The worker will also be punished if they report black work, even though legalization is in the state's interest

Eszter's experience highlights the vulnerabilities of workers in Hungary's informal economy, where many are employed without proper contracts. Despite initial agreements for compensation, her employer denied benefits during her pregnancy, reflecting a broader issue of job insecurity. Legal repercussions discourage employees from reporting such irregularities, as they risk facing charges themselves. The hidden economy in Hungary is significant, with estimates suggesting that a quarter of GDP is generated through informal activities. This situation is exacerbated by the reluctance of small businesses to comply with tax regulations, leading to a competitive disadvantage for compliant firms. Efforts to reduce the informal economy include digitalization and simplifying administration, but challenges remain in ensuring fair taxation and adequate public services.