I would so love to write, that I have written at least a 1000 words on the thesis, but instead I share one of the case studies in 1800 words:
Through three Hungarian case studies it is going to be analysed how the entrepreneurial taxation of artisans effects the decreasing number of artisans in Hungary. It is also going to be looked at how these individual women are affected by the lack of financial support in the form of a possible micro credit system. The women chosen for the case studies have different backgrounds: D has a full – time job as a seamstress in a clothing factory, B lives on benefits, although she is a trained ceramic painter and C, who is a self – thought jewellery maker is on maternity leave. All three of them face the same problem, not being able to start and make their own products within the legal boundaries of the current policy making and not being eligible of bank loans to start up.
D’s case study – village tailoring
The bureaucratic burden in a transition economy and the effects of policy has on an artisan’s life is examined through D’s case study, who is in her early 30s. She works in a clothing factory in Town A and does alterations and small sewing jobs in Village B where she lives. She is often asked by locals why she does not practise as a village tailor in Village B.
Background information about clothes shopping habits in Village B.
The internal effects of the current policy making: incredible high taxes and low wages were examined through the results of a quantitative survey undertaken in Hungary. The questionnaire targeted 84 individuals and focused on consumer behaviour in clothes shopping, tailoring and local hand – made products.
Most of the respondents were between the age of 30 – 59, and 75% of them were women. It is important to point out that the largest age group in the village was the 50 – 59 - year olds, indicating the ageing population in rural areas.
The ageing in Village B is an important factor in D’s case, because the majority of the older generation lives off small pensions, which affects their clothes shopping habits.
50% of the respondents were in full –time employment, the second biggest group was pensioners and the third was other (mainly agricultural workers) and those who live on benefits. Part –time employment in Hungary is minor comparing to those in England. The high number of full – time employment is down to the high number of respondents between the age of 30 – 39 in the town, where there are more jobs. 64% of the respondents have had clothes made – to – measure for them before (more amongst those who live in the town) and 43% had their clothes altered. The respondents named fifteen people from D’s village, who made clothes for them. Nine out of those had been trained to be tailors (not including D, who was trained to become a seamstress in the clothing factory).But only two of the trained tailors are still alive and none of them practices the trade. The rest of the group (four) has not been trained as a village tailor, but has a potential to use their skills to earn some extra money. Under the current policy making and bureaucracy in Hungary their attempt is illegal, classed as black economy and tax evasion (Ékes, 2003). D’s small jobs (alterations) are also classified illegal.
Through the result of the survey and interviews with both village and town tailors, it was investigated how taxation and the standard of living affects artisans. The analysis is based on the current situation of tailoring in Hungary.
82% of the respondents said they would have their clothes made by tailors to help micro economy. 96% said they would more likely to have their clothes made by tailors to help social sustainability, job creation and long – term, local economic growth. When examining the respondents’ shopping habits and the amount of money they would be able to spend on locally made clothes it is clear that although they have the will to support local producers, the reality of their financial situation does not make this possible. Most of them only buy clothes when it is necessary. The average amount of money they spend monthly on clothes is around 2000-5000Ft (£5.72-£14.3). This is not more than 3-10% of their monthly income (estimate based on exchange rates on 06 March 2009) of 30.000Ft - 60.000Ft (£85.85-£171.7). Majority of their clothes shopping is done on the Market, which is the only place where women meet and socialise.
Under the current legislation a tailors have to pay 50.000Ft/month (£143) in tax, national insurance and superannuation tax regardless of their monthly income. This is exactly the same amount as an entrepreneur has to pay. The profit is further taxed at the end of the tax year by 18% (Necessity Entrepreneur11 to Fodor, 2009).
The effects of low wages and incredible high taxes on tailors show a direct decline in the interest of made – to – measure clothing. The minimum wage (just over 60.000Ft) is under the living wage and every third person in Hungary lives on minimum wage (www.adozona.hu). This has a direct effect on the amount of money the respondents would be able to spend on made – to – measure clothes. It can be concluded, that realistically with these wages, benefits and pensions it is almost impossible to revive tailoring, unless the government’s policy making has a different approach on local development, which includes lowering the tax levels on artisans and increasing the minimum wage.
