On November 20, 2024, the Prime Minister’s Office, in collaboration with the Oeconomus Economic Research Foundation, organized a workshop conference titled The Relationship Between Demography and Competitiveness in Budapest, as part of the Hungarian Science Festival series. The conference featured three panel discussions in which the topic was explored from different perspectives.
The conference was opened by Miklós Panyi, the Deputy State Secretary for Parliamentary and Strategic Affairs at the Prime Minister’s Office. In his opening speech, he highlighted that while the European Union faces significant challenges in terms of competitiveness, population decline is becoming an increasingly serious issue. To underscore the severity of the problem, he pointed out that Europe is falling significantly behind: “If we look at the private sector, if we examine corporate aspects, we can see that in 2024, 208 of the world’s 500 largest companies are from East Asia, 153 from North America, and only 118 are from Europe.” EU leaders have recognized the gravity of the situation and, at Hungary’s initiative, adopted the new competitiveness pact, the Budapest Declaration. The Deputy State Secretary also addressed the EU’s decades-long demographic decline and then presented Hungary’s family policy achievements since 2010.
Panel 1
The first panel examined the demographic and competitiveness challenges facing the Hungarian communities in the Carpathian Basin. The discussion featured Dr. Ádám Csepeti, Deputy State Secretary for Strategic Affairs at the Prime Minister’s Office, Zoltán Csányi, a sociologist at the Central Statistical Office, and Dr. Zoltán Kántor, Director of the Institute for National Policy Research. The panel was moderated by István Loránd Szakáli, Strategic Director at the Oeconomus Economic Research Foundation.
Dr. Ádám Csepeti emphasized that the study of demography and competitiveness is critical because the working-age population represents an easily accessible source of economic revenue for the state, making families the foundation of society in economic terms. He highlighted that young people, as the main entrepreneurs, are particularly crucial for innovation. Unfortunately, Europe is seeing a decline in its youth population, which leads to fewer entrepreneurs and less innovation.
Regarding productivity, Dr. Csepeti noted that improving productivity is essential for Hungary to remain competitive. He mentioned that when it comes to digitalization, robotization, and automation, SMEs are not homogeneous in terms of adoption. Surprisingly, a significant portion of SMEs is not open to innovation, which negatively impacts their competitiveness.
He also stressed the importance of maintaining cross-border development programs and launching more similar initiatives where possible, helping to establish a competitive cross-border region around Hungary.
Zoltán Csányi presented the demographic trends in the region. He explained that societies are aging, which is not exclusive to the former socialist bloc. He pointed out that Central Europe is less of a target for mass immigration than Western countries, meaning that natural population growth can only partially offset immigration. Hungary’s employment policy, he added, has wisely set a deadline for foreign workers, which minimizes the social costs of immigration.
The fertility rate experienced a significant increase in 2010, pushing Hungary into the EU’s top performers in this regard. Csányi also argued that it is incorrect to separate demography and competitiveness from the supply side, as stagnation in the labor force could lead to significant problems. Finally, he discussed the Draghi Report, which acknowledges the demographic challenges but does not propose solutions.
Dr. Zoltán Kántor discussed the situation of Hungarian communities beyond the borders. He explained that the demographic and competitiveness issues are especially relevant for ethnic Hungarians, as they are in an ethnic competition with the majority population. Hungarian communities live on areas twice the size of Hungary’s territory, with 20-30% in scattered areas, and their numbers have decreased by about 30% every decade. Unfortunately, in many significant foreign cities, Hungarians do not constitute the majority, and a few percentage points fewer Hungarian students attend universities compared to the majority population. Regarding emigration, Kántor noted that it is lower in Slovakia, higher in Transylvania, and highest in Vojvodina.
From a national policy perspective, the competitiveness of Hungarian enterprises abroad is a key issue: all systems are interconnected abroad. Quality education is important, but preserving identity through family unity is essential. Hungarian communities beyond the borders must be viewed as a complex, regional entity. Support for entrepreneurs is also crucial, and the National Policy Secretariat works to connect Hungarian entrepreneurs abroad, operating mentoring programs for them. Positive examples, cooperation, and innovation in this field are essential. Good news is that the number of Hungarian children enrolled in foreign Hungarian schools has not decreased as much as demographic trends would suggest. Local organization and support from Hungary are key to success.
Panel 2
The second panel discussion approached the issue from a rather unusual perspective, focusing on the links between demographic trends and a country’s defense capabilities. The topic was discussed by Mihály Tatár, Senior Analyst at the Oeconomus Economic Research Foundation, Zoltán Koskovics, Geopolitical Analyst at the Centre for Fundamental Rights, and Prof. Dr. István Resperger, Head of the Security Research Centre at the Hungarian University of Agricultural and Life Sciences. The discussion was moderated by Endre Kéri, Senior Analyst at the Oeconomus Economic Research Foundation.
