollowedby the sudden"discovery" of povertyasa by-product(but definitelynot asa product)of the recentpoliticalchanges.Thecurrentefforts of the stateand otherinstitutionswithin the societyin copingwith thisproblemwill bepresentedin thecontext of the complexityof social,politicalandeconomictransformationwhich areaccompaniedby seriousstrugglesof diverginginterestsamidthecircumstancesof thepresentchroniceconomic crisis of the country. 1.18 Oneof theclassicalapproachesto theevaluationof theeffectivenessof socialpolicy isto questionhoweffectiveinitiativeshavebeenin mitigatingsocialinequalitiesandin reducing poverty. However, this classicalapproachseemsto havelimited relevancein contemporary Hungary. Thechallengewhichpolicy-makersfacestodayarerelatednot only to the questions of efficiencyandbettertargeting,but aredeeplyrootedin the structuralreorganizationof the institutionsof the previousregime.Theseinstitutionsarein the processof redefinitionasthey haveto betransformedfrom following thedictatesof totalitarianrule overthe societyto those which expressa degreeof legally guaranteedsocialrights in a democracy.Their everyday functionalsohasto bereshapedastheyattemptto meetthedivergingneedsof membersof the society insteadof representingthe primacy of the political dictatesof a ruling authority. Obviously,thesebroaderchangesdo not imply merelyabetterallocationof theresourcesand a redefinitionof thosein chargeof thedaily decision-makingprocess.Much broaderandmore significantissuesrelatingto the necessarychangesin ownershipanddecision-makingandthus struggleswith respectto powerandcontrolareimplied. t19 Therefore, any attempt to describeand analyzethe contemporarychangesin Hungariansocialpolicy hasto simultaneouslyapply two distinct perspectives.One axis of analysiswould be the degreeof "denationalization" of its institutions,which hasimportant implicationsrelatingto issuesof accessandcontrol.Theotheraxisof evaluationcanbethatof a more classicalcharacter,i.e. identifyingthe benejiciaries and the losers of theseongoing changes.The presentstateof poverty can be interpretedand understoodin the context of 6 significantsocialrestructuring,whichalsoembracesimportantprocessesbeyondthechangesof theclassicalfields andcapacitiesof socialpolicy. 1.20 It is a peculiarityof the recentHungarianhistory that it is quitedifficult to tell preciselywhen the Hungariansocietybegunits move from classical"socialism" toward a market-regulatedsocio-economicorder. The so-called"systemicchanges"of 1988-90were in fact the completion of a long-term gradual erosion of the "old rule", rather than the revolutionaryoutsetof radicalsocialandeconomicchangesof recentyears. In other words, while in most of the other former "socialist" societiesof Easternand Central *Europethe political turmoil of 1989beganthe processof transformationof the previously"untouched", rigid socialandeconomicinstitutions,thecollapseof state-socialismwentthe otherway round in Hungary.Duebasicallyto thepeculiaritiesof thepost-1956phaseof socialismin thecountry, whichwasdeterminedbythedelicatepoliticalcompromisebetweentherulersandtheruledafter the defeatof the 1956revolution,quitesignificantmovestowardsa market-economyandnew relationshipsof private ownershiphadgraduallydevelopedbeneaththe seemingly"socialist" political surface and within the classicalinstitutionalframes of the economicand social organizations.The ultimate disintegrationof the weakenedpolitical structurewas a natural outcomein this sensethoughnoonecouldforeseewhenit wouldoccurandwhatwould follow. It was well preparedby a generalsocial, economicand ideologicalcriseswhich has since opened,more andmore, the frameworkfor democracythroughoutthe 1980s. 1.21 Thesechangeswere strengthenedsimultaneouslyby externalandinternal forces. Theexternalfactorsweremainlyof aneconomicnature.After thelate 197Os,the regimehad to faceup to theundeniablesymptomsof anoverallcrisisof theeconomy,thatcouldno longer be coverednor handledby the old "firefighting" methodsof "productions-campaigns".The traditionalsourcesof growth.basedontheever-lastingquantitativeincreaseof labor, cheapraw material and capital-savinginvestmentsbecamedrasticallyexhausted.Even the additional externalresourcesobtainedthroughincreasedindebtednessof thecountrybecameinadequateto financethe economyin its givenform. Thenew economicpolicy declaredby the Communist Party (HSWP) in 1978 attemptedto counter-vailthese unfavorableprocessesby placing restrictionson importsandby attemptingto curtail domesticconsumption.The shift towards liberalizingtheeconomyrequiredamorepronouncedorientationto market-supportivereforms of theeconomy"at home". Thegradualliberalizationof pricesandimports,reforms aimedat facilitatinglabor mobility andultimatelythe privatizationefforts pursuedby the Government (from 1982on), were logical and indispensableelementsof measuresdictatedby pressing necessities.Theseled to a gradualerosionof the old rule and to a simultaneousgradual adjustmentof the societyto newchallengeslongbeforethecollapseof the Communistregime. 1.22 Theseexternalmacro-economicdeterminantsof aslowtransitiontowardsamarket economywere coupledwith andstrengthenedby the slowly evolving"internal" forceswithin the societythat playedanequallyimportantrole in thedissolutionof the "socialist" order and in theevolutionof informalmarket-orientedwaysof socialadaptation.Thoughadetailedsocio- historicalanalysisof thesefactorsisbeyondthescopeof thispaper,it hasto beemphasizedthat 7 perhapsthe most importantvehicleof this erosionwasthe socialparticipationof a significant proportionof thesocietyin theinformaleconomy.As will bedemonstratedbelow,thismassive participationhasalsobecomethemainstrategyfor preservingpreviousstandardsof living amid the devaluationof incomeswhich were primarily derivedfrom the formal segmentsof the economy,i.e. both earningsfrom the activitiesat the "official" workplacesaswell asin-cash benefitsfrom socialsecurity. During the 198Os,real wagesin the socialistsector declined sharply.Householdsmaintainedthe growth in realper capitalabor incomethroughincreased relianceon two full-time earners,which waspartly facilitatedby anincreasein femalelabor participationandthroughincreasedsecondaryemployment. 1.23 Thepeculiarityof thedevelopmentof thisphenomenonin Hungarycanbefoundin the fact that the daily participationin oneor anotherform of informalproductiveactivity in additionto regularwork in thestate-controlledsocialistfirms hadgraduallybecomeanunwritten norm duringthe lasttwo decades.By themid-1980s,three-quartersof all householdsobtained additionalincomefrom informal sectoractivity and an ever-increasingdaily participationof nearly all family-membersin its various "sectors" hasbeenevidenced.'Between1978and 1987,earningsfrom primaryemploymentin thesocialistsectordeclinedfrom 50percentof total householdincometo 41percentwhileearningsfrom secondaryemploymentrosefrom 7 to 11 percentduringthisperiod(World Bank,1992).In addition,thesespheresof informalsociallife becamethe major forms of alternativeservicesamid the shrinking state-deliveredcare for children,the sick, disabledandelderly. 1.24 Thisvastinformalsphereof production,distributionandconsumptioninvolvedthe cooperationandactivecontributionof all membersof thefamily. It demandeda deliberateand permanentsearchfor theoptimalcombinationsof theparticipationof thefamily-membersin the formal sector(dictatedby thelegal,administrativeandfinancialregulationsof thestate-socialist order) andin the informal economy(dictatedby theaspirationsandneedsof thefamily which couldbestbemet by self-production). 1.25 Theindispensablerole of theinformal sectorhasto beconsideredwhenanalyzing therecenttrendsof economicandsocialtransformation.Onecannotfind adequateexplanations to therecentsubstantialincreaseof thenumberof smallprivateenterprises,`jor to therelatively slow and gradual increasein the rate of unemployment,and especially,to its peculiar 5. For detailed data and analysis see: Changes in the Way of Life of the Hungarian society, CSO, Budapest, 1990. 6. The number of registered limited companies (ltd.) increased from 19 in December, 1982 to 12,559 by July, 1990. The ratio of those employed in the private sector was 3.4 percent of all employees in 1980, growing to 8 per cent by 1988. (See: The Book of Facts `91; R&i6 Publishing House, Budapest, 1991, and Tibor Kuczi-Agnes Vajda: The Social Composition of Small Entrepreneurs, Institute of Labor Studies, Budapest, 1990.) 8 composition,'or evento themarkedrestructuringof poverty,* without takinginto accountthe material,but alsothe culturalaspectsof the lastingexperienceof theHungariansocietyin it. Thoseexperiencesof organizinglivesaccordingto therequirementsof the co-existence of the formal and informal spheresof activities has inducedremarkablechangesin the habits, motivations,aspirations,valuesandprioritiesof thesociety,andhelpedthewidespreadevolution of market-orientedbehaviorlongbeforethe openingof channelsfor its full realization. 1.26 Therefore,it isjustifiableto expandthenotionof the "transition" periodin Hungary to includethe 10 to 12 year period in which theseconcurringexternaland internalfactors occurred. The more recent reforms that havetakenplacein the last 2-3 years are in fact "organic" continuationsof theprocesses,modificationsanddevelopmentsdiscussedaboveand emergedmuchbeforethepolitical acknowledgementof the completeerosionandcrisisof the "old system". 1.27 Theconsequencesof theadaptationof theHungariansocietyto thechallengesof the transformationcan be demonstratedin nearly all aspectsof life. However, the analysisis restricted to a limited number of areas that are more closely related to the classical "competence"of socialpolicy, i.e. namelyto the developmentsin themaintenanceof income andstandardsof living. 1.28 A surprisingaspectof theeconomiccrisisof the 1980swasthe fact that the steady declinein theproductivityof the socialistfirms wasnot accompaniedby a paralleldecreasein the aggregate indicatorsof incomeandconsumption.As indicatedin Table4, while in the secondhalf of thedecadethelevelof realearningsderivedfrom the"official" workplacesnever reachedthestandardof 1980,indicesof per capitarealincomesandthoseof theaggregatereal valueof consumptionshoweda modest(thoughsomewhatoscillating)increase. 1.29 The diverging trends of earningsand incomeswere due to severalconcurring processes.On the onehand,asit hasalreadybeenmentioned,thegovernmenttried to control domesticconsumptionby introducinga set of measuresto restrict both investmentsand 7. The number of registered unemployed in 1991 was approximately 320,000, roughly 7 percent of the labor force. This was below the expected level officially announced at the beginning of the year (most of the economic forecasts calculated a rate around ten percent of the labor force by the end of the current year). The peculiar composition of unemployment was even more remarkable: roughly two-third of both the self-reported and the registered unemployed were men, while women were obviously over-represented in the bulk of (mostly unskilled or semiskilled) jobs that are being liquidated. The key to the paradox seems to lie also in the above described relative strength of the (former) informal economy. Women seem to take up work in an increasing number on the edges of the two economies, i.e. in various forms of (yet undeclared and mostly unregistered) part-time work in local services, small-scale production, casual employment etc. This temporary way out of unemployment seems largely to be closed for men whose household status does not permit them to give up seeking "ordinary" forms of gainful employment. 