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A good start is half way to success
Measures aimed at labour market integration
of young people in Hungary
1
TABLE OF CONTENTS
Foreword
I. What is the situation? – The youth in the labour market in light of international data
II. From school to work – The situation of young people in education and training
5
6
13
III. What and for how much?
– The employment structure and earnings situation of the youth population
14
IV. What will the future bring? – Labour market prospects of young career starters
based on “Short-Term Labour Market Outlook” data for 2013
17
V. Stay or go? – Youth migration potential and its characteristics
19
VI. Where there is a need… – The situation of young jobseekers
on the basis of data of the National Employment Service
VII. … there is help – The young people at the focus of government strategies
22
26
VIII. Career Start – The Government’s agenda
to facilitate the employment of career starters in Hungary
27
1. Creating a tax system that stimulates youth employment
27
2. Employment programmes run by NGOs and non-profit organisations
to help young people gain work experience
29
3. Supporting innovative employment programmes
aimed at labour market integration of young people
30
4. VET reform and the launch of a new traineeship programme
31
5. Developing the system of career guidance
33
6. Stimulating youth entrepreneurship
34
7. Facilitating youth employment through complex labour market
programmes implemented by labour centres
35
8. Housing allowance
37
9. “First job guaranteed” central labour market programme
39
3
FOREWORD
The labour market situation of young people has become a high-priority issue
both in Hungary and the European Union in the post-crisis years. Millions of
young persons in Europe are faced by the problem of unemployment. Tens of
thousands of young Hungarians struggle with difficulties in entering
employment and starting their careers.
The phenomenon has long been at the forefront of common European
thinking: one of the key priorities during the Hungarian presidency in 2011
was the improvement of young people’s employability, which has remained on
the agendas of all subsequent presidencies ever since. The European
Commission has taken a number of initiatives to draw attention to the gravity
of the problem urging further measures by the Member States: the “Youth On
The Move” and “Youth Opportunities” initiatives and the “Youth Employment Package” issued on 5 December
2012 have been designed to offer a wider range of tools to promote Member States’ programmes and interventions
serving to support young persons’ entry into secure employment. Besides providing guidance to Member States by
summarising experience of former programmes and supporting the process of mutual learning, these documents
– through Community-level initiatives – directly facilitate students’ mobility, fi nding a job abroad, developing a
better match between labour supply and demand, as well as improving the transparency of the European labour
market.
Concerning the labour market situation of the youth in Hungary, unemployment in the post-crisis years
assumed alarming levels with close to 28% in the 2nd quarter of 2012. The reasons behind this phenomenon are
diverse, raising the levels of employment and education in parallel calls for holistic and integrated solutions. In
2012, the Government of Hungary adopted a package of measures aimed to integrate young people in the labour
market which combines conventional policy interventions with innovative – as yet untested – solutions.
Common goals of these programmes are the improvement of the educational level of young people, facilitating
their transition from education to the labour market and enabling them to get on in life by offering them att ractive
and quality jobs and career opportunities in their home country.
Nowadays many articles have been published in the press about how today’s youth see worsening prospects to
fi nd employment at home and how a growing number of them seek to secure a livelihood abroad. However,
statistics do not reflect such a dramatic picture of the Hungarian labour market: the migration potential and the
frequency of entering employment abroad are not strikingly high compared to neighbouring countries. Work
experience obtained in a foreign country and career management in a global economy ensure a significant
competitive advantage that can also be exploited by the national economy by making use of the knowledge of
employees returning home. The future of Europe is in the hands of its young people. We must do whatever it takes
to ensure young people also stand to gain in their own country, everyone has a chance to build a career, and
working abroad is not a constraint but an opportunity.
Th is publication gives a comprehensive overview of the Hungarian labour market situation and how it affects
young people and also of the solutions and targeted measures the Government wishes to apply in order to promote
youth employment. The outcomes of our solutions can be evaluated against the forthcoming period’s statistics and
complemented with applying further European good practices so that, rather than becoming losers of the crisis,
the younger generations actively engage in the process of recovery both in Hungary and across Europe.
Dr. Sándor Czomba
Minister of State for Employment Policy
5
6
I. WHAT IS THE SITUATION?
– The youth in the labour market
in light of international data
The youth constitute one of the groups most severely affl icted by the economic crisis and as such
need priority attention. There are over fi ve million young unemployed persons – aged 15 to 24 years
– in the European Union in 2012, i.e. roughly one million more than in 2008, before the crisis. Youth
unemployment at EU level exceeds 20% and is even higher than 30% in some countries (Greece,
Spain, Ireland, Portugal, Italy, Latvia and Slovakia), while there are only three Member States where
it is below 10% (Austria, Germany and the Netherlands). Challenges arising from the labour market
situation of young people vary by Member State but in most countries problems are posed by the lack
of necessary skills and work experience, the high number of school dropouts, limited training opportunities, ineffective labour market programmes, and the overrepresentation of young people in less
stable forms of employment (fi xed-term employment and part-time work).
In Hungary, the population of 15-24-year-olds was 1.2 million as of 1 January 2012, which was
12.1% of the overall population. The youth population has been dropping in number and percentage
over the years, its rate of decline being much higher than in case of the total population. In 2012, the
number of 15-24-year-old population was down by 2% from the previous year, whereas the overall
population declined by 0.2%. As the years of age fall so does the size of this population and with each
year of age a 0.2-0.3% of excess of male population can be observed.
Figure 1
Distribution of the Hungarian population between age 15–24,
January 1, 2012.
Age groups
age 24
age 23
age 22
age 21
age 20
age 19
age 18
age 17
age 16
age 15
80 000
60 000
40 000
Men
SOURCE: DEMO, Eurostat
20 000
0
Women
20 000
40 000
Men surplus
60 000
80 000
Ever since the early 1990s, in the wake of economic and social transformation, youth participation
in the labour market has been on a near steady decline in Hungary. One of its explanatory factors is
educational expansion and the extended time young people spend in education. In 2002, 28.7% of
young persons aged 20 years engaged in higher education studies (EU27: 32%). Th at percentage grew
at an enormous rate to 38.5% by 2010 (EU: 36.9%).
Q2 data of the Labour Force Survey 2012 showed that 75.4% of those aged 15-24 years were inactive, which is partly explained by extended participation in education. The proportion of active young
persons in Hungary fi rst fell as a consequence of the crisis and then, similarly to the overall population, slightly grew in 2010, followed by another slight decline in 2011. In Q2 2012, the participation
rate stood at 24.6%, far below the same rate measured in the EU (EU27: 42.2%).
Figure 2
Activity rate of population age 15–24 in EU-27
%
50,0
45,0
40,0
35,0
30,0
25,0
20,0
2004
2005
2006
2007
EU-27
2008
2009
2010
2011
2012.
Q2
Hungary
Source: LFS, Eurostat
The youth were among the losers in the labour market situation emerged in the aftermath of the
crisis. From a labour market aspect, young people are far more vulnerable and their situation is rather
uncertain as they have multiple disadvantages compared to the 25-54-year-old population in best
working age. Such disadvantages may include the lack of work experience, lower than necessary
qualifications, or a role played in generating income for the family.
As a consequence of low and declining labour force participation, the youth employment rate also
remains low in international comparison and lags far below not only the EU average but even below
the same indicator measured in the 10 Member States joined to the EU together with Hungary. In
recent years, according to domestic indicators, Hungary was already one of the lowest-ranking countries among the EU27 Member States regarding youth employment: following a steady decline, the
employment rate among 15-24-year-olds was 17.8% in Q2 2012, which was below the Community
average significantly, by 15%.
7
8
Figure 3
Employment rate of population between age 15–24 and changes in Q2 2012
%
%-point
6,0
4,0
2,0
0,0
-2,0
-4,0
-6,0
-8,0
-10,0
-12,0
-14,0
-16,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
Decrease compared to the same period of the previous year
Employment rate, %
FI
SE
UK
PL
PT
RO
SI
SK
LV
LT
LU
HU
M
T
N
L
AT
EE
IE
G
R
ES
FR
IT
CY
DE
EU
-2
7
BE
BG
CZ
DK
0,0
Increase compared to the same period of the previous year
SOURCE: LFS, Eurostat
How typical working during studies is in a given country also significantly influences the employment rate. Th at is not an established tradition in Hungary, where very few people work during studies,
while in some other countries a substantial proportion of students work besides pursuing studies or as
part of them.
Discrepancies in youth employment rates between different European countries mostly reflect differences in educational systems. Differences are even more striking regarding the 15-19-year-old age
group, as in countries applying a dual training system a high percentage of secondary school students
work besides their studies. (E.g. the employment rate in this age group is 50% in Germany and the
Netherlands, 40% in Austria, while less than 3% in Hungary.) Th is implies that young people in these
countries are already much closer to the “real” labour market at an age as early as that.
The figure below also shows very well that in the overwhelming majority of European Union Member States only a few percent of 15-24-year-olds work besides their studies, while there are countries
where their proportion exceeds 20% or even 30%, with the Netherlands and Denmark having the
highest values (43.3% and 37.8%, respectively).
Figure 4
%
Participation of young people in formal education and employment
in the European Union Member States, 2011
43,3
40,0
37,8
30,0
23,7 24,3
18,8 19,5
20,0
10,0
0
1,4
1,4
2,0
2,0 2,0
2,8 2,9
3,2
4,3
4,5 4,6 5,8 6,2
7,4 8,2 8,3
8,6 9,1 9,8
11,7 12,8
14,4
IT
G
R
CZ
BG
CY
BE
ES
PT
LU
LT
M
T
PL
LV
FR
IE
EE
EU
-2
7
SE
UK
SI
FI
AT
DE
DK
N
L
HU
SK
RO
-10,0
-20,0
Participation of young people in formal education and employment
SOURCE: LFS, Eurostat
%-point
6,0
5,0
4,0
3,0
2,0
1,0
0
-1,0
-2,0
-3,0
Change compared to the previous year
The acquired level of education greatly determines the labour market prospects of the youth. Typically, as the educational level grows so do the chances of employment while the unemployment level
also falls. In Q2 2012, the employment rate among higher education and secondary school graduates
was 56.3% and 28.6%, respectively. By contrast, only a mere 8.8% of the 15-24-year old population
with elementary schooling was present in the labour market with an employment rate of 4.9% and an
unemployment rate of 44.6%.
