Guide to living and working in Hungary

Hungary

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Country Overview

 

Population

10.1m

Unemployment Rate

7.5%

Average annual unemployment rate 1995 – 2004

7.3%

GDP

€84bn / $123bn

GDP per head

€7,379 / $10,820

Capital

Budapest

Major language

Hungarian

Life Expectancy (UN)

77 years (men)

82 years (women)

Monetary unit

1 forint = 100 filler

Internet domain

.hu

International dialing code

+36

 

Hungary has a per capita income at nearly two-thirds that of the EU-25 average. The private sector accounts for over 80% of GDP. Inward foreign investment and ownership of Hungarian firms are widespread. Foreign direct investment since 1989 exceeds $60 billion. In 2007, Hungary eliminated a persistent trade deficit. Inflation declined from 14% in 1998 to a low of 3.7% in 2006, but has since jumped to 7.8% in 2007.

nemployment remains above 6%. Hungary's labour force participation rate of 57% is one of the lowest in the OECD (Organization for Economic Cooperation and Development). Hungary’s main economic challenge in 2008 is to reduce the public sector deficit from 6% down to 4% of GDP.

The government's programme of tax hikes and subsidy cuts has reduced Hungary's large budget deficit, but the reforms have reduced domestic consumption, slowing GDP growth to less than 2% in 2007.


The Economy

 

Industries include: mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals) and motor vehicles.

 

Pay

 

 

 

Human development Index

Ranking:  36th
Index value:  0.874

 

The Human Development Index combines statistics on GDP, adult literacy, average years of schooling and life expectancy to provide an indicator of human development. The HDI shown here gives the ranking of 24 countries among 177. See http://hdr.undp.org/en/ for more information.

 

Getting a job

Overview of the labour market:

The number of people aged 15–74 in the labour market was 4.2 million in the first quarter of 2007, a year-on-year increase of 13,000. This growth was caused by a decrease in unemployment and a demographic increase in the labour pool. The number of employed persons reached 3.9 million in Q1 2007, an increase year-on-year of 20,000. The employment rate reached 50.6%, an increase of 0.3% compared to the previous period.

The Hungarian labour market is characterised by significant regional differences. Economic growth is the strongest in Central Hungary and Central and Western Transdanubia. In these regions, the labour market situation is the most favourable and the unemployment rate is much lower than the national average. Progress in the modernisation of the economy is slower in the regions of North Hungary, the North & South Great Plain and South Transdanubia.

Applying for a job:

A Curriculum Vitae (CV) should generally be typed. It should only be written by hand if this is specified in the advertisement. The applicant should always attach documents certifying qualifications and copies of language exam certificates. The entire CV should be no more than one or two pages long and should always include the following details:

  • Personal data
  • School qualifications (chronological order, most recent first) 
  • Courses (chronological order, most recent first)
  • Work experience (chronological order, most recent first)
  • Computer skills
  • Language skills, driving licence
  • Hobbies, leisure activities

 

A letter of motivation should contain any important data not included in the CV. This should include details of where you heard about the post, the position applied for, important skills and abilities relevant to the vacancy, why you are the most suitable candidate for the post, your objectives, plans, etc. The motivation letter should be no longer than one page, and - unlike the CV - should always be handwritten.

 

Conditions and rights

Employment law:

Hungarian labour law is regulated by Act No. 22 of 4 May 1992 on the Labour Code, which governs all employment relationships. Certain provisions of Act No. 22 applies to employment relationships governed by the Civil Code, pertaining to employees under 18 years of age, or to contracts for the hiring out of workers between placement/temporary employment agencies and user enterprises (sec. 1(5), Act No. 22). In addition, art. 70(B) of the Hungarian Constitution guarantees the right to work and free choice of work and occupation.

Working hours:

Standard hours: Full-time work involves eight hours of work a day and 40 hours a week. The employee’s daily or weekly working hours may not exceed 12 or 48 hours respectively. Agreement of the parties may establish shorter working hours or – if the job involves being on call, if the employee is also the employer or a family member - although these may not exceed 12 hours/day and/or 60 hours/week.