8. See earlier section for more detail. 9 consumerdemand.That policy led to a gradualshrinkingof the first economy,a steadyand previouslyunforeseenrise in consumerprices,gandthe introductionof taxationon personal incomes.On the other hand, the societyrespondedwith a remarkableexpansionof and intensificationin its participationin the informaleconomy. 1.30 Some comprehensivedata may presenta better understandingof the overall importanceof the informaleconomy.Table5 providesestimateddataon time spentin work activitiesin both theformal andinformaleconomies.Thedetailedbreakdownof the dataalso : .,.: showsthe changesin the divisionof laborwithin households.As indicated,the expansionin informal sectoractivity was mainly due to the dramaticincreaseof the performanceof the inactivepopulationwhich is comprisedbasicallyof pensioners.1o 1.31 Table6presentstheratesof participationandthetimeallocatedto variousactivities by the populationaged 15-69 years. As indicated,both men and women increasedtheir participationin all activitiesoutsidestate-control,thoughthe rates of increasewere more remarkablein "urbanized"typesof work ratherthanin agricultural. 1.32 These data also highlight how householdshave started to "build" into their long-term strategiesthestableexistenceandwideacceptanceof theinformaleconomyandhow they have attemptedto find ways of self-protectionby combiningseveraltypes of coping strategies.In thisway, manywereableto avoidthedeteriorationin their standardof living and infact asignificantproportionhavebeenableto improveit. Frequently,thisoccurredby merely utilizing previouslyaccumulated"unregistered"knowledgeandskillsthat peoplehadacquired duringtheir continuousparticipationin the informaleconomy.Themostwidespreadresponse hasbeena skillful andadaptivestrategyof increasingtime allottedto activitiesoutsidethe registeredspheresof production.This turnedout to be useful for raisingthe incomeat the 9. For detailed data see the series "Minutes on the Indices of Consumer Prices" edited by the Central Statistical Office. The overall increase of consumer prices between 1980 and 1990 (1980= 100.0) was 277.1 percent, that was significantly exceeded by the 307.0 p.c. - index of clothing, by the 327.1 p.c. rate of increase of service-prices, and by the 294.7 p.c. rate of increase with regard to goods outside the consumption-basket of everyday consumption for subsistence. 10. The scope of the paper does not permit an analysis of the gearing of the "formal" institutions of social policy (especially, the routes to social security) into the functioning of the informal economy and vice versa. It has to be noted, however, that the use of sick-pays, disability pensions and of some of the child-benefits for a (mostly temporary) withdrawal from the first economy, accompanied by a simultaneous intensification of participation and work in the informal one was a natural outcome of the functioning of the old system which served the interests not only of the individuals and their families, but, first and foremost, the smooth functioning of the "official" economy itself. This characteristic feature of multiple functions of social policy in "socialism" (and much' of it even in the process of transition) is often forgotten, when the rates of expenditures on social security are regarded to be "too high". (A detailed analysis of the complexity of functions and of the multiple use of the social security system can be found in: Julia &alai: Exit from State Economy; in: Time for Retirement (eds.) Martin Kohli et al; Cambridge University Press, New York, 1991.) 10 disposalof the household,substitutingin-cashexpendituresor alleviatingthe constraintsin everydayconsumptionby "home-made"goodsandservices. 1.33 Theshift from theformal towardtheinformaleconomyhasfurther implicationson changesin thecompositionof incomeandconsumption,aswell ason otheraspectsof the way of life in Hungariansociety. First, the expansionof work in the secondeconomyenabled householdsto earn incomederivedfrom sourcesoutsidethe direct interventionof the state. Earningsandspendinghavecomemoreunderthecontrolof theindividuals,andcanbeadjusted to theemergingandchangingneedsof families.Datafrom subsequentincomesurveysreveal, thattheimportanceof earningsfrom sellinggoodsandservicesproducedby unregisteredsmall family-enterpriseshasbeenincreasingsignificantlyduring the 1980s- while their sharewas 14.9percentin thetotal cash-incomeatthedisposalof an"average"householdin 1982,it grew to 20.4percentby 1987." 1.34 Second,thegrowthof theinformaleconomyandits prevalencein theeverydaylife of the societyhas led to a remarkablesurgein the participationof individualsin efforts to improvetheir lives. Perhapsthiscanbestbe demonstratedin thesphereof housing.As datain Table7 show,thequalityof thenationalstockof dwellingshasremarkablyimprovedduringthe lastdecade.Three-quarters of theflatsin Budapesthaveabathroom(asopposedto 56percent in 1980),four out of five flats areconnectedto thecommunalsewagesystem;one-thirdof the stockconsistsof largeflats with threeor morerooms(it hasto benoted,that the rate among thenewly built flats isevenhigher:in 1989,theyrepresented61 percent).Detailedanalysesof yearly statisticalreports on constructionindicatethat thesedevelopmentshavebeenalmost exclusivelyproducedthroughprivateresourcesandby privateactivitiesof families.`* 1.35 The main transformationin the traditional functions of socialpolicy, i.e. the protectionagainstthe fall of incomesandagainstthe declineof a previouslyattainedgeneral standardof living, hasbeenits "privatization" duringthe lastdecade.Thereactionof a large proportionof Hungariansocietyto thechallengesof thecrisisof thestate-economyhasbeenthe reductionof their dependenceonitsinstitutionsand"substitution"by increasedindividualefforts and productivity. The stateassistedthis processin a rather peculiarway - state-controlled resourcesfor housingandfor incomemaintenancethroughsocialsecurityhaveincreasinglygone to those,who "converted"theseresourcesintoself-controlledproduction.In otherwords,social policy helpedthosewho helpedthemselves.This maybedemonstratedby dataon the gradual 11. See: The Level and Distributionof Family Incomes in 1982; CSO, Budapest, 1985, and Income Distribution in Hungary; CSO, Budapest, 1990. 12. The withdrawal of the state in the field of housing was very remarkable in the last decade. While the ratio of dwellings built (partly or exclusively) by "official" agents (state-run constructing firms, building companies, cooperatives, enterprises etc.) was 30 percent in 1981, it declined to 18 percent in 1985, and dropped below 10 percent in 1989. For a detailed analysis of the background forces and some consequences, see: JAnosFarkas-Agnes Vajda: Situation in Housing, Social Report, 1990; TGRKI, Budapest, 1990. 11 shifts of the centralresourceson housingfrom state-financedconstructionto state-subsidized loans on individual building-activitiesor by the speedyincreaseof central expenditureon disabilityor old agepensions,whichwasaccompaniedby theabove-mentionedincreasein work by pensionersoutside the formal sphereof production.It is importantto add, though,that the significantincreaseof statespendingonpensionswasnot accompaniedby a riseof the relative value of thesebenefits.In fact, the averageper capitareal valueof pensionssignificantly decreasedduringtheearlyto mid-1980s.For example,thosewhoretiredin 1980,hadto suffer a 25-30 percentlossin thepurchasingpowerof their pensionby 1987.Anotheraspectof this phenomenoncanbe demonstratedby the fact that some60percentof thepensionersreceived benefitsbelow theofficially declaredpensionminimumin 1989.13Thisway thegreatmajority havereallybeensuccessfulin countervailingthenegativeimpactsof thewithdrawalof the state andhaveattemptedto exploreandexploitthepositiveaspectsof thetransitionandof thegradual erosionof the "classical"socialistrelations. 1.36 However, the macro-economicaggregatesand nationalaveragesof the trends presentedabove,hide one crucial aspectof the processes,namely, the parallel significant increaseof socialinequalitiesof all kinds. While it is evidentthat thosewho had accessto private resourcesand/or the protectivefamily network could copeand even in somecases improvetheir living standards,aswasdiscussedearlier, thosewho for onereasonor another haveremainedoutsidetheinformalsafety-nethavebeenexcluded.Theyarethe "forgotten" part of thesociety,the "old" and"new" poor, whoarealsothemostdefenselessvictimsof therapid withdrawalof the statefrom theprovisionof socialservices. 1.37 The impact of the crisis situationwith regardsto socialpolicy and servicesis unjustlyandunevenlyput on the shouldersof its mostneedyusers:the sick, theold, children and their families. The high inflation rate of the last few yearshascreatedinsurmountable difficultiesfor thepoor asincreasesinpricesof goodsandfeesfor serviceshasresultedin many of thembeingeffectivelypriced out.14 1.38 Data of the lasttwo years showa decrease in the numberof childrenattending kindergartensor takingup school-meals,andan increasein the numberof thoseapplyingfor arbitrarily distributedmeans-testedwelfare assistanceat the local councilsor in family-help centers.However,theseinstitutionsareunableto copewith thegrowingneedastheyfacesevere resourceconstraintsdue to cuts in statefunding. In addition, if adequateresourceswere available,mostlackthe skilledpersonnelandadequatefacilitiesto effectivelyadministersocial programs. 13. See: Book of Facts, 1990; R&i6 Publishing House, Budapest, 1990. 14. The following data are self-expressive: the number of children on regular monthly welfare increased from 30,656 in 1986 to 79,728 by 1989. The average monthly value of assistance has grown only by 14 percent, while the rate of increase of consumer prices was 46 percent throughout the three-years period in question. (See: Statistical Yearbook, 1989; CSO, Budapest, 1990.) 