Hungary

The research leading to these results has received funding from the European Community’s Seventh Framework Programme under grant agreement No. 320121 (Project INSPIRES)

INSPIRES Working paper series 2014 no. 6

ISSN 2215-1605

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Innovative Social Policies for Inclusive and Resilient Labour Markets in Europe

National report on the labour market position of vulnerable groups

National report on the labour market position of vulnerable groups in Hungary

To be cited as: Tóth, L. & Lengyel, G. (2014). National report on the labour market position of vulnerable groups in Hungary. Budapest: Corvinus University of Budapest.

This report is part of work package number 2 of the INSPIRES project. The INSPIRES project is a collaborative research project of thirteen universities in eleven countries, funded by the European

Union. The goal of the INSPIRES project is to contribute to the resilience and active inclusion of labour markets in European countries by identifying innovative policies that contribute to resilience and inclusiveness and by analysing strategies of policy learning that facilitate the development and

transfer of these innovations within and across European countries.

http://www.inspires-research.eu

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Table of contents Introduction 4 1.1. BASIC STATISTICS OF HUNGARY 5

1.2. THE WELFARE SYSTEM IN HUNGARY 10

1.3. MAIN CHARACTERISTICS OF THE LABOUR MARKET IN HUNGARY 11

2. 1. STATISTICAL OVERWIEV – THE LABOUR MARKET POSITION

OF VULNERABLE GROUPS 13

2.2. REGIONAL INEQUALITIES IN HUNGARY 19

3. DETAILED PICTURES OF VULNERABLE GROUPS – General Introduction 23

3.1. THE POSITION OF THE DISABLED ON THE LABOUR MARKET 25 3.1.1. The labour position of the disabled in the pre-crisis period (2000-2007) 26 3.1.2. The labour position of the disabled in the crisis and after crises period (2008-2013) 32 3.2. THE POSITION OF MIGRANTS ON THE LABOUR MARKET 42 3.2.1. The labour position of the migrant in the pre-crisis period (2000-2007) 42 3.2.2. The labour position of the migrant in the crisis and after crises period (2008-2013) 43 3.3. THE POSITION OF YOUTH ON THE LABOUR MARKET 44 3.3.1. The labour position of youth in the pre-crisis period (2000-2007) 44 3.3.2. The labour position of youth in the crisis and after crises period (2008-2013) 50 3.4. THE POSITION OF ELDERLY WORKERS ON THE LABOUR MARKET 53 3.4.1. The labour position of elderly in the pre-crisis period (2000-2007) 53 3.4.2. The labour position of elderly in the crises and after crises period 56 3.5. ADDITIONAL INFORMATION ON THE POSITION OF OTHER RELEVANT VULNERABLE GROUPS ON THE LABOUR MARKET - THE ROMA 57 3.5.1. The labour position of Romas in the pre-crisis period (2000-2007) 57 3.5.2. The labour position of Romas in the crisis and after crises period (2008-2013) 60

4. THE CRISIS, POLICIES IN THE CRISIS AND THE EFFECT OF THE CRISIS ON THE VULNERABLE GROUPS – General Introduction 59

4.1. THE POSITION OF THE DISABLED ON THE LABOUR MARKET IN THE CRISIS 64

3

4.2 THE POSITION OF MIGRANTS ON THE LABOUR MARKET IN THE CRISIS 66

4.3. THE POSITION OF YOUTH ON THE LABOUR MARKET IN THE CRISIS 66

4.4. THE POSITION OF ELDERLY WORKERS ON THE LABOUR MARKET

IN THE CRISIS 67

4.5. THE POSITION OF OTHER RELEVANT VULNERABLE GROUPS ON THE

LABOUR MARKET IN THE CRISIS – THE ROMA 67

5. 1. FACTORS AFFECTING THE POSITION OF VULNERABLE GROUPS –

Governmental Policies 70

5. 2. FACTORS AFFECTING THE POSITION OF VULNERABLE GROUPS –

Structural Changes 73

References 77

Appendix 82

4

Introduction

Short background

After WW II, Hungary came under the influence of the Soviet Union, which contributed to the establishment of a four-decade long state socialist regime (1947–1989). The country gained widespread international attention regarding the Revolution of 1956 and the opening of its previously-restricted border with Austria in 1989, which accelerated the collapse of the Eastern Bloc.

Since 1990, Hungary's top foreign policy goal has been achieving integration into Western economic and security organizations. Hungary joined the Partnership for Peace program in 1994 and has actively supported the IFOR and SFOR missions in Bosnia. Hungary got invitation to join both the NATO and the European Union in 1997. She became a member of NATO in 1999, and member of the EU in 2004.

Politics

Prime Minister Viktor Orbán's conservative Fidesz party's sweeping victory in the 2010 election has enabled it to push through radical legislative changes, including new constitution, new media- and electoral law. The EU has expressed concerns over what it sees as Hungary's failure to respect European democratic standards since 2010. 1

Economy

Since 2010, the Hungarian government has pursued "unorthodox" economic policies that include aggressive taxes on foreign-owned companies. (Source: BBC Monitoring)

Administratively, Hungary is divided into 19 counties. In addition, the capital, Budapest, is independent of any county government. The counties and the capital are the 20 NUTS third-level units of Hungary. Since 1996, the counties and Budapest have been grouped into 7 regions for statistical and development purposes. These seven regions constitute NUTS' second-level units of Hungary. They are: Central Hungary, Central Transdanubia, Northern Great Plain, Northern Hungary, Southern Transdanubia, Southern Great Plain, Western Transdanubia. The counties are further subdivided into districts.

