Education, Anti-corruption, Poverty Concerns in Recent EC Recommendation Paper on RRF Funds

As the EU has been withholding Hungary-bound recovery funds for one year now due to corruption concerns, the European Commission has published a report and recommendations. According to the document, the Hungarian government should make improvements in several areas, such as education, anti-corruption measures, labor market, taxation, and the justice system.

As we have previously reported, for the past year, the EU has been witholding a vast amount of money, more than €7.2 billion in funding from the EU’s Recovery and Resilience Facility (RRF) for post-pandemic reconstruction.

The first funds were available to member states from the beginning of last summer. Viktor Orbán even wrote to EC President Ursula von der Leyen before the election to urge her to allow Hungary to draw its allocation, but no money has yet arrived.

Governing Fidesz politicians claim that the move is a political attack from Brussels on what they call as the “child protection law” (which according to its critics contains parts restrictive to the LGBT+ community). Meanwhile, EU officials consistently insist that the witholding only has to do with rule of law concerns and dissatisfaction with anti-corruption efforts in the country’s spending plan.

In a long article, government critical 444.hu takes a look at the recommendations that the European Commission suggests Hungary should adopt. The document includes a list by the Commission of several problems and recommendations on how these need to be improved for Hungary to be able to receive the money.

According to this recently-released report:

• Hungary’s labor market is overall in a good shape, however, challenges remain in relation to the low employment rate of women and of disadvantaged groups.
• There is significant room to increase the employment rate of certain disadvantaged groups, such as the low-skilled, long term unemployed, persons with disabilities, and Roma.
• Assistance during the job search is limited, and only half of the registered unemployed receive financial benefits. The duration of the unemployment benefits is among the shortest in the EU. Joblessness is concentrated in the less developed regions and in rural areas
• The risk of poverty has decreased markedly, but many people are still unable to afford basic necessities.
• Poverty rates are three to four times higher for the Roma, related to their more limited access to the labor market and public services.
• The social safety net has weakened for families without stable employment over the last decade and the poverty gap has widened recently.
• The tax system disproportionately burdens the lower-paid workers.
• Low-income families are also less likely to benefit from the income tax allowance per child. Their major sources of income, such as the public works wage, the minimum income, and the family allowance did not keep up with the cost of living
• Education outcomes in Hungary are below the EU average. By the age of 15, basic skills are significantly below the EU and regional averages and have decreased over the last decade.
• Contrary to European trends, school drop-out rate increased in the last decade to 12.0% in 2021, above the EU average of 9.7%. The drop out rate is higher in the least developed districts, and six times higher among the Roma than the non-Roma.
• The share of 25-34 year old people with a tertiary diploma rose since 2010, but remains among the lowest in the EU.
• Health outcomes lag behind most other Member States, reflecting both unhealthy lifestyles and the limited effectiveness of healthcare provision. The prevalence of smoking, alcoholism, and obesity are among the highest in the EU.
• The number of avoidable deaths is one of the highest in the EU, partly due to inadequate screening and primary care management.
• There are significant socioeconomic disparities in access to quality care.
• Hungarians are among the most likely in the EU to suffer premature death due to bad air quality.
• Deficient independent control mechanisms and tight interconnections between politics and certain businesses are conducive to corruption.
• Concerns regarding judicial independence persist.
• Hungary’s energy sector depends strongly on Russia for fossil fuels.

featured image: EC president von der Leyen; via europarl.europa.eu