Prof. Dr. István Resperger began his speech by presenting a global overview of the reserve system. Apart from Norway and Switzerland, people are leaving military systems everywhere. In Finland and Sweden, there are 2.5 million trained reservists. Hungary currently has 18,000-19,000 reservists, with development plans for the period between 2016 and 2032. The goal is to have 30,000 regular soldiers in Hungary. Austria, for instance, performs well with 110,000 reservists. The USA, Russia, China, and India have 1 million active-duty personnel, plus 1 million reservists, along with an additional 500-600,000 paramilitary forces. Hungary contributes 2.34 percent of its defense spending to NATO, which is an excellent value. Resperger stated that Europe has lived in peace for forty years (excluding the Yugoslav wars). However, it is concerning that only 2 out of 10 people in Hungary are fit to serve as soldiers, which is problematic because, “no matter how much we automate, the foundation of any army is the soldier,” he concluded.
Mihály Tatár argued that Western world religion today is WOKE-ism. A young WOKE individual seeks to experience freedom and find themselves, whereas military service is, in contrast, not about experiencing freedom. As long as the WOKE ideology persists, no substantial change is expected. The economic labor shortage results in the use of mercenaries in the military. If an industry’s skilled workforce declines, the country’s army will not be able to deploy high-tech weapons on a large scale. Tatár emphasized that with decreasing competitiveness, military capabilities also diminish. Regarding drone technology, he stated that the integration of drones with human forces would lead to success. He added that hopefully drones will not dominate the battlefield. While drones can solve many problems, other countries, such as China, can manufacture them more cheaply, gaining a serious competitive advantage.
Zoltán Koskovics was first asked: What domestic and international trends are visible regarding military readiness (physical and mental)? The answer was bleak: it turned out that the situation is catastrophic, and Western Europe is practically “dead.” In 2020, only 23% of young Americans were fit to serve in the military. The main reasons for unfitness were: 35% due to obesity, 33% due to illness or physical disabilities, 32% were regular drug users, and 23% had mental health problems. Only 41% of the 23% eligible Americans are willing to fight. In Western Europe, 52% are unwilling to fight, even to defend their own country. In Eastern Europe, 32% of young people of military age are willing to fight, while in Russia, about one-third of the population is ready to defend their homeland.
Panel 3
When examining the links between demographic trends and competitiveness, the state of the labor market is an unavoidable topic. This issue was discussed in the third panel, which was particularly exciting because the experts approached the topic from vastly different perspectives. The panelists included Nóra Dobre, Senior People Lead at Temenos and Assistant Professor at the Babeș-Bolyai University in Cluj-Napoca, Attila Sztojka, State Secretary for Social Opportunities and Roma Relations at the Ministry of Interior, and Dr. László Lovászy, Chief Advisor for Strategic Research at the Prime Minister’s Office, futurist, and UN human rights expert. The discussion was moderated by Dr. Szabolcs Pásztor, Research Director at the Oeconomus Economic Research Foundation.
Attila Sztojka emphasized that since the regime change, the question of how to address the Roma issue has never been fully clarified. Until 2010, no systemic intervention had taken place. He stressed that the saying “If there’s work, there’s everything” should penetrate every segment of society. In 2010, Hungary started from a deep moral crisis, and today we are talking about labor shortages, which have greatly helped improve employment opportunities for disadvantaged groups. Roma women are a key target group in the labor market. Institutionalized support systems have been well established in Hungary, but it is important that the country follows international trends. In terms of childcare services, Hungary has kept up with international trends by increasing the number of daycare centers. The integration of disadvantaged groups should happen within an institutionalized framework. It is evident that conscious family planning among the Roma population is becoming more linked to education levels: family planning is not a financial issue either for the majority population or the Roma.
Nóra Dobre presented the situation in Romania. We learned that every 10 years, 1 million citizens leave Romania. Regarding family planning, Romania follows the same trends as Hungary, with the notable difference that Romania has an exceptionally low number of daycare spaces. When asked about the issue of work-related loans, she expressed that, in her view, such loans are unnecessary in Romania, and she was skeptical about how loans could positively influence demographic trends. On artificial intelligence, she emphasized that the education and integration of young people is a key issue in this field.
“Since 2010, we have indeed succeeded in creating a work-based society,” began Dr. László Lovászy in his speech. Referring to the remittance data, he noted that Hungarians living abroad are thinking long-term about returning to Hungary, and they support their families who live here. He also pointed out that Hungary’s economic versatility places it among the top 15 globally, which is a solid foundation to build upon in the future. He criticized the Draghi Report for not mentioning the issue of aging, a growing problem in Europe. On innovative technologies, he explained that workforce competence must be increased, and Europe needs to decide whether it wants to proceed through immigration or automation. Regarding artificial intelligence, he mentioned that significant developments will be inevitable for the European Union in the near future.
