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Hungary seeks to kick start economy

By Nick Thorpe
BBC News, Budapest

Viktor Orban
Viktor Orban has an ambitious target of a million new jobs

Hungary was, after the collapse of communism, one of the countries quickest to adopt free market reforms, leading the way in the former Soviet bloc.

But since those early days, the reforms have stagnated, and Hungary has fallen behind its neighbours.

Now a new prime minister, with a convincing mandate, is promising to reinvigorate the country.

Hungarian President Laszlo Solyom has invited Viktor Orban, the leader of the Fidesz party, to lead the next government. Mr Orban accepted "with the utmost pleasure".

Fidesz, a centre-right party which began as a libertarian student movement in the late 1980s, won 68% of the seats in the new parliament. The Socialists have 15%, the far right Jobbik 12%, and the Green LMP 4%.

That gives Fidesz an unprecedented mandate to change the constitution and push through laws which require a two-thirds, rather than a simple majority.

Work scarce

Even as Mr Solyom and Mr Orban met in the Sandor Palace on Castle Hill, overlooking the River Danube in Budapest, the Hungarian currency, the forint, slid over fears about the impact of the Greek crisis on Eastern European economies.

I've got two diplomas... I'm doing this because it's the only job I can get
Jozsef Mandoki
Street sweeper

And the latest figures show unemployment brushing 12%. Hungary has the second lowest employment rate in Europe - at 54% of the active population, only Malta is worse.

Mr Orban's target of a million jobs in 10 years would simply bring the figure up to the EU average of 65%.

"People here really need work," said 26-year-old Jozsef Mandoki, as he swept the streets in his home town of Sajoszentpeter in north-eastern Hungary.

"Look at me, I've got two diplomas, I finished my studies last year. I'm doing this because it's the only job I can get."

Little tension

In the shade of the 16th-Century Reformed Church, a group of men and women are preparing their orange grass-trimmers.

Ruszo brothers, Hungary
The Ruszo brothers remain optimistic despite difficulties at home and abroad

The work is paid by the town council, and each receive the minimum wage, 78,000 forints (290 euros; £250) per month. That is double what most were getting in unemployment benefit.

There is other work collecting litter and rebuilding or demolishing derelict buildings. But their contracts only run till July.

About half the work-gang cutting grass are Roma Gypsies.

But there is no sign of the tension between the minority and majority, for which Hungary has hit the headlines in the past years.

Across the River Sajo, swollen with recent rains, most of the town's estimated 3,000 Roma live in reasonable houses.

Illes Ruszo worked for 16 years in the chimneys of a glass factory. Since then he has only had temporary work.

We sit in the sunshine in front of his home, as laughing children troop home from school across the bridge.

Three of the Ruszo sons went to Canada recently, in search of work - but are about to come home empty-handed.

"We always got on well with the Hungarians here," Mr Ruszo's wife Agnes tells me.

"We went to school together, we greeted each other in the street."

Disused factory, Hungary
Industry has ground to a halt in parts of Hungary

But she resents the fact that her younger sons are put in Roma-only classes in the town school. Segregation is growing, she says.

Most Roma they know voted Fidesz in this election "because they never harmed us".

The boys talk about their dreams. Even if they learn a trade in nearby Kazincbarcika, there is little work available locally.

"I'm going to Toronto," 17-year-old Aladar announces, confidently.

How to start a boom?

Back in the capital, everyone is waiting to hear how Fidesz intends to fulfil election promises to cut taxes, strip away bureaucracy, and make Hungary competitive again.

"Creating a million jobs in 10 years is just possible," says economist Zoltan Pogatsa, "if Hungary could increase the employment rate by 3% a year".

That was a figure achieved by Ireland in its boom years of the 1990s. But how to start the boom?

"What I want to know is what he means by 'national consultation'," says trade unionist Karoly Gyorgy.

As a positive example, he sites regular meetings between President Nicolas Sarkozy of France, trade unions and employers, to talk about the burning issues of the day.

Hungary has similar forums, but no one knows how the new government will use them.

We may start to find out when parliament meets for the first time, on 14 May.



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14 Feb 12 |  Country profiles
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14 Feb 12 |  Country profiles


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