10.6092/issn.1561-8048/15687
For the Hungarian government the debate was not really about the details of the NextGenerationEU plan, but rather how to hinder the conditionality regulation. Finally, a compromise was reached to suspend application of the conditionality regime until the CJEU ruling, which was delivered on 16 February 2022, confirming the regulation’s validity. The European Commission sent a letter to the Hungarian government to start the conditionality mechanism on 5 April 2022. At the same time, the European Commission has not given the greenlight to Hungary for the NextGenerationEU fund. Hungary’s Recovery and Resilience Plan focuses on health and transport, and little attention has been paid to social issues. As an exception, an innovative programme is planned to support catching-up settlements
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Catching-up settlements
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Tamás  Gyulavári
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    National Recovery and Resilience Plan                                          Italian Labour Law e-Journal
    Hungary                                                                       Special Issue 1, Vol. 15 (2022)
    Tamás Gyulavári                                   NextGeneration EU in Action: Impact on Social and Labour
    gyulavari.tamas@jak.ppke.hu                                                                          Policies
                                                                                                ISSN 1561-8048
                                                                 https://doi.org/10.6092/issn.1561-8048/15687




         National Recovery and Resilience Plan: Hungary
                                            Tamás Gyulavári


                                                 Abstract

     For the Hungarian government the debate was not really about the details of the
     NextGenerationEU plan, but rather how to hinder the conditionality regulation. Finally, a
     compromise was reached to suspend application of the conditionality regime until the CJEU
     ruling, which was delivered on 16 February 2022, confirming the regulation’s validity. The
     European Commission sent a letter to the Hungarian government to start the conditionality
     mechanism on 5 April 2022. At the same time, the European Commission has not given the
     greenlight to Hungary for the NextGenerationEU fund. Hungary’s Recovery and Resilience Plan
     focuses on health and transport, and little attention has been paid to social issues. As an
     exception, an innovative programme is planned to support catching-up settlements.

     Keywords: Hungary, Conditionality regulation, Health care reform, Catching-up settlements




1. The Hungarian government and Next Generation EU: a political game

   In the aftermath of the Covid-19 crisis and during the political negotiations in the autumn
of 2020, the main priority of Hungarian prime minister Viktor Orbán and his government
was to thwart the passage of the EU rule-of-law-conditionality regulation. For Hungary
therefore the debate was not really about the details of the Next Generation EU plan or the
upcoming budget, but only how to hinder the conditionality regulation. This new
conditionality regime allows the EU to take measures – for example, suspension of payments
or financial corrections – to protect the EU budget. Measures under the conditionality
regulation can be proposed only if the Commission finds out that breaches of the rule-of-




    Professor of Labour Law at Pázmány Péter Catholic University (Budapest, Hungary).
    Tamás Gyulavári                                                              Italian Labour Law e-Journal
                                                                                Special Issue 1, Vol. 15 (2022)
                                                                      NextGeneration EU in Action: Impact on
                                                                                    Social and Labour Policies




law principles directly affect or seriously risk affecting the sound financial management of
the EU budget or its financial interests in a sufficiently direct way.1
   After opposing the draft conditionality regulation, the Hungarian and Polish governments
formed an alliance, which indicated in November 2020 that it would veto the European
Union’s Multiannual Financial Framework (MFF) for 2021–2027 and the Next Generation
EU (NGEU) economic recovery fund.2 According to the Hungarian argument:

     it jeopardises trust among Member States and also the interests of Hungary if conditions
     were tied to the next seven-year budget and the extraordinary recovery package which do
     not precisely define what a presumed breach entails and which could arbitrarily lead to
     politically motivated budgetary sanctions through the application of double standards.3

