Since this coming Sunday will be the first time most larger retail stores will be closed by law, let’s return to one of the most politically foolish and economically harmful decisions of the Orbán government.
I already wrote two posts on the subject, both in late 2014 when the Christian Democratic Party (KDNP) once again floated the idea. Once again, because this was not the first time that KDNP pressured the Orbán government to curtail the liberal retail store hours that have existed in Hungary for the last twenty years. In 2011, when the idea was first proposed, Viktor Orbán wisely rejected it, saying that the Hungarian economy couldn’t afford the luxury.
But in early November 2014 the KDNP leadership returned to its favorite hobby-horse. This time, learning from the 2011 fiasco, they decided to turn in their bill in the form of a proposal by an individual member of parliament. In 2011 it was the government that vetoed the suggestion for economic reasons, citing the results of an unpublished impact analysis. When an individual member of parliament submits a bill, however, no impact study is necessary.
The initial reaction of government members, Fidesz leaders, and Fidesz MPs to the KDNP proposal was negative. Mihály Varga publicly voiced his opinion that “‘the move wouldn’t be wise.” Lajos Kósa, another heavyweight in the party, was also against the bill. So was Miklós Seszták, minister of national development. Initially, even Viktor Orbán was unenthusiastic about the idea. In one of his radio interviews he admitted that he himself shops on Sundays and added that he “is not planning to influence the behavior of the people, who can decide for themselves what to do on Sundays.” So, by mid-November most commentators believed that the KDNP proposal was dead in the water. If the government vetoed the KDNP proposal in 2011, how could Fidesz possibly agree to it “in such sensitive times, after the internet tax affair when there are demonstrators against [the government],” a member of the governing board of Fidesz asked.
Great was the surprise when less than two weeks later, on December 1, 2014, Népszabadság learned that the full Fidesz caucus and naturally the prime minister now enthusiastically endorsed the zany plan of KDNP. Viktor Orbán’s abrupt change of mind was especially strange because initially he wanted to see an impact study and no analysis was produced in the interim. Orbán within two weeks became such an enthusiastic supporter of the measure that he paid a visit to the Fidesz parliamentary delegation and twisted the arms of his troops in parliament. By early December the government parties gave their unanimous blessing to the measure. Since then they have been tinkering with it with scores of amendments which at times loosen, at other times tighten its grip on retail stores.
Although it was always pretty clear that the majority of Hungarians were against the Sunday closings, since March 13th we know how strongly people feel about KDNP’s idea. Ipsos conducted a poll which showed that 64% of the population want stores to be open and only 32% are for store closings. Ipsos broke down the data on the basis of sex, cities and towns versus villages, young versus old, and interestingly enough the differences were not substantial. In fact, there were some unexpected results. For example, people living in villages opted for keeping stores open on Sunday in higher numbers (70%) than people in Budapest (62%). Clearly, the measure is not popular. Just how unpopular it is we don’t yet know, despite the appearance of the poll, because last Sunday was a national holiday and the stores would have been closed anyway. But this coming Sunday, the people who missed the news will be greatly surprised when they travel to their closest supermarket and find it locked up. The song that is spreading like wildfire on YouTube expresses people’s sentiments about the Sunday closings. It was written to the tune of the internationally known song “Gloomy Sunday,” from the 1930s.
Opinions about why KDNP was so eager to change the law vary. Some people believe that since it is a religious party (and here and there even call the leaders bigots) it wants Hungarians to go to church instead of to the mall. Others interpret the move as an attack on multinationals in favor of the one large Hungarian chain that is made up of family-owned franchises, most of them small enough not to be affected by the new law. The latter theory might explain why Viktor Orbán eventually decided to support the KDNP proposal. After all, he wouldn’t at all mind if the foreign supermarkets and large chains simply abandoned their businesses in Hungary. Such an outcome would benefit his favorite oligarchs, who could purchase their stores on the cheap. These hypotheses may reflect KDNP reasoning, but I don’t think either fully explains why the prime minister changed his mind and decided to endorse the KDNP bill.
A few days ago another theory emerged, presented by a “senior researcher” of the political think tank Policy Agenda, which I found utterly unconvincing. There is nothing “sinister” or “complicated” behind this decision, he explained. After all, KDNP is a coalition partner. They have had many demands that were not satisfied by their larger partner. So, it was time to throw them a bone. First of all, it is not true that KDNP’s demands have been ignored in the past. Just think of the increased subsidies for parochial schools, the incredible number of gymnasiums that were passed into the hands of the Catholic Church, and the decision to make religious education part of the regular school curriculum. Second, this is not how political decisions are reached. Would Viktor Orbán for such a trifling reason assume substantial political risk? Unlikely.
My own theory is that the Christian Democrats, realizing Fidesz’s rapid loss of support and the decline in Viktor Orbán’s popularity, decided to put pressure on the prime minister, most likely accompanied by a threat. KDNP has 23 votes in parliament, which can be withheld at any time. I wouldn’t be at all surprised if the KDNP heavies told Viktor Orbán that it is either Sunday closings or no parliamentary support from the Christian Democrats on certain key issues.
As of this morning we know what was in the impact studies of 2011, which were leaked to Népszabadság. Pretty much the same negative results that trade unions and trade associations have predicted since the bill resurfaced last November. There will be a loss of 10,000 to 15,000 jobs. This can be translated into a 2.3 to 3.4 billion forint expenditure for the government in the form of unemployment insurance. About 26 to 27 billion forints would be lost annually in income taxes and social security payments. Expected lost sales for the companies would be 20.4 billion forints. VAT collections would drop by about 7.6 billion forints. All told, the Sunday closings would cost the Hungarian government 43.9-49 billion forints. That’s a steep price for Fidesz to pay to accommodate KDNP and a heavy burden for the Hungarian taxpayers to bear to keep the Fidesz-KDNP government in power.