Figure 5
Employment rate of population between age 15–24 years
by educational attainment in Q2 2012
%
60,0
56,3
56,0
50,0
44,4
40,0
28,6
30,0
19,3
20,0
10,0
4,9
0,0
Pre-primary, primary
and lower secondary education
Upper secondary
and post-secondary
non-tertiary education
EU-27
First and second stage
of tertiary education
Hungary
SOURCE: LFS, Eurostat
While in Hungary the level of employment among people with elementary and secondary education significantly lags below the EU average, this difference disappears in the case of young graduates.
However, it should not be overlooked that young people often have to enter employment below their
level of education displacing those whose education level is lower but sufficient to fi ll the same job and
thus weakening their employment prospects.
An employee status is more typical of young persons in employment – in 2010, 88% of the
15-64-year-old population and 95% of 15-29-years-olds had this status. A quarter of young employees
worked under fi xed-term employment contracts but their proportion (13.5%) among those aged
25-29 years was above the average (9.6%). The percentage of self-employed young persons is rather
low (3,3%); data suggest that Hungary only falls slightly below the EU level (among older persons
there is a bigger difference).
Table 1
Share of self employment in total employment, % (2012. Q2)
From 15 to 24 years
From 20 to 60 years
EU 27
4,5
14,8
Hungary
3,3
10,9
SOURCE: LFS, Eurostat
9
10
Although in Hungary working in part-time employment has recently become more widespread,
Hungarian employers still tend to choose this solution in hiring young persons less frequently in
comparison with the EU. Part-time employees make up 9.3% of the 15-24-year-old population compared to the EU average of 32%. Differences between countries are significant with 76% in the Netherlands, 66% in Denmark and 50% in both Sweden and Ireland. In our country, it is women, lowskilled people and those in the youngest age bracket who most frequently work part-time.
The least painful way employers responded to economic difficulties was to stop or defer recruitment, which affected the youth to a greater degree. Furthermore, a greater percentage of them were
affl icted by layoff s, since they had fi lled insecure jobs which employers found easier to cut. Thus, youth
unemployment assumed increasing proportions and has by now eroded improving pre-crisis tendencies.
In 2008, the domestic youth unemployment rate approached 20% and then, after stagnation in the
preceding 4-5 years, it began to climb steadily from 2009 due to the global crisis. Compared to unemployment among the overall population, youth unemployment showed a faster rate of deterioration.
In Q2 2012, youth unemployment (among 15-29-year-olds) stood at 27.9%, which exceeded the EU
average (EU27: 22.4%) by 5.5 percentage points. Among the 27 Member States of the European
Union, Hungary had the 9th highest unemployment rate.
Unemployment is high primarily among low-skilled people, a rate of 44.6% of those with basic
education being significantly worse than the EU average (30.7%), whereas unemployment (15.6%)
measured among young graduates falls below the EU average (16.6%).
Figure 6
Unemployment rate of population between age 15–24 years
%
28,0
26,0
24,0
22,0
20,0
18,0
16,0
14,0
12,0
10,0
2002
2003
2004
2005
2006
EU-27
2007
2008
2009
2010
2011 2012. Q2
Hungary
SOURCE: LFS, Eurostat
It is worth examining the unemployment rate by age groups. Up until Q2 2012, rising unemployment can be seen in each age group observed (15-24-year, 25-29-year and 30-34-year brackets) and it
also indicates an intensifying trend in absolute terms. In case of 15-24-year-olds the rate is much
higher (27.9%) than among the 25-29-year-olds (13.8%) and 30-34-year-olds. Th e reason is that the
overwhelming part of this age group has not yet entered the labour market and so the number of those
employed determining the denominator of the unemployment rate remains rather low.
Besides the unemployment rate, another “acknowledged” indicator of the labour market situation
of young people is the share of the unemployed among the population. Th is indicator measures the
percentage of unemployed people in a particular age group and thus does not depend on the number
of economically active persons or of those employed who determine it in a greater extent. The analysis
of this data among 15-24-year-olds shows a rate of 6.9% in Hungary (Q2 2012 figure), which is better
than the EU average (9.4%). In other words, our unfavourable position regarding the rate of unemployment – compared to the EU average – is not that unfavourable when the number of unemployed
is compared to the overall number of population. The underlying observation is that while 93.5% of
the 15-19-year-olds was still in education, the number of students gradually decreased in the higher
age groups , with barely over 10% of 25-29-year-olds present in the educational system in 2011.
Table 2
Participation of young people in education and training in Hungary, %
Age group
2010
2011
15–19
93,5
93,5
20–24
50,1
49,2
25–29
11,5
11,6
SOURCE: Eurostat
Conventional indicators – like the rates of unemployment and employment – only have limited value
in assessing the role of the young people in the labour market, since they only give a picture of those who
are already in employment or are actively seeking jobs. However, the percentage of young people in the
educational system is extremely high in both public and adult education. Moreover, the majority of
young people leaving the education system become inactive for shorter or longer periods, since they see
the labour market as uncertain and they consider possible further studies. The above statistical problem
is designed to be handled by the NEET rate1, which shows the proportion of young people neither in
employment nor in education or training. Those “not in employment” include not only persons wishing
to work but excluded from the labour market for some reason but also persons who do not want to work.
Figure 7
Young people aged 15–24 years not in employment
and not in any education and training
%
14,0
13,5
13,4
13,0
12,4
12,5
12,0
11,5
11,0
13,3
12,9
12,8
EU-27
11,5
11,3
10,9
12,4
Hungary
10,9
10,5
10,0
2007
2008
2009
2010
2011
SOURCE: LFS, Eurostat
1
NEET = Young people not in employment and not in any education and training.
11
12
Based on the NEET rate, Hungary with a rate of 13.3% is ranked in the middle among the 27 Member States of the European Union, which is over the EU27 average by 0.4 percentage points. The same
rate was below 7% in four of the 27 Member States (Denmark, the Netherlands, Austria and Luxemburg) and above 18% in five Member States (Ireland, Latvia, Bulgaria, Spain and Italy).
Figure 8
Young people aged 15–24 not in education, employment or training in the EU
%
20,0
15,0
10,0
5,0
2011
IT
BG
LV
G
R
RO
IE
ES
CY
UK
FR
LT
PT
EU
-2
7
HU
SK
EE
SE
CZ
FI
M
T
PL
BE
AT
SI
DE
N
L
LU
DK
0,0
2010
Source: LFS, Eurostat
If we examine the NEET rate by gender the Member States of the European Union show a mixed
picture. In Hungary, the difference between the two genders is 1.7 percentage points in total, i.e. there
are near equal numbers of men and women among 15-24-year-olds who neither work nor study. The
widest gap between the genders can be observed in Greece and Romania, where the difference is close
to 5 percentage points between men and women.
Figure 9
Young people aged 15–24 years not in employment and not in any education
and training by educational attainment level
100%
80%
60%
40%
20%
Upper secondary and post-secondary non-tertiary
and first and second stage of tertiary education (ISCED 0-2)
SOURCE: LFS, Eurostat
DE
N
L
PT
ES
M
T
DK
EU
-2
7
RO
BE
AT
FI
IT
FR
UK
IE
LU
BG
HU
EE
LV
SI
PL
CZ
G
R
LT
SE
SK
CY
0%
Pre-primary, primary
and lower secondary education (ISCED 3-6)
There are also typical differences in the NEET rates between Member States in terms of qualifications. In the 15-24-year-old NEET group the rate of low skilled people is the highest (over 60%) in
Spain and Portugal – while in Cyprus, Slovakia and Poland low-skilled persons represent 20%. The
rate of 45.9% in Hungary is somewhat below the EU average (47.7%), but in evaluating this data it
should be noted that there are great differences between individual Member States.
II. FROM SCHOOL TO WORK
– The situation of young people
in education and training
Drop-out in vocational education and training
In Hungary, greater drop-out rates than the average have been observed in vocational education and
training (VET) for decades. Apart from taking measures to improve the quality of education, the
Government, in cooperation with the Hungarian Chamber of Commerce and Industry, also aims to
reduce the drop-out rate by transforming the structure and contents of VET.
Numerous researches have demonstrated that there are a great number of young people in Hungary
who leave public education too early, without acquiring the knowledge and qualifications necessary
for entering into employment. Surveys and analyses have revealed that the number of students failing
or unfit for assessment due to non-attendance and therefore dropping out of school is the highest in
the second semester of Year 9 in vocational schools, while there are also many who fail at the end of
Year 9 and do not enter Year 10. Although those dropping out of Year 10 in vocational schools are less
numerous, they also make up a non-negligible proportion. The total number of 14-18-year-old dropouts amounts to approximately 30 thousand persons.
Among the underlying causes of drop-out and failure it is needed to be mentioned that nowadays 80%
of vocational school students are to be considered to be vulnerable or multiple disadvantages in respect
of education. Another important observation is that, due to protracted general theoretical education, the
relatively high rate of early school-leaving is caused by students’ unwillingness to spend five years in
school even to acquire vocational qualifications. The monitoring held by vocational schools to identify
the causes of failure has also revealed that an important factor is the lack of teaching methods and procedures that increase motivation for studying while re-establishing teacher-student relationships.
A number of measures have been taken in the recent years with the aim to prevent drop-out, including the adoption of a new VET Act introducing, and serving the roll-out of, a dual VET system, which
provides that apprenticeship contracts can be concluded as early as in Year 9, or the introduction of a
traineeship programme discussed in a subsequent chapter of this publication.
Experience from graduate career tracking
A central graduate career tracking system in Hungary was launched in 2008. The results of career
tracking surveys have been published in, among other things, a series of publications entitled “Frissdiplomások” (New Graduates). The most recent publications present the fi ndings of research carried
out in 2011, whereby 31 higher education institutions collected data about their graduates. Research
has revealed that young persons concerned defi ne three years after graduation as a transitional period
themselves, during which they regard their attempts to enter the labour market as an effort to fi nd their
13
14
place. In interpreting the labour market situation of new graduates, it is essential to analyse the duration and continuity of the transitional period and the overlap of the two areas (education and work).