12 1.39 Similartendenciescanbereportedwith regardto thesituationin thesocialsecurity- schemes.Thecutsandrestrictionsonthespendingof the statebudgetwerepartly shiftedon." Therefore, pensions,most child-relatedbenefits, sick-payetc. have not been validatedin accordancewith inflation.Thelossof their valuehasbecomeanimportantfactor leadingto the rapid impoverishmentof thoseliving mainly from in-cashbenefits:pensioners,familieswith dependantchildren,peoplewho arechronicallyill, etc. 1.40 All thesedrasticchangesare accompaniedby efforts to targetservicesto selected beneficiaries.This argumentis well-knownfrom thehistoryof socialpolicy - sinceuniversal benefitsdo notdiminishinequalitiesof take-upandaccess,it ispreferableto concentratescarce resourceson thosereallyin need.Thus,therehavebeensignificantcutsin public spendingin the nameof "more just" social intervention.The outcomehasbeenan increaseof social inequalitiesof take-upandof per-capitaincomefrom benefits,whilemanyof thepoorhavebeen bypassedor havedroppedout. 1.41 Theseunfavorabledevelopmentsare not the "inseparable"and "automatic" by- productsof a "free market". Rather,it canbearguedthatthetrendsof povertypresentedabove arenottheconsequencesof themarketassuch,but aredueto thelackof deliberate,protective andwell-targeted socialpolicy. 1.42 As wasdemonstratedearlierin thispaper,theeffortsundertakento moveHungary towardsa marketeconomyhavehelpeda majority of the societyto obtainsomelevel of self- protectionagainstthe actualcrisis within the formal economy.Most havebeensuccessfulin buildingtheir lives (at leastpartly) on alternativepillarsandhaveworked to developcoping strategieswhich haveallowedthemto not only weatherthecrisis, but evento buildalternative waysof life andwork which openfuture opportunitiesfor them. 1.43 `However,manyof theinterventionswhichhavebeenundertakenin thenameof the "free" market and "socialjustice" havealsoled to the creationof a "secondarypart" of the society.In additionto thevariousgroupsmentionedearlier,suchasyoungurbanhouseholdsand pensioners,anothergroup has beenadverselyaffected by theseinterventions.This group comprisesmainlythoseindividualswhohavebasedtheir livesandaspirationsontheincentives, orientationsand regulationsof the pastforty yearsof socialism.Theyhaverespondedto the challengeof industrializationbymovingtourbansettlementstoprovideeducationalopportunities to their children(whichthey believedappropriatein a "socialist" economy)andby giving up theirpeasantrootsandtraditionseventheirwayof life to occupythelargeclosedhousingestates built "for them". Today,they are thevery oneswhich facea highrisk of unemploymentand poverty. lS.For a more detailed discussion on social sector expenditure in Hungary during the period 19751990 see: Hungary: Reform of Social Policy Expenditure. A World Bank Country Study, Washington, D.C., 1992 and Hungary in the 1980s: A Review of National and Urban Level Economic Reforms, Transpotiation, Water and Urban Development Deparrment, Working Paper No. 2, February 1993, Washington, D.C. 13 1.44 Many havetried to mobilizethe "general"self-protectivemethodsof the majority, theyhavealsointensifiedtheir work in theinformaleconomy(thoughtheyprobablyhaveaccess onlyto theworstjobs in it) andtiedup thenetworkof the(extended)family by moreregulated and "targeted" internal redistribution. However, without a parallel strengtheningof the macro-social Usafety-net, * the Hungariansociety may face seriousproblemsof social disintegration. II. SECTORAL INITIATIVES CURRENTLY BEING DESIGNED OR UNDERTAKEN IN THE CITY OF BUDAPEST 2.1 This sectionpresentsan overviewof the most importantrecentdevelopmentsin Hungariansocialpolicy, particularlyasit affectsthe situationof the urbanpoor. It beginsby discussingrecentchangesin theinstitutionalstructurewithin whichsocialpolicy initiativesare beingadministered.It thenpresentsdetaileddescriptionsof currentsocialpoliciesandprograms being designedor undertakenin the city of Budapest,with particular focus on the policy initiativesof theCity's self-governingbodies.Thesectorsexaminedincludehousing,education, health,socialsecurityandsocialassistance. Institutional Structure 2.2 To put the recentinstitutionalchangesinto perspective,onehasto recall that the greaterpart of the changeswith respectto regulating,administeringandfinancingof social policy initiatives relates to the ongoing significant restructuring of public and social administrationwithin Hungary. The formal institutional framework for a devolution of responsibilitybetweenthe centralandlocal organsof the statewas laid down in the Act on LocalSelf-Governments,enactedbyParliamentaspartof thefirst lawsof thesystemicchanges in July 1990.Throughthis Act the legalbasisfor a wide rangeof further stepstoward the decentralizationof theformerly centralizedadministrationof socialpolicyhasbeenconstructed. 2.3 TheAct establishedtherulesof localelectionsthattookplacein October,1990and definesthe fundamentalrights andresponsibilitiesof the new constituenciesandthe various committees/bodiesundertheirrule andcontrol.Further, it identifiedthesourcesof revenuefor the local district governmentsanddesignatedtheir shareof the formerly centralstate-owned properties. Thus, the newly electedlocal governments"inherited" all the public services previouslyrunby thecentrallyadministeredlocalcouncils,includingpublicschools,localhealth services,public child care facilities, public centersfor the care of the elderly, state-run family-help centers,etc. andbecamethe ownersof all previouslystate-owned dwellings within their administrativeboundaries. 2.4 TheAct specificallydelegatesto thelocaldistrictgovernmentstheresponsibilityof maintainingandadministeringbasicservicesin the following areas:1) child carefor children betweenthe agesof threeto six; 2) primary schools;3) intramuraland/orextramuralcarefor the elderly; 4) basichealthcare; 5) welfare assistancefor the poor; and 6) housing.Other servicesalsodelegatedto districtgovernmentsonamandatorybaseincludefamilyhelpcenters, educationaladvisorycenters,daycarefor schoolchildren,commumtycarefor thedisabled,and the mentallyill. 2.5 Sourcesof revenueare alsoclearlydefinedin this legislation.Themajor sources include: 1) reimbursementof a specifiedrate of the personalincometaxespaid into the state revenueby localinhabitants;2) transfersfrom thestaterevenuecalculatedonper capitanorms with regardto the abovementionedobligatoryservices;3) localtaxes;4) additionaltransfers from the centralbudgetfollowing successfulapplicationto run servicesandprogramsaspart 15 of thetargetedprojectsof thecentralstate;5) transfersfrom socialsecurityto administerlocal medical services;6) economicactivities/investmentsand salesof local governmentassets, includingthe saleof previouslystate-owned flats to private owners;and 7) donationsfrom foundationsin andoutsidethecountryandtransfersfrom charityorganizations. 2.6 Thesegeneralrulesalsoapplyto the capitalcity, Budapest.However, the sizeof the city and its traditionswith regardto the divisionof tasksanddutiesbetweenits central organsandthoseof the districtshasled to someadditionalandexceptionalregulationswhich were laiddown in the Act on theCapital,passedin the Springof 1991.As a result, Budapest wasdividedinto 23 new constituencies- thoseof the 22 independentdistrictsandthe Central bodyof the capital.All 23 constituenciesweredominatedby the two major liberalparties,the Associationof FreeDemocratsandtheAssociationof YoungDemocrats.Thepartiesdominating the Parliamentand the coalitionof the Central Governmentwere in a minority amongthe Membersof Parliamentof the City andalsoof the districts. The legislationdelegatesto the districtshavea high degreeof autonomyin definingthe socialprogramsimplementedwithin their administrativeterritory. TheCentralbodiesof theCity havea direct sayonly with regard to programsandserviceswhichareadministeredfor theentirepopulationof thecapital,but in someinstancesthey alsohavethe mandatefor thoseadministeredoutsidethe boundariesof Budapest.(Suchasthevarioussocialhomeswhich arediscussedlater.) 2.7 TheCentralConstituenciesaremandatedto focustheir activitieson elaboratingthe more long term priorities, whereasthe districtsare in full chargeof implementinglocal level policiesandprograms.Thepresentstateof divisionof rightsanddutiesbetweenthedistrictsand thecentraldecision-makingbodiesof thecapitalis a sourceof permanentuncertainties,since most of the necessarylegislation,includingthe SocialAct on BasicSocialRights andon the relatedcompulsorytasksof thelocalgovernments,havenot yet beenpassedby theParliament. Therefore,therearemanysignsof arbitrarinessandhaphazardnesswith agreatnumberof local regulationspresentlybeingregardedasonly transitory. 2.8 As a consequence,the Central Constituencyhas concentratedits efforts on negotiatingwith the Mayors and Committeesof the districts to help avoid anarchyand the splittingof the city into 22 independent"villages". In the recentlypublishedProgram of the Lord Mayor of Budapest, the Advisory Boardof the Lord Mayor attemptedto lay down the more longterm principlesof the maintenanceanddevelopmentof the economicandsociallife within the city, andtried to orientthe districtstowardmorecoordinationandcooperation. 2.9 Thebiggestissuepresentlyat stakeistheprivatizationof statehousingwhichaffects half of the stockof dwellingsin Budapest.While someof the district governmentsareactively pursuingprivatizationof the stockwithin their territorial mandatein anattemptto sellasmuch of it aspossible,others(typicallythosewith a relativelypoorerstockanda relativelypoorer population)arebeingmorecautiousindefiningthedesirableratiobetweenprivatelyandpublicly ownedflats, and are following a more gradualpolicy of privatization. This experienceof diverging privatization programshas led to the establishmentof a forum for preparatory 16 negotiationsamongthedistrictsin housingaswell asothersectors.Theimpactof theexistence of sucha forum canalreadybe felt in the more deliberateandcoordinatedstepstakenin the spheresof childcare,homesfor the elderly,andprimary andsecondaryeducation. SectoralPoliciesand Programs Housing 2.10 By way of background,this sectionbeginswith a brief descriptionof the housing sectorin Hungaryanddiscussesthe conditionof the housingstock,housingfinanceissuesand the rental sector.It thenoutlinesthe major housingpolicy initiativesthat are presentlybeing undertakenwithin the City of Budapest. HousingConditions 2.11 Forty five percentof thestockof dwellingsin Budapestwasbuilt beforetheSecond World War. Theintensityof housingconstructionwasvery low for thefirst two decadesafter the war for two main reasons.First, housingwasnot a high priority in economicandsocial policy formulation at that time, asinvestmentswere concentratedfor the purposesof forced industrialization. Second,the populationcould not afford to rely on private resourcesin substitutingstatespendingandthecomplementaryarrangementsof loans,firm-basedcontracting outs, etc. were not available.As a consequence,dweller/flat ratioscontinuouslyincreasedand the qualityof thehousingstockbecameseriouslydilapidatedduringthis period. 