Figure 1. The Regions of Hungary

1 Source: Country profiles compiled by BBC Monitoring, http://www.bbc.com/news/world-europe-17380792

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1.1. BASIC STATISTICS OF HUNGARY, 20122

(Numbers in parentheses refer to the OECD average)

LAND, PEOPLE AND ELECTORAL CYCLE

Population

- January 2013 estimate 9,908,798

- Oct 2011 census 9,937,628

Population density

- 107.2/km2

- 279.0/sq m

Under 15 (%) 14.5 (18.1)3

Over 65 (%) 17.0 (15.3)

Foreign-born (%, 2011) 4,7

Ethnic groups (2011 Hungary Census report)

- 83.7% Hungarians

- 3.1% Romani

- 1.3% Germans

- 14.7% undeclared

Latest 5-year average growth (%) -0.2 (0.5)

2 Source: OECD (2014), OECD Economic Surveys: Hungary 2014, OECD Publishing. http://dx.doi.org/10.1787/eco_surveys-hun-2014-en 3 Numbers in parentheses refer to the OECD average

6

Life expectancy (years, 2011) 75.0 (80.0)

Men 71.2 (77.3) Women 78.7 (82.8)

Last general election April 2010

ECONOMY

Gross domestic product (GDP)

In current prices (billion USD) 124.9

In current prices (billion HUF) 28 082

Latest 5-year average real growth (%) -1.1 (0.6)

Per capita, PPP (thousand USD) 21.9 (37.2)

Value added shares (%)

Primary sector 4.7 (2.5)

Industry including construction 30.6 (27.4)

Services 64.7 (69.7)

Hungary’s public debt was 79,8 %, the budget deficit 2,9 % of the GDP in 2013. The education expenditures were 4,9 %, health expenditures 7,7 % of GDP in 2010-11.

(Source: https://www.cia.gov/library/publications/the-world-factbook/geos/hu.html, last access 06.04 2014)

GENERAL GOVERNMENT

Per cent of GDP

Expenditure 48.6 (42.8)

Revenue 46.5 (36.4)

Gross financial debt 90.0 (102.3)

Net financial debt 61.1 (64.0)

EXTERNAL ACCOUNTS

Exchange rate (HUF per USD) 224.8

PPP exchange rate (USA = 1) 128.5

In per cent of GDP

Exports of goods and services 94.6 (53.8)

Imports of goods and services 87.2 (50.4) 7

Current account balance 0.9 (-0.5)

Net international investment position (2010) -111.6

Main exports (% of total merchandise exports)

Machinery and transport equipment 51.6

Manufactured goods 10.4

Chemicals and related products, n.e.s. 9.9

Main imports (% of total merchandise imports)

Machinery and transport equipment 41.6

Manufactured goods 12.8

Mineral fuels, lubricants and related materials 12.7

LABOUR MARKET, SKILLS AND INNOVATION

Employment rate (%) for 15-64 year-olds 57.2 (65.0)

Men 62.5 (73.1)

Women 52.1 (57.0)

Average hours worked per year 1 888 (1 776)

Gross domestic expenditure on R&D (% of GDP, 2011) 1.2 (2.4)

Unemployment rates (%)

Total (age 15 and over) 10.9 (7.9)

Youth (age 15-24) 28.1 (16.2)

Long-term unemployed (1 year and over) 5.1 (2.7)

Tertiary educational attainment 25-64 year-olds (%, 2011) 21.1 (31.5)

ENVIRONMENT

Total primary energy supply per capita (toe) 2.4 (4.2)

Renewables (%) 8.0 (8.5)

Fine particulate matter concentration (urban, PM10, μg/m3, 2010) 15.0 (20.1)

CO2 emissions from fuel combustion per capita (tonnes, 2011) 4.7 (10.0)

Water abstractions per capita (1 000 m3, 2008) 0.5

Municipal waste per capita (tonnes, 2011) 0.4 (0.5)

SOCIETY

Income inequality (Gini coefficient, 2009) 0.272 (0.305)

8

Relative poverty rate (%, 2009) 6.8 (10.7)

Public and private spending (% of GDP)

Health care (2011) 7.9 (9.5)

Pensions (2009) 10.5 (8.7)

Education outcomes (PISA score, 2012)

Reading 488 (497)

Mathematics 477 (494)

Science 494 (501)

Share of women in parliament (%, November 2013) 8.8 (26.0)

Net official development assistance (% of GNI) 0.1 (0.4)

WELL-BEING

Hungary is ranked by OECD findings as a country with low overall well-being performance amongst countries like Brazil, Chile and Estonia.4

Figure 2. Average well-being outcomes in Hungary and OECD countries

4 Source: How's Life? 2013, Measuring Well-being OECD 2013 DOI:10.1787/9789264201392-en

A. Average well-being outcomesBetter life index, 20131

0 1 2 3 4 5 6 7 8 9

10Income and w ealth

Jobs and earnings

Housing

Work and life balance

Health status

Education and skillsSocial connections

Civ ic engagement and gov ernance

Env ironmental quality

Personal security

Subjectiv e w ell-beingHungaryOECD

9

Figure 3. Well-being and GDP per capita in Hungary and other OECD countries

Figure 4. Severe material deprivation rate in OECD countries

1. Each well-being dimension is measured by one to three indicators from the OECD Better Life indicator set. Normalised indicators are averaged with equal weights so they range between 10 (best OECD country) and 0 (worst).

2. The overall Better Life Index is calculated with equal weights on the 11 dimensions. GDP per capita in US dollars at current prices and purchasing power parities.

B. Well-being and GDP per capita2

AUTBEL

CZE

DNK

EST

FIN

FRADEU

GRCHUN

IRL

ITA

NLD

POLPRTSVK

SVN ESP

SWEGBR

4

5

6

7

8

9

0 10 20 30 40 50GDP per capita (thousand USD, 2012)

10

3. Severely materially deprived are characterised as persons unable to pay for at least four of nine material deprivation items (e.g. rent, mortgage or utility bills; a washing machine or a car). 2011 instead of 2012 for Ireland.

