Hungarians Lean to the Left As Recession and Taxes Bite

HUNGARIANS are starting to look back on communist times with nostalgia and on the current free market reforms with increasing dread.

Medium-paced reforms under the Hungarian Democratic Forum government of Premier Jozsef Antall have brought a 20 percent unemployment rate, 50,000 new homeless, a steadily declining gross domestic product, and unexpected hardship to this former East bloc nation.

Several recent polls indicate that the popularity of the ex-Communist Party, renamed the Hungarian Socialist Party, has been increasing since it relinquished power in 1990. And with last month's victory of the former Communist Party in Polish parliamentary elections, Hungarians are talking about similar changes.

``At least under communism we had a job and a roof over our heads,'' cries one man at the Menhely Homeless Shelter as he discussed the economy with his friends.

Tamas Gyuris, who runs the Budapest shelter, says homelessness was outlawed under the former system. ``Now we have a housing shortage and an open real estate market,'' he adds, ``so rent prices are skyrocketing.''

``Imagine if the average salary of a worker is 15,000 forints [$165], and the cheapest apartment costs 10,000 forints [$110], and a monthly rail pass costs 1,000 forints [$11],'' he says. ``What do you have left to feed your family with?''

The Socialist Party does not expect to win control of the parliament after next May's elections, but they do expect to gain more parliamentary seats. They currently control 8.5 percent of the votes.

According to analysts, the Socialists might even enter into a coalition with the Federation of Young Democrats, an aggressive market reform advocate. The Young Democrats are leading in the polls, but may want to take advantage of the Socialists' strong ties to labor unions. Goodbye safety net, hello taxes

Hungarians received small salaries under the 42 years of communist rule but were provided with housing, health care, and education. Now most of these social programs are gone, but salaries are taxed heavily.

``We don't disagree that a change was necessary,'' Socialist Party member Laszlo Pal says, ``but we think this change should have been more gradual.'' Mr. Pal is vice chairman of the Parliament's Standing Committee for Economics and points out that Hungary's former Communist government initiated market reforms and privatization early in 1989.

``If the current regime would have just continued those measures'' Pal says, ``this country would be much better off. Instead of keeping what worked, they threw out everything that had to do with the past regime.''

The ruling party chose a middle road to privatization, unlike Poland, which employed ``shock therapy.''

``Poland's fast-paced reform has put them ahead of Hungary,'' counters Laszlo Rajk, a member of the pro-market opposition Alliance of Free Democrats. Premier Antall promised 80 percent privatization by 1994, he says, and they have only achieved 40 percent thus far. ``This slow pace is, unfortunately, politically rather than economically motivated.''

But economist Gabor Oblath, who works with the KOPINT-Datorn economic research firm, notes that there is no precedent for transforming a centrally planned economy to a market-based one.

``The truth is that the collapse of the [Soviet Bloc] suddenly destroyed half of Hungary's export market,'' he says. ``Hungarians can't afford their own goods, so the domestic market is weak too.'' Freedom in recessionary times

These changes occurred in the wake of a worldwide recession that only compounds Hungary's difficulties. The country's gross domestic product dropped by 12 percent in 1991, 4.5 percent last year, and has fallen by 2-3 percent this year. Exports since last September declined 30 percent.

``I admit Antall inherited a tough situation from us,'' Socialist member Pal says. Hungary's economy was stagnant during the 1980s, he adds, and Hungary's farming and industry could not keep up with technology. The result is a country full of workers unable to produce quality goods for export westward.

Thirty thousand of those workers - from farms throughout the country - gathered in front of parliament in mid September to protest farm subsidy cuts.

Since new land ownership rules are still being debated, farmers have trouble using their land as collateral for loans.

Of Hungary's 10 million people, nearly 2 million live near or below the poverty line, says Laszlo Filipsz of the National Federation of Agricultural Cooperators and Producers. ``We can't continue like this, where soon we will have a million living well and 9 million poor,'' he says. ``This country needs to be balanced, and the Socialist Party could do that.''

While some estimate Socialist support near 20 percent, opposition party member Mr. Rajk is quick to note the difference between the Polish and Hungarian situations. ``Poland has a completely new generation of socialists, people in their thirties,'' he said, unlike the Socialist Party, which is run by officials from the former communist regime.

Much like Poland's former communist Democratic Left Alliance party, the Hungarian Socialists are firmly behind continued market reform. ``The thought of going backward can't exist,'' Pal says. ``We just want to ease the pain of transition.''

``I can't guarantee that things will get better,'' he adds, ``but we'd make sure they wouldn't get worse.''