Social policy

In-depth analysis

SZ1 — Targeted support

• Mechanism: A three-tier targeting system: (1) income proxy-means test (PMT) — estimating need on the basis of 15–20 variables in addition to income (place of residence, household size, assets, educational attainment), (2) wealth test — automatic linkage of OEP/NAV data that takes into account not only current income but also property and financial wealth, (3) territorial weighting — residents of disadvantaged districts (HHJ) receive enhanced support. All social benefits can be applied for via an integrated platform (Social Portal), with automatic eligibility checks.
• Quantified target: The targeting efficiency of social transfers (share of transfers reaching the poorest 20%) should rise from 45% to 65% by 2028; administrative costs as a share of social spending should fall from 8% to 5%; the non-take-up rate (take-up gap) should fall from 30% below 15%.
• International precedent: Colombia’s SISBEN system: PMT-based targeting, coordinating the social benefits of 50M people. Targeting accuracy is 75% (share of support reaching the poorest quintile), but the system is vulnerable to manipulation — 10–15% of households report false data to qualify. Lesson: in the Hungarian system, automatic linkage of administrative data (NAV, land register) reduces the scope for manipulation.
• Trade-off / risk: Increasing targeting mathematically raises the marginal tax rate (the “disincentive”) at the threshold: if someone earns 1 HUF more than the cut-off, they lose the full benefit. This is the “poverty trap” — a phase-out reduces the effect but is administratively more complex and more expensive.

SZ2 — UBI pilot programme

• Mechanism: Randomised controlled trial (RCT): a treatment group of 2,000 people + a control group of 2,000 people in a disadvantaged region (e.g. segregated settlements in Borsod-Abaúj-Zemplén county). Members of the treatment group receive 100,000 HUF net per month unconditionally for 24 months. Measurement indicators: labour-market participation, mental health (GHQ-12), children’s school attendance, savings rate, exit from the informal economy, alcohol/drug consumption. The RCT is led by an independent academic institution (e.g. HAS KRTK), and the methodology and data are public.
• Quantified target: Launch of the experiment by 2027; total budget ~6 bn HUF/2 years (2,000 people × 100,000 HUF × 24 months + research cost); publication of the experiment in an international peer-reviewed journal; the political decision depends on the results of the experiment.
• International precedent: Finnish UBI experiment (2017–2018): 2,000 unemployed people, €560 per month, 2 years. Result: labour-market participation did not fall (the “laziness” hypothesis was not confirmed), subjective well-being and trust increased, but the employment effect was not statistically significant. Criticism: the sample was too small and too homogeneous (only unemployed) — the Hungarian experiment must cover a more heterogeneous population.
• Trade-off / risk: The experimental results cannot be generalised to the whole country: the “Hawthorne effect” (participants behave differently because they know they are being observed) biases the results. More importantly: the macroeconomic effects of UBI (inflationary pressure, labour-market equilibrium) only appear at a nationwide level — a 2,000-person experiment cannot measure these.

SZ3 — Housing data platform

• Mechanism: (1) Central housing database linking the land register, transaction data (NAV stamp-duty data), municipal rental-housing registers, energy certificates, and AirBnB / short-term rental data. (2) Public monthly housing-price index by municipality (m²/HUF), rental index, and affordability indicator (price-to-average-income ratio). (3) Municipal rental-housing monitoring: vacant flats, waiting lists, renovation status — publicly available.
• Quantified target: By 2027 the platform should cover 100% of data at municipality level; the average waiting time on rental-housing lists should fall from 3 years to 1.5 years (thanks to data transparency, capacity expansion is prioritised); the AirBnB effect should become measurable (estimate: rents in central Budapest are pushed up by 8–12%).
• International precedent: Berlin Mietspiegel (rent mirror): an official, biennially updated reference rent that has statutory force — rent increases may not exceed the Mietspiegel level. This stabilised the Berlin rental market but, as a side effect, reduced housing supply (new investment fell by 15% because returns became unpredictable).
• Trade-off / risk: Data transparency increases market efficiency but also makes life easier for speculative investors: if appreciating areas are publicly identifiable, capital flows there faster, pushing prices up further. In Barcelona, after the publication of the public housing-price index, foreign investor activity rose by 20% in the “trendy” districts.

