Hungarian politicians, both left and right, are predicting a grim near-term future for the Hungarian economy. Sometimes I think that the government may be overstating the case in order to have an easier time convincing the population as well as the opposition to cooperate in the economic restructuring necessary for future growth. Or it is equally plausible that they want to paint a very dark picture because, if the crisis is less severe than predicted, the population will be relieved and will think that after all Hungary has a government able to conquer towering economic difficulties. The curious thing is that no matter how bleak a picture the government paints, consumers keep on spending. Absolutely no sign of slowing down. Retailers expect a good Christmas.
Of course, there are already tangible signs of trouble. GE is letting one hundred workers go in Győr. In the same city Audi its closing its factory for a month. There was a demonstration against the temporary closing of the Audi factory, as if it mattered at all. Gordon Bajnai, minister of economics, predicted that in the next few weeks many thousands will lose their jobs. Last week, he mentioned 1,400. Yesterday he announced an additional 1,760. He added that in the next months the situation will get worse. He also mentioned that conditions will be most critical in the western regions where the multinational companies located.
What is the government trying to do under the circumstances? Some of the money received from the European Union will be used to save 100,000 jobs and to create an extra 20,000 in small companies. That sounds a bit extravagant to me. The plan at the moment is that if in one region too many factories close, the government will step in and declare the district a "disaster area" where they will try to keep factories open and reopen already closed ones.
The Christmas shoppers are not the only ones unphased by the grim predictions of Bajnai. The trade unions are not impressed either. As I mentioned earlier, the government wants to take away the thirteenth month pay of all government employees (close to 700,000), and the 4% increase in real wages promised earlier will be scrapped. The United Trade Unions of the Public Service Sector comprising 22 trade unions have been negotiating with the government, but they are getting nowhere. Thus,the decision was made to organize a huge demonstration for November 29. If further talks are unsatisfactory from the trade unions' point of view there will be a general strike starting January 12, 2009. I heard one union leader who is demanding an 18% raise. The head of the Hungarian Medical Association wants a 30% raise for people working in healthcare. If they stick to their demands, I'm afraid the strike is certain. How long it will last is another question entirely. If members of the trade unions show the same enthusiasm for the strike this time as they did earlier, when one strike after the other ended in total failure, they won't be picketing in the winter cold for long.