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Hungary has the third lowest youth poverty rate in the European Union

In a previous article, we showed that the proportion of people living in poverty in Hungary is lower than in many advanced economies, according to Eurostat. In this article we present the share of young people living in poverty based on the survey of the Organisation for Economic Co-operation and Development (OECD). The organisation has defined the poverty line by country on the basis of the median average wage. Of the 38 countries surveyed, Hungary had the third-lowest youth poverty rate in 2022, after Finland and Denmark, at just 5.2 per cent.

Many organisations produce studies comparing living standards across countries, the best known of which is the World Bank’s regular survey. In this report, the global poverty line is $2.15 per day in 2017 purchasing power parity terms, with the addition of $3.65 and $6.85 for middle-income and advanced economies respectively. In contrast, the OECD’s survey provides a more accurate picture of the comparison of living standards across countries, as it takes into account the wage levels in each country. The study’s methodology set the poverty criterion at half of the median average income per household. Based on the Hungarian Central Statistical Office’s (KSH) database, in 2022 the median net income after taking into account the benefits was HUF 280,600 per month, so the OECD survey set the poverty threshold at HUF 140,300. Of the 38 states surveyed, Hungary has the third-lowest poverty rate for underage people (0–17-year-olds). After 2.9% in Finland and 4.8% in Denmark, 5.2% of this age group lives below the poverty threshold in Hungary. Austria and Romania, which are often used as comparators, have youth poverty rates of 11.9 and 19.6 per cent respectively (2.3 and 3.8 times the Hungarian rate). These results put the two competitor countries in 20th and 31st place in the OECD rankings.

The figure can be referenced here: https://public.flourish.studio/visualisation/18286922/

As the statistics show, Northern and Central European countries with extensive and mainly community-funded social care systems top the ranking, while Southern European countries are at the bottom of the list, alongside OECD member states with developing economies. Among European countries, children are worst off in Turkey (21.8 per cent), and within the EU, in Spain (20.5 per cent). The average for the 38 countries surveyed by the OECD is 12.6 per cent, compared with 10.8 per cent for those countries that are also EU member states. Among OECD member states, Costa Rica is the worst performer, with 28.5 per cent of youth in the Central American country exposed to poverty.

The same OECD statistics are also available for ages 18-65 and over 65, as well as for the total population. Regarding the first age group, Hungary ranks fifth in the ranking with a poverty rate of 7.2 per cent, while 6.7 per cent of the over-65s have a daily income below half the median average income, putting Hungary in seventh place. Regarding the total population, 67 out of every 1,000 Hungarians have a daily income below the OECD poverty line, putting Hungary in fourth place out of 38 countries.

The fact that people who have children do not see their offspring as a “burden” but as a “resource” in financial terms, thanks to the tax benefits linked to having children, contributes to Hungary’s good ranking. Housing subsidies, credit subsidies (mortgage waivers for families, baby loans), personal income tax exemptions for mothers under 30 or with at least four children, student loan debt relief, family tax credits from the 91st day of pregnancy and childcare subsidies, crèche and nursery care, free school books and school meal subsidies. As a result of the latter, Hungary has the seventh lowest rate of children who were unable to access food due to lack of money in the 30 days preceding the survey out of 59 countries in the OECD study, and the fifth lowest rate out of 18 EU member states in the study.

The figure can be referenced here: https://public.flourish.studio/visualisation/18286924/

Statistics related to the living standards of juveniles were also produced by the Institute of Economics of the Centre for Economic and Regional Studies (Közgazdaság- és Regionális Tudományi Kutatóközpont Közgazdaságtudományi Intézete), but with a slightly different methodology. It studied the proportion of Hungarian children living in poverty since 2010. In their survey, the poverty threshold was set at 60% of the median average wage, so their data show a slightly higher proportion of young people exposed to poverty compared to the OECD study. Over the 12 years studied, the proportion of children living below the poverty line fell by 60 per cent to 10 per cent in eight years, by 2022, after a peak of 25 per cent in 2014.

Juvenile poverty has an impact that spans decades and even generations. Those who live in poverty early in life lack access to adequate nutrition, leading to poorer health and a strain on the health care system later in life. They also have more limited learning opportunities available to them, so they have less chance of upward social mobility due to lower levels of education and skills. An employee who was affected by poverty in childhood will also find it harder to provide good living conditions for their offspring due to their lower education, therefore their descendants will also be caught in this vicious circle. Youth deprivation also has macroeconomic implications through lower value-added work.

Junior kutató | Published writings

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