SZ4 — Digital equal opportunity

• Mechanism: (1) Free broadband internet for households in disadvantaged settlements (HHJ) (250,000 households, building on municipal infrastructure). (2) A “Digital Community Point” in every HHJ settlement with 500+ residents: 3–5 workstations, printer, scanner, a digital mentor 20 hours per week. (3) Pupil device programme: every disadvantaged primary-school pupil receives a tablet for learning (~80,000 devices per year). (4) Basic digital-skills training for the 45+ age group — under the National Employment Service.
• Quantified target: By 2028 the share of households without internet should fall from 12% below 3%; the number of Digital Community Points should reach 300 (currently ~50 eCsalád Points with digital functionality); at least basic digital skills among the 16–74 age group should rise from 49% to 60%.
• International precedent: India’s BharatNet programme: connecting 250,000 villages with gigabit broadband. By 2024 more than 200,000 villages had been connected, but utilisation is only 30% — physical infrastructure alone is not enough; without digital-skills development and local content, the internet remains an “empty pipeline”. Lesson: the Hungarian programme must pair infrastructure with mandatory digital-skills development.
• Trade-off / risk: Free internet may acquire a “poor people’s internet” stigma if the quality is low (low bandwidth, frequent outages). In addition, the growth of online presence in vulnerable communities increases the risk of cybercrime and online disinformation — Roma communities may become targets of tailored disinformation campaigns. Required: media-literacy education as part of digital-skills training.

SZ5 — Inheritance tax reform

• Mechanism: Progressive inheritance tax with 3 bands: (1) 0% band: exemption up to 100M HUF (family home + small savings — ~90% of households are unaffected), (2) 15% band: between 100M–500M HUF, (3) 30% band: above 500M HUF. Group exemptions: full exemption for spouses, partial exemption for agricultural holdings (80%), family businesses with 5-year deferred payment if the business continues to operate. Earmarked use of revenue: 50% educational equal opportunity (programmes of the SZ4 type), 50% rental-housing programme.
• Quantified target: Estimated annual revenue: 150–250 bn HUF (~0.3% of GDP); share of estates affected: ~5–8% (i.e. 92–95% of households pay nothing); the social-mobility index (intergenerational income elasticity) should improve from 0.45 to 0.40 within 10 years.
• International precedent: UK Inheritance Tax: 40% rate with a £325,000 (~150M HUF) exemption threshold. Only ~4% of estates actually pay — due to broad exemptions and planning techniques (trusts, gifts beyond 7 years), actual revenue is 0.3% of GDP. Lesson: despite the low exemption threshold, the wealthy circumvent it — the Hungarian system needs a simple, hard-to-avoid structure (linkage of gift tax, trust rules).
• Trade-off / risk: Hungary abolished inheritance tax in 2006 — reintroducing it is politically extremely costly, even if it does not affect the vast majority of the population. Opinion polls show that people tend to overestimate their own exposure (~40% of the population believes they would pay inheritance tax, whereas the actual share is <5%). Required: a massive communication campaign emphasising the exemption threshold and the actual share of those affected.

SZ6 — Support for community solidarity networks

• Mechanism: Tocqueville: “among democratic nations, associations of citizens take the place that was occupied in aristocratic societies by individuals.” Targeted support for civil society organisations and local community networks (neighbourhood assistance, time-bank systems, community kitchens) — an annual HUF 10 bn fund for local civil initiatives via a municipal grant scheme.
• Quantified target: An annual HUF 10 bn civil society fund by 2030; 500+ supported community projects per year; a 20% improvement in the community-participation index. 📖 Source: Tocqueville: Democracy in America; Rousseau: The Social Contract