Over half of responding graduates already tested themselves in the labour market prior to obtaining
their degrees and 60% of them reported having obtained work experience related to their studies during the years of higher education studies. Clearly, these rates are lower in the case of students in fulltime courses. According to the Q4 supplementary module of the Labour Market Survey 2010 focusing
on the labour market situation of young people, 20% of 15-29-year-old full-time students worked during their studies. By the time of obtaining their fi nal pre-degree certificates, two fi ft hs of graduates had
already found employment but the composition effect greatly influenced this figure as this rate was very
high (85%) among non-full-time students while only 16% of full-time students had full-time jobs. Some
of those obtaining their pre-degree certificates do not enter the labour market; slightly more than one
fi ft h of those graduated in 2010 engage in further studies, mostly in master’s programmes. From the
aspect of transition from education to work an important phenomenon is that somewhat over 30% of
pre-degree fi nal certificate-holders do not graduate immediately upon gett ing their pre-degree certificates. The most important reason for this deferral is the lack of an intermediate-level foreign language
examination certificate, which is a precondition of higher education graduation in Hungary.
As it is seen from the analysis of employment rates by education level, at present it is still worth
obtaining a higher education degree in Hungary, which is also confi rmed by graduate career tracking
research. A degree means not only a defi nitely higher income but actually better employment prospects. After gett ing their pre-degree certificates, one-third of young jobseekers found employment
within a month and the average time spent seeking jobs was 3.4 months.
It is an important sign from the aspect of labour demand, that medical and health degree holders were
the quickest to find jobs and those with agricultural degrees were the slowest. The answers of graduates
also revealed that one fi fth of jobs found by those successfully entering employment was not related to their
field of studies. The same proportion was found by the previously mentioned supplementary module of the
Labour Market Survey focussing on the labour market situation of young people: the responses suggest
that one fi fth of young graduates found jobs which did not meet exactly (8,1%) or at all (10,6%) their level
or field of education, which tendency was primarily characteristic of persons graduating from artistic field
of studies. These results clearly reflect the structural problems of higher educational expansion and its
displacement effect – young people get jobs that could also be fi lled with other/lower qualifications.
III. WHAT AND FOR HOW MUCH?
– The employment structure
and earnings situation of the youth population
In 2011, under-25s of those within the employed population made up 4% at national economy level. That
rate was higher in the private sector (5%) and lower in the public sector (3%). That is, the private sector
hires more people aged under 25 than the public sector, the reason being in part that in the public sector
there are more degree holders who enter employment at a later stage, and in part that there are two areas
within the public sector – education and health – with a high number of employees which “absorb” fewer
young people.
Analysing by economic sector the proportions of individual age groups among the employed population, it can be seen that most young people have entered employment in administrative and service
support activities (11%), while the fewest young people are to be found among educational and health
employees (1% and 2%, respectively), probably due to layoffs and institutional closings as well as poor
earnings prospects in these areas. The presence of young employees in catering (8%); manufacturing
(6%); and arts and entertainment (8%) is higher than average. However, in industries with high earnings prospects (e.g. fi nance and energy), the proportion of young people falls below the average (3%)
both in the private sector and in the national economy as a whole.
Figure 10
Share of employees under 25 years by economic sector according to the data of the
"Structure of Earnings" Survey in 2011
12%
10%
8%
6%
4%
2%
0%
11%
8%
4%
4%
Education
Administrative and
support service activities
Total: 4%
5%
2%
Other services
4%
Professional, scientific
and technical activities
Information
and communication
Transportation
and storage
4%
1%
Accommodation and
Food service activities
Construction
Wholesale and retail
trade, repair of motor
vehicles and motorcycles
3%
Arts, entertainment
and recreation
4%
2%
Human health and
social work activities
5%
Real estate activities*
5%
Public administration
and defence, compulsory
social security
Ratio of the under 25 years
4%
Water supply,
sewerage,
waste management
Manufacturing
3%
Electricity, gas, steam,
air-conditioning supply
Mining and quarrying
Agriculture,
forestry and fishing
4%
Financial and
insurance activities
6%
4%
SOURCE: The survey of individual wages and earning in 2011
18-29-year-old young persons hired full-time earned HUF 174 900 per month on average in 2011,
which made up 81% of the average salary (HUF 214 500) of the entire employed population at national
economy level. Young persons working in the public sector were paid 4% less and 1% more in the private
sector compared to the national economy average. Lower public sector salaries and higher private sector
earnings are consistent with the processes already described in respect of the entire employed population, though among young people the advantage of the private sector slightly lags below the rate (2%)
measured for the entire employed population. Th is indicates that the earnings advantage of young people in the private sector is slightly less, compared to older age groups. After 2009 the public sector’s
earnings disadvantage had emerged at a time when 13th month pay, bonuses and other types of optional
non-salary compensation were sharply cut.
Figure 11
Monthly gross earnings of young employees
(18–29 years) between 2002–2011 (HUF/pers./month)
HUF/persons/month
180 000
170 000
160 000
150 000
140 000
130 000
120 000
110 000
100 000
90 000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Young employees,
total economy
Young employees,
business sector
Young employees,
budgetary sector
SOURCE: The survey of individual wages and earning in 2011
15
16
Young people’s earnings between 2002 and 2011 reflect processes similar to those observed among
the entire employed population. The salary growth taking place between 2002 and 2008 slowed down
due to the crisis in 2008. However, the growth rate of young persons’ earnings between 2008 and 2010
was slower than among the entire employed population, which led to a slight widening of the gap
between the two earnings averages.
Figure 12
Monthly gross earnings of young employees
(18–29 years) and total employees, 2002–2011
HUF/person/month
230 000
210 000
190 000
170 000
150 000
130 000
110 000
90 000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Total employees, total economy
Young employees, total economy
SOURCE: The survey of individual wages and earning in 2011
Similarly to the national economy average, 18-29-year-old young people also made more money in the
energy, fi nance, ICT, science and engineering sectors, far above the average. Among the youth, the earnings advantage of high-profi le industries is slightly over one and a half times as high as in other sectors,
while the earnings advantage measured among the entire employed population is over twice that. Thus,
the advantage of well paid sectors among young workers is not yet as significant as in older age groups.
Figure 13
Monthly gross earnings of young employees
(18–29 years) by sector, 2011
Accommodation
and Food service activities
Construction
Other services
Education
Administrative and
support service activities
Wholesale and retail trade,
repair of motor vehicles
and motorcycles
Arts, entertainment and recreation
Manufacturing
Water supply, sewerage,
waste management
and remediation
Transportation and storage
Public administration
and defence, compulsory
social security
Mining and quarrying
Professional, scientific
and technical activities
Information and
communication
Financial and
insurance activities
Electricity, gas, steam
and air-conditioning supply
Source: The survey of individual wages and earning in 2011
Agriculture, forestry and fishing
Monthly gross earnings in 2011
Average
Human health
and social work activities
300 000
250 000
200 000
150 000
100 000
50 000
0
Real estate activities*
HUF/person/month
Among young persons under age 30, the earnings gap between women and men is very narrow and
has even dropped from 5% to 2% since 2002. Among employees aged under 20 years women earn 1%
more than men, probably because in this group men employed without skills and qualifications may
outnumber women. However, from age 31 the gender salary gap discernibly widens in favour of men,
presumably because in their early 30s more men get into management positions and more women
decide to enter motherhood.
Figure 14
Gross monthly earnings of young employees
(18–29 years) by sex
HUF/persons/month
180 000
170 000
160 000
150 000
140 000
130 000
120 000
110 000
100 000
90 000
80 000
2002
2003
2004
2005
2006
Women
2007
2008
2009
2010
2011
Men
SOURCE: The survey of individual wages and earning in 2011
As to regional differences, there are major disparities in youth earnings in Hungary. In 2011,
18-29-year-olds made 60% of earnings paid in comparison to those living in Budapest. Salaries paid to
young people in Central and Western Hungary were considered decent, while in the northern and
eastern counties much more modest earnings were offered. In the ranking order of the best-paying
and worst-paying counties no striking differences are observed between earnings measured among
young people and the entire employed population.
IV. WHAT WILL THE FUTURE BRING?
– Labour market prospects
of young career starters based on
“Short-Term Labour Market Outlook” data for 2013
The “Short-Term Labour Market Outlook” is based on the analysis of responses from over seven
thousand economic entities. The businesses covered by the survey employed 646.6 thousand people
in total at the time of data collection (in September–October 2012.), representing 16.4% of the
national economy. For the purposes of the outlook survey, a career starter is whoever completed his/
her education within the school-based system less than two and a half years before the time of the data
collection stage of the survey (September and October of the given year).
17
18
According to the 2013 forecast, 14.7% of businesses are planning to hire young career starters,
which is 0.5% point down from the previous year. Th is drop is observed in all staffi ng-level categories
of businesses. The number of businesses intending to employ career starters in 2013 will also fall
compared to the forecast for 2012, but in certain areas there are signs of growing demand for them.
These include fi nancial and business services, other services as well as catering, and electricity and
water utilities.
A relevant part of demand for career starters is in those occupations where this target group has the
best chances of entering employment: predictably, in 2013, shop assistant, miscellaneous product
assembly worker, mechanical engineer, meat-processing worker and locksmith can be the most
sought-after occupations in the labour market. Among professions requiring a higher education
degree, engineers, analytical economists and general medical practitioners can be highlighted as
most in demand.
Table 3
TOP 10 of the occupations
which are wanted to fill in by the school-leavers at the end of 2013
1.
Shop assistant
2.
Assembler of products
3.
Mechanical engineer
4.
Butcher
5.
Locksmith
6.
Machining worker
7.
Shop cashier, ticket clerk
8.
Electrical engineer (electronics engineer)
9.
Electronics (light current) engineering technician
10.
Agricultural and industrial machinery (engine) mechanic and repairer
SOURCE: Short term labour market forecast of 2013
In addition to forecasts, the “Short-Term Labour Market Outlook” has long contained data on
topical issues and subjects that, despite not primarily serving projection purposes, bear relevance
to the labour market. The survey performed in the autumn of 2012 assessed the importance of
skills and knowledge required from employees and satisfaction with them. The respondents had to
rate on a scale of one to fi ve how important they considered employees’ particular skills and
knowledge and how satisfied they were with them. The businesses involved in the survey had to
rate the importance of each factor according to their relevance to career starters and non-careerstarters.
