Repatriation allowance, wage supplement, tax relief - how to lure Hungarians living abroad back home

The Institute for Balance calculates that the share of working-age (20-64) Hungarian emigrants in relation to their age group more than tripled between 2010 and 2020, to 4.4 percent (260,000 people) in 2020.The three most attractive destinations for emigrants are Germany, the UK and Austria - with a total of 281,000 Hungarians working in these three countries alone. Data show that 3.3% of EU citizens of working age (20-64) live and work outside their home country (e.g. more than 18% in Romania, more than 10% in Bulgaria) In Hungary, the rate is 4.3%, which has increased significantly since 2010. (However, the fact that in Austria, for example, it has only been possible to work legally as an EU citizen since 2011 is a significant contributory factor.) Since the change of regime, the number of Hungarians living in Germany has quadrupled (220,000), the number living in the UK has tripled (82,000), while the number living in Austria has quintupled (79,000) - the latter also includes a significant proportion of commuters from Hungary.

It worked for most of them

In addition to the available information, the Balance Institute conducted questionnaires and in-depth interviews with hundreds of people (330 in total), the results of which provide the main reasons for emigration: financial problems and the higher salary available abroad; lack of available jobs, difficulties in finding a job; the opportunity to see the world, have an adventure and learn about other cultures; language learning, professional development, gaining work experience abroad and the unpredictable future, lack of legal certainty in Hungary and economic uncertainties that make life difficult for businesses. The majority of survey respondents consider life abroad better than life at home in terms of both personal life and work. For the most part, they have no problems following the rules, they fit in well, they feel valued at work and they feel comfortable at work.

Research shows that visible emigration has both positive and negative benefits. For example, the social welfare system is not burdened by those who live away from home, but they do not contribute to its maintenance. If people from oversupplied occupations go abroad, it improves the matching problem, but if people who are more productive go (and they usually are), domestic productivity is impaired. There is also a positive effect in terms of remittances: since 2013, Hungarians working abroad have sent home an average of 2-3% of GDP per year, which is comparable to the amount of EU funds paid to Hungary. In 2016, remittances were the largest, reaching 3.6% of GDP. In terms of knowledge, emigration can be a disadvantage because education at home is used abroad, but workers returning home can enrich the domestic economy with the knowledge they have acquired abroad.

Go home, Hungarian!

They forecast that by 2028, as the working age population will be shrinking for demographic reasons, the number of Hungarians living abroad will fall from 770,000 to 750,000 by 2028, while their remittances will fall from 2.2 percent of GDP to 1.4 percent. The Institute's research suggests that there is no reason to abandon the return of expatriates, as there is considerable potential for the Hungarian diaspora in Europe to make up for the increasingly tight Hungarian labour market. The Institute's research is all the more relevant as it calculates that the nominal value of Hungarian GDP could increase by HUF 300-1500 billion by 2028 if various return scenarios were to materialise. A ray of hope from this point of view is that, according to the survey responses, the longer someone has been living abroad, the more likely they are to say "much better abroad than at home". The survey also found that the same factors that discouraged Hungarians from moving home are basically the same as those that led them to do so: low income and financial difficulties, the mentality of Hungarians, the political climate and dissatisfaction with life abroad.

Those surveyed would consider coming home for 2/3 of their income abroad, or if health conditions and labour rights at home were substantially improved, but many would expect better education at home, and a substantial one-off expatriation grant would "oil" the wheels" for many. The survey also found that around five in six of those living abroad consider it unlikely or at most very unlikely that they will return home in the very near future, but around 15-17% plan or could imagine moving home in the next 5-10 years.

How to move home?

Akos Kozák, co-founder of the Institute for Balance, outlined the programme: there have been several repatriation programmes over the years, but the attempts in Hungary so far have been bona fide plans with limited results. According to the expert, there is no uniform practice in the EU member states, no comprehensive repatriation programme. The Institute for Balance has now developed one, proposing that companies employing expatriate workers in shortage occupations should receive targeted one-off repatriation grants and/or wage supplements if they agree to work in Hungary for a specified period. The state should also provide tax incentives for Hungarian workers returning from abroad to work in domestic SMEs. They argue that the state should be made faster and more cost-effective. To this end, they call for example for the creation of a paperless, digital state by 2030. Make the transfer of data between state bodies automatic. According to the Institute for Balance, returning Hungarians should be included in employment programmes, either through targeted programmes or by integrating returnees into existing labour market programmes and training. They believe that the state should also use targeted instruments (free language courses, social and labour market training programmes) to help family members integrate into the Hungarian society. In order to be more effective, they believe that the Hungarian state should involve organisations and associations of Hungarian communities in the larger target countries in its repatriation programmes. They believe that, instead of a general campaign to promote the country, the government should respond to the experiences and needs of those working abroad, and emphasise the financial and career-building benefits of repatriation. The Institute for Balance's package of proposals also includes a call for major cities in partnership with the state to become actively involved in organising return programmes. Cities facing a major sectoral labour shortage in connection with a major investment or development project are encouraged to launch targeted campaigns to attract workers from the sectors concerned back to the larger destination countries.

VOSZ: a few percent is good

At the launch of the programme, prepared in cooperation with VOSZ, Attila Gazsi, VOSZ vice-president, said that the aim of economic governance should be to ensure that the labour force does not change in proportion, i.e. that the labour force does not shrink over the next 5-10 years, despite the demographic outlook. As many workers from the pool of those who are currently not working or not working at home should be brought in as can be secured, he added. As for workers abroad, he said the aim should be to get more people to come home and fewer to go abroad to work. The VOSZ deputy chairman said that 10% of those living abroad could be reached by moving home, and Attila Gazsi would be happy if they could bring a few percent of them home. He said it would also help the labour market if people in their 50s came back and worked for a few years. They could boost productivity and pass on a lot of useful knowledge and experience to their colleagues at home, he added.

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