2.12 Theculminationof unmetneeds,bothin constructionandin the spheresof urban rehabilitationled to chronicshortagesandto higherthanaverageyearly inflationrateson the housingmarket.Becauseof theintensemigrationtowardthecapital,tensionsandshortageswere moredramaticin Budapestthanin mostof theothercities.Facingserioussocialconflictswith regardto housing,the CommunistPartybeganto give priority to the sectorin its long term socialpolicy planningaroundthemid-1960s.As aconsequence,new schemesof subsidiesand other forms of financialsupportwere introducedfrom the late 1960sonward, and housing constructionwas intensifiedreachingits highestlevelsin the 1970swhen 21 percentof the currentstockof dwellingsof the capitalwere built (mostof themaslargecondominia). 2.13 As mentionedin the previous section,the quality of the housingstock within Budapesthasimprovedduringthe lasttwo or threedecadesthoughat a lower ratethan in the countryside.Densityratioshavealsoimproved,thoughtheprocesswasaccompaniedby asteady increaseof inequalitieswithin the city - the flats built on the largecondominiaare generally smallandovercrowded.Thisis oneof thefactorsthat hasledto the developmentof new slum areas,especiallyin the outskirtsof the city. 2.14 Data obtainedfrom a HousingSituationstudy in Hungary (1990) indicatedthat Hungarymadesignificantimprovementsin investmentin thehousingstockduringthe 1970-1984 17 period. For example,the dataindicatethat the shareof the stockwith variousamenitiesmore thandoubledduringthisperiod.By 1986,Hungaryhadincreasedtheaverageunit sizedwelling unit in the country to 74 squaremeters.One-quarterof thestockof dwellingsconsistsof one roomflats andthisratio is identicalwith thatof thelargeflats(threeor morerooms).Forty nine percentof thestockhascentralheatingwith 51 percentheatedindividually(two-thirdsof them with traditionalmaterials,i.e. mostlywith coalor wood). (Ibid) HousingFinance . ; 2.15 Subsidiesgiventohouseholdspurchasingtheirhomesaccountedfor about75percent of all recognizedor official subsidiesin 1989.This amountof subsidiesis approximatelyin proportionto theshareof homeownersto allhouseholdsatthattime (Ibid: 32). However, when "off budget" subsidiessuchasgrantsfrom employersandlocalcouncilsandunmeasuredrent subsidiesaretakeninto account,theproportionchanges.For examplein 1989total subsidiesto thehousingsectoramountedto Ft. 126billion or 7.5 percentof GDP. Of this, 42 percentwas providedto staterentalhousingandtheremaining58 percentwent to homeowners(Ibid: 34). 2.16 Companiesprovidea major sourceof assistanceto their employeeswho want to purchasehomes.In 1989,employerhomeownershipsubsidieswereequivalentto 80percentof the socialallowancesfor homepurchasesgrantedby the state. 2.17 In additionto the subsidiesmentionedabove,two other types of subsidiesare providedto householdspurchasinghomes:1) interest rate subsidies which is calculatedasthe differencebetweenthe3percentloanrateandthegovernment'scurrentcostof fundsand2) the "socia1 allowance" whichis anup-frontgrantto householdsto reducethesizeof theloanto be taken(Ibid: 46). Neitherof thesesubsidiesareincome-basedbut thesocialallowanceprovided householdsincreaseswith thenumberof children. 2.18 Hungaryinstitutedahousingallowanceprogramatthebeginningof 1990to protect certainhouseholdsfrom rent increaseswhichareto beanintegralpart of thetransformationof thestaterentalsector.Housingallowancesareprovideddirectlyto householdsto beusedin the rentingof a unit andparticipationin theprogramis conditional--itis basedon the household's level of income.Householdshaveto apply throughthe local councilsto participatein the program. Under this newly institutedprogram,pensionersandhouseholdswith at leastthree children and monthly incomesof under Ft. 4,300 per capita were fully exempt from rent increasesthat were imposedin January1990. 2.19 Householdsparticipatingin the program have the liberty to chooseany unit. Householdallowancesaretenant-basedandnot project-basedsubsidies,if a householddecides to moveto anotherunit, thepaymentsgowith the household.It is assumedthat becausethese allowancesare tenant-based,competitionwill be fostered within the state rental sector. Participantswill inducelandlordsinto competingfor their patronageandif unitsarenot rented they will remainvacant(Ibid: 38). Althoughsystematicdataon participationare not readily 18 available,it appearsthat a largenumberof tenantshaveappliedto participatein the housing allowanceprogram. The Rental Sector 2.20 Therentalsectorin Hungaryconsistsof bothprivateandstate-ownedrentalunits. In 1990,thestaterentalsectorconsistedof approximately800,000flats, abouthalf of which are concentratedin Budapest-theonly city in which mosthouseholdsrent. Thenumberof units within theprivaterentalsectorisunknownbut includesthenormalrentalof privateunits(which is rentedoutprimarily to foreigners)andsubletsof part or all of state-ownedrentalunits. The numberof privaterentalshasbeenincreasingsteadilysincerentalunitswere madefully legal in 1989. 2.21 Approximately20percentof thehousingunitsin Hungaryarestate-owned.Thetotal marketvalueof thestate-ownedhousingstock,includingsitevalue,is estimatedat over Ft. 800 billion andprovidesaflow of implicit andexplicitsubsidiesto tenantsof over3percentof GDP (Ibid: 52). 2.22 In the staterentalsector,tenantsobtainan interestin their unit by makinga "key money"paymentto thegovernment'smanagementagencyat thetime of initial occupancy.This "right of occupancy"to theunit canbeinheritedby the occupant'schildrenor soldin a gray marketandisofficially recognizedbylocalcouncilswhopayvacatingtenantsseveraltimestheir initial "key money" paymentto encouragemobility to otherhousingunitsandgivethecouncil the right to allocatetheunit to newtenants. 2.23 Thestaterentalsectorischaracterizedby fragmentationof controloverrentalunits. For example,while localgovernmentshavebeendelegatedtheresponsibilityof maintainingand sellingunits within their districts, the party responsiblefor determiningrents chargedis not clearly defined as this responsibilityis sharedbetweenthe central authoritiesand local governments.In addition,theautonomyof thelocalgovernmentsisseverelyconstrainedby their limited ability to evict tenantsand by the monopolythat the state property management companies,theIKV's, exerciseon providingmanagementservices(Ibid: 54). 2.24 A majority of rentalunitsaresoldin the "gray market". A studyundertakenonthe housingsectorin Hungary,foundthatatthenationallevel,only0.6 percentof unitsarereturned to Councilsannually;andonly 0.2 percentin Budapest.Overall,it is estimatedthat 30percent of tenantsof staterental units "purchased"their unit in the gray market (Ibid). One of the consequencesof "renters" of staterentalunits ability to selltheir unit (andits accompanying subsidy)to anotherhouseholdis that rapid accessto housingrequiresaccumulatedsavingsor otheraccessto cash.Thisfactor hasbecomeoneof themainreasonsfor the inabilityof young householdsto gainaccessto housing. 19 2.25 The staterentalsectoris characterizedby the poor conditionsof units. Until the 198Os,the statebudgetdid not provideassistancefor maintainingunits. Theresulthasbeena drasticdeteriorationin thehousingstock.It is estimatedthat in Budapestaloneapproximately 105,000unitswere in needof rehabilitationamountingto an estimatedcostof Ft. 140to 160 billion. In recentyears, revenuesfrom rents andstatemaintenancesubsidieshaveincreased substantially,however, it is not evident that theserevenuesare being allocatedtowards maintenanceandrehabilitationof stocksaslocalgovernmentshaveautonomyin allocatingthese resources(Ibid: 37). 2.26 Anothermajorcharacteristicof the staterentalhousingstockisthat thereis limited targetingof the highly subsidizedhousingstocktowardslower incomefamilies. Data on the distributionof householdsby occupationcategoriesindicatesthatthosewith thehighestprestige occupationssuchas managers,intellectualsand white collar workers are disproportionately renters.Further, thisgroupcoupledwith shopfloor managersandtheself-employedoccupythe largestrentalunits. Current PolicyInitiatives 2.27 The Lord Mayor's Programon housingemphasizesthe needto developa urban renewalandhousingpolicywhichwouldimproveoverallmanagementof theassetsof theCity. Threefundamentalprinciplesof this strategyhavebeenidentified.First, thedevelopmentof an assetinvestmentstrategythat would increasereturnsto the City includingreorientingassets whicharenotprofitableor areoperatingat aloss.Second,formulationof anassetspolicybased onfreeenterpriseandprivateinvestment,includingforeigninvestment,to developtherealestate within thecity. Third, theestablishmentof atransparentandopenrelationshipwith district local governmentsto establishauniformassetmanagementsystemwith independentforms of transfer for the entiremetropolitanarea. 2.28 With this regard, the City establishedthe Centerfor AssetsManagementas the institutionwith themandateto overseetheCity's housingpolicy initiativesincludingrealestate managementanddevelopment,urbanrenewalandrehabilitation,saleof residentialandnon- residentialrentalpropertyandhousingfinancingissues. 2.29 Threemajorareashavebeenidentifiedin theMayor'sprogramashavingparticular importancein the housingsectorfor the city of Budapest.The first relatesto the issueof rehabilitationof thehousingstockwithin the city which hasbeenidentifiedasa priority task. It is estimatedthat over 100,000residentsawait rehabilitationwithin the inner districts of Budapestwith entiresectionsof thecity in adilapidatedandincreasinglydeterioratingcondition (Programof Mayor: 73-4). 2.30 Thesecondareaof concernidentifiedishousingfinance,in particularas it relates to thegenerationof localrevenuefor therehabilitationandrenewalinitiativesdiscussedabove. Presently,asmentioned,variedrulesandregulationsconcerningthesaleof apartmentsarebeing 20 enforcedwithin the variousdistrictsof the City. A ResidentialLaw is expectedto beenacted by Parliamentwhich will clearly define and categorizethe various regulationsconcerning housingfence. In addition,rentpolicy issuessuchasthelevelof rentsto be chargedaswell aswho hasthe mandateto determinerentsarealsoto beaddressedin this legislation. 2.31 Themostpressingissuein currentpoliticaldebatesis theprivatizationof dwelling units. Accordingto presentregulations,flats canbeboughtby their dwellersat very favorable conditionswith only 5-10 percentof the estimatedmarketvaluepaid in cashthe rest being coveredby long-term loansfinancedfrom budgetaryresources.Asof 1992,approximately25 percentof thehousingstockof thecapitalhadbeenprivatized,mostlytherelativelylargerflats with higherstandards.TheCentralConstituencyhasmadecontinuousattemptsto coordinatethe policiesof thedistricts,howeverthishasnotbeeneffective.TheProgramof theAdvisoryBoard of the Lord Mayor proposesanalterationto the currentpracticeanda modificationaccording to the "principlesof equityandefficiency". Theproposedreformsinclude:1) anewsystemfor the determinationof eligibility to purchasea unit which makelessdifferentiationaccordingto thestatusof thebuyer(presentlypreferenceisgivento former or presenttenants);2) regulations to raisethe shareof in-cash paymentsof potentialbuyers;3) the establishmentof tenants' associationsfor laterrehabilitationprograms;and4) the introductionof new regulationson the rights anddutiesof bothtenantsandowners. Education 2.32 Thissectionbeginswith adescriptionof theeducationsystemin Hungaryoutlining the major typesof educationalprogramsprovidedwithin the country. It thenpresentsa more detailedassessmentof preschoolsandprimary schoolswithin the city of Budapest.Finally, a presentationof the current policy initiatives of the Central Constituencyof the City are discussed. The Education Systemin Hungary 2.33 The educationsystemin Hungary embracespreschool,primary, secondaryand highereducationlevels.Preschoolsareprimarily administeredby the localgovernmentsor by enterprisesandaretargetedtowardschildrenbetweentheagesof 3 to 6. Theservicesprovided by theseinstitutionsincludebotheducationandchildcare,includingtheprovisionof mealsand other specialprograms. 