Hungarian hospitality industry receives new lifeline

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The Hungarian Government is extending an additional lifeline to the embattled hospitality industry, daily Magyar Nemzet found out from government sources.

State wage subsidies will now reach businesses in difficulty faster and easier: The government will pay the wage subsidy in a lump sum by the end of February. In addition to restaurants, the move will also affect hotels and fitness centers. The prospects of businesses were left uncertain by the stagnant operation of a highly bureaucratic support system, so the government decided to significantly alter the accounting and financing system of tenders aimed at protecting jobs.

In the future, state aid will not be paid following the month of application, i.e., via post-financing; to better alleviate their situation, companies will receive the wage subsidy at the beginning of the current month, meaning businesses will get the money in advance.

By the end of January, the number of employees in the hospitality sector receiving wage subsidies had already exceeded 100,000. In order to keep the jobs at risk, the program will remain open until February 8 to companies particularly exposed to epidemiological restrictions.

The depth of the industry crisis is indicated by the fact that by January, companies said they can no longer withstand any more burdens — their reserves have run out, so they cannot pay the wages of essentially idle employees without state help and cannot wait until next month. The change of model introduced by the government will allow these companies to get the help they need now.

The steadily expanding guest traffic of Hungary’s hospitality sector was unexpectedly interrupted last spring with the onset of the pandemic; then, due to epidemiological restrictions, businesses in commercial catering and accommodation were forced to stop their activity in the spring and again in late autumn.

As of the beginning of February, there has been no activity for these facilities for the third month in a row, while those who serve takeaway orders (or home delivery) only have a fraction of their previous customers.

By the beginning of the year, the chances of permanent closures had also increased, especially among smaller businesses. The hospitality sector has lost 30-40 percent of its employees during the pandemic, and without the new scheme, reopenings would also have been jeopardized, whenever they may finally come.

That is why the government stepped in after hearing the arguments of professional organizations representing employers about payment issues and the deterrent effect of an overly bureaucratic application process.

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