Tag Archives: retail stores

Viktor Orbán’s lost battle: Sunday store closings

A few days ago I recalled an interview with a couple of talking heads who complained about the pettiness of the political issues the opposition was wasting its time on, like the closing of larger retail stores on Sunday. Why have a political debate about such a ridiculous topic? Well, the question of whether large supermarkets and big box stores should be open or closed turned out to be a much larger issue than these people thought. After thirteen months of wrangling and scheming, the Orbán government threw in the towel. The 2015 law that forbade these stores to be open on Sunday will most likely be repealed tomorrow.

The news spread rapidly. Libération’s Budapest correspondence, Florence La Bruere, published a detailed article on the Orbán government’s decision to reintroduce Sunday closings 25 years after the change of regime. In the article she quotes a woman who told her that “under socialism, everything was closed on weekends. After the fall of communism, stores could be open on Sundays and we really enjoyed that. It was a symbol of freedom.” It was this feeling of freedom that was taken away from Hungarians, who overwhelmingly opposed the new law.

Ever since November 2014 a tug-of-war has been waged between the government, which stubbornly insisted on defending a bad decision, and the people this government allegedly represents. Numerous attempts were made to force the Orbán administration to allow a referendum on the question, all to no avail. At least until now, when the highest court of the land, the Kúria, overturning the decision of both the National Election Office and the National Election Commission, allowed the socialists to begin a drive to collect the necessary number of signatures. The government’s reaction was swift. Fearing defeat at the polls, they opted to repeal the law that Fidesz-KDNP had enacted in November 2014.

Because of lack of common sense Closed Opening: Uncertain

Because of lack of common sense
Closed
Opening: Uncertain

From the beginning there was an ongoing debate about why Viktor Orbán agreed to the demand of KDNP, the Christian Democratic People’s Party. KDNP is a party that doesn’t really exist. But its phony parliamentary delegation allows the right wing to be over-represented on committees. I suggested that the leaders of this party, which normally follows Viktor Orbán without question, decided to make an issue of the Sunday store closings. They most likely handed a reluctant Orbán an ultimatum: if Fidesz doesn’t cave on this issue, they might not support a bill that is of great importance to Fidesz. My opponents suspected that the key to this case was not so much the Christian Democrats’ insistence but pressure coming from two Hungarian-owned supermarket chains, operating as franchises. They lobbied for a law that would be advantageous to smaller stores that can remain open on Sundays and disadvantageous to the large foreign-owned chains. Of course, it is possible, even likely, that pressure came from these sources, but given the reaction of the Catholic Church and KDNP there can be no doubt that the Christian Democratic (non)-party had a major role to play here.

KDNP’s fight for Sunday closings began in 2000, and a year later the Conference of Catholic Bishops joined forces with the party. One must keep in mind that the chairman of KDNP, Zsolt Semjén, once described his party as the political arm of the Hungarian Catholic Church. Ever since that time Sunday store closings remained an important demand of the Christian Democrats as well as the Catholic Church. In April 2011 they managed to convince the national economic ministry to conduct a study which, unfortunately for them, showed that the issue was both politically and economically sensitive. It would be unpopular, and it would deprive the budget of about 50 billion forints in taxes. So, for almost four years the issue was not on the agenda. Sometime in early November 2014, however, Viktor Orbán unexpectedly decided to support the idea. The bill was signed into law on December 16, 2014, and beginning on the following March 15 supermarkets, big box stores, and many other retail stores closed their doors on most Sundays.

The repeal of the law on Sunday closings sheds light on decision-making in Orbán’s government. On Friday, on Hungarian state radio, Viktor Orbán still talked about the desirability of Sunday closings and in fact revealed that his government in the past few years has been trying to find ways to extend work-free Sundays to encompass not only the retail trade but other sectors as well. He said, however, that they will take a look at the economic consequences of the current practice on Monday. I got the impression that if the economic indicators were favorable, the present law would remain in force. Moreover, he added, they have “plenty of time” to make a decision. In one sentence that most people overlooked, however, Orbán said that “in light of the debate [in the cabinet meeting] we will decide on the right political conduct.” So, after all, it was not to be a purely economic decision.