Source: OECD (2013), OECD National Accounts Statistics (database), December and OECD Better Life Index; Eurostat (2013), “Income and Living Conditions”, Eurostat Database, December.

1 2 http://dx.doi.org/10.1787/888932982882

1.2. THE WELFARE SYSTEM IN HUNGARY

Gross public social expenditure increased from about 16% in 1980 to 18% in 1990 and to 22% of GDP in 2009 in OECD countries. In Hungary the public social expenditure as a percentage of GDP has been more or less the same as the OECD average. Although there is a significant difference regarding private social expenditure which in 2009 was 0,2% in Hungary while the OECD average was 2,7%.5

Figure 5. Public net social expenditure as a percentage of GDP

As other post-socialist countries the Hungarian welfare state also is oriented towards social transfers and state-funded wage-compensations. Similarly, this welfare system is also a fusion of several features as the pre-socialist heritage of some kind of Bismarckian social insurance system followed by the socialist universalism and egalitarianism that transformed into a market-based liberal system after the transition. Nevertheless, in order to deal with rising social inequalities there remained a high support for redistributive policies, special privileges for determined social and professional groups and the persistence of clientelistic relations (Cerami 2006).

5 Source: Factbook 2012 - ISSN - © OECD 2012

0,0

5,0

10,0

15,0

20,0

25,0

30,0

2000 2006 2007 2008 2009 2010 2011

Hungary

OECD

11

The development of Hungary’s present welfare system from the “premature welfare state”- in which welfare expenditures had occupied a too heavy weight in the yearly state budget of the late 1980’s (Kornai, 1996) - ended in the emergence of a bifurcated welfare state, where the social exclusion of the weakest groups, especially the dramatically marginalized Roma once in full service of “socialist production” has been almost completed, : “By the turn of the millennium, the indicated processes concluded in the evolvement of a bifurcated welfare system with hermetically separated structures of services for the well-integrated and the marginalized groups of society, respectively. With the country’s successful economic recovery all the contribution-based services and benefit schemes have produced remarkable rise in standards and coverage for those successfully involved in Hungary’s already dominant market economy. At the same time, it is the highly segregationist world of local welfare assistance that is meant to deal with the respective needs of the poor: the longer the period of their poverty, the thicker grow the walls that lock them into the secondary arrangements designed “for them alone”.” (Szalai, 2013)

1.3. MAIN CHARACTERISTICS OF THE LABOUR MARKET IN HUNGARY

In order to understand current tendencies on the Hungarian labour market one has to go back to the state socialist past of the country and the transition, take the effect of the Europeanization process and the EU accession into account together with the impact the global economic crisis had on the country’s economy.

The change of the political regime was accompanied by serious economic recession and important changes on the labour market in the 1990s. After (theoretical) full employment during the state socialism only about half of the working-age population were only employed. Labour market tendencies were at the bottom in 1996 when 42 per cent were inactive, and long-term unemployment exceeded 3 per cent. After that, the employment rate slightly increased until 2003 and stagnated around 57 per cent until the global economic crisis in 2008. Nevertheless, current difficulties are not to be explained solely by the economic crisis (Fazekas and Scharle 2012).

The main problems on the Hungarian labour market during these past two decades remained unchanged and the most important is the low employment rate that is unevenly distributed according to education level, region, and settlement type. University graduates and people living in the western part of the country are less affected by this problem, while the oldest and the youngest age groups, women of childbearing age, the low-skilled and people in the northern regions have lower employment rate than the average. Furthermore, the Roma population and people living in small settlements with bad transportation opportunities are characterised by low employment over the average as well (Fazekas and Scharle 2012).

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Figure 6. Employment rate in countries from Central and Eastern Europe (2000- 2013)

Source: Eurostat, LFS

In terms of the employment policy response to these problems the main objective was to reduce the number of unemployed, targeting older, low-skilled or low-productivity workers to leave the labour market. Through various welfare transfers (unemployment, early retirement, disabled pension, maternity, etc.), social tensions resulting from the end of full-employment could be partly avoided in the 1990s, but lead to the current structural distortions and the need for high government social expenditures meaning high taxes and contributions. Nowadays nearly a third of the working-age population is relying on some kind of welfare provision (Fazekas and Scharle 2012).

Throughout the 2000-2013 period the role of active labour market policy gained increasing importance, however, regulations and services destined to increase labour market participation have remained weak, while measures promoting to stay away from the labour market remained relatively generous (such as early pensions, insured maternity leave and disability pensions). Several other factors did not contribute to the flexibility of the labour market: the minimum wage was raised in 2001–02 and remained high since then, however, it did not lead to higher supply of labour, while it reduced employment in labour-intensive sectors. Furthermore, the Hungarian labour force is not geographical mobile due to bad public transportation and occupational mobility is also low that further decrease flexibility of the labour market.

The low employment level of the unskilled workforce is partly due to the characteristics of the firms: the low proportion of those type small and family enterprises that could keep them. Furthermore, the weak public education could not cope with the rapid technological change happening since the 1990s.

2. 1. STATISTICAL OVERWIEV – THE LABOUR MARKET POSITION OF VULNERABLE GROUPS

50

55

60

65

70

75

80

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

EU (27 countries)BulgariaCzech RepublicEstoniaLatviaLithuaniaHungaryPolandRomaniaSloveniaSlovakia

13

Table 1. Unemployment rates in different groups in Hungary, 2000-2012

General population (age: 15-

64)

Migrants (age: 15-

64)

Youth (age:15-

24)

Elderly (age:55-

64) 2000 6,6 : 12,3 3,1 2001 5,7 : 10,7 2,8 2002 5,6 : 11,4 2,9 2003 5,8 : 12,9 2,9 2004 5,9 : 14,4 2,9 2005 7,2 : 19,4 3,9 2006 7,5 : 19,1 3,9 2007 7,4 : 18 4,2 2008 7,9 : 19,9 5 2009 10,1 11,2 26,5 6,3 2010 11,2 8,4 26,6 7,8 2011 11 8,9 26,1 8,7 2012 11 11,1 28,1 7,9