2.34 Primaryeducationismandatoryupto Grade8 or theageof 14.Theprimary school systemconsistsof eightgradeswith studentsreceivingspecializationin the last four yearsof their education.Primary schoolsare mainly administeredby the local governmentsof the districtsalthoughin recentyears,privateprimaryschoolshavealsobeenestablishedwith some tennewprivateschoolsestablishedsince1990.In addition,churcheshavelaidclaimonprimary schoolswhich had beennationalizedby the governmentand there is considerabledebate concerningproperty issuesas definite decisionshaveyet to be madeby the Government. 21 Approximately'25 percentof primary schoolgraduatesproceedto secondary(gymnasium) schools(World Bank, 1991b:22). 2.35 The upper agelimit of compulsoryeducationis 16 with parentsbeing legally responsiblefor ensuringthat their childrenattendprimary schooluntil this age,if he/shefails to finishat theregularageof 14.However, in caseof a completedprimary education,children canseekjobs andcanbeemployedas "adult employees"over theageof 14. 2.36 Secondaryeducationin Hungaryconsistsof threetypesof educationalprograms: 1) gymnasiums;2) vocationalschoolsand 3) apprenticeschools.Gymnasiumschoolsare typicallyfour-year academicschoolswhichprovidecomprehensiveeducationalcurriculumand preparestudentsfor universitystudies.About40 to 50percentof studentswhopasstheGeneral Certificateof SecondaryEducation(GCSE)go on to universitystudies.Vocationalsecondary schoolsprovide generalvocationaltraining for four years and a Certificate of Vocational SecondaryEducation,equivalentto a GCSEin additionto a skilledworker's certificatewith whicha studentmayentercollegeor universityor employment.Apprenticeschoolsaregeared towardsthe provisionof narrowly skilledspecializations,especiallyfor heavyindustriesfor youngstudentsbetweentheagesof 14to 25. Thetrainingprovidedincludestwo- to threeyear programs in typing and stenography(63 schools);health care training (29 schools), and apprentice-basedtrainingin conjunctionwith enterprises(299schools)(Ibid). 2.37 Hungaryhasa two-tiered undergraduatehighereducationsystemwhich includes a five-year university program and a three or four-year collegeprogram. In general, universitiesand collegesare specializedinto sub-sectors such as economics,agriculture, medicineand technologywith specializationbeingmainly at the collegelevel. While some collegesare integratedinto theuniversitysystem,mostconstituteseparateprograms. 2.38 Educationpolicyandregulationaretheresponsibilityof the Ministry of Education and Culture (MOE). Public education, including vocational and technical training, is administeredthrough19CountyCouncilsplustheCapital.Trainingisfinancedbyacombination of stateandlocalfundswith CountyCouncilsreceivingstatebudgetfunds,whichthey allocate for local services, includingeducation.A VocationalSecondaryTraining Fund has been establishedthroughapayroll tax (1.5 percentof wageexpensesand1 percentin Agriculture), whichprovidesadditionalstateresources.Councilssupplementstatefundingwith localfunds. 2.39 Vocationaltraining with the exceptionof state-supportedretrainingprogramsare administeredby the Ministry of Labor andthe specializedforms of company-basedtraining (non-school basedtraining), areunderthe centralmanagementof the Ministry of Education (MOE). TheMOE, in collaborationwith sectorministriessuchasLabor, is responsiblefor the specializedcontentof school-basedtraining.Sectorministrieshavetheprimary responsibility of determiningthe vocationstaught, regulatingthe content,publishingeducationalmaterials, regulatingexaminations,andcontrollingsupervisionof training.Theobjectiveis to ensurethat 22 the contentof vocationalcoursesis "appropriate"andto promotecloseliaisonwith sectoral enterprises.Countyandcity councilsdirectlyadministertraining schools. 2.40 Following is more detailedpresentationof the two basic forms of education, preschoolandprimaryeducation,thathavespecialrelevancefrom theviewpointof socialpolicy. Preschools 2.41 Approximately83percentof preschoolswithin Budapest(totalling581)arerun by district localgovernmentswith theremaining17percentbelongingto eitherprivateownersor fiis. Theexactnumberof privatepreschoolsisunknownalthoughevidenceindicatesthatthey are increasingin number.Primarily, privatepreschoolsare of a caringcharacterrather than educationalinstitutions. Preschoolshave the double role of providing both childcare and educationalservices. In addition to the core educationalcurriculum, most implement supplementaryfeedingprogramsprovidingthreemealsa day andspecialprogramsincluding swimmingandforeignlanguagetraining. 2.42 Thegreaterpartof thefundingfor preschooleducationis financedby thestatewith parentspayinga fee basedon incomelevels.In casesof poor familieswith smallchildren, WelfareCommitteesof thelocalgovernmentsarein chargeof determiningeligibilityfor welfare assistancewhich is provideddirectlyto householdsor paiddirectlyto the schoolsthemselves. However, theseincomemaintenanceprogramshavenot effectivelyaddressedthe problemof drop-outs as statisticaldatashowthat the ratio of childrenat preschoolshasbeenmarkedly decreasingin recentyearsdueto risingeducationalcosts. 2.43 Most of thepreschoolsrun by thedistrictcouncilssuffer seriousproblemsof over- crowdednessand deteriorationof facilities. The averageclassroomto studentratio for 100 childrenis 84.3. Preschoolsownedby firms areusuallybetterequippedandhavemore space comparedto thosewhich are governmentadministered.Hungarianpreschoolshave a high internationallyacknowledgedstandard,with mostof theteachershavingadequatequalification. However, attrition is low dueto thelow salarieswithin thisprofession. Primary Schools 2.44 Thereare360primaryschoolsin Budapestwith yearlyenrollmentratesof 180,000 students.Totalnumberof classroomsisapproximately7,120.Theprimary schoolsystemisalso characterizedby overcrowdedschoolswith children studyingin two shifts, and sometimes outsideclassroompremisessuchasteacher'srooms, laboratoriesetc. Theaveragenumberof childrenper classis 25 with student-teacherratiosat 13:l. 2.45 Most primary schoolsprovide day-careand after-schoolcare servicesincluding breakfast,hot lunch or snacksduring the day. Feesfor theseservicesare determinedon the basisof householdincomewith varioustypesof assistanceprovidedto childrencomingfrom 23 poorhouseholds.Take-upratiosvarywidelybetweengradelevelswith 71.7percentof children in the first four grades(underthe ageof 10)participatingin feedingprogramsasopposedto 20.2 percentfor childrenin theuppergrades(5-8 grades). 2.46 In general,primary schoolsare more run-downthanpreschoolswithin the same neighborhoodsprimarily dueto thelackof resourcesfor rehabilitationandmaintenance.Some buildingsareat theedgeof collapsewith increasingratesof accidentsinvolvingchildrenbeing reported.As a consequence,in recentyearsparentshavebecomemore involvedin theupkeep of schoolsthroughboth financialcontributionsaswell asthroughin-kind contributionsin the form of laborand/ormaterialsandequipment.In addition,variousfoundationssetup with the purpose of supporting educationalactivities have become increasinglyinvolved in the maintenanceandrehabilitationof primary schools.However, thedeteriorationof the facilities hasnot beenreversedwith the systemcharacterizedby severelydilapidatedstructures. 2.47 Staterun primary schoolsarefree of chargealthougheducationalcostsat the start of the year for text books and other materialscreateunbearablefinancialburdensfor an increasingnumberof households.District governmentsandschoolauthoritiesareattemptingto copewith this situationby lendingschoolbooksandgiving exceptionalwelfare assistanceto childrencomingfrom poorfamilies. Current PolicyInitiatives in Education 2.48 At thetime of thewriting of this paper,reformsof theeducationalsystemwereat the core of current political debates.The recommendationspresentedby the newly elected Governmentfor thenewAct onEducationincludedaproposalto extendthe lower agelimit of compulsoryschooling,i.e. to start primary educationat the ageof 5. The Governmentalso proposedgreatervariety within the systemby revitalizingthe old modelsof 6+6 and4+8 gradesschooling,basedonvariouscombinationsof primary andsecondaryeducation.In terms of property-relations, thepresentgovernmentstronglysupportstheclaimsof thechurchesand alsoattemptsto give a greaterchanceto the private sectorandvariousfoundationsto open schools.Theliberalizationof thecurricula,accompaniedby agreateremphasison varioussets of final examinationsis also on the agenda.Financingreforms are also includedin the recommendationswith the expectationthat secondaryandfurther educationwill not be free of chargein the future (thoughthe forms andchannelsof grants,loansandstipendsfor students areplannedto beextendedin parallel). 2.49 TheEducationalProgramof theLord Mayorof Budapestemphasizestheimportance of protectingthe rights of the childrenand improvingeducationalservicesprovidedto them. With respectto curriculumdevelopmenthowever,theMayor's programstressesthat a change in the format of schooling,i.e. the 6+6 or 4+8 gradeschooling,is not necessaryfor the educationalsystemwithin Budapest.Rather,priority is placedon thedevelopmentof a variety of previouslynon-existent programssuchastrainingfor foreignlanguageteaching,computer technologydevelopment,physicaleducationaswell asstrengtheningthecoreeducationalcourses 24 provided,particularlyin the poorerdistricts. An importantelementof the Mayor's education programis its commitmentto thedevelopmentof variousspecialprogramstargetedtowardsthe mentallyill anddelinquents,for exampledrug usersetc. Also, family counsellingandsocial work with theaim to renderbetterandmoreefficientrepresentationsof schoolchildren'sneeds is alsoemphasized. 2.50 Oneof themajorgoalsstatedin educationpolicy is thepromotionof coordination of the variousinterestwithin the educationsectorandthe facilitationof democraticdecision- makingprocesswith regardsto educationalactivities.In thiscontext,the centralConstituency of the Capitalhasestablisheda forum for negotiationsby which thevariouspartiesincluding parents,teachers,employersandgovernmentagenciesmeetto discussandfind consensusamong theconflictinginterestsaroundeducationalissuessuchaspropertyrightsandthusattemptto find ways to protect the schoolsand their users from becomingthe victims of direct political struggles. 