Better off in Berlin? Think Tank Argues that Wage-Rent Ratio Worse in Budapest than in Many Western Capitals
At a recent event, experts from the Civitas Institute, a Budapest-based think tank, discussed the challenges facing young Hungarians who are at the beginning of their professional careers. Particular attention was paid to the financial struggles that, from a certain perspective, make it more financially attractive for Hungarians to live in London or Berlin than in Budapest.
According to its own website, the Civitas Institute of Economics and Social Sciences is “a politically independent think tank which primarily conducts economic, market, legal and political researches and advisory activities.”
The Institute’s director, Dr. László Vértesy, noted that, while wages have grown faster than inflation over the past 7 years, prices, particularly rent prices, have risen dramatically as well.
As reported by left-wing website 444.hu, while the average net Hungarian monthly salary is 175,000 forints (560 euros), the average rent for the whole country stands at 85,000 forints (270 euros), while in Budapest the average is 120,000 forints (385 euros). In other words, young people in Budapest who are in college or just starting their professional careers often see
as much as 69% of their month’s pay eaten up by rent alone, leaving them with around 50,000 forints (160 euros) for all of their other expenses.
Living with Their Parents
Practically speaking, the combination of low wages and high rent often forces a difficult choice on young people: either move abroad, or move back in with their parents.
According to Eurostat data, many are choosing the latter option. Astoundingly, among Hungarians aged 17-29,
a whopping 74% live with their parents, compared with 26% of young people in the UK, and 23% in Germany.
Better off in Berlin?
Of course, many young Hungarians, faced with either poverty in an apartment or living with their parents, choose to seek their fortunes abroad. According to surveys by the Civitas Institute, the majority of Hungarians who leave Hungary do so for economic reasons; just 12% leave to study.
And, according to Civitas, this is a decision that seems to be a good financial bet, despite significantly higher rents in cities like Berlin and London.
In Budapest, the average monthly rent is around 400 euros, while in London it is nearly 2000. Despite this, however, Civitas argues that, when you compare Hungarian wages with UK wages, a Hungarian living and working in his home country will have, on average, 200 euros left after paying rent, while a Hungarian living in the British capital will have more than 600 remaining.
In this respect, Berlin is even better; due to rent controls, the average rent is around 750 euros in the German city, while average wages are over 2000 euros per month, leaving roughly 1250 for any other potential expenses.
More Children Born Abroad
Another interesting aspect of the financial dilemmas facing young Hungarians was pointed out by researcher Kinga Szabó-Tóth. Examining childbirth statistics, she noted that young Hungarians living abroad tend, on average to have more children than those who remain in Hungary.
In particular, while the Hungarian government has, for years, been struggling to push Hungary’s birth rate above 1.4%, British statistics show that the birth rate among Hungarians living in England and Wales is at 1.6%. In other words, it would seem that the greater economic opportunities that can be found abroad provide greater financial security, which in turn makes young Hungarians more willing to start families and have children.
Of course, all of this is not a uniquely Hungarian problem; 444.hu notes that a high-rate of children living with their parents is quite common in Eastern Europe and in many Mediterranean countries. Likewise, demographic data show that, while in Poland married couples have one child on average, Polish couples living in England have two.