The Hungarian Test: Is a Basic Income Feasible, Worthwhile and Sustainable?

Three Lives, Three Outcomes

Imagine that tomorrow the government announces: every Hungarian adult is to receive a basic income of 150,000 forints a month (≈€420, at roughly 360 forints to the euro). Consider what that would mean in the lives of three particular people.

Gábor, 35, Budapest, single, office worker. He currently takes home 350,000 forints a month (≈€970) at an SSC — a shared service centre, one of those consolidated corporate back-office operations — where he does data entry. His manager has already told him that next year an AI tool will take over 80% of the team's work. If Gábor is handed 150,000 forints, that is less than half his current salary. A rented flat in Budapest costs 180,000–220,000 forints a month on average (≈€500–610), with a further 40,000–60,000 (≈€110–170) in utility bills. His 150,000 forints will not even cover the rent. Gábor either keeps working — but where, if AI has taken his job? — or moves to the provinces, where housing is cheaper but there are no jobs.

Mária, 60, small-town Hungary, pensioner. Her pension is 98,000 forints (≈€270), well below the average: according to 2025 data from Hungary's Central Statistical Office (KSH), the average old-age pension was 242,000 forints (≈€670). If the basic income were 150,000 forints and the pension system were abolished (because a UBI treats everyone alike), Mária would be 52,000 forints (≈€145) a month better off. In a small town, 150,000 forints covers the utility bills on a modest flat and the food shopping, leaving a margin of 20,000–30,000 forints (≈€55–85). For Mária, a UBI would mean survival — but that is not the whole picture. On the same terms, a neighbour living on the average pension of 242,000 forints would lose 92,000 forints (≈€255) a month and fall into deep poverty overnight. A UBI of 150,000 forints is thus a genuine lifeline for those on the lowest pensions, but a severe drop in living standards for anyone on an average or above-average pension. And what if inflation means that, a year on, the 150,000 forints is worth only 120,000? Mária is then back where she started — except that there is no longer a pension system to raise her benefit in line with inflation.

Dávid, 28, rural Hungary, small-business owner. He runs a small firm repairing agricultural machinery. He currently earns 400,000 forints a month (≈€1,110), though the figure fluctuates. The 150,000 forints would not solve his problems, but it would give him a cushion. At the same time, Dávid knows that if everyone gets 150,000 forints, so do his customers. And his customers — the local farmers — will not spend more on machinery repairs simply because they have a basic income. They are more likely to bid up local rents and food prices. Dávid must either raise his prices (and lose his customers) or settle for a lower real income.

A Snapshot of the Hungarian Budget

Hungary's population at the end of 2025 stood at 9.489 million (KSH). Of those, roughly 7.4 million are aged 18 and over. If every adult receives 150,000 forints a month, the annual total comes to:

7,400,000 people × 150,000 forints × 12 months = 13,320,000,000,000 forints

That is 13.32 trillion forints (≈€37 billion) a year.

Total Hungarian state spending in 2025 came to roughly 35–40 trillion forints (≈€97–111 billion). A UBI on its own would therefore swallow 33–38% of everything the state currently spends.

How much could be reallocated from existing benefits?

• Pension spending: ~5 trillion forints a year (≈€14 billion)
• Family support, GYES and GYED (the flat-rate and the earnings-related parental allowances), unemployment benefit, disability payments: ~2–2.5 trillion forints a year
• The public-works scheme (state-organised work for the long-term unemployed): ~300–400 billion forints a year

Scrapping all of it in favour of a UBI would still leave a 5.8 trillion-forint hole (≈€16 billion) in the budget every year. That gap can only be closed by raising taxes, by cutting spending, or by borrowing.

How realistic is a tax rise? Hungary's GDP is roughly 82 trillion forints (≈€228 billion). Filling the gap would require extra tax revenue equivalent to 7–8% of GDP. VAT would have to go up from 27% to 35%, personal income tax from 15% to 30%. Or a 15–20% "robot tax" would have to be levied on companies — something for which the Hungarian government's 2025–2026 tax packages make no provision whatsoever. If anything, the aim is the opposite: cutting corporate taxes and encouraging investment.

Alternatives — If Not a UBI, Then What?

If a UBI is not sustainable in Hungary as things stand, what other instruments are available? Four approaches are worth examining.

1. A negative income tax (NIT)

The principle of a negative income tax is this: anyone who does not earn enough pays no tax but receives money from the state. The economist Milton Friedman first proposed it in the 1960s. The difference from a UBI is that here the support falls as income rises. Someone who works does not lose the support entirely, merely receives proportionately less of it. That encourages people to take up work, because working always pays — you simply receive less support alongside your wages.

Hungary's tax system already has features of this kind: the family tax allowance, the tax breaks for mothers, the successive rises in the minimum wage. From 2026, mothers of two children will have 80,000 forints (≈€220) of their monthly income exempt from tax, and mothers of three 198,000 (≈€550) — an allowance set against the tax base, not a payment into the bank account. That is a partial echo of the NIT logic — except that it goes only to families and mothers, not to everyone. (One important difference from a true NIT: the Hungarian allowance is tied to earned income, so with no earnings at all the state pays out nothing.)

2. A job guarantee / public works

Hungary already runs a programme of this kind: the public-works scheme. In November 2025, 75,000 people were working on the scheme (KSH). The pay is low — generally somewhere around the minimum wage — but it provides work, structure and a community. In 2025–2026, however, the government is planning to overhaul the scheme and scale it back, on the grounds that it is expensive; the aim is to steer people into the open labour market.