2.51 Anotherareathatisemphasizedistheimprovementof theenvironmentfor teachers. Thepolicystatementnotesthat " ....themostimportantelementof educationin thecity is.....the educator-the educator'sprofessionaltraining,orientationandlove for work" (Programof the Mayor: 135).Variousmeasureshavebeenproposedincludingprovidingbetterrenumerationand training for the 50,000 teacherswithin the city to improve their skill levelsand working conditionsaswell asa meansof attractingnewtalentinto thecity. Health 2.52 This sectionbeginsby providing generalbackgroundinformation on the health sectorwithin Hungary. It presentsan overviewof the healthsituationwithin Hungary and discussesinfrastructureandfinanceissueswithin the sector.Finally, it presentsin detail the currenthealthpolicy initiativesthat arebeingundertakenwithin Budapest. Overall Health Status 2.53 Theoverallhealthstatusin Hungaryis oneof thelowestin Europe.Mortality rates in Hungaryhavebeenincreasingsince1965andHungaryhasoneof thehighestmortality rates among Europeancountries. The age-adjustedmortality rates of adult maleshas increased significantlyin the pastyearswith a decreasein the life expectancyfor menaged30 by 4.2 yearsover thepasttwo decades(World Bank, 1990). 2.54 Thecrudebirth ratein Hungaryhassteadilydeclinedwhilethecrudedeathratehas increased.Consequentlypopulationgrowthrateshavebeennegativesince1980.Also, theratio of dependentsandpensionersto activeearnershasdecreasedfrom 1.07in 1970to 1.20in 1989. Life expectancyratesfor malesandfemalesin Hungaryareoneof thelowestamongEuropean countries,andin fact, thegapin life expectancyratesbetweenHungaryandtheWesthasbeen wideningsincethemid-1960s.Life expectancyatbirth declinedby 0.4 yearsbetween1964and 25 1985.Overall, thisdeterioratinghealthsituationhasbeenattributedto severalfactorsincluding low levelsof income,associatedpoorhousingconditions,unhealthylifestylesandpoornutrition (Ibid). Health Care Infrastructure 2.55 Theprovisionof healthcareis primarily throughpublichealthinstitutesalthough privateandvoluntaryhealthinstitutionshavebecomeincreasinglyactivein this sector.Health care in Hungaryis predominantlyhospital-centeredwith primary healthcare servicesbeing very fragmented.Bothinpatientandoutpatientcareis providedthroughpublichospitals.With theintroductionof theProgressivePatientCarein themid-1970s,stand-alonepolyclinicshave beenintegratedwith thepublichospitalsystemandalsoprovidehealthservices.Factory-based healthcare and abouthalf of generalpractice(GP) servicesare also under the integrated hospital-polyclinicssystem.TheremainingGP servicesare independentlydeployedin villages andremotesettlementsandareadministeredby localcouncils(Ibid). 2.56 A privateandvoluntaryhealthservicenetworkexistsin Hungarybut its capacity andextentof involvementisdifficult to assess.Theprivatesystemisfinancedprimarily through smalldonationsof churchmembersandfrom foreignphilanthropicinstitutions.A network of voluntaryhealthcareprovidershasexistedin Hungaryduringthepastdecadeswith mostlocated within apublicfacility andfinancedthrough,its budget.Thishealthservicenetworkis currently being reviveddue to new healthlegislationwhich hasprovidedlegitimatestatusfor private health and socialcare enterprisesregardlessof origin or profit/non-profit status.Increased involvementof variousreligiousgroupsin theseinstitutionshasbeenevidenced. 2.57 The health sector in Hungary is characterizedby a high bed populationratio amountingto ten bedsper 1,000populationin 1989.Averagehospitalsizein Hungaryis very large with a nationalaveragesizeof 677beds,anda rangeof 354to 1,271bedsamongthe nineteencounties.Theaverageageof hospitalbuildings,takingintoaccountmajorrehabilitation undertaken,is 48 years.Thiscompoundedby themodestlevelof technologicalinfrastructure, includingthedistributionof energy,heatingandgas,airconditioning,communications,etc. has increasedthe degreeof obsolescencein a numberof hospitals.By 1988, approximately60 percentof hospitalswerebelievedto bein needof demolition,rehabilitationor reconstruction. 2.58 In terms of thedistributionof healthprofessionals,thereis a generaltendencyfor an increasingconcentrationof doctorsin thoseareaswhich were alreadybest servedin the 197Os,i.e. namelythemajorurbanareas.In Budapest,thedoctorto populationratio increased from 46to 60per 10,000populationduringthe 1970-88periodwhile in othertownsor villages theratioincreasedfrom 17.1to 27.7for thisperiod.Thisratiovariestenfoldbetweenthecapital city andthe smallestsettlementareas,but in recentyearstherehasbeena slightimprovement of the provisionof servicesin backwardareas- the differencein the ratio of physiciansper populationbetweenBudapestandothertownsdecreasedfrom 1.7 in 1970to 1.2 in 1988. 26 Health Care Financing 2.59 In termsof financing,healthcarein Hungaryhaspreviouslybeenprovidedalmost exclusivelythroughthepublichealthservicesdeliverynetwork.Until theendof 1989,operating andinvestmenthealthexpendituresweremainlyfinancedfrom theCentralGovernment'sgeneral revenues.Resourcesweretransferredfrom thecentralbudgetto the localcouncilsin chargeof operatingthe healthsystemon the basisof a per capitaallocationanda negotiatingprocess betweencentralandlocalgovernmentauthorities.Thebudgetsfor operatingcostsandinvestment expenditureswere determinedindependently. 2.60 SinceJanuary1990,public resourcesfor current healthexpenditureshavebeen channelledthroughtheSocialInsuranceFund with currenthealthexpendituresfinancedthrough contributionsfrom employersandemployees.Estimatedhealthexpenditures(excludingsickness benefits)from the nationalsocialsecurityfund amountedto 92billion Ft., whichis equivalent to 27 percentof the incomefrom socialsecuritycontributionsor about15percentof the total wagebill. Capitalexpendituresareprimarilytheresponsibilityof localcouncilsandarebudgeted from the shareof the socialinvestmentbudgetthat they receivefrom the centralgovernment. Theministriesof HealthandSocialAffairs haveresponsibilityover the investmentbudgetsof the nationalinstitutionswith recurrentexpenditurebeingfundedthroughthe SocialSecurity Fund. Current PolicyInitiatives in Health 2.61 Thesystemof healthcareis presentlyundertransformation.From 1992onwards, its administrationwill gradually be put on new principles. In terms of financing, health expenditurewasfinancedfrom the statebudgetandthe SocialSecurityFundadministeredthe transfers.The new regulationswould requirethat financialadministrationbe basedon direct contributionsto socialsecurity.Accordingto theproposedplans,peoplewill haveafree choice of their GPs,andtheir routeswithin thesystemwill bemanagedfully by their personal"family doctors". In otherwords, exceptin thecaseof urgentneed,theywill getto specialistsonly with theprescriptionof their chosenGP. Socialsecuritywill contractwith theGPsthroughthelocal authorities. 2.62 Theintroductionof thenewsystemwill takeseveralyears.At present,someof the "old" rules apply, anda descriptionof the current situationis presentedbelow. (Neither the basesof reimbursement,northepropertyrelationshaveyetbeenclarified.)Currently, GPswork underthecontrolof thedistrictlocalgovernmentswhichalsoadministersomeof the outpatient clinicswhile othersarerun by thecentralConstituencyof the capital.All hospitalsbelongto the CentralConstituencywhile clinicsarecontrolledandfinanceddirectly by the Ministry of Welfare. 2.63 Peoplebelongto oneor anotherGP accordingto their residentialarea.Thereare 867medicaldistricts for persons14 andover, and357for childrenunder 14. The sizeof an 27 "adult" district is usuallybetween1,000-l ,800andthat of a "child" district is around1,000. GPsseepatientseitherin their centers,or visit themattheirhomes.Althoughtheserviceis free by law, it is anunwrittennormto payespeciallyfor homevisitsandfor check-ups.Peoplehave to pay for the medicinesprescribedby doctors. Assistancefor the poor is meanstestedand renderedby the localWelfareCommittees.Thereare 23 outpatientclinicsin Budapestwhich provide several specialservicesand many are not attachedto hospitals.In principle, a prescriptionfrom a GP is a prerequisitefor seekingthe consultationof a given specialist. However, some40-50 percentof the turnover takes placewithout visits to the GP. The explanationfor this is manifold.First, GPsareoverburdenedandcannotprovidethe necessary , , `, attentionto patients, and therefore, welcomethe fact that their patientscan seek medical assistanceelsewhere.Second,dueto thepreviouspoorservicedeliveryof theGPsystem,people do nottrust the generalpracticeandareinclinedto usetheir informalnetworkto get "adequate care". Third, specialistsarelesscontrolledby thestrict sickpayregulationsand,therefore,are easilyaccessibleto thosewho canafford to pay. 2.64 The public health capacityof the City includes13 hospitalsfor adults, four children'shospitals,four institutionsdischargingspecialfunctionsaswell asnationalinstitutes, universityclinicsanda setof publichealthinstitutionslocatedin theCity andbelongingto other ministerialbranches.Thesystemencompassesa total of 18,300hospitalbeds.Thenetwork of hospitalsis probablytheweakestpart of the run-down infrastructureof the capital.Hospitals areusuallyovercrowdedandmanyof themshouldbecloseddownfor rehabilitation.Ownership of the hospital system primarily lies with the state and is characterizedby inefficient managementandoperationalmethods.TheCentralConstituencyplansto privatizesomeof the statehospitalsandis attemptingto attractforeigninvestmentfor this venture. 2.65 One could say in generalthat the whole systemis currently in a deepcrisis. Although somenew private clinics haveopenedrecently, their existencedoesnot easethe seriousconstraintsof permanentdeterioration.Therelativelybetter-off groupsfind their semi- privateroutes:theypayto getbettertreatmentor to geta betterpositionin thewaiting lists, or, evento buy the "private" visitsof a physicianemployedby the state.Thepoor, especiallythe unemployed,seemto beat highrisk of beinggradually"priced out". 2.66 TheLord Mayor'sprogramonpublichealthrecognizesthatthehealthpolicyissues for theCity dependonthe nationallevelreformsthat areto bemadein thehealthsector.This includesmajor reforms in financingof public health servicesin which individual liability insuranceandpaymentfor medicalservicesby a socialinsurancecard will be main features. Major elementsof thepublichealthservicesidentifiedinclude:1) servicesrenderedby family doctors;2) servicesrenderedby pediatricians;and3) dentalcareservices(Mayor's Program: 95-6). 2.67 With regardsto physicians,the Mayor's healthprogramemphasizesthe needfor physiciansto acceptpatientsthat possesssocialinsurancecardswith patientshavingthe right to chosetheir physicianswith no territorial restrictionsapplying.Theserestrictionsexisted 28 previouslydueto factors of time, distance,andexpense.Also, the program recommendsa privatizationof doctors'officesto enablea largerandwider locationof treatment. 