Hungarians gloomy over economic future

At 30, Tibor Koltai has just given up his job as a nurse because he has found something better - staffing the cloakroom at one of Budapest's sleazier bars. As a nurse, Tibor was earning 32,000 Forints (£156) a month but his new job will pay a generous 50,000 Forints.

"For that, he'll have to work six nights a week with no holidays. See how he likes that," his friend Krisztian Ficsor adds, a little unkindly.

Although Krisztian speaks good German and almost perfect English, he has no job at all and depends on a weekly allowance from his mother to make ends meet. The allowance has not arrived this week, so I am paying for the foul-smelling, murky white wine he likes to drink.

Like most Hungarians, Krisztian and Tibor are disillusioned with the market economy, which they had hoped would lift their living standards a lot closer to western levels. Before the fall of communism, Hungarians could console themselves with the knowledge that, compared to their neighbours in Poland, Czechoslovakia and Romania, they were relatively well off.

A liberal interpretation of Marxist-Leninist economics meant many western goods were available in Budapest's smarter shops and visitors from other communist countries would queue for hours outside the Adidas store on the main shopping street in Pest. Nowadays, they look west, towards Austria and Germany, and the comparison, not surprisingly, makes them feel frustrated.

In 1990, two out of three Hungarians welcomed the market economy but within two years, unemployment soared from practically zero to more than 12 per cent, affecting one family in three. Many young Hungarians who attempted to embrace the new system by becoming entrepreneurs saw their businesses fold within a couple of years and the jobless rate remains above 7 per cent today.

Hungary is in many ways one of the success stories of eastern Europe, with an economy growing at more than 5 per cent each year and a private sector that accounts for more than 80 per cent of GDP. But Hungarians remain gloomy and according to an opinion poll, only 18 per cent are optimistic about their personal prospects.

Earlier this year, Prime Minister Viktor Orban's centre-right government unveiled an ambitious development plan that will spend about £1 billion on such projects as motorway construction, high-tech research and development, home building and tourism. The plan, which is named after the 19th century liberal reformer, Count Istvan Szechenyi, will also help to boost the fortunes of small and medium-sized companies - a response to the fact that 50 big multinationals account for most of Hungary's economic activity.

The government also plans to increase the minimum wage from its present level of 25,500 Forints (£124) to 50,000 Forints (£243) by 2002. Even among trade unionists this increase is regarded as excessive and domestic employers claim it will drive many of them out of business.

Although he is the same age as Tibor and Krisztian, Kai has little in common with them. Dressed entirely in Tommy Hilfiger, he tells me about his holidays in Florida, Barcelona and Greece, his routine at the gym and about the high quality of Hungarian amphetamines and the low standard of its ecstasy. A member of Hungary's 600,000-strong German minority, he helps his parents run a textiles factory outside Budapest.

"Everything's going well now because we are much cheaper than the EU countries. But if wages rise too much, the contracts will go elsewhere. I think the EU countries are putting pressure on our government to increase wages because they don't like the competition," he said.

Whatever about EU governments, western firms are hungry for the cheap labour available in Hungary and I was told of a group of Budapest construction workers who fly to Dublin every weekend to work. But not all Hungarians want to leave home and when I tell Tibor about the shortage of trained nursing staff in Ireland, he is not impressed.

"I've heard it is a very beautiful country and I'd like to visit but I don't want to live there. If we are part of Europe, why should we have to leave Hungary to live like Europeans?" he said.