Table 4
Importance of skills and knowledge
in the career starters’ case, and it with this contentedness
Importance of skills
and knowledge
(average of the answers
on a scale of one to five)
Contentedness with the
skill of knowledge
(average of the answers
on a scale of one to five)
Theoretical professional skills
4,2
3,7
Practical professional skills
3,5
3,2
Technical skills, skills in using IT equipment
4,5
4,3
Ability to learn, self-training
4,6
4,2
Analytical and organising skills
4,1
3,7
Reasoning in writing
4,2
3,9
Reasoning in a foreign language
4,1
3,7
Organisational skills
3,8
3,6
Precise working
4,7
3,9
Ability to take large workload
4,6
4,0
Ability to work self-sufficiently
4,4
3,7
Ability to work effectively within a team
4,6
4,0
Networking ability communication skills
4,4
4,0
Numerical skills
4,3
4,1
Logical and spatial skills
4,1
3,9
SOURCE: Short term labour market forecast of 2013
From available data it can be concluded that in the case of career starters businesses att ach the
greatest importance to precision and endurance, combined with the employee’s willingness to engage
in continued self-study, cooperation with co-workers, and ability to use technical equipment. Less
relevant for businesses is having an understanding of social issues or an entrepreneurial spirit.
V. STAY OR GO?
– Youth migration potential and its characteristics
Following our accession to the European Union and the expiry of protective measures taken by
certain Member States, employees from Central and Eastern Europe (CEE) including Hungarians
gained access to license-free employment opportunities across Europe, which significantly added to
workforce mobility. Extension of the European Union’s fundamental freedom, namely the free
movement of workers, has led to an increase in the number of individual employees (including both
people relocating to another country and frontier workers), while the free movement of services has
opened up a significant market where orders are met by businesses registered in another Member
State via posting their employees who can thus perform work in the same manner without work
permit.
19
20
Based on different statistical data sources, the proportion of Hungarian citizens working in the
territory of the European Union for shorter or longer periods was estimated at 2% in 2010, hence the
rate of labour out-migration reached roughly 5% of the population. By comparison, the mobility rate
of Romanian workers stands at 12.5% and that of Lithuanians at 9%.
Figure 15
The mobility rate of 10 new member states according to latest data
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
RO
LT
BG
LV
PL
SK
EE
HU
SI
CZ
Distribution according to the residental time in the host country
Less than 3 years
Between 3 and 6 years
Longer than 6 years
SOURCE: Recent trends in intra-EU mobility – A focus on CEE Member States – DG EMPL,
Advisory Committee on free movement of workers, 30th of October 2012, Brussels
Typically, while workers from Poland and certain Baltic countries or Slovakia had already travelled to other Member States after the accession, the intensity of mobility in Slovenia, the Czech
Republic and Hungary lagged below the rates the above-mentioned countries for a long time.
Hungarian workers mostly took up jobs and resided in traditional destination countries, namely
Austria and Germany. In this respect, an important milestone was the opening of the German and
Austrian labour markets on 1 May 2011. The number of Hungarians working in Austria grew significantly after the liberalisation: In October 2011, their number totalled 38 thousand persons,
while in Germany, the other major destination country, it reached 33 thousand in March 2012.
Looking at the distribution of migrant workers by age, it can be seen overall that over half of
those arriving from the ten CEE countries are aged 25–34 years and 70% of them are under-45s.
Research on domestic trends has revealed that it is the youngest age group in our country, too, that
avails itself of the opportunity to freely engage in employment within the EU: 63% of those working in other Member States are under age 35. However, this rate is not considered strikingly high
in comparison with the other “newly joint” countries: Except for Bulgaria and Estonia, the percentage of young adults among migrants in all Member States under review exceeds that in Hungary.
Figure 16
Distribution of migrants according to age groups
100%
22
25
26
30
32
34
37
37
43
45
90%
80%
70%
60%
50%
35–64
60
44
53
56
56
50
51
44
42
43
25–34
15–24
40%
30%
20%
10%
0%
18
30
20
13
13
16
12
18
15
11
SK
LV
LT
PL
CZ
CEE
HU
RO
BG
EE
SOURCE: Recent trends in intra-EU mobility – A focus on CEE Member States – DG EMPL,
Advisory Committee on free movement of workers, 30th of October 2012, Brussels
There are differences between favoured destination countries in respect of migrant workers’
qualifications. In Austria and Germany, the majority of migrant workers take up industrial and
construction jobs while the proportion of those working in services or unskilled workers lags far
below that rate, as it is also the case with people fi nding jobs that require higher education qualifications. Highly qualified workers are primarily oriented toward the Scandinavian region, the United
Kingdom and Ireland. These countries are popular with skilled and highly qualified workers, as
since as early as 2004 they already extended the right to freely enter into employment to Hungarian
workers as well. Less interest is observable in regard to the Southern Member States: Italy and
Spain are not popular destination countries either with skilled or highly qualified jobseekers. From
the aspect of international employment, these two countries (and, according to certain approaches,
even Scandinavian countries) cannot be listed among the most popular destination countries as
workers not speaking the language of the given country cannot cope in the long term. Generally
speaking, the proportion of persons fi lling vacancies that demand higher education qualifications
remains low.
Based on the latest statistics of the European Commission, half of migrant workers have secondary education, while there are major differences between Member States in respect of the proportions of low-skilled migrants and workers with higher education qualifications. While e.g. 13% of
Romanian migrants hold higher education degrees and 34% are low-skilled, the situation is
reversed in the case of Hungary, where 35% of out-migrating workers are higher education graduates and only 14% have low education.
21
22
Figure 17
Distribution of migrants according to educational levels
100%
90%
14
10
26
25
15
12
22
34
25
34
50
54
47
50
61
65
56
47
56
53
80%
70%
60%
50%
40%
Low
Medium
High
30%
20%
10%
0%
35
35
26
24
23
23
22
19
19
13
HU
CZ
EE
LT
PL
SK
LV
BG
CEE
RE
SOURCE: Recent trends in intra-EU mobility – A focus on CEE Member States – DG EMPL,
Advisory Committee on free movement of workers, 30th of October 2012, Brussels
The main cause of migration is unique and complex in each country. Apart from the labour market
situation and the economic environment an important role is played, especially in regard of the youth,
by entrepreneurship and the desire to acquire international experience and live in a multicultural
environment, which, thanks to positive experience since our EU-accession, is becoming standard
practice for an increasing number of people. Furthermore, young persons’ foreign experience and
negotiation-level foreign language skills are almost a natural requirement on the part of domestic
employers, too. For today’s youth, the European Union is a single market and so it is natural that they
should want to develop their skills and abilities in as complex a way as possible.
Generally speaking, based on practice and the clientele contacting EURES it can be concluded that
it is young people who have completed their studies but are still before establishing a family who would
be/are open to taking up employment abroad and, among older age groups, it is the over-50s who, due
to their reduced family obligations, show somewhat higher willingness to work in other countries.
Most often, Hungarian workers engage in employment abroad on a seasonal basis or for about 1 to 3
years. Longer employment is only undertaken by those who have established a family abroad.
VI. WHERE THERE IS A NEED…
– The situation of young jobseekers
on the basis of data of the National Employment Service
The labour market organisation defi nes a career starter as a person who is aged under 25 years – in the
case of a higher education graduate, under 30 years –; fulfi ls the conditions of entry into employment;
and after completing their studies did not obtain entitlement to jobseekers’ allowance. Two thirds of
jobseekers under age 25 are career starters, i.e. one third of young people were entered on the jobseekers’ register after an employment relationship.
The number of jobseekers starting their careers showed a near steady rising tendency between 2000
and 2011. Th is affected young people in all educational categories, but the growth rate significantly
exceeded the average with low-educated and graduate young persons. In the fi rst half of the decade,
the number of registered jobseekers rose more slowly than that of career starters, as a result of which
the percentage of career starters signalled a steady growth and made up 10% of registered jobseekers
by 2005. It was in part thanks to the launching of an initiative known as the START programme
(offering employers a wage tax relief in return for hiring young persons – see more details below) at the
time that the previous trend was reversed. The number of career starters already dropped in 2006
compared to the preceding year and their growth rate would remain below that of non-career-starters.
As a result, the proportion of career starters within the registered jobseeker population steadily
shrank from 2005 up until 2009. Following the onset of the crisis, the number of jobseekers starting
their careers sharply rose again and then showed stagnation until 2011. However, 2012 have seen yet
another increase: in the fi rst eleven months of the year, the number of career starters grew by 15% over
the same period of the previous year. Th is is statistically consistent with the trends of the youth unemployment rate shown in the Labour Force Survey.
Figure 18
Number and proportion of registered school-leaver jobseekers
Number
%
70 000
12,00
60 000
10,00
50 000
8,000
40 000
6,000
30 000
4,000
20 000
2,000
10 000
0%
0,00
2011 Average
of the first 11 months
Percentage of school-leavers as a total jobseekers
in 2012
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Number of school-leaver jobseekers
2010
SOURCE: PES register
As can be observed, besides increased inflows into the register outflows diminished and so did the
number of career starters entering employment. Th is is consistent with the overall state of the economy and falling labour demand caused by economic slowdown and public sector downsizing. The
swelling jobseeker population was also the result of the government’s supply-side policy measures
(restricting early retirement; raising the pension age; and revising incapacity benefits), which
extended the working lives of older workers and impaired youth employment prospects. Limiting the
number of higher education entrants, in particular to subsidised places and the reform of higher education also made their impact felt: approximately 15 thousand fewer students commenced their
higher education studies in 2012 than a year ago.
The number and rate of jobseeking career starters show wide regional discrepancies. A basic
characteristic of the situation is that in counties and regions with more favourable labour market
conditions career starters within the registered jobseeker population are less numerous, although
23
24
their proportion has also increased in these areas in the past year. While in Central Hungary, a
region with the lowest unemployment rate, 6.4% of all jobseekers are career starters, as revealed by
data as of the closing date of the period January-November 2012, their proportion is twice that
fi gure (12.9%) at the other extreme in the Northern Great Plain region.