11 Necessity entrepreneur is the opposite of opportunity entrepreneur. Necessity entrepreneur is a direct result of transition economy, privatisation and high taxes. Many positions can only be filled, if the applicant holds entrepreneurial status, which means paying the 50.000Ft tax per month, therefore the employers does not need to pay taxes to the government after the employee.
Although the respondents indicated they would use tailors, all the tailors interviewed both from the village and the town believe that under the current economic situation with the level of unemployment and low wages and high taxes, the only tailoring services people could afford and have real need for is alteration. To lengthen or shorten a pair of trousers in the village costs 300-350Ft (£0.85-£1) and 600-700Ft (£1.7-£2) in the town (D to Fodor, 2009). To break even with the 50.000Ft (not including utility bills, machine maintenance and hourly wage), let alone making profit a village tailor would need to alter around 160 pairs of trousers a month, whilst a town tailor, around 80. D currently does 1 – 2 alterations a week.
The majority of the respondents, who would have their clothes made by village tailors indicated to pay a realistic wage to the maker, because it is a one – off piece, but it is still the same percentage as they pay for Chinese or English second – hand clothes 3-10%, 2000-5000Ft (£5.72-£14.3), which means an average 15 order would need to be placed to D to break even with the 50.000Ft alone:
2000-5000Ft ≈ 3500Ft 50.000Ft ≈ 15
3.500Ft
3500Ft is 5.3% of the average wage (minimum wage, benefits or pensions) that people live off in the D’s village. It is 10% behind of what a pair of made – to – measure trousers costs (10.000Ft). In comparison a pair of trousers in a Chinese clothes shop or an English second – hand shop costs between 3000-4000Ft or less. D would need to have clients ordering at least five trousers a month to be able to pay the 50.000Ft entrepreneurial tax to the government (let alone making a profit). Nearly 93% of the respondents said they were satisfied with products made in Hungary. During research in many conversations people indicated the quality of Chinese clothes were not good enough, but in the current situation it was still more affordable for them to buy more often on a lower price, than purchase good quality on a higher price. As most of the respondents (more in the village than in the town) said they only buy clothes when they need it, that indicates D would not have enough clients to be able to pay her taxes.
Analysing the change of taxation in Hungary from the 1970s and its effect on tailoring in D’s village it clearly shows how the ill-proportioned rise of taxes effected village tailoring. Looking at the tailors’ price list issued by the Hungarian Material and Product Office in 1976 table and examining the Monthly Payable Tax table it clearly shows the monthly NHS and pension outgoings are around the same amount as the lowest priced items on the Womenswear – 1976 list. (All the prices included expenses, utility bills and wages.) And a further 100Ft tax per month was paid to the government after the profit. To lengthen or shorten a pair of trousers in the 1970s cost 20Ft, which meant to be able to pay the average tax of 300Ft, a village tailor had to alter 15 pairs of trousers a month, whilst in 2009 in proportional conversion D would have to alter 160 trousers a month to be able to pay her taxes. This suggests that during the 1970s village tailoring was a profitable occupation, but not in 2009. Further more by 2009 the village have shrunk by the half (from around 4500 residents in the 1970s to 2300), which also plays a huge part in the lessening need for village tailoring.
Comparing the 1970’s data to the 1983 Payable Tax table nearly 10 years later it clearly shows a four times growths in expenses, whilst the profit stayed low. By this time the first boutique had opened in Village B, which directly effected the lessening need for village tailoring. In 2009, comparing the price of a suit between a tailor (50.000 – 80.000Ft) and a Chinese clothes shop (10.000 – 12.000Ft), it shows that the Chinese clothes shop prices are a lot more affordable to those, who took part in the survey. Whilst in 1976 the monthly tax was nearly the same (300Ft) as the price of one and a half made – to – measure pairs of trousers on the Womenswear – 1976 price list, in 2009 it is five times as much (trouser price – 10.000Ft, monthly tax – 50.000Ft).
From the analyses above we can clearly see, that for D to leave her job in the clothing factory in Town A and open her own workshop in Village B would force her under the poverty line, as regardless of not making any profit she would still need to pay the 50.000Ft per month to the Hungarian government.
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