Oh, Dear! I am sitting in the kitchen with Monsieur Thesis trying to mend the bits and pieces of the Discussion part of our relationship. As usual when we get down to the nitty-gritty it turns out there are more things to discuss and some of our points are just not relevant. And a part of me just realising that maybe I’ve been trying to solve our problems far too early, when we were just started to get to know each other and even before we got to the Literature Review stage of our dating I had all these ideas about Monsieur Thesis, as if we were living and breathing together for years I just made assumption about him, without letting him to reveal his true personality. On the other hand I am surprisingly content with him, even though I have no idea how to start to restructure nearly 11.000 words in two days and I might have to lose the majority of it.
I had two dinners in the past couple of hours, an ice-lollied banana, several glasses of lemonade and a bar of chocolate to help me to concentrate. I am not sure it is working. I put on Kerst music, in case it relaxes my sugar intake to feel more energetic to get on with the Discussion.
Discussion
Looking into other reasons for the decrease in numbers
Unemployment
The large number of people made redundant after the fall of communism during privatisation created a new segment of society the unemployed. Whilst during communism everybody had to work to build the communist country, unemployment was socially unacceptable and punishable by law. With the great fall, the loss of communist markets and the pitfalls of privatisation unemployment were created almost overnight. The government set up a benefit system from tax payers’ money to ensure social security for the unemployed. Above all that the level of those taking early or occupational retirement due to the closure of factories and farmer’s co-operatives rose unexpectedly. The more of those with earning capacity were taken out from employment the more the government needed to provide for. This provision was the base of the rising taxes and the high entrepreneurial monthly fees. This created a vicious circle and the increase of black economic activity. As a result of this process artisans started to be classified as entrepreneurs and had to pay the same taxes as the opportunity entrepreneurs.
Lost Generation
The lack of employment opportunity for young professionals is low in Hungary. Those born in the 1980s are classified as the ‘Lost Generation`, who is escaping to higher education being still students in their late twenties and early thirties. This makes them overqualified on the job market without experience.
Migration
Due to the lack of employment opportunities mainly the younger generations started internally and externally migrate from the rural areas of Eastern Hungary to the capital and the western part of the country where the standard of living is higher and due to the infrastructural advantages, which attracted new investors and the job market is more promising. The external migration in the hope for employment drives young professionals towards Western Europe.
Tax and administrative burden positioning
Currently in Hungary to start up as an artisan full time, high entrepreneurial monthly fees need to be paid to the government, which is almost 20 times more than that in England. If the artisan is in full-time employment, where the employer pays these fees, there is an opportunity to work as an artisan as a second job only paying taxes after the profit.
In comparison to the EU average it takes 38-16 days to open and 2 years to close an enterprise in Hungary. (World Bank Doing Business, www.doingbusiness.org) Closing down an operation takes double amount of resources and more than 8 months longer than the OECD average. The start-up cost is 3.5 times and the capital requirements two times higher (55.1% vs 46% profit in Hungary. The tax rate and the administrative burden is significantly higher than the OECD average. Whilst in Europe banks are major supporters of SME in Hungary it was only 11.3% in 2003.Financing SME Growth – Adding European Value, Access to Finance: The Way Forward Comission Staff Working Paper, 2006.06.29)
To be continued…
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