Hungary is a country that has experienced and managed fundamental economic transformation, as
well as political and social changes during the last decade. It is known that even very positive economic and political changes might have negative social, health consequences in the course of transition. The transition to market economy, economic regression and the enacted restrictive measures exercised a major impact on social and health conditions as well as on our ability to tackle them. Hungary has already passed the most difficult phases of transition and has accumulated enormous experience, both successes and failures, that are examined and assessed also in view of the accession process to the European Union, in the course of preparing for fulfilling Community obligations and requirements.
The current social protection system in Hungary is a result of the historical development and most recent responses to the challenges of the economic and social transition. Social protection in Hungary, as well as in other countries, is a complex set of measures to improve or protect human capital, ranging from labour market interventions, publicly mandated unemployment or old-age insurance to targeted (means-tested or group targeted) income support. Social protection interventions assist individuals, households, and communities in order to manage the income risks that leave people vulnerable. Specifically:
- to reduce the vulnerability of low-income;
- to allow households to shift income efficiently over the life-cycle, thus financing consumption
when needed;
- to enhance equity in particular for those who are exposed to adverse shocks.
Social protection interventions contribute to solidarity, social cohesion, and social stability and, at the same time, support sustainable economic development. As such, the government constantly
reviews tax and benefit systems, removing poverty traps in order to provide the right incentives to
work, and eliminate disincentives for older workers to remain active in the labour market. The process of review, the institutions of monitoring depend on the policy of the government, so the mandate and power of different ministries, other government bodies and committees change from time to time.
In its Programme of the new Government, elected in 2002, announced a "welfare turn" aimed at preventing the increasing inequalities in society. To support this process, the new Government remerged
two ministries, and created the Ministry of Health, Social and Family Affairs, which is responsible for a wide range of social security and social protection issues, including health, pensions, as well as social inclusion. The Government re-established the ministry responsible for employment and labour issues as well.

The Hungarian Government considers that the basic role of the state is to provide a chance for people
to find the way out of poverty and exclusion through their own efforts and community help. Of course, the state should provide assistance through the improvement of employability, widening skills and knowledge, and improving the opportunities of disadvantaged groups and regions. In its social policy, the Government intends to provide secure family- and child protection benefits and services, quality social services adjusted to the needs of the individuals, fair social security schemes as well as harmonised, targeted social benefits. It considers the improvement of the life of children as a strategic "investment", therefore it provides a universal family support system. At the same time, further assistance is provided to those in a disadvantaged situation. As the demand for quality social services has increased in the last years, the Government widens the extent and diversification of services, promoting the maintenance of existing abilities of the beneficiaries.

The Government pays special attention to the most disadvantaged groups. Among them the living
conditions of the Roma are the most unfavourable. Their health status, as well as their life expectancy at birth is poor, their general level of education, their labour market chances and activity are low. To hinder the further social exclusion of the Roma and to promote their social integration, the Government launched a wide-ranging programme, containing measures to provide equal rights for the Roma, improve their quality of life and their living conditions, develop their physical and mental health, provide equal education chances and long-term, marketable job opportunities, preserve their cultural values and enhance their self-organisation.

Social exclusion affects people with disabilities and with serious health problems to a large extent. Their level of qualification is often low and their position in the labour market is disadvantageous. Although the system of protected employment has been developed nation-wide, the employment opportunities for the disabled are still narrow. The Act on the rights and equal opportunities of disabled people, adopted in 1998, identified the rights and defined the instruments to enforce them.
The National Programme for the Disabled, enhancing the implementation of the Act, comprises tasks and measures aimed at improving the social integration of disabled persons, providing accessible environment for them, strengthening their rights, extending rehabilitation instruments and improving
their quality of life.

Providing sufficient pensions plays a key role in preventing the exclusion of elderly people. After the transition, the Hungarian pension system succeeded in protecting the old from extreme poverty. However, the rapid changes in the society and in employment patterns, as well as demographic trends made it necessary to reform the pension system. The reform, introduced in 1998, laid down the basis for the long-term sustainability of pensions. The transformation of the "pay-as-you-go" social security system, among others, resulted in a strengthened relationship between the paid contributions and the benefits. At the same time, a funded private pension pillar was introduced. It is a key challenge for the future to ensure that the public pillar provides an adequate pension also for those taking atypical employment. While further strengthening the insurance principle, the solidarity elements of the system need also to be retained. In order to prevent the exclusion of those with short qualification periods or a low pension due to other reasons, an allowance has been introduced as part of the social protection system. In the future we need to strengthen the private pension pillar by improving the guarantee elements, clarifying the rules for extending the service, and ensuring the profitability of asset management. Another challenge is to further encourage voluntary supplementary savings in the future.

Hungary joined the EU open co-ordination process in the area of social inclusion. A core element of the process is the drafting of the "Joint Memorandum on Social Inclusion" (JIM), which has already been elaborated and submitted to the European Commission in Spring 2003. The JIM received a very
good evaluation from the Commission, thus the Hungarian Government is looking forward to proceed with the signing of the JIM.

The Hungarian Government is committed to the high priorities of the European Social Agenda. During the transformation process of the Hungarian social protection system, the Government takes into consideration the principles and practices of the European Union to the greatest possible extent.