   In practice, the whole mechanism was designed to stop violations of democratic values in
these two member states, so Hungary and Poland have good reason to suppose that the
mechanism will immediately be utilised against them.
   Finally, a compromise was reached to suspend application of the conditionality regime
(mentioned above) until the CJEU ruling. This was delivered on 16 February 2022,
confirming the regulation’s validity.4 As a result, the EU budget from now on has an
additional layer of protection in cases in which breaches of the rule-of-law principles affect
or risk affecting EU financial interests. This general conditionality regime to protect the EU
budget5 has been in force since January 2021.6 It allows the Commission to suspend
disbursement of EU funds to a given state if it is adjudged to have violated the rule of law.
The European Commission sent a letter to the Hungarian government to start the
conditionality mechanism on 5 April 2022. At the same time, the European Commission has
not given the greenlight to Hungary and Poland for the Next Generation EU fund.7




1 Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020
on a general regime of conditionality for the protection of the Union budget. OJ L 433I , 22.12.2020, p. 1–10
2 Kovács Z., Five facts you should know about Hungary’s veto on the EU Budget. 26 November 2020,

https://abouthungary.hu/blog/five-facts-you-should-now-about-hungarys-veto-on-the-eu-budget
3 Cabinet Office of the Prime Minister, Hungary to veto EU budget and recovery fund, 6 November 2020,

https://miniszterelnok.hu/hungary-to-veto-eu-budget-and-recovery-fund/
4 Case C-156/21 Hungary v European Parliament and Council of the European Union, ECLI:EU:C:2022:97.
5 Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020

on a general regime of conditionality for the protection of the Union budget.
6 European Commission, Rule of law conditionality regulation, https://ec.europa.eu/info/strategy/eu-

budget/protection-eu-budget/rule-law-conditionality-regulation_en
7  Tamma P., Brussels holds up Hungary’s recovery plan … but for how long?, 7 July 2021,
https://www.politico.eu/article/brussels-holds-up-hungarys-recovery-plan-but-for-how-long/.

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    Tamás Gyulavári                                                                   Italian Labour Law e-Journal
                                                                                     Special Issue 1, Vol. 15 (2022)
                                                                           NextGeneration EU in Action: Impact on
                                                                                         Social and Labour Policies




2. Hungary’s Recovery and Resilience Plan: focus on health and transport

2.1 First only grants, later also loans

    Hungary submitted its Recovery and Resilience Plan on the use of Recovery and
Resilience Facility funds on 12 May 2021, after it was revealed that the country would forgo
the significant 9.1 billion euro credit line of the recovery package, and only take the grants,
worth 7.2 billion euros.8 The government justified this decision by saying they wanted to
restart the economy with the lowest possible foreign debt ratio. Many claimed, however, that
it had more to do with the strict conditions the EU is imposing on the use of the loans, such
as excluding the funding of public universities supervised by new foundations (see below).
    After all, on 18 March the Hungarian government had requested the immediate provision
of the allocated loan facility under the Recovery and Resilience Facility for defence and
border control, as well as humanitarian and other acute crisis management tasks. In his letter,
the Hungarian prime minister explained this changed position in terms of the adjustment
required by the crisis situation related to the Ukrainian war.9 No information is available on
the government’s amended plans, however.
    Many of the investments planned by the Orbán government would not be eligible for
Recovery and Resilience Facility funding because the project plans did not meet the
objectives of EU programmes, such as the restructuring of higher education institutions. We
can mention here the debates on the transformation of public universities and their
investments into foundations with boards of trustees loyal to the government.10 The
Commission has not approved Hungary’s recovery plan, which some attribute to a lack of
satisfactory anti-graft safeguards in the country’s spending plan.11


2.2 Main reforms and investments: focus on health care and transport

   The Hungarian plan is structured around the key policy areas of green transition, health
care, research, digitalisation, cohesion and public administration. The Recovery Plan’s main
objective is a sustainable and inclusive growth path that would contribute to economic
growth, job creation and job preservation, business competitiveness and social inclusion,