2.68 In the past, despiteimprovementsin quantitativeindices,the health systemhas performedpoorly andinefficiently.The systemwasplaguedwith a rigid allocationsystemof patients,basedona neighborhoodprinciple,whichcausedanofficial inequalityin the situation of patientsin additionto differencesin servicedeliverybetweendifferentareas.Theinstitutions functionedout of centrallyallocatedsubsidieswhichwerenot basedonperformance.Thishad resultedin mismanagementof resourcescausingshortagesin essentialmedicalinputsetc. 2.69 TheMayor'sProgramoutlinesseveralkeyareasof concernfor therestructuringof the healthservicedeliverysystemin the City. First, moreeffectiveintegrationof inpatientand ambulatory specialty care, particularly with physicians. Second, the rehabilitation and maintenanceof thephysicalinfrastructureaswell asenhancingresourceallocationtowardsthe improvementof the qualityof services.Third, the promotionof theenhancedinvolvementof the private sector in health sectoractivities such as in building or reconstructinghospital buildingsis outlined(Programof theMayor: 98-99). Social Security 2.70 This sectionpresentsa brief discussionof theprevioussocialsecuritysystemand outlinesthe variousmodificationsthat havebeenmadein recentyearswith regardsto social security. 2.71 Theprevioussocialsecuritysystemwasbasedon theprincipleof compulsoryfull employmentwith all entitlementsbasedonanindividual'spresenceinthe"socialistlaborforce". Peoplegot benefitsnot accordingto their contributionsbutratherby thetypeandlengthof their employmentatoneor anotherstate-controlledenterprise.Contributionsdidnotplayanimportant role in fiicing associalsecuritybenefitswereregardedaspart of onefeatureof the socialist state'svastredistributionschemes. 2.72 The structural modificationsof the systembeganin 1988when social security becameformally independentfrom the statebudget.Thecreationof a separateentity with an autonomousbudgetaryandadministrativestructurewasthefirst in a seriesof stepstowardsthe establishmentof acontribution-basedsocialinsurancefund. Thecurrentschemecoversold age and disabilitypensions,maternitybenefits,childcarefeesand grants,sick pay, schemesfor widowsandorphans,medicalcareandotherwelfareassistanceprograms.Oneof thekeyissues of thereform istheclarificationof thedivisionbetweenthesocialsecurityfundandstatebudget relatingto a distinctseparationbetweencontribution-basedandtax-basedbenefits.The Social SecurityFundisnowto financeonlythosebenefitswherepreviouscontributionshavebeenpaid, while the statebudgetis to providevariousallowancesfinancedthroughtaxes.The first step towardthis separationwasthetransferbetweenbudgetsfor family allowanceandthatof medical carein 1990.Familyallowancesarenowpaidout from thestatebudgetwith theSocialSecurity 29 Fundadministeringthe schemefor a "fee" from thebudget.Conversely,thefund for medical carehasbeenshiftedfrom thecentralbudgetto the SocialSecurityFund. 2.73 A further stepwastakenin 1991with theGovernment'sTemporaryAct on Social Securityin whichParliamentdecidedto setup two mainfundswithin socialsecurity- onefor pensionsandrelatedbenefitsandtheotherfor medicalcare.In 1992contributionsof employers andemployeeswere dividedbetweenthe two funds: 24.5 percentof the total 54 percentof contributionsallocatedto the pensionfund, 19.5percentto the fund for medicalcare, andthe remaining10percentto coverthe "transitory" itemsof childrelatedbenefits. . 2.74 Thetwo fundsareto becontrolledby two separateadministeringagencieswhich areexpectedto be in operationby early 1993.A supervisingcommitteeis to beestablishedto facilitate coordinationbetweenthe two funds. During the transitory period, two separate Committees,comprisingrepresentativesof employers,employeesandgovernmentofficialshave beensetupto administerthefundsandarein theprocessof preparingdetailedrecommendations for the administrativeandoperationalfunctionsof thesetwo agencies. 2.75 At presentthetransitiontowarda clearseparationof contributionversustax-based schemesis full of uncertainties.Onemajorproblemrelatesto thefinancialstatusof the social securitysystemwhich, dueto thebankruptcyof a largenumberof firms andtheseriousdeficit of the statebudget,facesa deficit of approximately55 billion Fts. which is threateningthe continuouspaymentsof benefits.Due to underfinancing,the medium-termgoal of indexing benefitsto the annualrate of inflation hasfailed with consequentlossesin the real valuesof benefitscausingtheimpoverishmentof thosesocialgroupshighlydependenton socialsecurity. Theseincludepensionersof which 18 percentdid not evenreceivethe official minimum of 5,200Fts/monthin 1991.Familieswith children,thechronicallyill andthe disabledalsoface tremendousdifficulties, reflectedin their over-representationamongthosewhoseper capita monthlyincomefalls belowthesubsistenceminimum. 2.76 Anotherareaof uncertaintyrelatesto unemploymentbenefits.Althoughthecurrent regulationsstatethat contributionsof the unemployedshouldbe coveredby the local labor exchangeoffices, theseregulationsfail to work in reality. First, manyof the unemployedare not registeredand thus are automaticallyexcludedfrom receivingunemploymentbenefits. Second,thereareseriousgapsincurrentregulations,especiallyin thecaseof theschoolleavers, who becomeunemployedjust after leaving school. This group, presently amountingto approximately200,000personsisofficially hinderedfrom becomingregisteredandthusunable to receiveanybenefits.Also, presentregulationsdonot applyto thosewho work onapart-time basissuchaswomen,who alsoarenot registeredanddo notpaycontributionsandthusarenot eligible for entitlementsfor free medical care and in-cash benefits related to previous contributions. 30 Social Assistance 2.77 This sectionpresentsa brief descriptionof thevarioussocialassistanceprograms that arecurrentlybeingdesignedor implementedwithin Budapest.Theinstitutionalframework within whichtheseinterventionsareadministeredis discussedandisfollowedby anassessment of the variousprograms. 2.78 LocalDistrict Governmentshavetakenovertheresponsibilityof administeringand financingsocialassistanceprogramsanddeterminethetype andscopeof activitiesundertaken within eachdistrict. However,whiletheyhavebeendelegatedadministrativeresponsibilitythey havenotbeenprovidedwith additionalresourcesandfew areableto generateadequateresources throughlocaltax revenues. 2.79 Welfare assistanceis one of the most important tasks of the Social Policy Committeesof thenewlyelectedlocalgovernments.Theschemesarehighlydecentralizedand financedby bothcentralandlocaltax revenues.Thereareseveraltypesof programsprovided by the districts. Regularsocialassistanceis a means-testedmonthly paymentmadeto those personswhosepensionsor otherregularsocialsecuritybenefitsarebelowthe actualminimum of the old agepension(6,300Fts. per monthfor 1992).Thispaymentis intendedto provide financialassistancemainlyto theelderlyanddisabled.Regulareducationalassistanceisdesigned for familieswith severalchildren.Eligibility requirementsfor this programare similarto that of the socialassistanceschemethoughthe standardof childcarein the family is an equally importantelementin determiningeligibilityandlevelof entitlement."Irregular" forms of both of theabove-mentionedschemesareprovidedonceor twicea yearonexceptionalbasisto cover emergencyneeds.Therearealsovariousforms of in-kindassistancesuchasdirect paymentto day-carecentersto cover children'smeals,assistancefor medicines(reimbursedto the local governmentby socialsecurity),andprovisionclothsof clothes,heatingstamps,etc. In addition, targetedin-cashpaymentscoveringspecialneeds,suchasfor rent, clothing,heating,electricity, andmealsareprovidedby localgovernments. 2.80 Thedataprovidedin Table8ontake-upfor thevarioustypesof assistanceprograms indicatea dramaticshift toward irregularforms of aid andassistance.Disaggregateddatafor Budapestareonly availablefor socialassistance.Thetrendsin the capitalare similarto those at the nationallevel,althoughtheper capitaaveragesfor Budapestaresomewhathigher.It has to betakeninto account,however,thatpricesandthecostof living arealsohigherin Budapest thanin the countryside.In otherwords, Budapest'spoor do not live better, especiallyasthey have less accessto self-sustainingforms of agriculture, which is an important sourceof compensationin thecountryside. 2.81 The capitalrunsa numberof otherservicessupportingfamiliesin needincluding educationalcounsellingcentersin eachof the 22 districtswhich provideadvicein mattersof 31 child-parentconflicts,mentaldisordersof children,andrenderprofessionalservicesfor children with learningdisabilities. 2.82 The capitalalsoruns specialschoolsandhealthcenterswhich offer a wide range of free or highly subsidizedservicesfor disabledpersons,thoughdemandfar exceedssupply. Theseinstitutionsarefinancedandsupervisedby theCentralConstituency.Similarinstitutions runby churches,foundations,associationsandvoluntaryorganizationshavesomewhatmitigated thepressureon statefinancedservices.TheProgramof theAdvisoryBoardof theLord Mayor statesthe City's intentionto establishevenclosercontactswith theseinstitutionsandto orient someof its financialresourcestowardthem. 2.83 Severalfamily helpcentershavebeenopenedin the last5-7 years.They arerun by thedistricts, thoughsomeof themobtainpartialfundingthroughvariouschannelsincluding specialfoundations,educationalauthorities,andchurches.Eachdistrict hasat leastonecenter which providesa wide rangeof servicessuchas sheltersfor the homeless,organizinglocal exchangeof goods,clothes,anduseddurables,etc. Familycentersareusuallymoreflexible in their policiesfor providing in-cashandin-kind assistanceandattemptto supportall families facingcrisissituations.Theywork closelywith thesocialworkersof theeducationalcounselling centersaswell aswith schoolswithin the district. Thebestcentershavegraduallydeveloped toward centersof communitywork with their staff usuallyrecruitedfrom more professional groupsof socialworkers, healthassistants,psychologists,teachers,etc., who haveobtained modemtrainingin socialwork duringthe lastdecade. 2.84 The Lord Mayor's Program emphasizesthat the major role of the Central Constituencyis to assistdistrictsin the administrationof socialassistanceprogramsto ensure thatconsistent,broad-basedandefficientservicedeliveryisachievedthroughoutBudapest.This effort hasinvolvedtheorganizationof forums,conferencesandmeetingsbetweenvariousactors such as district level governmentofficials, interest and lobby groups as well as private foundationsetc. to assistin the coordinationof the numerousandvariedactivitiesof the 22 districts. 