Minister of Innovation and Technology Dr. László Palkovics, a new face in Prime Minister Viktor Orbán’s fourth government, summarized the priorities, goals and immediate actions of Hungary’s newest ministry at an AmCham Hungary luncheon held at the InterContinental Hotel in Budapest on June 22. The event was sponsored by 4iG, Cloudera, and Tungsram.

“We now have our own MIT,” quipped AmCham Hungary President Dr. Farkas Bársony while introducing the featured speaker. “This new ministry addresses Hungary’s need to focus on higher value-added investment to move higher up the value chain.”

Minister Palkovics then took the floor and got straight to the business at hand, packing a great deal of information into a 20-minute presentation entitled “Concepts in Economic Policy, Sustainability and Innovation”.

Global megatrends, global challenges

“The Ministry of Innovation and Technology [MIT] is a new and unconventional ministry. We don’t cover traditional disciplines,” Palkovics began. “When we look at today’s global megatrends, we need to ask ourselves where the world is heading. Traditional means of investment and production have already begun to move from the West to other parts of the world, while changes in mobility and a transformation of the labor market present new challenges and problems. What all this means is that we need to cooperate with each other.”

As modern workplaces become increasingly automated and digitized, questions abound regarding human capacities in a technology-driven future.

The coming age of robotization will, of course, have different effects on different occupations. Retail jobs, for example, are the most common form of employment in today’s economy, but stand a 90% chance of being automated in the near future, according to the U.S. Bureau of Labor Statistics. Teaching and nursing, on the other hand, might emerge as the most common occupations. Automation will likely result in fewer floor managers and supervisors, with many lower-skill jobs will likely be displaced through automation.

“Will human capacities increase or decrease?” Palkovics asked his audience. “My own feeling is that technology and innovation will free capacities for value-added activities, which in turn will accelerate the development of new competencies. Social skills, creativity and higher education will likely matter more than traditional technical skills in the future economy.”

Key demographic challenges that Hungary will need to learn how to face in coming years, according to Palkovics, are increased levels of urbanization and an aging population. At present, roughly one in five Hungarians is aged 60 years or older, he noted. Hungary will also need to find ways to deal with emerging global concerns such as energy, food and water scarcity, the minister warned. 

Palkovics explained that the MIT has developed a civil infrastructure focusing on four main areas:  energy and climate policy; information and communication; transport and construction; and sustainability to meet the anticipated challenges. Efforts within each of these areas are broken down into separate elements of application, control, and infrastructure.   

 

Domestic challenges: added value, increased efficiency

“The weight of nationally-owned companies in value-added industries is low,” Palkovics noted, “and we need targeted development packages, as well as to raise the competencies of SMEs.” Innovation is also high on the list of MIT priorities.

“In terms of innovation policy, we want to achieve 1.8% of spending on R&D by 2020 and to increase the share of pipeline funds,” Palkovics said. “Right now, however, we’re not so good in innovation, ranking just 22nd in the EU, according to the Cumulative Innovation Index. So we’ll need to improve in this aspect to get money from Brussels.”

Three things that the MIT can do to get things moving in the right direction, Palkovics stated, are to “strengthen cooperation between ecosystem actors, focus on specialization and efficient use of resources, and to get good R&D and innovation policies in place.”

Scientific methods

Perhaps anticipating questions about the transfer of a portion of funds in the 2019 draft budget from the Hungarian Academy of Sciences to the new ministry, Palkovics declared the need to focus on sustainable activity and research, reiterating a claim made to the Hungarian media earlier this month that the MIT should have a say in determining areas of scientific research that are “important to the Hungarian public”.

Draft budget details reveal that the MIT will coordinate and distribute nearly HUF 70 billion in R&D funding between higher education institutions (HUF 29.1 bln), Academy of Sciences research institutes (HUF 28.1 bln) and the National Scientific Research Program (HUF 12.7 bln).

Palkovics went on to highlight the development of science parks in six Hungarian cities (Debrecen, Győr, Miskolc, Pécs, Szeged, and Zalaegerszeg) as important centers of innovation for a future society built around broadband communications and “sharing economy” principles.

“Transportation is one of the most important sectors, and while there is a need for improved logistics centers, a sharing economy will become an integral part of Hungary’s public transport network,” Palkovics said. “A unified ticketing system for public transport is one such solution.”

Palkovics noted that Hungary currently ranks sixth in the EU in terms of broadband coverage, and improvement in this domain can help to raise the percentage of adult education in the country, which stands currently at just 3% of adults (compared to 27.6% in Finland).

“Our aim is to reach a figure [for adult education] of 25% by 2030,” Palkovics said, elaborating that the number of people with secondary vocational qualification in Hungary is 15% lower than the OECD average, even as our number of advanced graduate students is 12% higher.”

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Zsófia JUHÁSZ

Zsófia JUHÁSZ

Strategic Operations Manager

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