Restructuring the Hungarian social protection system: Evaluation of the 2015 decision to deliver benefits locally

Last year, the Hungarian government introduced an extensive reform of the social protection system, notably separating provisions for income and expense compensation.

Local districts provide income-compensation benefits in the form of an “employment replacement subsidy” for unemployed people of active age and capable of work who are no longer entitled to the unemployment benefit but meet certain conditions. They also provide “support for the health impairment and for child supervision”, the former social assistance scheme. Both measures are funded from the national budget and conditions are defined nationally as well.

Local governments provide the so-called “settlement support” benefit which brings together the previous statutory housing maintenance support, kindergarten support, debt management services, equity public health provision and nursing fee. Conditions are set by local decrees and funding can be local or national, depending on whether or not a settlement has sufficient tax revenue.

Recent studies conclude that these reforms, especially the locally governed and predominantly discretionary “settlement support”, do not guarantee more uniform and adequate living standards for those in need.