The labour market situation of career starters is fundamentally determined by their educational
level. From the average of the fi rst eleven months of 2012 it can be stated that most career starters,
over 24 thousand (38.7%), are among the holders of certificates of secondary general education or
secondary vocational education. Another 21.3 thousand persons (34.9%) have maximum 8-year
basic education, and 12 thousand (19.7%) have graduated from trade schools or apprentice schools.
Career starters with higher education degrees make a mere 6.7%.
In regions where their percentage is lower among registered jobseekers, the composition of the
population of career starters by educational level is significantly more favourable. Namely,
employment prospects improve as the level of education rises.
Data in the Western Transdanubia region provide a good example of that, where the proportion
of persons with no higher than elementary schooling is nearly ten percentage points lower (26%)
than the national average, while graduate career starters represent almost twice (10.4%) the overall regional average.
Figure 19
Distribution of the registered school-leavers by region
and educational attainment in the first eleven months of 2012
100%
Tertiary (College, University)
90%
Secondary qualifications
(specialised school, technical school)
80%
70%
Secondary education
(vocational secondary school,
grammar school,
specialised technical school)
60%
50%
Primary school, 0–8 class
40%
CH: Central Hungary
CT: Central Transdanubia
WT: Western Transdanubia
ST: Southern Transdanubia
NH: Northern Hungary
NGP: Northern Great Palin
SGP: Southern Great Palin
30%
20%
10%
P
SG
P
G
N
H
N
ST
T
W
CT
CH
0%
SOURCE: PES register
During a one-year period, it was mostly the number of vocational school graduates that increased
(by 23%) followed by holders of secondary general certificates of education (by 15%); however, the
number of career starters with higher education degrees grew hardly, by a mere 4%. The observed 15%
rate of growth in the population of career starters in one year thus barely affected higher education
graduates in 2012, it was young persons with secondary vocational qualifications whose labour market position deteriorated to the greatest extent.
Gender differences of educational attainment also show a typical pattern among jobseeking career
starters. Among higher education graduates, women make up a significant majority, which presumably
has to do with degree holders’ diverse vocational qualifications, i.e. a larger proportion of women among
them have qualifications less in demand in the labour market. By contrast, men are overrepresented
among jobseeking career starters with only basic education, a fact indicating that low schooling as a setback in the job market is harder to overcome for men as low-educated women have more opportunities
to enter into other, more socially accepted statuses (e.g. household dependent role or motherhood etc.).
Table 5
Number of registered school-leaver jobseekers by educational attainment and gender
2011
Male
Gender
Educational attainment
41,1
39,9
Secondary qualifications (specialised school, technical school)
20,9
22,5
32,8
32,8
5,1
4,7
Secondary education (vocational secondary school, grammar
school, specialised technical school)
Total
Female
Average
of the first eleven month
Primary school, 0-8 classes
Tertiary (College, University)
100,0
100,0
Primary school, 0-8 classes
29,8
29,8
Secondary qualifications (specialised school, technical school)
15,9
16,9
44,6
44,7
9,7
8,6
Secondary education (vocational secondary school, grammar
school, specialised technical school)
Tertiary (College, University)
Total
Total school-leavers
2012
100,0
100,0
Primary school, 0-8 classes
35,6
34,9
Secondary qualifications (specialised school, technical school)
18,5
19,7
38,6
38,7
Secondary education (vocational secondary school, grammar
school, specialised technical school)
Tertiary (College, University)
Total
7,4
6,7
100,0
100,0
SOURCE: PES register
Long-term youth unemployment is a critical state as entry into the labour market becomes increasingly difficult over time. Th is causes many problems particularly in the case of career starters as their
linkages with the labour market are weak and have litt le work experience. Among career starters, those
registered for longer than six months made up 23 thousand persons, or 37.7%, as an average of the fi rst
11 months of 2012. The majority of them were unqualified under-25s: 45% of long-term jobseekers had
maximum 8-year elementary education, 30% held general certificates of secondary education, and 18%
had secondary vocational qualifications. 9.8 thousand persons had been on the register for over one
year, and an additional 2.3 thousand career starters had been registered for at least 2 years.
25
26
VII. … THERE IS HELP
– Young people in the focus of government strategies
The European Youth Strategy adopted in 2009 determined the framework for European-level youth
policy cooperation for the period 2010-2018. The short-term and long-term measures laid down in
the European Strategy encompass areas affecting young people, with special regard to their education, employment, creativity and entrepreneurial skills, social inclusion, health and sport activities,
civil participation, and volunteer work. The European Youth Strategy defi nes two comprehensive
measures namely the provision of more and equal opportunities for youth in education and the
labour market and the promotion of active citizenship, social inclusion and solidarity.
The same year saw the adoption of Hungarian National Youth Strategy, a 15-year strategic programme, in line with the European Youth Strategy. The document sets forth comprehensive horizontal and specific goals and related sub goals. The overall purpose of the Hungarian National Youth
Strategy is to unleash the potential of youth and promote the social integration of age groups.
The Hungarian Government adopted its youth policy framework programme entitled New Generations for the Future in 2012. The programme is not a strategy but a framework programme seeking to address the problems of the 14-35-year-old age group. Based on broad-based public consultation, the programme identifies four areas of intervention including citizenship, home, career and
leisure.
The framework programme contains the identification and description of problems related to
these areas together with proposals for their solution. The framework programme and the National
Youth Strategy together contribute to dealing with problems arising from the life situation of the
youth and enable them to benefit from opportunities created by civil and political participation,
volunteering, creativity and entrepreneurial skills, sports, and engagement in global activities.
Closely linked to the New Generation for the Future Programme and National Youth Strategy
there are employment policy measures that aim at improving youth employment by skills development and through targeted government measures. Based on their objectives, the initiatives can be
sorted into the following main groups (some initiatives, such as the traineeship programme, are
known as mixed programmes, i.e. they can fit in more than one main group):
– Measures to stimulate labour demand and facilitate gett ing the fi rst job
(e.g. tax reliefs);
– Youth programmes launched with the involvement of NGO and non- profit organisations
(e.g. innovative employment programmes);
– Programmes targeted at students in VET
(e.g. traineeship programme);
– Programmes encouraging self-employment
(e.g. encouraging young persons to become entrepreneurs);
– Active labour market policies
(e.g. complex labour market programmes);
– Programmes promoting mobility
(e.g. housing allowance).
VIII. CAREER START
– The Government’s agenda to facilitate
the employment of career starters in Hungary
1. Creating a tax system that stimulates youth employment
In 2010 the Government of Hungary made a decision to transform the system of employment-related
taxes and other contributions in order to make work pay and therefore encourage entry into employment. According to the plans, proportionate flat-rate taxation will be implemented and the tax system
will become much simpler and more transparent by 2013 providing sufficient motivation for young
people entering employment to build a career. The uniformly low – 16% – personal income tax will play
an important role in regaining the former good reputation of Hungary and in ensuring the most favourable tax environment in the Central-East European region, thus providing an att ractive background
that will also encourage young people to stay and have a job or start a business in their home country.
Until then, however, there are a number of things to be done. Although the personal income tax
decreases, non-wage labour cost are still considered very high as compared to the European Union average – due, primarily, to the extremely high level of employer contributions. The tax wedge makes up
approximately 45% of total wage costs2, significantly limiting job creation and reducing the competitiveness of the economy. As was proven some years ago, a few per cent overall reduction of employer contributions extending to all employees is not suitable to boost the labour market. While wage-related employer
contributions and taxes have been reduced by five percentage points in total since the second half of 2009
and early 2010, there still has not been a rise in the number of employees although the reduction came at
an extremely high price in budgetary terms. With a strict budgetary regime, from 2013 the Government
intends to implement high-impact measures while spending significantly smaller amounts.
In order to retain the existing jobs and to raise employment, the Government of Hungary approved
a job protection programme on July 4, 2012. The announced Job Protection Plan is aimed primarily at
retaining job and protecting the employment of disadvantaged employees. To reach these goals the
Government improves the competitiveness of employers hiring disadvantaged and therefore less
competitive employees through lowering the costs of employment. Th is measure is designed to reduce
the labour costs of groups that are problematic from a labour market perspective and make the
employment of these groups including young persons and career starters more favourable. The viability of the system is supported by several international examples: There were and are differentiated and
targeted contribution allowances in place in France, Belgium and Sweden, for instance.
We have seen examples targeted tax allowances in Hungary as well. An initiative known as the
“START” programme, for instance, that is in place since 2004 is aimed to facilitate the employment
of young jobseekers and career starters for one or two years. Th is support was later supplemented by
the “START Plusz”, the “START Extra” and the “START Bónusz” programmes co-funded by the
European Social Fund to include new target groups in the scope of the contribution allowance. The
most important difference between the new tax system hallmarked by the Job Protection Plan and the
former START programmes is that while in the START programmes allowances were only available
if the hired jobseekers held START cards, the new types of allowances can be obtained for every
employee in the target group (i.e. for those already employed as well). Consequently, the new tax
system will allow employers to use the allowance in case of over a million employees as compared to
2
Source: OECD Taxing Wages.
27
28
91 thousand employees employed with START allowances in the summer of 2012, meaning that (in
addition to the current segment of beneficiaries) the employment of several hundred thousand people
– who received no allowance before – will become more favourable as a result of the Plan.
The Job Protection Plan is about extending, mainstreaming and institutionalising START allowances as they have brought good results. Recent expert analyses also support the effectiveness of
START programmes. Under the new system coming into effect in 2013 the majority of the allowances
will be available to a much wider range of beneficiaries and in some cases without obtaining the
START card, through the normal tax return procedure requiring even less administration than
before. The fact that the content of the Plan will be integrated into tax legislation also indicates that
the implementation of this measure is not programme-based but that the Government has integrated
it into the tax system as a permanent element and expects long-term impacts.
Concerning the actual allowance: From 2013, on the gross wage of every employee under age 25 – and
up to a salary of HUF 100 000 (~EUR 360) –, the rate of employers’ contribution (social contribution
tax and vocational training contribution) will be 14% (instead of 28.5%). The employment of career
starters will be even more favourable than before: the allowance will be 28.5 per cent of the gross wage in
the first two years of employment for employees aged under 25 with maximum 180 days in employment
up to a salary of HUF 100 000.