8 Liboreiro J., Hungary left waiting as 12 EU states have spending plans for COVID recovery approved, in Euronews, 26
August 2021, https://www.euronews.com/2021/07/13/hungary-left-waiting-as-12-eu-states-have-spending-
plans-for-covid-recovery-approved.
9 https://cdn.kormany.hu//uploads/sheets//8/86/86a/86ade12ca394e1244d5ea5dd51e1b85.pdf
10 Kőműves A., Dunai M., Orbán extends dominance through Hungarian university reform, 27 April 2021,

https://www.reuters.com/world/europe/orban-seen-entrenching-right-wing-dominance-through-hungarian-
university-reform-2021-04-26/
11 Cseresnyés P., EC to Delay Approval of Hungary’s Recovery Plan, in Hungary Today, 13 July 2021,

https://hungarytoday.hu/ec-delay-approval-hungary-eu-recovery-plan-lgbt-law/.

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     Tamás Gyulavári                                                                        Italian Labour Law e-Journal
                                                                                           Special Issue 1, Vol. 15 (2022)
                                                                                 NextGeneration EU in Action: Impact on
                                                                                               Social and Labour Policies




across all elements of the economic ecosystem and taking in all groups in society.12 Hungary
plans to channel the 7.2 billion euros of the Recovery and Resilience Facility (RRF) to finance
investments primarily in the health sector and sustainable transportation. These two areas
will be allocated around 60 per cent of all funds. Projects in the plan cover the entire lifetime
of the RRF until 2026.


Table 1 The nine main areas to be financed partially or fully by RRF funds and the funds allocated

                                                                     Allocated funds          Share of all entire
       Component
                                                                     (billion euros)          funding
1. Demography and public education                                   0.64                     9.19%
2. Highly skilled, competitive workforce                             0.78                     11.19%
3. Catching-up municipalities                                        0.22                     3.08%
4. Water management                                                  0.12                     1.77%
5. Sustainable green transport                                       1.76                     25.13%
6. Energy (green transition)                                         0.73                     10.45%
7. Transition to a circular economy                                  0.29                     4.10%
8. Health                                                            2.39                     34.13%
   Anti-corruption, public procurement measures,
9. technological development in public services                      0.07                     0.96%

      Total                                              7.01                     100.00%
Source: Aranyi D., Szopkó R., Health and sustainable transportation at the heart of Hungary’s recovery and
resilience plan, in Bird and Bird, September 2021.

   The plan’s most significant element is the further development of the health-care system,
toward which the government will spend 34.1 per cent of available resources. Priority will
also be given to the development of environmentally friendly transport and the
comprehensive development of education, including higher education, public education,
vocational training and adult education, with 25 per cent of resources being devoted to these
areas. The remaining resources will be spent on the transition to a circular economy, the
catching-up of underdeveloped areas and protecting the environment.13
   As it is clear from the above, the priorities of the Recovery Plan lie primarily with the
health sector and sustainable transportation, followed by the green transition and public
education. The biggest projects among the Recovery Plan’s 50 major reforms and
investments are:


12 Aranyi D., Szopkó R., Health and sustainable transportation at the heart of Hungary’s recovery and resilience plan, in Bird
and Bird, September 2021,
https://www.twobirds.com/en/news/articles/2021/hungary/health-and-sustainable-transportation-at-the-
heart-of-hungarys-recovery-and-resilience-plan
13 Ágostházy S., Hungary's Recovery Plan aims to relaunch the economy and improve competitiveness, in About Hungary, 25

May 2021, https://abouthungary.hu/blog/hungary-s-recovery-plan-aims-to-relaunch-the-economy-and-
improve-competitiveness

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     Tamás Gyulavári                                                              Italian Labour Law e-Journal
                                                                                 Special Issue 1, Vol. 15 (2022)
                                                                       NextGeneration EU in Action: Impact on
                                                                                     Social and Labour Policies




–           development of the railway and tramway systems in the suburbs of Budapest;
–           technological improvement of the health-care sector;
–           covering the 2021 salary increases for doctors; and
–           digitalisation of public education.

