Early estimates of social protection benefits
Released: 17 February 2025
The Hungarian Central Statistical Office (HCSO) has made early estimates of gross and net social protection benefits – similarly to the majority of European countries – on an experimental basis for the time being. Thanks to the new method, annual gross expenditure, broken down by social protection function, and related tax and contribution liabilities can be published 11 months earlier compared to data calculated according to conventional methodology. The estimation is made using macro-level preliminary statistics and available administrative data sources. Compared to these, regular official statistics are constructed from more data sources with a deeper breakdown, and are based on a more detailed framework, and on data analyses requiring longer time, therefore, there may be differences between calculations made according to early estimation and conventional methodologies. At the same time, calculation results can be compared in content, since early estimates are also made in compliance with basic EU legislation on social protection statistics.
Gross social protection benefits more than doubled (to 12,466 billion forints) at current prices in Hungary between 2010 and 2023. However, the proportion of benefits measured as a percentage of gross domestic product – owing to a higher GDP growth rate – decreased until 2022 (16.4%), and practically stagnated in 2023 (16.6%). There was a substantive rise only in 2020 (17.9%), the year of start of the pandemic, due to health and labour market protection measures of the government.
The largest proportion (46%) of social protection benefits was made up by old-age and disability pensions, related to old people. 30% of benefits contributed mostly to the costs of inpatient and outpatient care, within the framework of sickness/health care. Family benefits, as well as expenditure on child protection ranged between 10% and 12% each year. Disabled people, survivors, unemployed people, homeless people and recipients of housing allowances had a share in the remaining proportion (14%).
Social protection expenditure expressed in national currency has continuously increased in all EU member states, however, expenditure expressed as a percentage of GDP declined in the past years. According to early estimates for 2023, the proportion of social protection benefits as a percentage of GDP was the highest (31.3%) in France and the lowest (12.0%) in Ireland. The value of the indicator was 16.6% in Hungary.
The largest part of social protection benefits was made up of amounts devoted to old people’s care as well as expenditure on the function of sickness/health care in all EU member states. Italy and Romania spent the most – partly resulting from the age structure of the countries concerned – on benefits for old people as measured against total expenditure (around 50%), and Hungary was in the sixth place (45.8%). The proportion of benefits paid to help the living of families and children was higher, too, in Hungary (10.2%) than the EU average (8.6%).
In Hungary, about one-third of social protection expenditure is qualified as benefits in kind and two-thirds as benefits in cash.
Benefits in kind dominate mainly the function of sickness/health care (3,344 billion forints), sickness/health care benefits in kind1 accounting for three-quarters of all benefits in kind. As for families and children, services providing institutional care, as well as family and child welfare services are qualified as benefits in kind helping families and children, on which an amount corresponding to 406 billion forints was spent, a further nearly 9% of all non-cash benefits.
In respect of benefits in cash, pension-type benefits provided to old people (5,391 billion forints), as well as benefits to help families and children (862 billion forints) made up four-fifths of the benefits. Passive unemployment benefit (204 billion forints) and survivors’ (widow(er)s’ and orphans’) benefits (543 billion forints) are provided almost exclusively in cash form.
Hardly a fifth of benefits in cash are subject to personal income tax and/or social security contribution, which was equivalent to the payment of 206.2 billion forints to the central government budget in 2023.
Benefits provided for the period of falling out of work because of long-lasting livelihood risks for health reasons, such as illnesses or child-bearing, are – taking into account allowances – almost fully subject to tax and/or contribution.
Tax or contribution payments are to be made, however, on two-thirds of cash benefits provided for the living of families and children. The highest deductions from benefits, some 94 billion forints in 2023, were recorded here.
Tax and contribution payments of 20.8% on average, of a value of 37.4 billion forints, were made on cash benefits supplied for the period of unemployment and on redundancy payments provided for dismissal.