Source of data: Eurostat

Figure 7. Unemployment rates in different groups in Hungary, 2000-2012

Source of data: Eurostat

Throughout the 2000-2012 period the unemployment rates in different vulnerable groups in Hungary showed different pattern comparing to tendencies of general population. In the pre-crises period the unemployment rate was the lowest among elderly people, between 3 and 5 per cent, while the youth unemployment rate was the highest, between 12 and 18 per cent, it worth noting that in the latter case while the main tendency was a stable 1-2 per cent, year by year increase but between 2004 and 2005 there was a dramatic 5 per cent leap. The general unemployment rate was

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General population (age: 15-64)

Migrants (age: 15-64)

Youth (age:15-24)

Elderly (age:55-64)

14

between approximately 6 and 7, and there are no data available regarding migrant unemployment in this period.

In 2008, the year of the outburst of the crises, there were no explicit changes in the trends of statistics.

Between 2008 and 2009 the unemployment rate of the general population increased by more than 2 per cent, the elderly unemployment rate increased by 1.3 per cent, while the youth unemployment increased again dramatically from the already high 19,9 per cent to 26,5 per cent.

Between 2009 and 2012 the unemployment rates did not reduce and moreover increased by 1 or 2 per cent. In the case of youth unemployment it reached almost 30 per cent. Data regarding migrant unemployment has been available from 2009, it has followed the trend of general population. Since migrant data came from official statistics, it indicated only legal migrants’ situation.

Table 2. Employment rates in different groups in Hungary, 2000-2012

General population (age: 15-

64)

Youth (age:15-

24)

Elderly (age:55-

64) 2000 55,9 33,1 21,9 2001 56,1 30,4 23,1 2002 56,2 28,6 25 2003 57 26,7 28,9 2004 56,6 23,3 30,4 2005 56,9 21,8 33 2006 57,3 21,7 33,6 2007 57,3 21 33,1 2008 56,7 20 31,4 2009 55,4 18,1 32,8 2010 55,4 18,3 34,4 2011 55,8 18,3 35,8 2012 57,2 18,6 36,9

Source of data: Eurostat

Figure 8. Employment rates in different groups in Hungary, 2000-2012

15

Source of data: Eurostat

Throughout the 2000-2012 period the employment rates in different vulnerable groups in Hungary showed different pattern comparing to tendencies of general population.

During the entire examined period (including pre-crises period, crises and after crises period) the employment rate of the general population was evenly low (the lowest in OECD) between 55.4 and 57.2 per cent. It seems that the employment rate was so low that even the crises could not decrease it further. Between 2008 and 2009 the fall was only 1.3 per cent and in 2012 the rate was equal to the pre-crises one.

Behind the above mentioned, the development of employment rate of youth and elderly showed remarkably contrasting tendency. While between 2000 and 2012 the youth employment rate decreased from 33.1 to 18.6 per cent, the increase of the employment rate of the elderly was almost unbroken and grew by 15 per cent, from 21.9 to 36.9.

Table 3. Long-term unemployment (12 months or more) in different groups in Hungary as a percentage of the total unemployment 2000-2012

General population (age:15-64)

Youth (age:15-24)

Elderly (age:55-64)

2000 47,9 37,2 57,4 2001 44,7 35,3 57,1 2002 44,7 35,7 55 2003 40,5 33,8 48,6 2004 45,1 34,2 64,1 2005 45,1 34,9 56,4 2006 45,1 36,8 52 2007 46,8 36,8 53,7 2008 46,5 32,2 55,8 2009 41,6 29,9 51,3 2010 49,3 39,2 53,8 2011 47,9 35,9 59,5

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General population (age: 15-64)Youth (age:15-24)Elderly (age:55-64)

16

2012 45 31,2 59,3 Source of data: Eurostat

Figure 9. Long-term unemployment (12 months or more) in different groups in Hungary as a percentage of the total unemployment 2000-2012

Source of data: Eurostat

The development of long-term unemployment (12 months or more) was slightly under 50 per cent in the general population during the entire examined period. Paradoxically the largest change happened between 2008 and 2009 when the ratio of long-term unemployed fell with almost 5 per cent. It happens when the total unemployment rate increased from 7.9 to 10.1 per cent, which means that the long-term unemployment rate reduction is not due to a recovery but to the higher number of newly unemployed in the statistics. The group of youth had a relatively favourable situation compared to the elderly, they had an overall 20 per cent less long-term unemployed. At the end of year 2012 a young person has twice as much chance than an elderly not to get into the long-term unemployed category.

Table 4. Inactive population as a percentage of the total population in different groups in Hungary

2000-2012

General population (age: 15-64)

Youth (age:15-24)

Elderly (age:55-64)

2000 40,1 62,2 77,4 2001 40,6 65,9 76,2 2002 40,5 67,7 74,3 2003 39,4 69,4 70,3

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General population (age:15-64)

Youth (age:15-24)

Elderly (age:55-64)

17

2004 39,8 72,7 68,7 2005 38,7 72,9 65,7 2006 38 73,2 65,1 2007 38,1 74,4 65,5 2008 38,5 75 66,9 2009 38,4 75,4 65 2010 37,6 75,1 62,7 2011 37,3 75,3 60,8 2012 35,7 74,1 60

Source of data: Eurostat

Figure 10. Inactive population as a percentage of the total population in different groups in Hungary

2000-2012

Source of data: Eurostat

The inactivity of the general population decreased evenly between 2000 and 2012 from 40.1 per cent to 35.7 per cent. The inactivity rates in groups of elderly and the youth developed in the opposite direction. The inactivity rate among the elderly reduced by 17.4 percent, while among the youth it increased by 11.9 per cent. These tendency might be connected on the one hand with the expansion of the higher education which in Hungary, like in the other new member states of the EU, started at the beginning of the 1990s and reached the highest point in 2004 and started to fall in 2005 (only partly because of the decrease of the smaller number of the next generation involved in higher education). After this period due to the crises young people could not get job, especially without proper education. On the other hand the fall of elderly inactivity rate might be due to restrictions in old age pension and disability pension eligibility.

