Hungary has moved away from the socialist (communist) era when nearly all cultural actors were either civil employees or members of the monolithic artistic associations enjoying benefits comparable to salaried persons. The most difficult task has been to transform the system of health care and pension plans of the so-called “Art Fund”, inherited from the communist period, to a new insurance system. The state guarantees the payment of old age support (de facto pension) to those artists and writers who had been paying members of the Art Fund before it was transformed into the Hungarian Public Foundation for Creative Art (Magyar Alkotóművészeti Közalapítvány, MAK) in 1992. The budget for 2014 of the Ministry in charge of culture contained a subsidy of HUF 1,5 billion for these pensions.
It is estimated that over 75% of actors, dancers, musicians, arts organisers, technicians, designers and other cultural operators working for a variety of clients are self employed. Many self-employed people remained on the margins of the social security frameworks because they had been coerced into the position of quasi entrepreneurs instead of the more secure employee status, so that the employer (often a public institution like a theatre or a museum) could save on the social insurance fees; another reason was that self-employed people tended to pay social insurance after the minimum monthly wage only upon their own choice. To counteract this problem, a few years ago the government started a campaign of re-integration of these “false entrepreneurs” into employment, and passed measures to make paying social insurance fees more attractive. This issue was behind the introduction of EKHO in 2005, a regime of simplified contributions to common charges (literally “public burden”). The scheme has so far survived the many changes in the taxation system.
In the framework of EKHO, more favourable conditions and simplified procedures were offered to a list of professions, typically in the cultural sector. A condition of this status is that the annual income of the person remains below HUF 25 million (about EUR 100 000). The EKHO Law (Act CXX/2005) states that the minimum mandatory tax base for social security contribution payments is the minimum wage, while the rest of the citizen’s income should be taxed according to the rules of EKHO. This simplified way of paying social security fees is open to employees and self-employed people as well, including pensioners.
Independents are not able to claim unemployment benefit. Sickness benefit may be covered by paying into a private insurance policy. Most independents in the cultural sector pay into a private pension fund to top up the state pension.