Holidays and leave:

An employee has the right to regular leave in for every calendar year employed. Regular leave consists of standard and extra holidays. Standard holidays only depend on the age of the employee as follows:

  • up to the age of 25: 20 working days
  • from the age of 25: 21 working days
  • up to the age of 31: an additional working day every three years
  • up to the age of 45: an additional working day every two years
  • 45 years and over: 30 working days

 

Extra days: The Labour Code specifies four types of extra day, for: young employees, an employee playing the main role in bringing up a child, a single parent (with a child under 16 years of age), blind employees, employees working underground on a permanent basis and employees spending at least three hours a day in a workplace exposed to ionising radiation.

The employer has the right to determine when leave is taken, but must permit at least a quarter of standard leave on the days requested by the employee.

Sickness leave: employees are entitled to 15 days of sickness leave per calendar year.
Maternity leave: a new mother is entitled to 27 weeks of paid maternity leave.
Study leave: Leave may be granted – alongside payment of the average salary – for the purpose of acquiring an academic degree, taking part in research work, undertaking a study trip or writing a textbook (specialist book). The period of leave of this nature may not exceed one year.
Unpaid leave: three cases of which are defined in law: 

  1. Women are entitled to 24 weeks of unpaid maternity leave. The employee is also entitled to unpaid leave for the purposes of child-care: a) until the child reaches the age of three, b) until the child reaches the age of 14 if the employee receives child care benefit, and c) until the child reaches the age of 12 in case of a illness.
  2. An employee is entitled to unpaid leave for the purposes of attending to a close relative requiring nursing or care. 
  3. An employee is allowed unpaid leave of up to one year if building a house with his or her own resources.

Public holidays: 1st January, 15th March, Easter Monday, 1st May, Whit Monday, 20th August, 23rd  October, 1st November, 25th and 26th December.

 

Contracts

Types of employment:

Anyone aged 16 and over may take up employment. Hungarian law recognizes different forms of employment: full- and part-time employment, employment for a fixed contract period, distance working, working from home and outsourcing of labour. Another uncommon form of employment is employment with a casual employee booklet, the main rule of which allows only 120 days of work per year. The employer enrols the employment in the casual employee booklet and meets its obligation to pay public taxes by way of sticking in the relevant stamp.

Employment contracts:

Employment is always established by means of a written employment contract. The contract of employment must contain the employee’s job description, basic salary, name and designation of the parties and information on the workplace. The employer must also provide information in writing outlining the day of payment of wages and conditions for working abroad, etc. The employer and employee may only amend the contract of employment in writing and by mutual consent.

 

Visas and work permits

A foreign resident who is interested in working in Hungary needs a work visa, a work permit and a residential permit.

Visas and passports:

The foreign resident must apply to the Hungarian consulate or embassy in their country of residence, unless there is an agreement between that country and Hungary. A work visa is usually issued for one year.

The following nationalities do not need visas for visits to Hungary of up to 90 days: Andorra, Argentina, Australia, Austria, Belgium, Bolivia, Bulgaria, Brazil, Brunei, Canada, Chile, Costa Rica, Croatia, Czech Republic, Cyprus, Denmark, Ecuador, El Salvador, Estonia, Finland, France, Germany, Greece, Guatemala, Honduras, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, Netherlands, New Zealand, Nicaragua, Norway, Panama, Poland, Portugal, Romania, San Marino, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Uruguay, USA, Vatican City and Venezuela.

Nationals of countries not mentioned above need a visa to visit Hungary.

Work permits:

An application for a work permit should be submitted by the employer through an employment centre in Hungary. No work permit is needed by any of the following:

  • A person whose work has its origin in an agreement between 2 nation states.
  • A diplomat or a person who works for certain international organisations. 
  • Senior employees in businesses that are in partnership with overseas bodies.
  • Students and lecturers in institutes for higher education. 
  • Church workers.

‘New’ EU Member Countries: (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia) and citizens of the UK, Sweden, Ireland, Malta and Cyprus are welcome to live and work in Hungary without a visa or work permit.

