1.9.2022
EN
Official Journal of the European Union
C 334/143
(28)
Hungary scores low among the Member States in social dialogue, stakeholder engagement in developing primary law, consultation with social partners, civil society, and the use of evidence-based instruments.
National rules on the obligatory public consultation of draft legal acts and their impact assessments have been systematically disregarded.
The number of laws subject to consultation has significantly declined in recent years.
(29)
Measures have been taken to further improve the tax system, but some challenges remain.
The tax burden on labour has decreased but remains high for many low-income earners.
Sector-specific taxes and a large number of small taxes complicate the tax system and raise compliance costs, in particular for smaller firms.
(30)
Regulatory barriers and State involvement in product markets hinder the selection of efficient enterprises and limit competition.
Ad hoc exemptions of business transactions from competition scrutiny hinder the functioning of the market and hamper investment.
The unpredictability of the legal framework is a further problem, especially in the retail sector, which in recent years has faced frequent changes in regulations.
Regulations and taxes might prevent businesses from growing, especially in retail and utilities.
Regulation of professions also remains restrictive.
Slow and costly insolvency procedures might hinder the restructuring of failing businesses.
The procurement market remains vulnerable to anticompetitive practices.
The proportion of contracts awarded in procedures where there was just one bidder remains among the highest in the Union.
The authorities improved the supervision of the regularity of public procurement in response to the earlier findings of the Commission’s successive audits in the field of Union funds management, carried out in 2014, 2015 and 2017, which identified serious, systemic deficiencies and irregularities, in particular related to the use of framework agreements.
Whether all of the previously identified deficiencies have been fully addressed remains to be seen in practice.
Recently, new risks emerged with the apparent exclusion of public-interest trusts from public-procurement rules.
In February 2021, the government set itself an ambitious target of reducing the percentage of public-procurement procedures with only a single bid to less than 15 %, although without a fixed timeline.
(31)
The transition to a climate-neutral economy is still at an early stage.
Half of Hungary’s territory is significantly exposed to climate-change risks, including drought and floods.
This creates the need for sustainable climate adaptation solutions, in particular through nature-based water retention, including by restoring natural hydrology, adapting agricultural practices and carefully monitoring ground- and surface-water abstractions for irrigation.
Air and water quality remains a concern.
The main sources of air pollution are residential solid-fuel combustion, agriculture and transport emissions.
A large share of the drinking water supply network is in poor shape, and the regulatory environment creates barriers to investment.
The circular economy is still in an initial phase, recycling of municipal waste is underdeveloped and economic instruments are insufficient to address environmental challenges.
Waste management was reorganised by the government in several steps.
The changes limited competition in the sector, with the side effect of declining efficiency and recycling rates.
Sectors that are likely to decline or transform due to the green transition provide jobs for nearly 4 % of all workers, who could particularly need up- and reskilling.
Labour shortages in the energy sector could hinder the transition to climate neutrality.
(32)
Transport infrastructure is characterised by a dense motorway and electrified rail network.
Hungary has experienced a strong increase in emissions in the transport sector, which is rapidly becoming the largest emitting sector.
Hungary is among the most congested Member States, with an increasing number of hours lost per driver in urban areas.
The share of newly registered zero-emission passenger cars and the number of charging points grow steadily.
While the corresponding indicators show a leading position among regional peers, it still remains under the Union average.
(33)
Research and innovation is a critical driver for long-term growth and competitiveness.
Hungary ranks as an emerging innovator.
Spending on research and development is increasing and reached 1,61 % of GDP in 2020.
The shortage of highly skilled workers is a key obstacle to innovation.
Tertiary education attainment rates are among the lowest in the Union.
The recent exemption of young workers from personal income tax and other structural changes hindering academic freedom decrease the attractiveness of higher education.
Digital skills and the use of digital technologies by firms and public services remain below the Union average.