Hungary has moved away from the communist era when nearly all cultural actors were either civil employees or members of the monolithic artistic associations who enjoyed benefits comparable to salaried persons. Many people found themselves 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. It is estimated that today over 75% of actors, dancers, musicians, arts organisers, technicians, designers, and other cultural operators working for a variety of clients are self-employed.
This issue was behind the introduction of EKHO in 2005, a regime tailored to taxpayers in the creative sector, allowing for simplified contributions to common charges (called literally “public burden”). The scheme has so far survived the many changes in the taxation system. In 2021, the condition of this status is that the annual income of the person remains below HUF 60 million (about EUR 170 000). 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 at a 15% rate, which includes social security duties. EKHO is open to employees and self-employed people, including pensioners.
Independents are not able to claim unemployment benefit. Sickness benefit may be covered by paying into a private insurance policy. Self-employed people in the cultural sector can pay into a private pension fund to top up the state pension; nevertheless, many of them tend to pay social insurance only after the mandatory minimum monthly wage upon their own choice, risking their old-age care. The several hundreds of holders of all state awards listed under chapter 7.2.3, however, enjoy a lavish complementary pension after the age of 65.
This arrangement is crowned by the life-time allowances of the members of MMA. In 2021, full MMA members get 410 000 HUF a month, about 1 150EUR, close to the average income in the country, on top of their regular pension or salary. Corresponding members’ monthly allowance is 340 000 HUF. The Artists of the Nation (see chapter 7.2.3) receive 23 times the official minimum retirement pension of 28 500 HUF beyond the age of 65. Widows, widowers, and orphans are also entitled to certain allowances.
All these systems historically trace back to the establishment of high life-time allowances to members of the Academy of Sciences, imitating the Soviet model in the 1940s, spreading over to culture. Beyond the acknowledgment and stimulation of cultural achievement, these allowances develop surreptitious loyalty to the state.
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