If you are from a country that is not mentioned above, you must obtain a work visa or permit to work in Hungary.

Residential permits:

A work visa will usually be sufficient to grant an individual entry to Hungary. A resident's permit is obtained by making an application to the police department that deals with foreigners. The application for the permit should be made at least 15 days before the work visa expires.

 

Tax, social security and healthcare

Tax system:

Hungary's taxation of an individual's income is progressive; so the higher the income, the higher the rate of tax payable. In 2008, the tax rate in Hungary for an individual is 18% to 36%, with reduced tax rates for lower income earners.

Corporate tax in Hungary in 2008 is 16% and there is an additional 4% sur-tax (this rate has various specific adjustments and exemptions..
An individual pays tax on his income as a wage-earner or as a self-employed person. Tax for an individual who meets the criteria of a "permanent resident" in Hungary will be calculated on his income in both Hungary and abroad. A foreign resident employed in Hungary pays tax only on income earned in Hungary.

To be considered a Hungarian resident, there are a number of criteria to be met: 

  • Ownership of a home 
  • Hungary must be the family’s permanent residence 
  • You must spend more than 183 days a year in Hungary.

Employers are obliged to make monthly deductions of the tax payable directly from an employee's salary. A self-employed person must prepay income tax; this is later offset on filing an annual return. The amount of the advance payments is determined on the basis of the return made for the previous year. In the event of a new business, the level of the advance payments is calculated on the basis of estimates made by the business owner.

Hungary Individual Income tax rates for the year 2008 (HUF):

Income Band (HUF)

Tax %

1 - 1,700,000

18%

1,700,001+

36%

There is an additional 4% solidarity tax for salary income above 7,137,000.

 

Social security system:

In Hungary the following concepts are used: social protection, social security, social insurance and social assistance.

Social protection rests on two pillars: social security benefits and social assistance.
Social protection includes: benefits based on insurance, universal benefits, and assistance, including: benefits due in the event of illness, maternity, disability or unemployment; old-age benefits (pensions and pension-type benefits); dependents’ benefits; family benefits and social welfare benefits.

The concept of social security includes: social insurance benefits, universal benefits based on subjective rights, and specific, non contribution based benefits. Social insurance is compulsory in Hungary, based on the fundamental principle of solidarity and the insurance concept (such as health, pension and unemployment insurance). Individuals who fulfil the legal regulatory conditions are entitled to universal benefits regardless of previous insurance. Specific, non-contribution based benefits include elderly allowance or disability allowance.

Social welfare support includes welfare services and assistance awarded to those in need, beyond social security. Financial subsidies include temporary subsidies, regular social welfare subsidies and/or health/nursing costs. Treatment/residence in various institutions and home care form part of the system of social welfare services.

Health system:

Both State and private health care services are available in Hungary. 28 of the total 175 hospitals in Hungary are private hospitals. However, most of the 6,847 general practitioners (GPs) provide their services privately. Pharmacies are also primarily private service providers. Certain non-prescription medicines are available from sources other than pharmacies, where the retailer is licensed to sell pharmaceutical products, such as petrol stations.

Health care benefits include financial benefits and benefits in kind. Benefits in kind include: screening, emergency care, GP services, specialist out- and in-patient care. All citizens under the age of 18 and over 60 are entitled to free dental care. Regardless of age everyone is entitled to free dental examinations and the treatment of teeth and mouth diseases. Financial benefits include pregnancy allowance, sickness pay and accident disability allowance; these are dependent on previous insurance contributions.

People classified as insured parties are entitled to the services of the health care system in Hungary. This classification includes minors and those receiving social welfare benefits; these classes are entitled to health care benefits in kind. EU citizens staying in Hungary on a temporary basis can use emergency services if they hold a European Health Insurance Card. There is a per visit/treatment fee which is applicable to everyone; HUF 300 per visit to a GP, HUF 300 per day in case of outpatient care and HUF 600 for medical care provided without medical assignment.