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Financial Exclusion in Hungary

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Richárd Gál

on 11 October 2014

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Transcript of Financial Exclusion in Hungary

Financial Exclusion in Hungary
Patrícia Varga
Hanna Kancsus
Introduction
Level and structure of financial exclusion
Causes and consequences of financial exclusion
Government role in preventing financial exclusion
Institutions and their actions
Other activities against financial exclusion
Conclusions
Agenda
General Information
Population: 9.9 million people
Currency: Hungarian Forint
Capital: Budapest
Conclusion
Affected:
People with low-income
Unemployed
Single parents
Illness or disabled people
Immigrants
A process whereby people encounter difficulties accessing and/or using financial services
Deeply interrelated with social exclusion
Financial exclusion
Having access to a bank account is a necessary condition for social inclusion
INTRODUCTION
Financially excluded: 34%
Fourth worst data within the EU
Together with Poland, Lithuania and Latvia
Population without bank account: 49%
GDP per capita
Disadvantaged regions in Hungary:
Eastern Hungary
North-Eastern Hungary

Unemployment rate
Unemployment rate %
EU recommendation to the Hungarian Government

2008. European Commission
Encouraged and controlled by the government
Financial performance of banking institutions
Client protection
Transparency
Basic banking services to over-indebted people

2010. year of combating poverty and social exclusion

Hungarian Anti-Poverty Network
Reduction of poverty and social exclusion
Increasing social awareness

Causes
monetary background of social groups
lack of knowledge
lack of awareness of the circumstances
aging population
technology
geography
family background

Financial exclusion in Hungary has been gradually increasing
1/3 of Hungarians is under poverty line
The situation is corresponding with EU average
Key issue especially since the economic crisis of 2008

EU 2020
EU28 regulations & expectations
Funds & projects

International approach
Széchenyi plan
Governmental regulations
Increase connectivity among regions

National approach
behavioral responses
cannot change their future
hopelessness
motivation
risk taking
scams

Groups of people
groups of people
local society
national approach
international international approach
2. Consequences of financial exclusion for people, local society, country and Europe
monetary skills
financial education
technological knowledge
Education

no skills
can not climb out
can not change situation

Monetary background
geographical differences
societal differences
stereotypes, prejudice
help locally

Local society
not using technology
no will to adapt
Aging population

1. Causes of financial exclusion
Causes and consequences of financial exclusion
2007 joined with the European Parliament & Congress
Financial, economic & monetarial skills
2008 the structure has changed
More people were affected
34% of the citizens under poverty line
50% of citizens without transaction bank accounts
steep social gap
technological
2013 still high numbers
32%
EU 2020 plan

UN aimed to solve it with education
1. Level and structure of Financial Exclusion
Financial Exclusion
Richárd Gál
Financial Exclusion
1. Level and structure of Financial Exclusion
2. structure of financial exclusion according to:
gender
age
education
place of living
occupation
gender
men: 15.1%
woman: 30.1%
Fluctuation of measures
age
6 year: 36.9%
18- 24: 40.5%
25-54: 27%- 29%
55- 64: 33.4%
64- 33% - 36.4%

agriculture
production
environmental development,
increase number of skilled, educated, higher educated, employed residence

EU28 member state poorest regions
Hungary has 4 out of its 7
education
157 000 primary school student
only 10% of “highly excluded children”
geography
gap between rural and urban areas
Northeast region & far Southwestern
lowest employment rate
2007 government program
Financial Exclusion
1. Level and structure of Financial Exclusion
2. structure of financial exclusion according to:
gender
age
education
place of living
occupation
3. Forecasting level and structure of financial exclusion in the next years
stable GDP
at 2.1%
decrease of unemployment rate
by 0.3% to 9.3%
Based on World economics, EU regulations & projects, politics
2020 EU28 objectives
European Economics Forecast
National debt
Political
Established by private shareholders

Provide  social support, financial services and information
For disadvantaged people with willingness to become entrepreneurs
Decrease the level of discrimination against the Roma


Institutions and their actions

2004.
Small amount of short-term credits
Flexible and competitive services to partners
Staff with years of experience

Micro and small businesses
Non-profit organizations
Extremely poor Roma individuals

Mikrohitel Zrt. /Micro Credit Ltd./
Provide professional assistance to clients
Creating successful business plans
Keeping contact with the bank starting from contracting to the repayment of the loans
Monitoring and evaluations
Administration of the program


2003.
Experts, qualified professionals
Improving the employment situation in Hungary
Development of work related non-profit organizations
Trainings
Contributed in nearly 1000 organization’s professional development

Projects:
„Tiszta út a munkába”
Training in the field of cleaning for 24 disadvantaged people
Obtained 12 moths long part-time job employment

„Segítő-háló”
Help strengthen 200 nonprofit organizations

Wages increased 3 times in the last four years
Government action against poverty
Decreasing burden on families
by providing work
conserving:
wages
pensions
Reduced
Tax on families
Overhead
16% lowest in EU
-20%
Child meal support
40 billion HUF
360 free meals for thousands of children
720.000 needy student gets free textbooks
Workplace protection action
Protects nearly a million people
Who are vulnerable to changes
300.000 people jobs
100.000 got winter training to get new skills
Pensions increased by 5.2%
Thank You For Your Attention!
Other activities against exclusion
The 2010 European Year against poverty
raising awareness
change the public opinion
educating tolerance
Legal regulations to become less complicated
Utilization of existing resources to fight poverty more efficiently
Providing broader opportunities to people living in poverty
There are serious issues regarding financial exclusion
Hungary has to work harder against it to reach the EU 2020 goals
Many people are willingly excluding themselves from financial services
People living in poverty are not motivated to use financial services
Many people who would use the financial services from non profit organizations don't know about them
Lack of good promotion
Very risky to open new enterprises
Introduction of group-based credit
Strong bond among the members
Motivating influence
Person to person method
Possibility to claim more after repayment
140 enterprises

"Cucumber project" from 2011
Participants can produce for companies
Stable job
Exported to Slovakia and Germany
Cost efficient
150 clients in 5 years
Hungarian Association of Non-Profit Organizations Helping the Unemployed
Full transcript