Approximately HUF 140 billion (about EUR 500 million) is budgeted for targeted allowances next
year. Th is amount would allow a maximum of two percentage point overall reduction in the social
contribution tax, which would not be sufficient to influence employment favourably. According to our
calculations, the new tax system will make the employment of approximately one million people –
including around 200 thousand young persons – more favourable.
Table 6
The target groups of allowances introduced in the framework of the Job Protection Plan
Types of allowances
Target groups
Estimated number
of workers affected
(thousand of persons)
Allowance for employees under 25 years
People under 25 years
Allowance for carrier starters
People with employment record of
180 days at most, under 25 years
200
Allowance for employees above 55 years
People above 55 years
500
Allowance for employees
in jobs not requiring any qualification
Employees in jobs not requiring
any qualifications
250
Allowance for permanent job seekers
Job seekers registered for at least
6 months
30
Allowance for employees
having young child/children
People returning to employment
after child care
30
We expect approximately 20 000 new jobs to be created in the private sector equalling to a 0.5 percentage point increase in the number of employees as a result of the new tax system. As a result of this measure, new employment opportunities will open up for the disadvantaged, while the decrease in the social
contribution tax will lead to an approximately 0.5 percentage point increase in average gross wages.
2. Employment programmes run by non-governmental
and non-profit organisations in order
to help young people gain work experience
A strikingly high number of young people with vocational qualifications are unable to fi nd employment. 3 The reason is that they either have qualifications that are not in demand in the labour market
or, due to the lack of work experience, their skills have become outdated and deteriorated over time.
As the lack of work experience remains a major obstacle to the employment of career starters registered as jobseekers, the Government considers it important that young people start working as soon
as possible after fi nishing their school education and obtain work experience, which is a precondition
of permanent employment. Those young people with vocational qualifications who can not fi nd
employment due to their lack of work experience should be provided an opportunity to enter subsidised employment allowing them to acquire the necessary practical skills and work experience
“without loss of time”. Public agencies and institutions can not only fulfi l their public duties in cooperation with the non-governmental organisation (NGO) and non-profit sector and by relying on
supplementary funding, while certain market actors organise their activities utilising non-public
funds to achieve some community or social objective in the framework of the market economy. NGOs
and non-profit organisations play an important role in linking the unmet needs of individuals or communities with the unutilised labour resources and explore new opportunities of job creation. The
labour market role of the sector has increased over the last decade and the employment potential of
these organisations has improved significantly in Hungary.
By now there are approximately 400 to 450 project organisations that have made a noticeable
impact – for almost a decade – by providing employment and labour market services for the disadvantaged. In addition, the number of paid employees in the entire non-profit sector has been on a steady
rise adding around 53 thousand new employees and resulting in a 46% increase in the number of
people employed in the sector.4 75% of the not-for-profit economic organisations and institutions hire
full time workforce, while two third of all the people employed in non-profit organisations (123 thousand employees) is working in non-profit economic companies and institutions. Th at is no accident
since the majority of revenues are concentrated in these organisations. These revenues basically
include public grants and revenues generated from core activities. Public grants are mostly awarded to
educational, social, cultural, healthcare and economic development-oriented organisations.
The role of NGOs and non-profit organisations in employment needs to be increased. Their support and appropriate regulation may enable them to employ more employees on a permanent basis.
Sustainable expansion of activities is a particularly important criterion in awarding grants.
From the beginning of 2013, the Government intends to support the objective of strengthening the
job creation capacity of NGOs and not-for-profit organisations and helping young people gain work
experience in a common application framework. Grants provided under the new programme will
serve the reinforcement of the internal capacity of the organisations, the improvement of the quality
of services provided by the related organisations and their adaptation to changing social and economic conditions. Special attention needs to be paid to strengthening NGO capacities in the entire
country as local organisations may have a crucial role in the social and economic adjustment of disadvantaged regions.
3
40 per cent of the registered job seekers under age 25 have vocational qualifications.
4
http://www.ksh.hu/docs/hun/xftp/stattukor/nonprofit.pdf
29
30
Under the scheme announced as part of the New Széchenyi Plan, HUF 5 billion will be allocated
to support 2000 to 2500 unemployed career starters to gain work experience through employment
and adapt to the world of work. The support will be co-funded by the European Social Fund.
NGOs and non-profit organisations can submit their applications under a simplified procedure in
the fi rst quarter of 2013. The subsidies will cover in part or in whole the wages of career starters for 12
months and the costs of potential training and equipment purchase required for employment as well
as the costs of human services which helps their integration into the workplace.
3. Supporting innovative employment programmes
aimed at labour market integration of young people
Employment policy tools aim primarily at improving employability and better matching labour
demand and supply as well as facilitating the employment of jobless and other working-age unemployed by operating different policy tools and institutional systems in a co-ordinated manner. In
addition to nationwide development efforts that are based on uniform principles and are carried
out within the national labour market organisation, certain areas require special programmes that
allow new types of employment services to be designed and tested. The pilot projects of the EQUAL
programme running between 2004 and 2006 demonstrated that there was a great need for new and
innovative tools, services and methods in an continuously changing labour market environment
that were able to meet requirements in a flexible way and, aft er piloting, were suitable to be mainstreamed as part of the daily practice of labour market actors and the employment policy toolkit.
Following the termination of the EQUAL programme, its developmental approach was applied
again in the 2007–2013 planning period. In the programme announced in the second half of 2012
– similar to the EQUAL Community Initiative – a support organisation was selected on the basis of
its professional expertise to be permanently available to help project holders in professional and
other technical questions arising during implementation and also in process evaluation.
Based on the concept of social innovation, we can determine what models and methods an innovative and experimental employment programme can be expected to develop. Project plans must
respond with a clear and innovative idea (product or service) to a labour market problem outlined
in the accurate description of the situation and achieve results by involving new contacts and cooperating partners in addressing the problem. 5
It is of particular importance to launch comprehensive programmes offering services, training
and employment to low-skilled long-term unemployed people or disadvantaged young career starters living in disadvantaged regions/ sett lements and having weak labour market positions, as well
as to spread methods not yet in widespread use and to fi ll gaps in service provision. Therefore it is
paramount that opportunities are created to support pilot projects in these regions. The scheme
allows each organisation to respond to labour market problems occurring on its own territory by
using the widest possible range of tools and by developing new methods.
The objective of the scheme is to make labour market interventions more effective by developing
or adapting and supporting the implementation of innovative initiatives and pilot employment
projects and to design in these projects methods and models that can be mainstreamed into policies
and also used by other organisations, ultimately resulting in more effective labour market pro5
Young Foundation for the Bureau of European Policy Advisors, 2010.
grammes. The planned scheme is primarily expected to support the smooth administrative implementation of projects with innovative contents providing novel solutions to help unemployed and
inactive people enter the labour market, improve the adaptability of employees and employers, and
implement other related development efforts.
The scheme allows applicants to receive support under several priority themes such as the
development of innovative methods suitable to facilitate the employment of unemployed young
people. In the first half of 2011, the Hungarian Presidency of the European Union addressed the
issue of youth employment as a priority and organised several conferences and high-level meetings on this subject. As a result of negotiations, Council Conclusions on “Promoting Youth
Employment to Achieve the Europe 2020 Objectives” were adopted. The conclusions discuss in
detail the labour market position of young people and the possible solutions to improve the situation. Such solutions can include, for example, the expansion of practice-oriented training;
traineeship and opportunities to gain work experience, provision of customised services and
forms of support, job creation, and competency development in line with labour market demands.
In the framework of the call for proposals, we support initiatives that promote by innovative solutions the employment of the target group of inactive young people (who are neither in training
nor in work) in the 15-24-year age bracket and particularly those whose labour market entry cannot be achieved efficiently within the traditional framework, or by using the conventional tools,
of labour market policy. In addition to the priority target group of 15-24-year-old unemployed
youth, under this theme, the participating organisations may also develop and adapt innovative
and more effective integration methods that differ from those already used to solve the problems
of career starters.
To support innovative and experimental employment projects, HUF 4.7 billion have been allocated among the interventions announced in the New Széchenyi Plan in 2012. The implementation
of the scheme is co-funded by the European Social Fund. Besides improving the employability of
unemployed youth, the scheme also gives priority to support pilot programmes that ensure the
employment of people with reduced work capacities in the open labour market, to create “green
workplaces”, and to develop digital tools and competencies required for work. As these topics have
been identified as important breakout points in the EU2020 Strategy, the scheme also supports the
testing of innovative employment methods in these areas.
4. VET reform
and the launch of a new traineeship programme
The employment programme of the New Széchenyi Plan specified the objectives of developing VET,
namely for VET to contribute to raising employment and boosting economic growth. The Government is determined to create a VET structure that can ensure a balance between labour demand and
supply, the effective use of individual and social resources spent on VET, and the reduction of early
school-leaving to a minimum.
To significantly improve the indicators of effectiveness it is necessary, in addition to applying
more effective teaching techniques, to create alternative pathways for 14-year-olds in VET schools
and give them and their parents the opportunity to choose between these pathways. In order to
minimise drop-out, possible VET pathway options include, in addition to existing ones, the following:
31
32
– Prior to Year 9, engagement of persons with completed 8-year elementary education in remedial
preparatory courses under the HÍD (“Bridge”) programme to fi ll general knowledge gaps.
– From Year 9, engagement of persons with completed 8-year elementary education in two-year
VET courses including general studies up to 33%. Th at would enable students to enter practical
training as early as Year 9 and learn and appreciate their profession and work.
– Engaging persons with incomplete 8-year elementary education in HÍD programme courses
offering partial vocational qualifications.
For training workers with practical vocational skills that meet the demands of the economy it is
critical that the practical aspect of VET is strengthened and supported based on an extended dual
VET system. The Széll Kálmán Plan states that a new dual VET system shall be established based
on Hungarian traditions and the current German practice ensuring that master-apprentice relationships are formed and students engage in theoretical studies at school and practical training at
work simultaneously.
Businesses have an interest in dual training as practical work experience will supply them with
qualified labour according to local needs. A well-trained workforce will in turn allow them to
preserve their competitiveness and train future employees as required by the businesses’ own
needs. Th at will enable saving costs that would be incurred if the company had to hire and train
inexperienced labour from the job market. Dual VET may ensure a secure job and future for students with workplace training providing them marketable vocational skills and opportunities to
acquire qualifications in a short time that will improve their employment prospects in the labour
market.