   Criticisms include the fact that the Hungarian Recovery and Resilience Plan has
undergone major changes since its first draft, it is still far from ensuring a green and just
recovery, it leaves households on their own to improve energy efficiency and it fails to
propose easily-achievable biodiversity measures.14


2.3 Impact of the reforms on labour and social affairs

   The planned reforms should have an impact on the labour market because Component
B of the Recovery and Resilience Plan15 is aimed at promoting a well-educated and
competitive workforce, based on the Country Specific Recommendations in 2019 and 2020.
These reforms support regional cohesion through investments in higher education
infrastructure, human capital, research and innovation. The main objective is to increase the
number of educated and trained workers, which is planned to be achieved by the following
reforms:

             –    modernisation of higher education infrastructure to meet the needs of the
          labour market;
             –    renewal of vocational training;
             –    promotion of innovation on the basis of higher education institutions.

   These measures include in particular the improvement of practice-oriented higher
education infrastructure, human capacity and innovation, vocational training institutions,
digital training materials and the establishment of a new network of national laboratories for
innovative research.
   Another social aspect of the Recovery and Resilience Plan aims to promote the catching-
up of poor villages16 by fighting poverty in housing and improving living conditions, in
accordance with Principles 19 and 20 of the European Pillar of Social Rights. The
programme on catching-up settlements is aimed at improving housing quality in 300
designated settlements with accumulated disadvantages in the north-eastern and south-
western parts of Hungary, where poverty is highest and the Roma population is particularly


14 Dönsz-Kovács T., Botár A., Hungary’s recovery plan – not green, just, or resilient, in Bankwatch, Network, 2
June 2021, https://bankwatch.org/blog/hungary-s-recovery-plan-not-green-just-or-resilient
15-Magyarország Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-

es-ellenallokepessegi-eszkoz-rrf, 36–66.
16-Magyarország Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-

es-ellenallokepessegi-eszkoz-rrf, 97–127.

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 Tamás Gyulavári                                                                        Italian Labour Law e-Journal
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                                                                             NextGeneration EU in Action: Impact on
                                                                                           Social and Labour Policies




numerous. The strategy is based on supporting public services, community and
employability. The following measures will serve this purpose:

   –     building or refurbishing social accommodation;
   –     supporting community regeneration and use of renewable energy;
   –     improving work socialisation and skills on the basis of local conditions.

    These measures will include the renovation of 2,500 houses (out of 27,000 in the selected
villages) and building 600 new social flats. About one-third of these villages are capable of
using solar energy. Employment rates may be increased by complex services, such as a
mentor programme.
    Also of social and labour market relevance is the Recovery and Resilience Plan component
on health care, which put forwards the following five main objectives:

          (i)    improve basic health care services close to where people live, based on the
       network of local medical practitioners to decrease the burden on special health care
       institutions;
          (ii) improve infrastructure;
          (iii) cover doctors’ wage rises (awarded in 2021);
          (iv) improve digitalisation in the health care system; and
          (v) implement a digital programme to improve the safety of people with a
       reduced ability to live independently.17

   Out of these objectives, covering the radically increased wages of medical doctors
(ongoing from 2021)18 has a strong impact on employment conditions in the sector. This
may decrease under the counter payments, labour shortages and migration of highly skilled
doctors to Western European member states for higher wages. It may also contribute to
better health care services with a more motivated workforce. However, the wage increase
affects only medical doctors (18,000 people), so other health care personnel will remain on
low pay, widening the pay gap in the sector and increasing tensions. However, many doctors
did not accept the new contract with its changed conditions, for example, because it restricts
access to other professional income. As a side effect of legal changes and wages, many
workers have left the sector, resulting in a decrease of 17,000 workers in a year (from 197,000
to 180,000).19 This has caused a serious labour shortage in the health sector.