Table 5. Temporary employees as percentage of the total number of employees in different groups in Hungary 2000-2012

0

10

20

30

40

50

60

70

80

90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General population (age: 15-64)Youth (age:15-24)Elderly (age:55-64)

18

General population (age: 15-74)

Migrants (age: 15-74)

Youth (age:15-24)

Elderly (age:55-74)

2000 6,9 : 12,7 8,5 2001 7,5 : 14,8 7,5 2002 7,5 18 14,6 8 2003 7,6 18,9 15,8 6,6 2004 6,9 16,5 15,1 5,5 2005 7 14,4 17,2 5,2 2006 6,7 16,9 16,9 5,1 2007 7,3 14,1 19,1 5,6 2008 7,9 12,2 20 5,5 2009 8,5 10,7 21,4 5,9 2010 9,7 14,9 24,9 7,2 2011 8,9 15,2 22,9 6,2 2012 9,4 : 22,4 7,5

Source of data: Eurostat

Figure 11. Temporary employees as percentage of the total number of employees in different groups in Hungary 2000-2012

Source of data: Eurostat

The ratio of temporary employees in general was evenly low during the whole examined period. In the group of youth it increased by more than 10 per cent between 2000 and 2010 when it reached its peak, and started to reduce by 1-2 percent per year since then. Migrants’ participation in temporary employment was the highest at the beginning of the 2000s when it was almost 20 per cent and from than it has decreased and during the latest years sank under measurable scale. The ratio of the elderly in the temporary employment more or less followed the general tendency but was slightly higher at the beginning and slightly lower at the end of the examined period.

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General population (age: 15-74)Migrants (age: 15-74)Youth (age:15-24)Elderly (age:55-74)

19

Table 6. Part-time employment as percentage of the total employment in different groups in Hungary, 2000-20012

General population (age: 15-74)

Migrants (age: 15-64)

Youth (age:15-24)

Elderly (age:55-74)

2000 3,6 : 2,5 14,6 2001 3,5 : 3,2 12,1 2002 3,6 : 3,7 11,8 2003 4,4 : 3,4 13,4 2004 4,6 : 4,1 14,5 2005 4,1 : 4,3 11,5 2006 4 : 4,7 10,4 2007 4,1 : 5,3 11,3 2008 4,6 : 5,4 13,8 2009 5,6 : 7,2 13,4 2010 5,8 : 9 12,6 2011 6,8 8,8 10,5 12,8 2012 7 9,7 9,7 13,8

Source of data: Eurostat

Special value: : not available

Figure 12. Part-time employment as percentage of the total employment in different groups in Hungary, 2000-20012

0

2

4

6

8

10

12

14

16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General population (age: 15-74)Migrants (age: 15-64)Youth (age:15-24)Elderly (age:55-74)

20

Source of data: Eurostat

The data of part time employment situation shows the inflexible character of the Hungarian labour market. In the general population the ratio of part-time employees increased from 4 per cent in 2000 to about 8 per cent in 2012. This increase might be the impact of the crises, introducing part time employment, or changing full- time employment to part- time employment could function as a certain kind of strategy not to lay off the employees when market circumstances became harsh and the minimal wage was increased continually.

2.2. Regional Inequalities in Hungary

Figure 13. Evolution of the unemployment rate by county6

Registered jobseekers in per cent of economically active population aged 15-64 in 2012 (Data for 2004 is shown in parentheses for comparison.)

Table 7. Evolution of the unemployment rate by county7

Registered jobseekers in per cent of economically active population aged 15-64 in 2004 and 2012

6 Source: HCSO (2013), "Regional Statistics: Labour Market", STADAT Tables, Hungarian Central Statistical Office, December. 7 Source: HCSO (2013), "Regional Statistics: Labour Market", STADAT Tables, Hungarian Central Statistical Office, December.

21

Region County 2004 2012 differences between 2004 and

2012

Central Hungary Budapest 2,9 5,8 2,7

Pest 3,9 7,3 2,4

Central Transdanubia Fejér 7,8 11,6 3,8

Komárom-Esztergom 6,6 10,1 3,5

Veszprém 8,6 10,8 2,2

Western Transdanubia Győr-Moson-Sopron 5,3 5,6 0,3

Vas 6,9 7,4 0,5

Zala 8,4 12,5 4,1

Southern Transdanubia Baranya 13,8 17,7 3,9

Somogy 16,8 20,5 3,7

Tolna 12,3 15,8 3,5

Northern Hungary Borsod-Abaúj-Zemplén 21,2 25,5 4,3

Heves 11,7 16,8 5,1

Nógrád 17,3 25,9 8,6

Northern Great Plain Hajdú-Bihar 14,7 21,1 6,4

Jász-Nagykun-Szolnok 13,2 18,5 5,3

Szabolcs-Szatmár-Bereg 20,4 26,2 5,8

Southern Great Plain Bács-Kiskun 10,6 15,3 4,7

Békés 14,6 16,9 2,3

Csongrád 10,7 12,1 1,4

Figure 13. Regional inequalities: The share of registered unemployed relative towithin the economically active population, per cent, in NUTS-2 level regions

22

Source: NFSZ REG.

Figure 14. Regional inequalities: LFS-based unemployment rates in NUTS-2 level regions

Source: KSH MEF.

