Hungary’s ministers of finance and technology and innovation had some harsh words about the alleged lack of competence and competitiveness of Hungary’s small businesses at a panel discussion at the 29th Balvanyos Summer University in Baile Tusnad, Romania on July 26.

The summer university dubbed "Tusvanyos" is a major cultural and political event held every year since 1989 in the region of Sekerland, which has a majority ethnic Hungarian population. 

Hungarian Prime Minister Viktor Orban delivers his regular closing speech at the end of the five-day event on July 28. It was in the summer of 2014, only three months after his party’s second supermajority election victory, that he delivered his controversial speech about the illiberal state.

Generally, a casual, laid-back atmosphere surrounds panel discussions at Tusvanyos. Former Romanian President Traian Basescu was the first and last Romanian head of state to attend the event in 2009 when he was invited for Orban's closing speech.

Hungary is on the right path to closing the gap with more developed countries, Finance Minister Mihaly Varga said at this year’s event, highlighting the government measures of recent years that helped to reduce the country's risks and vulnerability. He alluded to the reduction of state debt, the exposure to foreign currency debt and the steady growth path of the economy while exports and wages have increased.

"They don't even have a lousy website"

Hungarian media gave a completely different account of the panel discussion. Whereas state news agency MTI focused on the positive aspects and only touched vaguely on the criticism formulated by the ministers, independent news sites such as Index.hu gave a much more critical account of what was said at the discussion between Varga, Minister for Innovation and Technology Laszlo Palkovics, and Tamas Bernath, CEO of state development bank MFB.

Improvements are still needed in terms of state services and competitiveness, Varga said. There are serious problems at Hungarian SMEs, a Dutch worker produces twice as much value as his Hungarian peer, he was quoted as saying. He also talked of a lack of flagship companies or brands that have gained worldwide recognition.

“We should not delude ourselves into thinking that Hungarian SMEs will able to compete against large multinationals in the manufacturing sector, but in the service sector, it is a possible scenario. Whereas in Austria, one out five employees go on training, this ratio is one out ten in Hungary,” he added.

He also criticised economic policy that benefits from a weak currency and low wages. These measures can help temporarily, “but when you go out to the sun, they do not matter,” he was quoted as saying.

He also lashed out at the lack of digital literacy. Many smaller companies do not even have a “lousy website”, Varga said. 

Palkovics did not shy from criticism either. The minister for technology and investment is now responsible for state innovation after the parliament approved legislation to move state funding for R&D activities at the Hungarian Academy of Sciences (MTA) from the academy's budget to the budget of the ministry. The decision sparked debates on the possible effect of centralisation of funding and the future of academic research.

Palkovics stressed that a lack of innovation capabilities is a general phenomenon especially with Hungarian firms, which are “defenceless” if they are making products from the ideas of others.

The lack of language skills is also a problem. MFB’s CEO proposed that the English language should be compulsory at all elementary schools.