17-Magyarország   Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-
es-ellenallokepessegi-eszkoz-rrf, 244–272.
18 Cseresnyés P., Hungary’s New Pay Scale for Doctors a Step Closer to Western Healthcare Salaries, in Hungary Today, 14

October      2020,     https://hungarytoday.hu/hungarys-new-pay-scale-for-doctors-a-step-closer-to-western-
healthcare-salaries/. See also Doctor and Physician Average Salaries in Hungary 2022, in Salary Explorer,
http://www.salaryexplorer.com/salary-survey.php?loc=98&loctype=1&job=13&jobtype=2.
19 Egy év alatt majdnem 17 ezerrel csökkent az egészségügyben dolgozók száma, in HVG, 31 January 2022,

https://hvg.hu/gazdasag/20220131_egeszsegugy_egeszsegugyi_dolgozo_ksh

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    Tamás Gyulavári                                                               Italian Labour Law e-Journal
                                                                                 Special Issue 1, Vol. 15 (2022)
                                                                       NextGeneration EU in Action: Impact on
                                                                                     Social and Labour Policies




    Another initiative presented in the Recovery and Resilience Plan, which concerns labour
and social policies, is the establishment of a digital programme intended to support people
of reduced ability to live independently. This programme is likely to affect the entire elderly
population. Non-stop service centres will provide rapid and effective help for elderly people
living in their homes and facing difficulties. This will improve their quality of life, safety and
protection through a help line and non-stop rapid aid services.
    As for the other components, social and regional cohesion will be strengthened through
better public services, such as improved water and energy supply (see Section 3.2 below).20


3. The social and labour dimensions in the Recovery and Resilience Plan

3.1 Evaluation by the Commission and the Council

   The next question is how the European Commission and the European Council evaluate
the Hungarian plan, with specific reference to social and labour policies. There has been no
Commission Staff Working Document analysing the Recovery and Resilience Plan and a
proposal for a Council Implementing Decision on approval of the assessment of the recovery
and resilience plan of Hungary. ‘The European Commission is continuing the assessment of
the Hungarian recovery plan on the basis of the 11 criteria in recovery and resilience fund
regulation.’21 This assessment had still not been finished by the time of writing.


3.2 Implementation of the European Pillar of Social Rights and the Social Scoreboard

   The European Pillar of Social Rights is mentioned in four parts of the Recovery and
Resilience Plan. There is no reference to the Social Scoreboard indicators.
   The first and most detailed mention of the European Pillar is in the chapter on sex
equality,22 which summarises the effects on the European Pillar on the following measures:

–        In the ‘Demography and public education’ component, early education is mentioned
         as promoting social equality and parents’ employment opportunities. This measure
         equally serves all three chapters of the Pillar, as it promotes equal opportunities,
         employment opportunities, balance between work and family life, and the right to early
         education and care.



20-Magyarország  Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-
es-ellenallokepessegi-eszkoz-rrf, 383.
21 Zalán E., EU Commission tightlipped on Hungary recovery-plan decision, in EU Observer, 1 October 2021,

https://euobserver.com/democracy/153090
22-Magyarország Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-

es-ellenallokepessegi-eszkoz-rrf, 30.

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    Tamás Gyulavári                                                               Italian Labour Law e-Journal
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                                                                       NextGeneration EU in Action: Impact on
                                                                                     Social and Labour Policies