2.85 In addition,theMunicipalGovernmentdirectlyadministersvariousprogramssuch ashomesfor theelderly. Oneout of everyfour personsisretiredin Budapestwith onein every three householdshavingonly inactivemembers.Pensionersas a groupsconstitutea highly vulnerablegroup; their financialsituationis reflectedby thefact that approximately160,000to 180,000retireesneedsometype of socialassistance.In recognitionof the rapidly growing elderly populationwithin the city, the CentralConstituencyoperates26 socialhomes, 10 of which are in Budapesttargetedtowardsthe elderly. The network of socialhomesincludes variouslocationsincludingcastles,palaces,manorhouses,stables,granaries,office buildings, high rise buildingetc. Theentirenetworkis not efficientlymanagedor administeredresulting in inadequateserviceprovisionto the elderlyandhandicapped.Oneof themajor objectivesof theMayor's programfor socialassistanceis to revampthesystemto makeit moreefficientand uniformly consistentin terms of servicedeliverythroughoutthe network. 32 2.86 The Municipal Government recognizesthat homelessnessis one of "the manifestationsof the presentgravecrisisof Hungariansociety"(Programof the Mayor: 118). TheGovernmentbeganto addresstheissueof homelessnesstwo yearsagobutnoprogrammatic measureshavebeenundertakenasof yet to buildanintegratedsystemto dealwith theproblem. The City administersa total of 28 institutionswhich serveasautonomousagenciesproviding housingandrelatedservicesto the homeless. 2.87 With regards to the handicapped,the articulated policy indicatesthat equal opportunitiesand rights are to be guaranteedto the physicallyand mentally handicapped. Servicesthat are presently provided and are in the processof being expandedinclude pedagogicalandsocialrehabilitationservicesandemployment-orientedskillstrainingaimedat assistingthehandicappedto integratebetterinto thesociety. 2.88 TheMunicipalGovernment,whilenotdirectlyinvolvedinfamily assistancecenters, recognizestheimportanceof theseinstitutionsin providingservicesto thepoorandattemptsto assistthroughcreatinglinkagesandtieswith charityorganizationsandfoundationswhichcould providefinancialresourcesto localgovernments. Overall Conclusion 2.89 Thegreatestcontroversiesin contemporaryHungariansocialpolicy emergearound the socio-political"interpretations"of its functions.Thepastcoupleof decadeshaveshowna gradual"privatization"of socialself-protectionwith somehiddenformsof "privatization" being imbuedevenwithin the formal socialservicesof the state.Althoughthe overt changeof their ownershiphascomeontheagendajust veryrecently(with theelectionof thenewself-governing localauthoritiesin 1990),theeverydayworkingsof education,childcareandhealthinstitutions, and of the distributionof local resourceson housingetc. has followed the abovedescribed dualizationof the society.They haveincreasinglyhelpedthose,who havehelpedthemselves. Thusthe poor havebeengraduallypushedon themargin. 2.90 The emergingforcesof the civil societycannotas yet take over the role of the disappearingstateservices. Thoughthereisa mushroomingof newassociations,religiousand local community initiatives for helping the homeless,school-dropouts,the young, the unemployed,the elderly, mostof thesenewlyemerginginstitutionssuffer from a chroniclack of capitalandskilledpersonnel,andtheir temporaryassistancecannotsubstitutefor the lackof a cohesiveandcomprehensivesocialpolicy frameworkwhich guaranteesa minimum levelof incomeandthe legallysecuredminimaof socialrights. It is recognizedthat theold principles of socialmembershipbasedon the compulsoryparticipationin state-controlledemployment obviouslydo not applyanymore.However, the currentsocialpolicy initiativeshavenot been effectivein filling the gap. 2.91 In conclusion,whiletheachievementsof thegovernmentseemto besignificantwith regardto the"de-nationalization"of socialpolicy, theyareweakwith regardto theclassicaltask 33 of themaintenanceof incomeandstandardsof living. 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Report and Recommendationof the Presidentof the International Bank for Reconstructionand Developmentto the ExecutiveDirectors on a "ProposedSecond Industrial SectorAdjustmentLoanto the HungarianPeople'sRepublic" in an Amount Equivalentto US$200Million. ReportNo. P-47696-HU.Washington,D. C.: TheWorld Bank. (May) -. 1986."Country EconomicMemorandum."ReportNo. 5952-HU. (March) -. 1983."EconomicDevelopmentsandReformsin Hungary." ReportNo. 4174-HU. (March) TABLES Table 1. Number and ratio of persons living below the subsistence level. Number of Persons Living Ratio of those Living Below Below the Minimum the Minimum, as a % of the Total Population Living in Years In the In the In all Households Households All Households Households Households with Active without Households with Active without Earner(s) Active Eamer( s) Active Earner(s) . Earners (Rounded Data) (Percent) A. From the Income Surveys 1977* 963,700 274,200 1,237,900 10.7 18.0 11.7 1982 906,700 195,700 1,102,400 10.0 11.9 10.3 1987 1,191,200 152,800 1,344,OOO 13.5 8.5 12.7 B. From the Household Surveys 1978* 1,314,800 322,800 1,637,600 14.4 21.1 15.4 1980* 1,179,900 247,400 1,427,300 13.2 17.2 13.8 1982 1.360,000 218,700 1,578,700 15.0 13.3 14.8 1983 1,476,800 314,900 1,791,700 16.5 18.0 16.7 1985 1,426,300 247,400 1.673.700 16.0 14.2 15.7 1987 1,279,500 188,800 1,468,300 14.5 10.5 13.8 * Subsistenceminima were retrospectively calculated by the CSO only back to 1982. The values for 1977, 1978 and 1980 are estimated ones, with the assumption, that the ratio of the national subsistenceminimum to the average monthly per capita income was the samefor those years, as for 1982 (the year of the first offtcial calculation). Average monthly per capita income data are drawn from the Household surveys for 1978 and 1980, and from the (more accurate) data of the Income survey for 1977. Source: Statistical Yearbooks 41 Table 2. Composition of the total population and of the population living in the lowest decile*, 1977, 19s2, 1987. (Calculations are based on the income survey of the year) Composition of the Population of Composition of the Population of the Lowest Decile (Percent.) all Households (Percent.) 1977 Active earners 18.6 47.0 Persons and child care Fee or grant 3.3 2.5 * Pensioners 25.5 18.6 Children aged under 6 15.0 9.0 Studying children 19.4 15.4 All children 34.4 24.4 All other dependents 18.2 7.5 Together 100.0 100.0 Active earners 23.7 45.7 Persons and child care Fee or gram 4.8 2.2 Pensioners 17.3 20.3 Children aged under 6 18.9 9.0 Studying children 21.9 17.2 All children 40.8 26.2 All other dependents 13.4 5.6 Together 100.0 100.0 Active earners 27.0 45.8 Persons and child care Fee or grant 4.2 2.0 Pensioners 16.4 22.4 Children aged under 6 15.7 7.2 Studying children 24.8 18.2 All children 40.5 25.4 All other dependents 11.7 4.4 Together 100.0 100.0 * On the basis of deciledistribution of per capita income. 42 Table 3. Risks of dropping below the minimum 1985, 1987 (on the basis of the household surveys). Type of Residence and Economic Activity Ratio of those Living below the Subsistence Level as a Percentage of the Total Ponulation in the Given Groun 1985 1987 Urban, active earners 13.9 13.4 Rural, active earners 9.6 6.8 Urban, on child care fee/grant 42.1 40.3 Rural, on child care fee/grant 25.3 18.6 Urban, pensioners 8.7 7.5 Rural, pensioners 6.6 4.4 Urban, children 28.2 27.8 Rural, children 21.0 18.2 All other adult dependents (Urban-Rural) 28.0 27.6 Total 15.7 13.8 Table 4. Indices of (net) real earnings, real incomes and consumption, 1980-1989 (1980= 100). Net Real Earnings Net Per Capita Real Value of Yearly Per Head Real Incomes Consumption per Head Year Of Workers Of Those Working (Total Population) (Total Population) and Employees in Agri. Coops. 1980 100.0 100.0 100.0 100.0 1985 96.1 96.2 108.1 107.8 1986 97.9 98.6 110.6 110.0 1987 97.5 96.8 111.4 114.2 1988 92.7 94.5 110.0 109.1 1989 93.5 90.4 112.8 109.6 Sources: Statistical Yearbook, 1989, CSO, Budapest, 1990, and Book of Facts `91; R&i, Publishing House, Budapest, 1991. 43 Table 5. Workfund (measured in hours) of the society (on a yearly basis, in million hours*). 1977 1986 Rate of Increase Between 1977 and 1986 (1977= 100) Working time spent in workplaces of the first economy 9,984s 9,296.3 -7 Small-scale agricultural production of: - active earners 1,737.5 1,896.6 9 - inactive population 632.0 1,137.0 80 - dependents 384.8 375.7 -2 House-building activities (in the informal economy) of: - active earners 266.9 374.7 40 - inactive population 33.7 79.6 136 - dependents 21.0 17.2 -18 Total 13,060.4 13.177.1 * See: Tie-Budget; Changes in the Way of Life of the Hungarian Society according to the Tie-budget Surveys of Spring, 1977 and Spring, 1986. CSO, Budapest, 1987. Table 6. Rates of participation and time devoted to given activities by the 15-69 years old population on an average day of the year, by sex; 1977, 1987*. Rate of Average Time (in minutes) Devoted Rate of Increase 1987/77 Participation to the Given Activity by those in Duration of (Percent.) Actually Doing It Participation (1977 = 100) 1977 1987 1977 1987 1977 1987 MEN Work at official (main) workplaces 55.7 47.6 498 480 85 96 "Additional"" white collar-type work 0.5 1.3 134 215 260 160 "Additional"* non- agricultural manual work 1.1 5.0 234 286 455 122 Small-scale agricultural production 35.9 40.0 174 198 111 114 WOMEN Work at official (main) workplace 37.6 33.5 456 445 89 98 "Additional"' white collar-type work 0.4 0.8 139 244 200 176 UAdditional nanon- agricultural manual work 0.4 2.8 190 256 700 135 Small-scale agricultural production 35.2 34.2 147 142 97 103 a "Additional" refers to second economy activities, that are classified according to the "sphere of production". Namely, a given activity belongs to the first economy, if it is done as a main job, and/or in the institutionalized formal sphere, whereas it is classified as work done in the second economy, if one is engaged in it on top of his/her regular daily job, and/or the activity is done in the non-instimtionalized "businesses" of the family. *Source: Changes of the Way of Lie of the Hungarian Society (On the basis of the country-wide representative time-budget surveys of 1976177 and 1986/87); CSO-Institute of Sociology of the Hungarian Academy of Sciences, Budapest, 1990). 45 Table 7. Some indicators of the standards of housing; 1980, 1989 1980 1989 Percentage ratio of dwellings with: - One room only 27.7 18.7 - Three or more rooms 20.1 33.4 - Running water (inside the dwelling) 67.3 78.5 - Bathroom 56.5 74.7 - Toilette (inside the dwelling) 53.3 68.4 - Modem heating 19.1 31.6* - Sewage 70.0 79.8 Number of rooms per dwelling 1.99 2.20* Number of persons per room 1.51 1.22* * Data refer to 1988. a Sources: Microcensus, 1984; CSO, Budapest, 1985, Statistical Yearbook 1989; CSO, Budapest, 1990; JftnosFarkas-Agnes Vajda: Situation in Housing; in: Social Report 1990; (Eds.: R. Andorka-T. Kolosi-Gy. Vukovich), T&&i, Budapest, 1990. Table 8. Take-up and per capita sum for various forms of assistance. National Form of Assistance 1987 1990 Number Per Capita Number Per Capita Cases Value Cases Value Regular social 48,070 1,792 46,823 3,209 Irregular social 563,952 1,424 807,836 2,159 Regular education 39,081 661 101,033 879 Irregular education 194,997 897 375,243 2,071 Budapest Regular social 3,000 4,394 Irregular social 253,638 2,513