The essence of the new traineeship programme announced by the Government lies in supporting employment in new jobs by fully or partially subsidising wages and contributions for nine
months. Grant is available to micro and small and medium-sized enterprises hiring young qualified career starters, who have acquired vocational skills for their chosen occupation under apprenticeship contracts. Trainees are expected to be career starters aged under 25, who acquired their
fi rst secondary vocational qualifications in full-time school-based education not longer than 18
months ago and engaged in at least 6-month practical training to obtain practical work experience
under an apprenticeship contract during their studies.
During employment, the employer must pay a trainee at least the guaranteed wage minima but
can also undertake to pay a higher amount than that up to 150% of the guaranteed wage minima. A
condition for the business receiving a grant is to hire the trainee in a job which the trainee is qualified to fi ll. As a further condition, it must continue to employ the trainee upon expiry of the grant
period, thereby allowing young persons an opportunity to have access to secure employment and
prove their abilities. During the programme, the employer must arrange for a mentor to support the
career starter, document their progress, and evaluate their work, which can serve as a reference for
subsequent employment. Under the programme, the helping mentor’s supplementary wage and the
purchase of equipment for creating a trainee job can also be subsidised.
The primary purpose of the programme, apart from supporting job creation, is to enable making
use of the fi rst school-based qualification and helping career starters acquire early work experience in order to improve their employability. Furthermore, the programme is aimed at strengthening dual VET, support students and businesses concluding apprenticeship contracts, and indirectly, increase the number of businesses participating in dual VET.
The total budget for the grant scheme is approximately HUF 8.5 billion and is co-funded by the
European Social Fund. Applications may be submitted in a simplified application procedure from
January 2013 until resources are exhausted but no later than the end of April 2014. In the planning
process 2000–4000 grant awards are expected, on the basis of which the employment of several
thousand trainees can be supported.
5. Developing the system of career guidance
In Hungary, career guidance services and service providers currently available under different subpolicy fields (labour market policy, VET, adult education, public education, culture, social welfare,
and higher education) not only differ by target group but their relationships with each other are also
loose and they are far from functioning in a synergic way . With limited human resources and capacity,
service providers are unable to meet demand, they compete with each other in some locations while
there are geographical regions where services are not available at all. They operate under diverse professional guidelines, essentially without a standard protocol and thus their services differ significantly
both in nature and quality. Currently, the state does not have a uniform and authentic career information database universally accepted by all public institutions.
Incomplete and differing career guidance services lead to non-conscious career choices, that result
in higher dropout rates and hinders young people’s entry into the labour market. In the case of adults,
failed career changes also put a burden on the budgets of public institutions and programmes. The
high number of inadequate career and occupational choices also means the ineffective or wasteful use
of resources expended on training.
The Europe 2020 Strategy, the “Education and Training 2020” work programme and the “New
Skill for New Jobs” policy initiatives treat the question of lifelong guidance and career guidance as a
high priority in the period 2010–2020. They emphasise that government measures can be only effective by co-ordinated policy responses (education and employment) and through the development of
a common uniform approach among professionals working in these areas.
A major scheme launched under the New Széchenyi Plan is designed to respond to these challenges.
The purpose is to build a national career guidance system that can effectively help people of different
age-groups and in different situations in order to enable them to fi nd learning pathways best suited to
their individual abilities and also meeting labour market requirements. The programme extends to
youth and adult career guidance services alike. As a result of the programme, career guidance services
will become more transparent and a uniform career information system will be established containing up-to-date labour market and training information for 7 million potential users.
The fi rst phase of the project saw the start of development process in line with EU and international
lifelong guidance recommendations and guidelines. Within that framework, the instruments and
services of the new career guidance system were set up, a nationally accessible network of lifelong
guidance counsellors began operations based on a standard professional protocol, and the development of new career guidance tools matching the occupational structure got underway.
In the second phase of the project, development already underway will continue. Besides coordinating work aimed at developing vocational orientation, job counselling and guidance services; a
national lifelong guidance system will be set up on standardised professional, ethical and methodological base, which will be followed by creating the possibility of user feedback and a monitoring system to ensure the continuous operation of the system.
33
34
The initial results of the new labour market forecasting system to be completed by 2013 can be
channelled into the programme. Based on factual data and information, career guidance services
will be able to supply the target group with more accurate and detailed information than before.
By the end of the development cycle, every young person and adult (employees and employers)
facing a career choice/change will have access to a high-quality career support system, which will
reduce school dropout rates; ensure improved and conscious career choice and/or career change
based on individual abilities, skills, interests and also competences; and facilitate labour market
integration and all phases of transition (work – studies – work). Access to services and tools will
enable improved provision of information to people in disadvantaged micro-regions, low-educated
people, and the Roma, which will strengthen social inclusion and promote equal opportunities.
In order to facilitate decision-making related to career guidance, course materials and curriculum will be developed and accredited under the programme to support the preparation and training of career guidance stakeholders. The existing multichannel career guidance portal will also be
upgraded. In addition to the quantitative and qualitative development of human resources used in
guidance, equipment and tools (occupational profi les and vocational guidance fi lms and fi les) used
by counsellors and supporting users of the career guidance system in making their decisions will be
enhanced. The objective is to provide career guidance counselling to at least 339 thousand young
persons annually.
The direct beneficiaries of the project are career guidance professionals (e.g. professionals in the
fields of social and labour market policies, teachers, trainers, etc.), who will receive high-quality
and up-to-date knowledge and information by att ending the training courses. The indirect beneficiaries are individuals in the process of career choice, career change and career planning. The programme has continued since the summer of 2012 and has a HUF 2.8 billion budget for development
purposes.
6. Stimulating youth entrepreneurship
Once economic recovery has started it will be crucial to increase the labour market participation of
youth and career starters due, among other things, to unfavourable demographic trends and rising
demand for new skills required by new jobs in order to increase labour market activity and fully
exploit employment potentials. From this perspective, it is inevitable to support the acquisition of
skills and competencies that improve the employment opportunities of young people or help them
enter self-employment.
Today in Hungary, micro and small enterprises are major net job creators. Approximately 60% of
these enterprises are single-person businesses, i.e. they are run by self-employed people. Facilitating business activities and supporting start-ups is essential for boosting the economy and increasing employment. Thus, the Government pays special att ention to strengthening support for businesses and to stimulating youth entrepreneurship.
A new scheme co-funded by ESF supports youth entrepreneurship and thus contributes to
increase economic activity of the target group; to facilitate entry into the labour market; and to
obtain competencies necessary to start up and run a business by developing adaptability and entrepreneurial skills of young people. Th is concept is in line with the principles laid down in the New
Széchenyi Plan stating that micro-enterprises and SMEs are the most capable of raising employment levels in Hungary.
The fundamental objective of the programme is to give assistance to young people planning to
start micro-enterprises. It is targeted at young people aged 18-35 years with good ideas, realistic
expectations and the right entrepreneurial att itudes to start a business.
The programme consists of two bidding phases. Under a range of interlocking programmes
ensuring support services related to the start-up of businesses, young people can acquire the competencies necessary to launch a business; learn about the types of businesses; become capable of
planning their steps towards self-employment or entrepreneurship; and receive help to prepare
their business plans. They then may obtain a grant to cover costs incurred in the start-up period.
In the fi rst phase, organisations/consortiums providing business start-up and development
services are selected in each region. The selected service providers will then recruit potential young
entrepreneurs with viable business ideas and help them start their business and become selfemployed through individual counselling and/or group briefi ngs. Young people involved can participate in different types of training according to their individual needs and skills, and can acquire
further knowledge about legal, fi nancial, economic, work organisation and management aspects.
During these support services, young people will develop their business plans to be evaluated and
approved by the regional service providers involved.
In the second phase of the grant scheme, only participants of the fi rst phase are allowed to apply,
i.e. those with approved business plans and successfully fi nished training courses aimed at facilitating entrepreneurship. They can apply for a grant under a simplified procedure, the maximum
amount of which is set at three million forints for individuals and six million forints for micro
companies as a non-refundable grant to be supplemented by mandatory self-fi nancing (10% of total
budget). The grant can be used to fi nance costs related to preliminary expenses of a company (postfi nanced), obtaining required licences, purchasing assets, market entry (e.g. marketing, participating in trade fairs), IT upgrades, participation in training, professional consultation (e.g. on business
strategy); purchasing materials, accounting, and hiring employees. In addition to fi nancial support, young entrepreneurs may also obtain guidance free of charge from the regional service providers for a six-month period following start-up on how to operate lawfully and successfully,
develop a tax-conscious business behaviour, and develop their enterprise.
The bidding phase for selecting enterprise development organisations has been already concluded and bid evaluation is currently in progress. A total of two billion forints has been allocated
to the activities of regional service providers. The grant scheme for young people to start their businesses is expected to be available from Q1 2013. The amount earmarked for this purpose is HUF
4.94 billion. The target of the scheme is to assist a total of 1 500 young entrepreneurs in launching
their businesses.
7. Facilitating youth employment through complex labour
market programmes implemented by labour centres
To achieve the employment target set by the Government in its National Reform Programme
(75% employment rate in the 20-64-year age bracket by 2020), it is particularly important to
facilitate the labour market entry of the most disadvantaged job-seekers and to raise the number
of ALMP-participants. Th erefore, it is pivotal to target measures precisely at the most disadvantaged groups, especially in micro-regions with harsh labour market conditions due to the lack of
jobs.
35
36
Stimulating employment in the open labour market by active labour market instruments is a priority objective of the Government’s employment policy. Unemployed people’s (active) job search and
re-employment are assisted via active employment policies, services and incentives in order to
improve their employability and thus facilitate employment growth while decrease the use of cash
benefits. These measures have an important role both in increasing competitiveness (by improving
the employability of the workforce and assisting companies to satisfy labour demand) and in integrating the disadvantaged job-seekers in the labour market.