–        In the ‘Highly educated, competitive workforce’ component, the measures in higher
         education and vocational training on infrastructure, capacity building and digitalisation
         contribute to the promotion of equal opportunities in providing high quality higher
         education and vocational training.
–        The ‘Catching-up settlements’ component represents a turning point in social policy
         in tackling the problems of small depressed villages in all their complexity with a special
         strategy. The elements of this component, with their synergies, should bring about a
         remarkable improvement in the catching-up of the selected 300 settlements by
         enhancing social mobility and strengthening families and communities.
–        In the ‘Water supply’ component the objectives (such as water supply for regions with
         water shortages) will improve equal access to basic services.
–        In the ‘Sustainable and green transport’ component interventions in suburban and
         regional train networks will increase social mobility in remote regions in order to
         reintegrate them.
–        In the ‘Energetics (green transition)’ Component the individual solar system and
         heating modernisation investments should strengthen social protection and inclusion,
         but also bring about a general improvement for all social groups and regions.
–        The ‘Effective waste management’ component also includes elements aimed at
         enhancing social and regional cohesion.
–        In the ‘Health care’ component, almost all elements support social protection and
         cohesion because better quality health services and a reduction in under the counter
         payments should bring advantages especially for social groups in need. The remote
         health digital services programme targets individuals who cannot independently take
         care of themselves in their homes, thus promoting their social inclusion.
–        The Horizontal measures in general are aimed at promoting equal opportunities, and
         thus serve to achieve the objectives of the European Pillar.

   The second (specific) mention concerns the Horizontal measures of the Recovery and
Resilience Plan,23 which are aimed at promoting equal opportunities. They therefore support
the objectives of the European Pillar (in general terms). These Horizontal measures include:

–        Improving the efficiency of anti-corruption measures to promote trust among
         businesspeople and citizens.
–        Enhancing competition in public procurement with interventions on both the demand
         and supply sides.
–        Improving the efficiency and quality of public services and decision-making processes
         with the use of AI technologies and automation.




23-Magyarország  Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-
es-ellenallokepessegi-eszkoz-rrf, 31.

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                                                                        NextGeneration EU in Action: Impact on
                                                                                      Social and Labour Policies




    The third and fourth (specific) mentions24 are related to the same issue, namely social
housing. The component on catching-up settlements25 is aimed at investments in poor
villages to fight poverty in housing and improve living conditions, in accordance with Pillars
19 (housing) and 20 (access to essential services) of the European Pillar of Social Rights.


3.3 Country-specific recommendations

   In the context of the 2019 Country-Specific Recommendations (CSRs), the Council called
on the Hungarian government to

   continue the labour market integration of the most vulnerable groups, in particular by
   upskilling,   and    improve     the    adequacy    of    social   assistance     and
   unemployment benefits. Improve education outcomes and increase the participation of
   disadvantaged groups, in particular Roma, in quality mainstream education. Improve
   health outcomes by supporting preventive health measures and strengthening primary
   health care.

The 2020 CSRS then recommended that Hungary

      address shortages of health workers and ensure an adequate supply of critical medical
   products and infrastructure to increase the resilience of the health system. Improve access
   to quality preventive and primary care services ... Protect employment through enhanced
   short-time working arrangements and effective active labour market policies and extend
   the duration of unemployment benefits. Improve the adequacy of social assistance and
   ensure access to essential services and quality education for all.

   In this regard, the Health care component will contribute to supporting preventive health
measures and strengthening primary health care. The Catching up settlements component
will improve community services and living conditions in remote villages with accumulated
disadvantages, in which the Roma population is particularly high. However, it will not include
measures on education (beyond general improvements of public services in higher education
and vocational training), social assistance or unemployment benefits. At the same time, there
will be a referendum (proposed by the opposition parties’ election coalition) on raising of
the maximum period of unemployment benefit from three to nine months in 2022.26

24-Magyarország    Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-
es-ellenallokepessegi-eszkoz-rrf, 117, 418.
25-Magyarország Helyreállítási és Ellenállóképességi Terve (RRP), https://www.palyazat.gov.hu/helyreallitasi-

es-ellenallokepessegi-eszkoz-rrf, 97-127.
26 LMP Advocates Referendum as ‘2nd Step’ to Change Government, in MTI-Hungary Today, 4 January 2022,

https://hungarytoday.hu/hungary-opposition-referendum-lmp-csardi/; Csurgó D., Megvannak az aláírások az
ellenzék népszavazási kezdeményezéseihez, in 444.hu, 20 January 2022, https://444.hu/2022/01/20/megvannak-az-
alairasok-az-ellenzek-nepszavazasi-kezdemenyezeseihez.

