Government plans to buy Dunaferr Steel

Left-wing and liberal pundits harshly criticize the government’s bid for Dunaferr Steel Works after it announced the layoff of 1,500 employees. Critics suggest that renationalization will mean that taxpayers will have to shoulder the company’s losses.

Last week Dunaferr announced that it will dismiss 1,500 workers (20 per cent of its total workforce) in order to reduce running costs. The company was sold to the Ukrainian Donbass holding in 2004, and has been loss-making since 2008. In the past two years its deficit grew to 50 billion Forints. Minister of National Economy Mihály Varga said the government proposed to start negotiations on a takeover. The government also offered to take on two-thirds of Dunaferr’s 150 billion Forint debt as part of a future deal. The Ukrainian top manager said he would prefer the owners not to sell Dunaferr in its present state.

, Ferenc Hajba writes in Népszabadság. The left-wing columnist accuses the Orbán government of intending to restore the interwar Horthy era (see BudaPost), while following in the footsteps of state Socialism in economic policy. Hajba believes that the government’s bid may temporarily help to save 1,500 jobs, but he is skeptical whether the operation of a company with huge losses can or should be sustained in the long run. Nationalization will not make the company profitable, Hajba remarks. He wonders whether the government will now buy all companies which face bankruptcy in order to save jobs.

In Népszava, András Törő fears that the price of the takeover will have to be shouldered by Hungarian taxpayers. If the government wants to cut the losses of the steel company, it will have to lay off some workers sooner or later, Törő notes.

In addition to saving jobs, the government wants to offer perks to the Russian owners of the Dunaferr company, the IDEA Institute speculates. The left-wing liberal think tank speculates that by purchasing Dunaferr from its Ukrainian-Russian owners, the government wants to slash the losses of the company in the hope of brokering favorable deals with Russian companies investing in the Hungarian energy sector.

Tags: economy, jobs, nationalisation, Varga