It can be seen from the tables and figures above, that regional inequalities did not change. Unfortunately policies which addressed the problem of regional inequalities so far could not make progress. The rank order of counties and regions regarding their economic performance and labour market position is the same as it was before and after the transition. The main reason for that is in the history of these backward regions. Prior to 1990, Hungary had very low recorded unemployment, while labour force participation and employment rates were high. Expenditure on social programmes to support the non-employed were, in consequence, low. These favourable aggregate statistics masked a number of serious problems in the form of low productivity, labour hoarding and involuntary employment. As the transformation to a market economy – which began in the mid-1980s – accelerated, large numbers of enterprises were revealed to be uneconomic and as they were shut down or restructured tens of thousands of jobs were destroyed. There was an initial and dramatic rise in registered unemployment from 0.9 per cent in the first half of 1990 to a high of 12.6 per cent in the first half of 1993. 8 During this period unskilled workers and /or who

8 Source: OECD Economic Surveys 1996-1997 Hungary 23

worked for the closed down heavy industry firms and in mining or in agricultural co-operatives became unemployed. In these regions the ceased industrial activity has not revived and besides competence deficit and lack of adequate education the housing and transport problems decreased further the necessary mobility. OECD document on year 2013 reported that substantial labour mismatches weigh on economic performance9 in Hungary and contribute to low employment and weak productivity. „These imbalances between labour supply and demand across geographic regions, sectors, occupations and skills in Hungary originate primarily from the large structural excess of low-skilled labour supply, resulting in a very low employment rate among this group (Fazekas and Scharle, 2012). In contrast, high-skilled labour is in somewhat tight supply in certain fields, such as medical professions, and more companies report skill shortages than the European Union (EU) average (European Commission, 2013a). Among employed workers, under or overqualification appears less common than in most OECD countries (Figure 2.2, Panel B; OECD and Statistics Canada, 2011; Randstad, 2012; in contrast, Quintini, 2011, suggests frequent under-qualification of workers), but many people occupy a position not directly related to their field of study, a common pattern across Eastern European countries (Figure 2.2, Panel C). Mobility of workers is essential to good matching. Although job-to-job mobility is about average, the reallocation of labour across economic sectors has slowed since the mid-1990s (Harasztosi, 2011) and geographic mobility is low, resulting in persistently large regional discrepancies in the unemployment rate....” (OECD 2014)

Internal migration is taking place from job-poor areas in the south and east of the country, to job-richer ones around Budapest and near the Austrian border. However, the pace of migration over the past decade has been insufficient to reduce the large regional differences in unemployment. Increasing the mobility of workers, both in terms of relocating and commuting, has significant potential to increase employment. A risk is that workers leaving job-poor areas may further depress activity there, adding to geographic inequalities. Efforts to relocate activity to disadvantaged areas, such as the recent creation of “free enterprise” low-tax zones, can help mitigate this risk. Take-up to these new zones has started slowly – the authorities assess that 400 jobs were created (or shifted) in the first half of 2013. The relocation of workers could be facilitated by a more flexible housing market. In Hungary the high homeownership rate is an obstacle to mobility. (During the socialist regime, the state first neglected the housing, then encouraged people to build flats for themselves, as a consequence of that practice people usually live as owner in their own property.) Housing mobility is very low in Hungary, reflecting the underdevelopment of the rental market, substantial transaction costs and, more recently, high mortgage indebtedness of certain households (Figure 2.15; Andrews et al., 2011). The lack of a rental market is particularly detrimental to relocating workers as house prices are much higher in job-rich areas, particularly Budapest. In this respect, a relocation subsidy launched in 2012 for 500 selected workers may help, but only at the margin. The homeownership rate has been extremely high since the transition to a market economy, when earlier council flats and houses were sold to tenants at a large discount.

The improvement of public transport and reducing commuting cost would be another means to reduce regional inequalities. Although commuting by public transport is more common in Hungary than in neighbouring countries (Paci et al., 2007), but there is room to develop it further by making transport more efficient. This would facilitate labour market matching and stimulate employment in rural areas, which strongly depends on commuting costs (Bartus, 2012). A 30 kilometre monthly train or bus ticket costs about EUR 70, 20-70% more than in the other Visegrad countries. Still, many workers commute by public transport, reflecting a lower car ownership than in most OECD countries and a very dense public transport network, although the network would benefit from better integration between transport modes.

9 Source: OECD (2014), OECD Economic Surveys: Hungary 2014, OECD Publishing. http://dx.doi.org/10.1787/eco_surveys-hun-2014-en

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The unemployment rate differences between before and after the crisis show that the earlier disadvantaged regions more or less remained similarly disadvantaged compared to other regions. Paradoxically there was some kind of levelling up change, since regions earlier in better position worsened more than regions which were earlier badly off.

3. DETAILED PICTURES OF VULNERABLE GROUPS

GENERAL INTRODUCTION

According to the interviewed experts, the circle of disadvantaged groups - which were given priority in labour market policies – were well defined already in 1996, when the “Decree No 6/1996 (VII. 16.) MüM (Ministry of Labour) on aid for promoting employment and on the aid that can be provided from the Labour Market Fund for the management of employment crises “ 10came into force.

According to the decree a disadvantaged jobseeker is any person who

1. has not attained an upper secondary educational qualification or its equivalent,

2. is older than 50 years when taking up employment, or

3. is a young entrant under the age of 25 years

4. has been registered as unemployed with the PES for more than 6 months

5. living in his own household as the only adult with one or more dependents,

6. has been receiving maternity, child-care related or carer’s benefits within

the previous 12 months, or

7. has spent time in a penal institution within the previous 12 months.

Thus, according to the decree, people with low level of education, young people (under 25) and elderly (over 50), women with young children, long-term unemployed, the only bred-winners in the households and people recently released from prison, were regarded as disadvantages. The 1996 decree did not mention the Roma (Gypsies) and the disabled (with the 2006 amendment the disabled were also included in the category of disadvantaged) and women in general who were usually mentioned in our interviews along with any groups living in disadvantaged regions of the country. Living in a disadvantaged region means disadvantaged labour market opportunity for anyone, and that the various disadvantages typically are accompanied by each other.