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    Tamás Gyulavári                                                       Italian Labour Law e-Journal
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                                                               NextGeneration EU in Action: Impact on
                                                                             Social and Labour Policies




   Moreover, the Council recommended in 2019 to ‘focus investment-related economic
policy on research and innovation, low carbon energy and transport, waste infrastructure and
energy and resource efficiency, taking into account regional disparities. Improve competition
in public procurement.’ In 2020 the Council added that Hungary should

     focus investment on the green and digital transition, in particular clean and efficient
     production and use of energy, sustainable transport, water and waste management,
     research and innovation, and digital infrastructure for schools... Ensure effective
     involvement of social partners and stakeholders in the policy-making process. Improve
     competition in public procurement.

   In this field, the measures in the ‘Highly educated, competitive workforce’ component
will bring about investments in higher education and vocational training on infrastructure,
capacity building and digitalisation. The ‘Water supply’, ‘Sustainable and green transport’ and
‘Energetics (green transition)’ components all focus on decreasing regional disparities.
   The Council also recommended in 2019 that Hungary should

     reinforce the anti-corruption framework, including by improving prosecutorial efforts and
     access to public information, and strengthen judicial independence. Improve the quality
     and transparency of the decision-making process through effective social dialogue and
     engagement with other stakeholders and through regular, appropriate impact assessments.
     Continue simplifying the tax system, while strengthening it against a risk of aggressive tax
     planning. Improve competition and regulatory predictability in services sector.

   In this respect the wage increase for medical doctors is a decisive step against informal
payments and other illegal practices, as well as corruption in the health sector. Furthermore,
the horizontal measures include the following anti-corruption initiatives:

–        modernisation of cooperation between public prosecutors in order to fight corrupt
         practices;
–        halting illegal activities in health care;
–        improving the Electronic Public Procurement System (EKR);
–        strengthening the demand and supply sides to improve competition;
–        elaborating an anti-corruption policy.

   There is also horizontal reform to further simplify the tax system. The national
information technology infrastructural system will be reformed to increase the effectiveness
of public services. Decision-making processes are planned to be improved through
horizontal reforms to enhance efficiency and transparency, and decrease the risk of
infringements:

–          promoting data based decision-making and legislative processes;

https://doi.org/10.6092/issn.1561-8048/15687                                                          10
     Tamás Gyulavári                                                              Italian Labour Law e-Journal
                                                                                 Special Issue 1, Vol. 15 (2022)
                                                                       NextGeneration EU in Action: Impact on
                                                                                     Social and Labour Policies




–           extending automatic administrative decision-making.


4. Lessons from the previous crisis

4.1 Recommendations in the context of the in-depth reviews

   Hungary has not been presented with macroeconomic recommendations in the context
of the in-depth reviews carried out by the Commission since the Covid-19 pandemic began,
including the 2022 Spring Package.



4.2 Country-Specific Recommendations 2022

   The 2022 Country-Specific Recommendations include the following: ‘Continue the
labour market integration of the most vulnerable groups, in particular through upskilling,
and extend the duration of unemployment benefits. Improve the adequacy of social
assistance and ensure access to essential services and adequate housing for all. Improve
education outcomes and increase the participation of disadvantaged groups, in particular
Roma in quality mainstream education. Improve access to quality preventive and primary
care services.’27


