The new Labour Code, new public work programme and employment boosting measures:
Key objectives of the new Labour Code - which was adopted by parliament in December 2011 and the provisions of which enter into force on 1 July 2012 - are to increase competitiveness in line with new economic requirements and claims of employees as well as to establish a differentiated regulation. The new law aims to create the most flexible labour market regulation possible. To this end, the document reduces state intervention and -- parallel to defining guarantees for employees – it intends to offer a significantly larger scope for civil law-based regulation than before.
Recently several favourable economic trends have developed in Hungary. Some of these can be identified by data published by the Hungarian Central Statistical Office (KSH) and others are manifested by various international comparative studies. The below study presents, after the paper of last week, further trends, which now rather focus on changes identifiable from economic statistics, but we will also analyze competitiveness and purchasing manager indices.
Several favourable economic trends have recently developed in Hungary. Some of them can be identified by the data published by the Hungarian Central Statistical Office (KSH) and others are manifested in various international comparative studies. The below list presents some of these tendencies: it includes an indicator based on comprehensive economic aggregates (such as the Human Development Index), but it also analyzes an economic sector (i.e. tourism), as well as a soft, non-quantitative factor such as the situation of mothers in a various society. The presentation of favourable trends will be resumed in the Outlook of next week.
In the past two years the unfavourable trend characteristic of the prior period has been reversed and the holdings of government securities of residents have risen gradually. This trend has accelerated from the beginning of 2012. As a parallel phenomenon, the holdings of residents within the total holdings of HUF denominated government securities have also increased, which is a positive development for households and the national economy, too.
The European Commission has recently published its study titled General Government Data of spring 2012, which provides a comprehensive overview of the fiscal balances and general government debt of EU countries for 2011 as well as relevant projections for 2012 and 2013. According to the figures published by the Commission, with regard to fiscal balances of 2011 Hungary has been a top performer in Europe: our surplus of 4.3 percent is much more favourable than the GDP deficit of 4.5 percent in the EU and 4.1 percent in the euro-zone.
On 23 April 2012 the Government of Hungary approved the Széll Kálmán Plan 2.0 programme which has been highly appreciated by the EU and international market participants. The Széll Kálmán Plan 2.0 secures fiscal sustainability for Hungary for the period it covers and thus for the first time in eight years the excessive deficit procedure against Hungary can be lifted.
The Eurostat has recently published its fiscal statistics concerning the EU member countries. In light of these the favourable Hungarian figure is analyzable in international comparison and thus we can state that Hungary has achieved an outstanding result in 2011 with regard to the indicator that is most closely observed by investors.
The Széll Kálmán Plan published in Q1 2011 can be considered a success from every aspect. In the period after publication favourable trends began on both the sovereign bond and the currency markets: the amount of government bonds owned by foreigners increased to an unprecedented level which resulted in the decline of yields, too. The implementation of the Széll Kálmán Plan was also carried out optimally, as 458bn HUF of fiscal adjustments have materialized as a consequence of the measures proposed for 2012 and that corresponds to the 83.3 percent of anticipated savings.
The Gini index (or Gini coefficient) is the indicator most frequently applied for measuring income inequalities. The figure may vary on a scale of 0 to 1, or it is often expressed in percentages. The figure 0 indicates that incomes are perfectly evenly distributed and 1 signals absolute inequality, that is all incomes are owned by one person (which, of course, is an extreme example which can never occur in reality.)
The Ernst&Young has recently published its annual report on globalization which includes the globalization index for the 60 largest economies of the world, and according to this ranking Hungary was placed the 10th.