Women, especially women with young children were one of the named vulnerable groups partly because of the characteristics of the Hungarian system of maternity leave; for two years it gives a generous benefit proportional to previous earnings and for one further year a flat rate for

10 Later the definition of disadvantaged was further developed , the Parliament adopted Act CXIII of 2006 on the amendment of Act IV of 1991 on the Promotion of Employment and Provision for Unemployment on December 11, 2006. The new act entered into force on January 1, 2007. The amendment

mainly concerned the conditions of employment subsidies. Also Ministry of Labour regulation 6/1996 (VII. 16.) on employment subsidies and crises

measures from the Labour Market Fund had to be brought into line with the act. Its amendment took place on February 17, 2007.

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everyone11. Since it served the aim both of the cash support system (the most generous financial compensation of absence from work in the developed world) and also functioned as welfare and unemployment support among those who had weak ties to the labour market, i.e. were unemployed before childbirth and or had poor labour market prospects (Bálint and Köllő 2008, Köllő 2012) added considerably to the exclusion of women from the labour market. The authors stated: „Taking the conclusions of previous studies and the results of our analyses into account, we are in agreement with the criticisms voiced by the OECD and other international organisations.12 The system of maternity leave has developed in an ad hoc manner through a series of modifications motivated by political and ideological considerations, without any factual discussion of its objectives, costs, benefits, or overall coherence. The current system provides an incentive for working women to leave the labour market for a (from the point of view of child welfare unnecessarily) prolonged period of time, while it fails to offer appropriate assistance to women with poor labour market prospects in returning to work or entering the labour force for the first time.” (Bálint and Köllő, 2008). Returning back from maternity leave was equally hard because of the lack of child care institutions and because of the resistance of employers. The amortization of skills during the average 4, 7 years (Bálint and Köllő 2008) of maternity leave worsened the problem. Many of the interviewed experts also categorized women as one of the vulnerable groups. It is a common experience and findings of many researches that women are discriminated on labour market. As a consequence of the above mentioned factors and due to the traditional division of labour within families in Hungary the labour market activity of women with small children is particularly low. The proportion of women in managerial positions, among entrepreneurs and in government is small. There is also an average 15 per cent unexplained wage gap between men and women which is caused partly by employers’ prejudices, partly by the occupational segregation by gender (Sik et al., 2011; Koncz, 2011). Women are often grouped into occupations where wages are lower, both in horizontal terms (these are typical ‘women’s jobs’) and in vertical terms (there are fewer managers). According to a 2013 research the most common reasons behind the perceived discrimination in Hungary were as follows: being Roma, age, disability, and being women.13 These findings are in accordance with the previous research and surveys of the Hungarian labour market, which found that the Roma, women, elderly, and disabled workers are discriminated against most often. It worsen the situation that yet nearly two-thirds of the working-age population belong to these groups (Lovász 2012).

The decree No 6/1996 neither defined Roma (or Gipsies), the largest ethnic minority group in Hungary explicitly as specific disadvantaged groups but the experts agreed on that Roma, because of their low educational level, and because of their long term unemployment anyway always has belonged to the defined disadvantaged groups. Besides, Roma usually live in deprived regions where there is no job and they are more often long-term unemployed. The problem of identifying Roma in order to estimate the size of target group in case of policies addressing Roma, is of practical importance. The problem is that in Hungary, in the same way as in other part of Central Europe, Roma is not a clear cut ethnic category, since a great many Eastern Europeans have Roma ancestors

11 The system combined the following elements: Insured maternity leave (in Hungarian: gyed), flat rate parental leave (in Hungarian: gyes) and flat rate parental leave (in

Hungarian: gyet). Parents who have been insured for at least 180 days over the 2-year period prior to the birth of the child are entitled to the child care fee (gyed). The

child care fee is available to parents – biological or adoptive parents as well as to guardians – up to the child’s age of 2 years , and can be paid either to the father or to the

mother may get child care fee. For the period of the child care fee the employer must provide an unpaid leave to the parent. The amount of the child care fee is 70 % of

the parent’s daily average income in the previous year. 12 The views of the World Bank (2007) are in accord with the OECD (2007): “Hungary has the most complex system, with a plethora of fragmented benefits and

programs, many of which have no connection with each other.” 13 TÁMOP-5.5.5/08/1 Combating Discrimination – Shaping Societal Attitude and Strengthening the Work of the Authority. The Extent of Equal Treatment Awareness

Among Students in Higher Education.

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even they are simply not aware of, and mainstream society regard well-integrated Roma as non-Roma or “whites”. On the other hand racially non-Roma underclass families are easily labelled as ‘Roma’ if they fail to meet certain social expectations. Thus, ‘Roma’ becomes more of a codename for ‘underclass’, with an ethnicizing flavour (Janky- Pogátsa 2013). Researchers use different approaches to estimate the number of Roma (e.g. self-categorizations, categorization by the researchers or pollsters, or categorization by the social environment), any of these methods can be debated. In Hungary their number is estimated to be anywhere between 300 000 to 800 000. In the latest Population Census in 2011 there were 315 583 persons who professed themselves to be Roma.14 (The sensitive questions of ethnicity, religion and the infirmity of an individual could only be asked with restrictions. Therefore responding to these questions was not compulsory.)

One of the findings of the European Integration Fund15 supported researches in Hungary was that migrants and the issue of migration in Hungary is not as much significant as other social issues (the most often mentioned were: the problems of Roma integration, the corruption, and poverty). However a recent opinion poll found that the Hungarian evaluation of immigrants is one of the least positive of EU 27 member countries16. This is all the more startling as, compared to the old EU members, the rate of immigration to Hungary is low. While immigrants from non-EU countries amount to nearly 4% of the total EU population, the corresponding figure is less than 1% for Hungary (Göncz – Lengyel – Tóth 2012).