This morning Bence Tuzson, undersecretary in charge of government communication, seemed not to have been updated since Friday. In an interview on ATV’s Start he fiercely defended the current practice of Sunday closings. A couple of hours later, Sunday closings were on their way out.

Although I’m sure he tried, Viktor Orbán couldn’t convince the KDNP to support the repeal of the bill their party found so important for ideological reasons. Only about half an hour after the announcement of the decision by Antal Rogán, Népszabadság learned that Péter Harrach, leader of the KDNP caucus, indicated that their MPs will not vote for the repeal. “The question has been a matter of principle for the last seven years,” he said. Soon after the announcement, the Conference of Hungarian Catholic Bishops complained that the government hadn’t asked their opinion. András Veres, president of the Conference, added that “as a Christian and as a bishop of the Church [he finds] the present decision of the government mistaken and outright wrong.” The same Veres, according to HVG, declared that he “hasn’t heard of anyone who died of starvation because he couldn’t buy food on Sunday.”

It is not only the Christian Democrats and the Catholic Church who are against the decision to repeal the law. According to rumor, János Lázár is considering not voting for the bill that most likely will reach the floor tomorrow, although Orbán warned the Fidesz ministers that not voting for the bill might mean losing their jobs. Many rumors are baseless, but perhaps this time there is something to this gossip because Nándor Csepreghy, Lázár’s deputy who is close to his boss, indicated that the younger generation of Fidesz politicians was ready to continue the fight despite societal opposition and pressure from the opposition. Lázár certainly belongs to the younger generation of Fidesz leaders.

As for the economic side of the question, it is hard to decide whether Sunday closings hurt retail business or not. Those who claim it did point out that today there are 8,000 fewer employees in retail trade than at the beginning of 2015. Moreover, they add, in the last year alone about 800 small stores had to close. They argue that the small stores didn’t gain at the expense of large foreign chains, as the government intended. On the contrary, they lost customers. The real beneficiaries, the argument goes, were precisely those large supermarkets and big box stores the government wanted to discriminate against. On the other side, the argument goes something like this. Businesses have only gained by Sunday closings. Their turnover last year was 6% higher than the year before. But the increase in turnover might be explained by higher real wages and the hookup of cash registers with the National Tax Office. And, at the same time, the shuttering of many smaller stores may have nothing to do with Sunday closings.

The wisdom of the repeal is obvious. As Magyar Nemzet rightly pointed out, Fidesz isn’t so much afraid of the result of the referendum as the “road to it.” If a referendum were held, the opposition parties would have three months to campaign in favor of the repeal and against the government. Although the retreat is a loss of face for Fidesz, given its current problems it is better for the government to back down than to slug it out.

Now the opposition should turn to the role played by the officials of the National Election Office and the National Election Committee. The Kúria clearly stated that these officials are unfit to lead an independent body that is supposed to guard the purity of the elections. How can we trust the results of future elections if the decisions of these people are guided by the government’s interests? The opposition parties should also force the government to begin a serious investigation into the circumstances of the February 23 events at the National Election Office. The likelihood of Fidesz involvement on some level in the skinheads’ appearance at the Election Office is pretty obvious to everybody. If the opposition parties put as much effort into these two projects as MSZP did in validating its referendum question, victory might be possible. Fidesz is becoming vulnerable.

April 11, 2016

What is behind the Sunday closing of Hungarian retail stores?

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.

Fidesz brain / Closed on Sundays too

Fidesz brain / Closed on Sundays too

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.

Hungary’s pending blue law

For weeks we have been reading about the Christian Democrats’ brainstorm to close stores over a certain size on Sundays. This despite the fact that in the past twenty years shoppers have gotten used to stores being open on Sundays; shopping has become a family affair. Everybody can have a say in the purchase of large items: a new refrigerator, stove, TV set, or new furniture. And while they are out shopping on Sunday, the family often has lunch in one of the malls or goes to the latest movie.  People like the convenience, and I’m certain they will be mighty unhappy if and when the Fidesz and KDNP majority votes to close targeted stores on Sundays. People expect their options to increase, not decrease.

