Yesterday I wrote briefly about the changes the government is planning to introduce in the structure of the government bureaucracy by either eliminating or amalgamating 73 ancillary institutions that have served the ministries. I suspect that in this case the real reason for streamlining is not so much saving money or making the system more efficient but rather depriving these think tanks of their independence.
There has, however, been talk lately about large-scale dismissals of government employees. At the end of January Nándor Csepreghy, deputy to János Lázár in the prime minister’s office, threw out some wild numbers. In an interview on ATV he put forth the possibility of letting go 150,000 public employees when the time is ripe for such scaling down of the government bureaucracy. This is no more than irresponsible talk. Given the present centralized nature of the Hungarian labor force it is impossible to imagine a situation in which the state institutions can let 150,000 public employees go and still keep functioning.
Today János Lázár, during his usual Thursday press conference nicknamed “government info,” was less draconian. He talked about the dismissal of 6,000 civil servants. I don’t know who is being targeted. Only a week ago we heard that the “rationalization” of the ancillary institutions would involve 6,000 government officials. Does this mean that between now and the beginning of July 6,000 or 12,000 people will lose their jobs? The latter seems to be the case. Lázár talked about civil servants who currently work in the ministries and in the offices of the 175 “járás[ok],” smaller territorial units within the counties. He claimed that these government institutions employ altogether 30,000 people. If the government gets rid of 6,000 of them, this would mean a 20% personnel reduction. Considering that before 2013 there were neither “járások” nor “járási hivatalok” and that three years later serious job cuts have to take place, one wonders about the wisdom of setting up such offices in the first place.
Before we try to make sense of Lázár’s figures we must distinguish among civil servants (köztisztviselők), public employees (közalkalmazottak), and government officials (kormánytisztviselők). I must admit that the distinction between civil servants and government officials is not very clear to me. But, judging from the official numbers provided by the Hungarian Central Statistical Office and the numbers mentioned by Lázár, I assume that he was talking about the civil service corps that last year had almost 35,000 members. The number of government officials is much larger than that. According to the last official statistics (September 2015) they numbered 78,600. So, if they axe 12,000 (and here I assume that employees of the ancillary institutions are considered to be government officials), this would be about a 10% reduction in the number of government officials and civil servants.
When Lázár tried to explain why it was necessary to reduce the number of civil servants and government officials and compared Hungarian figures to those of other countries in Europe, he managed to confuse matters–most likely intentionally. He spoke not about civil servants and government officials but about public employees. The largest group of people who receive their salaries from the government are the public employees, most of whom work in education and healthcare. They numbered 854,100 at the end of 2014. Healthcare and social services employed 302,000 people, and 227,400 people worked in educational institutions.
Lázár’s misleading explanation went as follows. The number of public employees is far too high in Hungary. They constitute 20% of the total workforce whereas, according to him, the European average is only 10%. That is too high a number, and the resultant bureaucracy decreases competitiveness. Every month the government pays the salaries of about 1 million people out of the 4.2 million wage earners. According to him, there is a direct connection between these figures and Hungary’s lagging competitiveness.
Here Lázár was talking about public employees, who include doctors, nurses, social workers, schoolteachers, and university faculty members. Their ranks are not bloated. In fact, there are too few doctors and nurses in Hungary. Lázár was trying to justify the dismissal of civil servants and government officials by pointing to the number of public employees, some of whom only recently became state employees by government fiat.
But that’s not the only problem. Lázár’s claim that the percentage of public employees in the workforce is much higher in Hungary than in other European countries is simply not true, and the assertion that the European average is 10% is outright laughable. Here are some figures from the International Labor Organization: Belgium 21.9%, Bulgaria 24.5%, Croatia 31.7%, Czech Republic 34.0%, Denmark, 31.1%, Estonia 20.5%, Finland 24.4%, France 20.0%, Sweden 28.9%, Netherlands, 21.4%. Should I continue? Ten percent on average? Only according to the math of the prime minister’s office.
Lázár claimed this afternoon that there is a direct correlation between the size of the public workforce and the country’s competitiveness. Again, the Orbán government is making decisions based on faulty data and mistaken notions. It is worth taking a look at a short piece on the Becker-Posner blog from 2011. Gary Becker is a Nobel laureate in economics and Richard Posner, a judge and professor of law and economics, both at the University of Chicago. The article, written by Posner, was titled “Too many government workers?” After examining the size of the public sector in relation to GDP per capita, he came to the conclusion that there “does not appear to be a relation between a country’s prosperity and the number of public employees it has.” So, if the Orbán government thinks that reducing the number of civil servants (not the number of public employees) will boost the productivity and competitiveness of the country, producing higher GDP figures, it is sadly mistaken. Yet another hasty decision without a firm grasp of facts and figures. And without the benefit of the most elementary logic.