But what if the public-works scheme ought to be reshaped rather than scrapped? Not road-building but community care, park maintenance, digital teaching support, environmental projects? Job-guarantee programmes in India (MGNREGA, a rural employment guarantee with more than 200 million participants that is still running today) and in Ethiopia (the Productive Safety Net Programme) show that where the state guarantees the work rather than the money, the inflation risk is lower and social cohesion higher. Economists of the Austrian school, though, point out that if state-organised work produces no genuine additional value, such programmes can stoke inflation too.

3. Retooling education and retraining

In 2025, the Hungarian government adopted a new Artificial Intelligence Strategy for 2025–2030. As part of it, AI pilot courses have begun in 60 vocational schools, with the aim of completing a roadmap for integrating AI teaching into state education by the spring of 2026. A further 15 billion forints (≈€42 million) is going into strengthening vocational training: 8.9 billion for foreign-language teaching and 6.2 billion for setting up sectoral training centres.

This is the right direction — but it is slow. According to PwC, 922,000 jobs in Hungary could be automated by 2030. Reforming vocational training reaches a few tens of thousands of young people a year. The majority — middle-aged office and factory workers with secondary education — will not be going back to the classroom. What they need is not education but a combination of transitional support and retraining.

What is more, the shortage of teachers holds the process back: according to figures from Eurydice, the EU's education information network, half of Hungary's teachers are 50 or older and a mere 7.2% are under 30. Even the people who would teach the new skills are in short supply.

4. "People-first economics" — developing capabilities, not handing out money

There is another approach, one endorsed by Nobel-laureate economists such as Amartya Sen and Joseph Stiglitz. On this view, the goal is not for the state to hand out money but to create capabilities. Developing human capital — health care, education, housing, digital access — lays a foundation on which people can then earn a living, adapt and start businesses of their own.

In Hungary, that would mean:

• Housing support not in the form of cash transfers but through community-led housing and a public rental-housing programme
• Expanding primary health care, so that people are well enough to work
• Free or cheap retraining programmes for those in their forties and fifties too, not only for the young
• Encouraging local enterprise: microcredit, rural tourism, support for craft industries

This is slower than a UBI, but more sustainable. The state is not doling out money; it is equipping people to make their way in the market — even as that market is transformed.

The Technology Optimists' Case — Will Production Offset Inflation?

The UBI supporters' most important counter-argument runs as follows: robots and AI do not merely take work away, they raise productivity dramatically. If a factory runs on 10 people plus an AI system instead of 100 people, output rises and prices fall. "Free money", on this view, is not simply lost to inflation, because genuine economic growth stands behind it.

The argument is not entirely groundless. The International Labour Organization's 2026 report finds that generative AI may raise global GDP over the long run. Goldman Sachs calculates that AI could lift world GDP by as much as 7% over ten years. If the growth really does materialise, and there is a mechanism for sharing the proceeds (corporate taxes, carbon taxes or digital services taxes, for instance), then a basic income could indeed be funded.

But there is that "if". As this series has already set out, the chief economist of Goldman Sachs reckons that in 2025 AI investment had "basically zero" effect on US GDP growth. The overwhelming bulk of the money went on hardware bought abroad. The productivity gains are lagging — by years, perhaps by a decade.

Nor is the distribution of the proceeds straightforward. If the owners of the robots hold their profits offshore, the state cannot tax them. The benefit of new money and new technology reaches the rich first. By the time it trickles down to the many, inflation has already pushed prices up.

So the technology optimists' case can work in theory — but only if:

• the productivity gains really do materialise and are measurable,
• there is an effective tax system for sharing the proceeds (with no offshore escape route),
• the state can afford to wait until the growth arrives — without becoming insolvent in the meantime.

In Hungary, not one of those conditions is fully met. The productivity gains are lagging, the tax system cannot reach the multinational technology companies effectively, and the budget is in no position to wait a decade.

Weighing It Up — Is There a Way Out?

At the end of this series, we cannot promise miracles. The transformation of the labour market by AI is real, it is irreversible, and Hungary is not exempt. A UBI, fine promise though it is, cannot be sustained by the Hungarian budget as it stands. "Equality" at 150,000 forints a month would mean hunger in Budapest and bare survival in the provinces — and inflationary pressure everywhere.

But complete despair is not warranted either. The best defence is not "free money" but flexibility:

1. Education reform: The middle-aged need retraining as much as the young do. The government's 2025 AI strategy and the 15 billion forints pumped into vocational training point in the right direction, but they need to be faster and broader.
2. Strengthening local economies: Rural tourism, craft industries, local food production — these sectors are harder to automate and can provide work in rural Hungary.
3. Reforming the tax system: Rather than a "robot tax", it is worth examining a digital services tax, a carbon tax, and rules to block the offshoring of profits. If the technology companies really did pay tax here, that could fund the retraining.
4. Reshaping the public-works scheme: Not road-building but work of real community value — care, environmental protection, spreading digital literacy.
5. Introducing a negative income tax: Extending the existing family tax allowance and mothers' tax breaks to low-income people without children as well, and encouraging part-time employment.

A basic income is not a bad idea in principle — but in Hungary today it is still premature. First, productivity has to rise, the tax system has to be rationalised, and society has to come to terms with the idea that "work" is not a single office job but a range of activities: care, training, local production, enterprise.

The story of Anna, Gábor, Mária and Dávid does not have to be the story of technology's victims. It can be the story of people who find a new way of being useful — without waiting for money from the state. Money is only ever a stopgap. Capability is what lasts.

End of the series.