Until now it looked as if Viktor Orbán and the Fidesz leadership would not endorse the KDNP plan. Mihály Varga, minister of national economy, said that, given the touch-and-go economic situation in the country, taking away the opportunity to conduct business seven days a week was not a good idea. Associations representing the merchants reported that Sunday is their third busiest shopping day. They figured that about 12,000 jobs would be lost if they were forced to close their doors. Even Viktor Orbán announced a couple of weeks ago that the question should be discussed with everybody involved because the Christian Democrats consulted only those organizations that supported their position: right-wing trade unions and groups like the association of large families who backed their plan for ideological reasons.

The way the proposal was originally worded, the bill discriminated against foreign-owned large chains since only those stores larger than 400m² that were not family-owned and operated would have been forced to close. The bill would not have applied to Hungarian franchises such as CBA, a chain of smaller stores owned by three fanatic supporters of the current Hungarian government: László Baldauf, Vilmos Lázár, and his brother Zoltán. These small stores can’t compete successfully with the large chains. Their selection is limited and their prices are higher. If the large chains were forced to close on Sundays, the small CBA stores would reap the benefit. I suspect that Fidesz’s initial hesitation was due to their recognition that the bill was discriminatory. After all, having German, British, and French companies sue the Hungarian government is not something Fidesz needs at the moment.

Today Antal Rogán came out with what seems to be the final word on the subject. The Fidesz parliamentary delegation will support the proposal but with substantial amendments. Even the name of the bill will be changed. From here on it will be known as the “Law on the prohibition of work on Sundays.” The aim is, Rogán said, the “total cessation of work on Sundays.” An ambitious plan indeed, and I could give Rogán a few suggestions. No football on Sunday; after all those players are paid for their work. And then there are the priests and ministers who are also paid for Sunday work. And one could continue with policemen, firemen, doctors, nurses, or agricultural workers during planting and harvest season. What about restaurants or theaters, movies, concert halls? This proposed Hungarian blue law reminds me of Ottawa in the 1950s and 1960s when everything but everything was closed. It was a jolly place indeed. When I read such nonsense I always suspect that these people don’t think before they speak.

I understand that some of the influential higher-ups in Fidesz argued against the store closures because they knew that the move would be unpopular and, they argued, the government does not need another huge demonstration. According to an article that appeared on November 19, the Christian Democratic proposal was not popular among Fidesz leaders, including Viktor Orbán. But now, it seems, he changed his mind. According to vs.huOrbán turned against those, among them Lajos Kósa, who today argued for dropping the idea because of the current public mood. Orbán apparently countered that unpopular pieces of legislation should be introduced right at the beginning of the new administration. But, of course, this does not answer the question: why is the Sunday closing of stores such an important issue? Why should the government gamble on its already waning popularity? It is hard to fathom what’s going on in Orbán’s head. Has he lost his earlier keen political sense or is the Christian Democratic delegation perhaps blackmailing him, threatening him with a withdrawal of their support?

CBA Pecs

We know few details of the Fidesz amendments to the KDNP bill. One change that has been mentioned is that only very small family-owned stores can be open and only members of the family can work in them on Sundays. The size of stores that will be exempted from the blue law will be smaller than the originally proposed 400m² because it will include not only the shopping space but the store’s storage area as well. With the Fidesz amendments it seems that most CBA franchises will suffer along with the foreign-owned supermarkets. I don’t know the average area of these stores (or the average size of the families owning the franchises), but the Pécs CBA I found pictured online surely couldn’t do business on Sunday if this proposal becomes law.

Switching topics: Vladimir Putin announced a few hours ago that Gazprom has cancelled the construction of the South Stream pipeline. Not a good day for Viktor Orbán. What will happen to the storage facilities in Hungary? What about Paks? It looks as if Viktor Orbán might fall between two stools. It was risky gamble from day one, and it is getting riskier by the day.

Sunday shopping? The Christian Democrats against the multinational chains

It was only yesterday that Viktor Orbán had to retreat, even if only temporarily, on the issue of taxing internet usage. A hundred thousand people were out on the streets of Budapest and elsewhere in the country. Now the government may be preparing the way for a new debacle, although I personally can’t believe they will be so dim-witted.