SZ7 — “Dignity-based” social policy

• Mechanism: Rousseau: the essence of the social contract is to replace natural inequality with “moral and lawful equality.” Radical simplification of the social benefit application process: automatic eligibility determination via data linkage (NAV+NEAK+municipality), minimisation of in-person appearance, reduction of the “burden of proof of need”.
• Quantified target: Social benefit application time falls by 50%; automatic eligibility determination covers 60% of benefits by 2030; the case-handling score (client satisfaction) improves by 30%. 📖 Source: Rousseau: The Social Contract (Book I, Chapter 9)

SZ8 — Consumption stimulus in the lower income band

• Mechanism: Keynes: low propensity to consume holds back economic growth — redistribution of income towards consumption is “positively favourable to the growth of capital.” Targeted consumption support for the bottom 20% income band: energy support, food vouchers, automatic uprating of child benefits based on the KSH subsistence-cost index, with an inflation-tracking mechanism.
• Quantified target: Real consumption of the bottom quintile rises by 3%+ per year; the energy-poverty rate falls from 20% below 10%; the child-poverty rate falls by 15%. 📖 Source: Keynes: The General Theory of Employment, Interest and Money (Chapter 24)

SZ9 — Public monitoring of wealth inequality

• Mechanism: Keynes: the two main faults of the economy are “the failure to provide full employment and the arbitrary and inequitable distribution of wealth and incomes.” An annual “Wealth Inequality Report”: income and wealth Gini coefficients, intergenerational mobility index, ratio of bottom to top decile — produced by an independent statistical body, publicly.
• Quantified target: Annual Report from 2028; 10+ indicators on income and wealth inequality; automatic policy review based on the data if inequality exceeds a threshold value. 📖 Source: Keynes: The General Theory (Chapter 24)

SZ10 — The cognitive load of poverty — behavioural-science social policy

• Mechanism: The revolutionary insight of the World Bank’s WDR 2015: poverty is not only a material shortage but also a cognitive burden — material scarcity “consumes cognitive resources”, impairs executive functions (planning, self-control, decision-making) and thereby further deepens disadvantage. This means that traditional social-policy tools (monetary transfers) are necessary but not sufficient — the design of interventions must take cognitive constraints into account. Programme: (1) automatic determination of social benefits (SZ7), (2) simplified decision architecture: forms of max. 1 page, visual decision trees, (3) commitment savings accounts built on social benefits — WDR 2015 demonstrated that this measurably improves the savings rate and investment decisions.
• Quantified target: By 2029, every social-benefit application form should be max. 1 page; a commitment savings account pilot programme in 10,000 households; the take-up rate of social benefits rises from 30% above 50%.
• Trade-off / risk: Behavioural interventions focus on “easy wins” — they do not solve the structural causes of poverty (unemployment, housing, discrimination). Nudging complements, but does not replace, structural measures. 📖 Source: World Bank: World Development Report 2015 — Mind, Society, and Behavior (Chapter 4)

SZ11 — Targeted protection of the losers of globalisation

• Mechanism: Stiglitz documented: globalisation caused “far more pain than was necessary” in developing countries and in certain sectors of developed countries — the IMF’s prescriptions failed to take local context into account. According to the IMF WEO 2025, tariff wars and trade restructuring are fundamentally reshaping the employment structure. Hungarian programme: (1) “Globalisation Impact Assessment” — an annual analysis: which sectors, regions and groups of workers are the losers of trade opening and restructuring? (2) Targeted protection: retraining, income replacement (70% of the previous wage for up to 12 months), regional economic diversification — modelled on K5 (Just transition). (3) Mandatory social impact assessment built into the impact analysis of trade agreements.
• Quantified target: Annual Globalisation Impact Assessment from 2028; 60% of affected workers in a new job within 2 years; social impact assessment in 100% of trade agreements.
• Trade-off / risk: The “losers of globalisation” rhetoric can be used for populist ends — the programme must be built on data-driven targeting, not general protectionism. 📖 Source: Stiglitz: Globalization and Its Discontents; IMF: WEO 2025