Lázár blamed red tape for Hungary’s failure to grow as rapidly as the other Visegrád Four states. Once bureaucracy is reduced, the country’s international position in competition will improve, he said. Hungary needed to reduce the number of its administrative organisations, the number of people working for them, and the number of regulations affecting individual areas to ensure GDP should grow by 2 to 4 percent even after 2018.
According to Lázár, who is the Minister in Charge of the Prime Minister’s Office, public employees represent around 20 percent of the national workforce, as against 10 percent in Poland and 13 percent in the Czech Republic. “The Prime Minister’s Office has proposed a new government model in which central government, strategic planning and decision-making are organised in ministries, while regional administration is carried out by district and government offices,” he said.
The system of district and government offices had already proven its efficiency so the problem with state administration was at the higher level and not at the bottom, with 90 organisations of the central state administration employing the largest number of employees. Lázár said this is why he had proposed a reorganisation of the 73 supporting institutions that employ 50,000 people.
“Today it rather seems that instead of the ministries having supporting institutions, the supporting institutions have ministries,” he said, citing as examples a farm ministry office that has more employees than the ministry and the Education Office that employs 600 people. Superfluous institutions that were costly to operate would be closed down and their tasks would be carried out by the ministries or government offices.
The health insurance office for instance can be operated as part of the human resources ministry or the economy ministry, he said. The change in structure would not mean that the tasks carried out by a given institution would be discontinued, but the state would carry them out in a more efficient, cheaper and sensible manner. Decisions on supporting institutions would be made by mid-year and after that state-run shareholders’ companies would come under scrutiny.
Lázár said some 20 percent staff cuts are expected at the supporting institutions that would be merged with ministries by July 1 and next year, and the Prime Minister’s Office expects ministries to cut the workforce by an additional 15 percent. District and government offices would have to carry out more tasks with a smaller staff, but the development of district offices was already under way and 270 new government windows would be opened by May this year.
The government would offer several opportunities to people laid off. Those who volunteered to leave their job in the second half of this year and agreed not to return to the state sector in the next ten years would be entitled to twice or three times the usual severance pay, meaning 5-10 million forints per person. The state would launch a scheme offering tax allowances to corporations that employ people leaving their state jobs, he added.
It was not just bureaucratic institutions and public administration workers that needed to be cut but the number of administrative regulations as well. Citing Organisation for Economic Co-operation and Development data, the minister said an entrepreneur in Hungary today has to spend 277 hours dealing with tax administration, while the process of installing electricity at new facilities can take up to 252 days.
Setting up a business venture in Hungary required 24 separate administrative procedures but only 12 in the other three Visegrád Four countries. Bureaucracy in Hungary was inconvenient, annoying and expensive, and this must be changed.

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