The Orbán government on paper is a coalition government. Fidesz’s partner is the Christian Democratic People’s Party or KDNP whose chairman, Zsolt Semjén, is Viktor Orbán’s deputy. The funny thing about KDNP is that it is a non-party. It’s like a private club where the party leaders get together now and again, but for over a decade the party has been absent as a separate entity at national elections.

The Christian Democrats don’t disturb much water. Their parliamentary members dutifully vote alongside the Fidesz PMs. In fact, it seems almost random who sits with the KDNP caucus and who with Fidesz. The important thing is that KDNP’s caucus should be bigger than that of MSZP, Jobbik, or LMP. The Christian Democrats don’t contribute much to Fidesz and Orbán’s government. Their main purpose is to provide Christian trimmings to a Christian-national regime. Occasionally, thankfully only very rarely, they come out with ideas of their own. Three years ago they proposed that stores should be closed on Sundays. Good Christian families should attend church instead of shopping in department stores and malls. And the poor workers who are forced to work on Sundays must be protected from those awful foreign capitalists. At that time, the government–where of course the last word is that of Fidesz–refused to introduce the measure, which would have had disastrous consequences for the economy.

Source: Europress / AFP

Source: Europress / AFP

But these Christian Democrats are tenacious; they don’t give up easily. They came out with a new version of a bill which was leaked to Magyar NemzetThe proposed bill is an attack on supermarket chains and discount stores owned by international companies because the bill’s provisions would affect only shopping centers and stores larger than 400m². Tobacconists, pharmacies, gas stations, flower shops, newspaper stands, and bakeries would be able to remain open with some restrictions. For example, they could sell their wares only until noon. Restaurants, stores in airports and railway stations, and open-air markets could continue doing business as usual.

But restricting Sunday shopping is not enough for our Christian Democrats. They are upset over those foxy owners of chains who try to sidestep the controversial “plaza stop” law by establishing smaller stores and thus competing with those mom and pop stores the “plaza stop” legislation is designed to protect. They opened stores in buildings that are now deemed to be of historic significance or in world heritage sites. If the proposal is adopted, these intruders would have to vacate their current premises by January 2016.

If the KDNP’s bill on Sunday closings was a bad idea three years, it is doubly so today. The government has enough on its plate: corruption cases, strained relations with the United States, the internet tax, and the growing displeasure of Brussels over the Hungarian government’s flaunting of every rule in the book. This move is blatantly discriminatory against foreign companies.

A blogger who happens to be familiar with the retail trade brought up multiple arguments against the proposal. It is injurious not only to the financial well-being of the stores but also to the employees who receive a higher salary (+50%) for working on Sundays. Stores also often hire outsiders for the weekends. These people are happy to supplement their meager salaries with some extra work. In these chains Sunday is the third busiest day of the week, after Saturday and Friday.

How would people feel about this restriction? The Christian Democrats claim that they discussed the matter with employees and with families who have many children and that they were most enthusiastic about the plan. I doubt that the party is basing its estimates on scientifically conducted polls because I’m almost certain that the great majority of the population would be outraged at the very idea. I talked to people who went through the times during the Kádár regime when everything closed at 5 p.m. and who said how happy people were when stores were open on Thursday nights. Apparently everybody felt liberated when, after the change of regime, stores were open all day long, including Sundays. The Christian Democrats bring up the examples of Austria and Germany where stores are closed on Sundays. But it is one thing to have a long tradition of Sunday closings, to which people are accustomed, and another thing entirely when people who are used to stores being open seven days a week for  the last twenty-five years are now being told that, sorry Charlie, no more family shopping on Sundays.

A couple of online sites offer their readers the possibility to vote on the matter. I checked out both, and a sizable (although again unscientific) majority opposes the measure. On one site: 69%. Another blogger makes fun of the Christian Democrats, saying “nonexistence must be hard for a party.” They feel that they have to come up with something now and again, but they surely picked a very bad time to introduce this bill. I must agree with him. I can already see another 100,000 demonstrators on the streets all over the country if the government makes Sunday shopping impossible.