In 2011, in order to achieve its objectives of increasing employment and reducing unemployment,
the Government launched nationwide programmes to be implemented by labour centres as part of the
New Széchenyi Plan using EU funds. The main priority of these schemes was to improve the employability of over 91 thousand disadvantaged people and facilitate their entry into the open labour market. These initiatives enable labour centres to provide interlocking and customised services and support to jobseekers and inactive people in order to facilitate their employment by adopting a comprehensive approach combined with decentralised implementation to better meet local demand. Career
starters and young adults under age 25 form one of the priority target groups of both the previous
labour market programmes and those launched in 2011.
A fundamental aspect of selecting the tools and combinations of instruments is that people to be
supported must be willing and able to look for work independently and engage in employment (on a
permanent basis) – if possible – in the open labour market. Th is objective is served by the services and
subsidies aiming to assist job search; entry into employment; acquisition of work experience; and get
in touch with employers. Training services have a dedicated role in this regard; they may prepare
individuals for a career change or improve their situation while responding to individual ambitions
and the requirements of regional and county labour markets.
Personal assistance and mentoring is available on a continuous basis to programme participants.
Support services include professional and personal development. Mentors are responsible for managing these processes, creating/reinforcing the abilities of job-seekers required to design (new) career
paths; assist selection of training as well as promote individual job-search.
The professional content of the project is characterised by the following activities aiming at facilitating employment of the target group:
• promoting labour market training,
• subsidies to help entering into employment,
• support to enhance mobility: long-distance travel and housing allowances,
• facilitating entrepreneurship and
• provision of labour market services.
In the second half of 2012, the projects have been extended in respect of both available funding for
implementation and professional content. Additional funds were allocated primarily to improve
youth employability and labour market participation in line with the Youth Opportunities Initiative
of the European Commission. Based on the recommendations of the Commission, Member States are
expected to make increased efforts to improve youth employment opportunities, for which the use of
European Social Fund resources is recommended. The project will give priority to preventing and
managing youth unemployment and use additional funds accordingly.
Preventing unemployment and shortening and facilitating transition from education to work is
crucial for young people. Therefore, it is crucial to reach out to young people who, albeit not registered
jobseekers, are neither in training nor in work. It is also important to address young people studying
in the school system in order to prevent and manage drop-outs and support career-choice.
Based on regional plans and taking into account the above policy requirements and local labour
market conditions, distribution of target groups of the project will be as follows.
Table 7
Target groups
Planned no. of participants
Ratio (%)
People with low education level
17 395
15%
Young people and carrier starters
37 219
32%
People above 50 years
17 017
15%
4 120
4%
People receiving employment substitute benefit
14 129
12%
People at risk of long-term unemployment
27 120
23%
People returning to the labour market
after child care
Total
117 000
100%
SOURCE: documentation of Social Renewal Operational Programme (SROP) 1.1.2 and 1.1.4 projects
By using the available HUF 117 bn budget, the projects will contribute to improving the employment situation of over 117 000 disadvantaged people. Over 53% (at least 62 180 persons) of those
engaged in the programme will undergo labour market training by 2015. The plan is to place 72 000
persons in subsidised employment and to assist 4 103 individuals in starting up their own business. 93
950 persons are expected to successfully complete their individual programmes, around 36% of them
(34 250 persons) shall be in employment on the 180th day following programme completion.
8. Housing allowance
In Hungary, labour mobility is extremely low, which can be explained by a number of reasons. The
most important is the high costs of living far from home in comparison to earnings gained from work.
Mobility will not improve if employees must spend a decisive portion of their income from work on
housing. To tackle this challenge, the Government introduced in 2012 as a new intervention housing
allowance for those jobseekers who, in absence of suitable jobs, are not able to enter employment
locally. Since youth mobility is considered to be the highest in Hungary, they are more likely to be
entitled to and benefit from this allowance.
The target groups of this measure are jobseekers trying to fi nd employment for at least three
months; jobseeking career starters; and employees affected by collective dismissals. Target mechanism of this support is facilitated by the following simple and easily verifiable conditions of entitlement:
– At least six-month long twenty-hour-per-week employment found at least one hundred kilometres or three hours’ (six hours daily in total) travel by public transport from the person’s domicile;
– Monthly gross earnings may not exceed 300% of the amount of the minimum wage.
The allowance must be applied for prior to entry into employment. In every case, the decision is
made by the local job centre competent according to the place of domicile.
37
38
The housing allowance is payable for 18 months as a fi xed amount calculated degressively every
six months: for the fi rst six months HUF 100 thousand, for the second six months HUF 60 thousand, and for the third six months HUF 40 thousand (i.e. HUF 1.2m/person in total) may be
awarded, which amount can be spent on rent and overheads proven by invoices. If the family moves
together and several members are entitled to the allowance, the amount will be higher. If two persons are entitled to the allowance in the family, its amount will be HUF 150 thousand, HUF 90
thousand and HUF 60 thousand, respectively. If there are three or more persons having entitlement to support, the amount of the allowance will increase to HUF 200 thousand, HUF 120
thousand and HUF 80 thousand for the respective periods. Aft er the 18-month-period has expired,
the allowance can only be applied for again after 36 months. However, if the recipient loses their job
but re-enters employment within 30 days, they will continue to receive the allowance already
awarded.
Th is measure is fi nanced within EU-funded active labour market programmes under the New
Széchenyi Plan. Over HUF 2 billion has been ringfenced for this purpose allowing engaging about
1 800 persons.
Figures suggest that over 5 000 persons have so far inquired about the allowance and interest has
been growing steadily. During this period, a total of 300 applications for support have been registered by labour centres. Most of them were submitted in Budapest, Pest County and in Hungary’s
western counties, which clearly shows where labour demand is higher and that most jobseekers
reside in the northern and eastern counties.
Figure 20
Number of people inquiring about housing allowance
since the start of the scheme, 2012, persons/week
7000
6000
4798
5000
4000
3207
3000
2000
1000
3676
5362
5826
4213
2320
1106
0
Week
Week
Week
Week
Week
Week
Week
Week
40
41
42
43
44
45
46
47
SOURCE: PES statistic
9. “First Job Guarantee” central labour market programme
The labour market integration of youth is often hindered by lack of work experience and appropriate
work practice. The problem can further aggravated if the young person cannot fi nd work for a long
time, in which case there is a risk of long-term exclusion and inactivity.
In September 2012, the Government launched a new labour market programme known as “First
Job Guarantee” designed to support the entry into employment of young persons under age 25.
Under the measure, employers hiring registered jobseeking career starters in part-time or full-time
employment may be entitled to a subsidy for maximum 4 months, the amount of which is 100% of
total labour cost up to twice the minimum wage (HUF 186 000), plus the refund of travel expenses.
Any employer hiring or intending to hire an employee can be subsidised in the programme – i.e.
economic entities with or without legal personality and private persons and their associations
without legal personality, as laid down by law – regardless of sector or form of business. Th e period
for engaging in the programme is from 6 August to 30 November 2012, while subsidising employment is possible between 1 September and 31 December 2012.
Figure 21
Number of employees supported in 'First job guarantee' labour market programme,
2012, persons/week
8000
7000
6378
6880
6996
7142
6730
7086
6627
Week
Week
Week
Week
Week
Week
5876
6000
5129
5000
3981
4000
4287
3020
3000
2000
1386
1000
0
62
Week
34
Week
35
Week
36
Week
37
Week
38
Week
39
Week
40
Week
41
42
43
44
45
46
47
S OURCE: PES statistic
The final beneficiaries of the grant scheme may be career starters who are under age 25 – with
higher education graduates, under age 30 –, who are registered with the National Employment
Service; meet the conditions for entry into employment; and did not obtain eligibility for jobseekers’ allowance after completing their studies. Among career starters, priority is given to
unskilled persons and long-term jobseekers. Upon registration in the programme, the career
starter can be placed immediately without having to spend the statutory three-month waiting
period.
39
40
The HUF 3.6 billion budget of the programme has been earmarked from the National Employment Fund. The goal is to place approximately 7 000 thousand career starters in the primary labour
market. The programme has started very intensively as there are a vast number of applicants.
According to the latest data, it has already over-achieved the initial employment target. The grant
scheme is the most popular in counties with severe labour market disadvantages, i.e. Békés, HajdúBihar, Szabolcs-Szatmár-Bereg and Borsod-Abaúj-Zemplén.
Figure 22
Number of employees supported in 'First job guarantee' labour market programme,
persons/county
983
1000
900
960
866
802
800
700
600
500
416
340
235
200
123
100
296
182
173
216
227
Nógrád county
300
Komárom-Esztergom county
335
221
162
211
184
184
Zala county
Veszprém county
Vas county
Tolna county
Szabolcs-Szatmár-Bereg county
Somogy county
Pest county
Heves county
Jász-Nagykun-Szolnok county
Budapest county
Fejér county
Csongrád county
Borsod-Abaúj-Zemplén county
Békés county
Bács-Kiskun county
Baranya county
SOURCE: PES statistic
Hajdú-Bihar county
26
0
Győr-Moson-Sopron county
400
Data contained in this publication are obtained from the database of the Public Employment Service,
the Hungarian Central Statistical Office and EUROSTAT.
Following programmes, included in this publication, are carried out within the framework
of the New Széchenyi Plan with the co-financing of the European Social Fund:
’Employment programmes run by NGOs and non-profit organisations
in order to help young people gaining work experience’;
‘Supporting innovative employment programmes aimed at labour market integration of young people’;
’New traineeship programme’;
’Stimulating youth entrepreneurship’;
‘Facilitating youth employment through complex labour market programmes implemented by labour centres’;
’Housing allowance’.
Thanks to the following colleagues of the National Labour Office and of the Ministry
for National Economy participated in the preparation of the publication:
Eszter Andrási, Rita Antóni, Irén Busch,
Károly Butora, Péter Dienes, ifj. Sándor Fülep,
Ágnes Gerzsényi, Györgyi Ignits, Miklós Katona,
Ágnes Nagy, Anna Probáld, Zsolt Ruszkai,
Pál Réthy, Gyöngyi Szauer, József Tajti,
Réka Török, Katalin Zsámboki, Katalin Zsidik.
Coordinators:
Katalin Kissné Bencze, Krisztina Pelei, Andrea Szarvas
Editor:
Sándor Ádám
Printed by
the National Labour Office
377/2012
Published by
the Ministry for National Economy
Sándor Czomba Dr., Minister of State for Employment Policy
December 2012, Budapest
Ministry
for
National Economy