By Krisztina Than
ROZSALY, Hungary (Reuters) - Laszlo Jaroka herds swine for a living in eastern Hungary, at the furthest edge of the European Union - employed by his village under a unique scheme to help struggling locals make ends meet.
Rozsaly, near the border with Romania and Ukraine in one of the country's poorest regions, pays local workers to grow crops and raise livestock to help the village feed itself and ease the poverty that has affected it for generations.
Last year, it was also among the first places in which the Hungarian government introduced its new public works scheme, which aims to help hundreds of thousands of mostly unskilled people back into the labor market.
Jaroka, 46, looks after the pigs, and the local government slaps a little extra on his public works paycheck.
His family lives on a total monthly income of 80,000 forints ($370). That's enough to make ends meet, although educating his two children is still tough, Jaroka says.
Officially, unemployment in the region runs at about 16 percent but the reality is much worse, with many households subsisting on welfare and income from seasonal farm work or uncertain jobs in the grey economy.
Investors and employers have traditionally ignored the region, which is 330 kilometers east of Budapest but feels decades behind. Just a few streets from Mayor Zoltan Sztolyka's office, at the end of a dirt road, many local Roma live in houses without basic amenities like running water.
Sztolyka says he can employ 85 people under the public works scheme out of 128 villagers currently registered as unemployed.
Many of them work in the fields to help make the village self-sufficient in food, a long-standing local goal.
When state farm cooperatives were dissolved in the 1990s following the collapse of communism, the municipality kept some of the farmland on which now it grows crops and vegetables. It also has farm machinery and a herd of swine, which it sends to its own slaughterhouse.
Using these precious resources, the village provides free lunches at the local school and nursery, where most of the children come from deprived families, and meals for the elderly at a daily cost of less than half a dollar.
It also operates a "social shop" offering basic foodstuffs cheaply and through which local farmers can sell their produce.
The scheme could be successfully copied by other villages provided they have sufficient land, Sztolyka said.
"In villages which own a plot only the size of their cemetery this model won't work," he says, adding that in time he would like the village to have its own mill and bakery.
The public works scheme also offers jobs digging ditches, maintaining roads, logging or doing traditional farm work for a net wage of 47,000 forints a month. Skilled workers earn slightly higher wages.
The conditions are strict: those who refuse to participate or are fired lose eligibility for state aid.
Hungary's conservative government plans to spend 132 billion forints to employ 206,000 people this year in mostly menial jobs, focusing on the least developed regions, with the aim of easing their reliance on welfare payments.
The government, which is hoping to start talks with the International Monetary Fund and EU for a loan deal to keep open Hungary's access to international markets and avert a financial crisis, treats the public works scheme as a priority.
Most of those who take part are unskilled, and many are from the Roma minority of about 500,000 to 700,000 people who suffer from discrimination in the labor market in Hungary as in most other countries in emerging Europe.
Jobs under the program are mostly temporary, available only for a few months at a time.
"This public work program would be good if it was continuous, not for limited periods, because then people would have a decent annual income," Jaroka says.
"A family otherwise gets 22,800 forints (a month) as social aid ... that is not enough even to pay the bills, and then what do they eat? That is the question."
The scheme has other critics.
"This public works program will not boost (market) demand for unskilled workers ... It can improve employment statistically but at the same time it tries to discipline people," said Balazs Kremer, a professor of sociology, referring to the loss of benefits for non-participants.
Interior Minister Sandor Pinter, whose ministry is in charge of the scheme, told a university forum last week that the program was "a huge experiment" that would hopefully lead many long-term unemployed back into work.
He said 188,000 people had already been employed, with more jobs to come when the weather allows agricultural work again.
"Its impacts are multifold: first of all sociological," Pinter said. "If people in a family did not work for three generations then the fourth generation will only live on aid, won't even know what work is.
"It also has a significant impact on public safety: while they work, they will not steal, that's for sure."
Mayor Sztolyka praises the public work scheme, saying it helped some tractor drivers in Rozsaly to find employment in the private sector.
But even government programs and Rozsaly's own community enterprises face a huge challenge to undo the dire poverty that has gripped the region for decades.
During the cold snap that hit Hungary earlier this month, Roma villagers had to build a fire around the public hose to get water.
"Public work is there for one to three months and then that's it," said Andras Lakatos, 28, who has two children and whose job ended on December 30.
He is now waiting to be placed in the program again. "I would take any, any kind of job." ($1 = 215.2752 Hungarian forints)
(Reporting by Krisztina Than. Editing by Catherine Evans)