4.3 Political context

   The national political landscape was not impacted at all by the adoption of the Next
Generation EU plan. The main debate between the governing Fidesz and the oppositional
six-party coalition centred around the introduction of the rule-of-law conditionality
mechanism in 2021–2022. The Orbán government fiercely attacked the EU conditionality
regulation adopted in January 2021, while the opposition parties warmly welcomed it.
   The role of social dialogue and civil society involvement is very limited, generally speaking,
also in relation to the Recovery and Resilience Plan. Forums of (tripartite) social partnership
with the participation of employers’ and employees’ organisations have been terminated and
degraded since 2010. The national system of social dialogue is thus not effective in general,
and it certainly could not play any role in the elaboration of and debate on the Next
Generation EU plan. Civil organisations, for example, criticised the extremely short deadline
(14 days) for submitting an opinion.28 The Mayor of Budapest, representing the opposition
parties, also criticised the inadequate consultation process, which led to a political debate

27 Council Recommendation on the 2022 National Reform Programme of Hungary and delivering a Council
opinion on the 2022 Convergence Programme of Hungary {SWD(2022) 614 final. Recommendation No. 3.
28 Bizottság H., Észrevételeink az Európai Bizottsághoz benyújtandó Helyreállítási Tervezethez, 19 April 2021,

https://helsinki.hu/eszreveteleink-az-europai-bizottsaghoz-benyujtando-helyreallitasi-tervezethez/

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     Tamás Gyulavári                                                              Italian Labour Law e-Journal
                                                                                 Special Issue 1, Vol. 15 (2022)
                                                                       NextGeneration EU in Action: Impact on
                                                                                     Social and Labour Policies




about the adequacy of the consultation process between local government and central
government.29


5. Conclusions

The overall impact of EU financial transfers will be limited by the government’s decision to
accept only the grant of 7.2 billion euros and refuse the loan of 9.1 billion euros. However,
this decision was changed by the government on 18 March in a letter to the European
Commission. The changed plans in relation to the loans have not yet been published,
however. This change in the government’s original plans considerably increases the room for
manoeuvre in expenditure, in particular in the social domain. The original (published) tighter
budget was focused on health care (mostly on doctors’ salary increases) and transport
projects (predominantly suburban railways). The approach to social and labour protection
policies is characterised mainly by negligence so far (a mere 3 per cent of the budget).
   The only exception is the innovative and very much needed support for villages in
depressed regions with a high rate of extremely poor Roma people. The bad news is that
only 200 million euros – 3 per cent of the budget – will be spent on this component over
four years. It is regrettable that this part of the plan has received so little attention. The bulk
of the recovery fund (60 per cent of the budget) will instead be spent on health care and
transport-related projects. For instance, the raising of wages in one part of the medical
profession will cost around 1 billion euros, and health infrastructure another 1 billion. Similar
amounts will be spent on transport projects in the suburbs of Budapest on railways and other
transport systems.
   All in all, it has emerged that social and labour objectives were not of high importance for
the Hungarian government in the elaboration of the Recovery and Resilience Plan, which,
therefore, will not result in the reinforcement of the social dimension of EU and national
policies. The same applies to social dialogue and civil society involvement, which has not
played a significant role in planning and discussions. Infrastructural investment is the key
word in spending the Next Generation EU fund, whether it be in health care, higher and
vocational education, or the transport network. None of this has much to do with social and
employment policies, although a few minor contact points and intersections were
highlighted.


Copyright © 2022 Tamás Gyulavári. This article is released under a Creative Commons
Attribution 4.0 International License.

29  Karácsony Gergely bírálja a helyreállítási tervet, a Miniszterelnökség cáfol, in Index.hu, 25 May 2021,
https://index.hu/belfold/2021/05/25/helyreallitasi-terv-karacsony-gergely-fopolgarmester-
miniszterelnokseg-agosthazy-szabolcs-fovarosi-onkormanyzat/; https://www.origo.hu/itthon/20210525-a-
miniszterelnokseg-nyilt-levelet-irt-karacsony-gergelynek-magyarorszag-helyreallitasi-terverol.html; Szalai A.,
Karácsony: Nem tudom, hogy létezik-e ezer oldalas SMS, in Népszava, 5 May 2021,
https://nepszava.hu/3120808_karacsony-nem-tudom-hogy-letezik-e-ezer-oldalas-sms.

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