The foundations of the Hungarian labour market policy were laid down by Act IV of 1991, commonly known as the Employment Act. The policies set out by the Act are commonly referred to as employment policy measures in the Hungarian technical terminology. The act on the prevention of unemployment and unemployment provisions was adopted in 1991, after the political changes in Hungary.17 The regional Labour Centres created pursuant to the Act supervised nearly 200 local job centres. The employment service has operated under the supervision of various ministries over the past decades, depending on the government structure of the time.

3.1. THE POSITION OF THE DISABLED ON THE LABOUR MARKET

3.1.1. The labour position of the disabled in the pre-crisis period (2000-2007)

According to Judit Lechnerné Vadász’s (Senior Rehabilitation Policy Adviser Employment Office, Hungary) presentation on the January 2006 International Conference on Rehabilitation18, in Hungary due to specific historic reasons, the cause of disabled people had not been put on the public agenda, and had only remained a problem to be tackled by the individual families until the last decade of the 20th century. During the period of the socialistic command economy, the system of social and vocational rehabilitation was non-existent. However, the employment of people with reduced work

14 Source: Population census 2011, The Hungarian Central Statistical Office 15 http://ec.europa.eu/dgs/home-affairs/financing/fundings/migration-asylum-borders/integration-fund/index_en.htm 16 In spring of 2008 the ”Eurobarometer 69” survey found that 10% of the Hungarian population agreed with the statement that ”Immigrants contribute much to Hungary”, compared to an average of 44% for the EU. 17 1991. évi IV. törvény a foglalkoztatás elősegítéséről és a munkanélküliek ellátásáról. Flt. (Act IV of 1991 on Furthering Employment and Provisions for the Unemployed) http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=99100004.TV 18 http://en.afsz.hu/sysres/ofa/english/eloadasok-index.htm

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capabilities caused by their work, was resolved, mainly within the framework of large corporations, in relation to legally compulsory full employment. The system of wage regulation forced employers to hire workers for several low-earnings jobs in order to be able to pay more for workers who were important for the firms. Therefore, the employment of people who were or became disabled was solved in simple auxiliary-service type jobs, although rehabilitation, working to the full of someone's capabilities was not ensured. Disabled people were only employed in larger numbers at workplaces or companies specifically established for them. One of our interviewees said that “In that era people with disability were engaged with sorting buttons in order of size and colour. And after they had finished with one portion, the employers mixed up the buttons again and gave it back them to sort it out again and again.” Thus neither the institutional system, nor the methodology of rehabilitation was developed. The operation of NGOs was basically restricted to leisure and sports activities therefore their social role was not really significant. Partly as a consequence of their labour market role and position, for the disabled or people with reduced work capabilities, there were no proper educational and vocational opportunities which could have provided a basis for their future employment. Therefore, this peripheral stratum of the society (being employed in low-skilled or unskilled jobs and having low education) was also the biggest loser of the changes of the social and the related economic system.

At the beginning of the 90-es the number of employed people dropped by one and a half million, but only a part of this drop was reflected in increased unemployment. The most dramatic change was registered in the growth of inactive people among the population in the active age. It is an important fact that the number of active age people on disability pension increased to 364,946 by 1997, and continued to develop further to amount to 110,000 by 2004 (while at the same time the retirement age for women increased by 7, and for men by 2 years).

Table 8. Pensioners and the average age at retirement

Pensioners aged below the statutory retirement age

Average age at retirement, years

old-age and similar disability together women men

1990 232 617 n.a.

1991 252 103 n.a.

1992 288 966 n.a.

1993 294 812 n.a.

1994 99 235 313 049 n.a.

1995 64 207 332 332 n.a.

1996 66 889 352 032 53,1 52,4 54,1

1997 75 505 364 946 54,0 52,7 54,9

1998 69 723 380 148 52,6 52,1 53,1

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1999 173 897 424 459 52,2 51,9 52,7

2000 148 381 418 746 52,6 52,1 53,2

2001 172 525 447 001 53,4 51,4 54,7

2002 169 633 453 203 53,9 52,6 55,0

2003 196 753 467 289 54,3 52,5 55,3

2004 181 485 462 228 55,3 54,5 56,0

2005 213 416 465 797 55,4 55,1 55,7

2006 222 916 454 348 55,6 55,2 56,1

2007 265 392 451 953 56,8 56,2 57,4

2008 297 861 432 840 56,7 56,1 57,4

2009 343 515 422 695 57,5 56,6 57,9

2010 312 465 379 326 57,5 56,4 58,1

2011 275 151 362 124 58,1 57,8 58,8

Source: Statistical Yearbooks of the National Pension Fund and The Hungarian Labour Market – Review and Analysis 2008 and 2012

Note: Data for 2011 are preliminary. The number of pensioners is for January each year, old age pensions include old age, widows, and miners pensions. Disability pensions include the rehabilitation benefit introduced in 2008. The average age of retirement applies to all types of old age and disability pensions, but excludes the rehabilitation benefit.

According to a study on a labour market explanation for the rise in disability claims (Scharle 2008) the upsurge in disability pension claims starting in the mid-1960s in Hungary was accompanied by a clear and substantial decline in the general health of the population. The situation was different in the late 1980s: the previous declining trend seemed to be reversing. Although the indicators of mortality only showed improvement from 1993 onwards (Sándor, 2003), Pauka and Tóth (2003) affirm that negative health trends had come to a halt earlier than that. The proportion of people living with severe disabilities was stable in pre-retirement age groups between 1980 and 1994 and the self-rated health status of the population showed improvement.19 It was proven by the data that the relative number of disability pension applications is significantly affected by labour market conditions in addition to factors related to the state of health. Relatively more applications were submitted in counties with lower employment rates and where black employment is more accessible. A high share of the Roma population tends to dampen the negative effect of good labour

19 Pauka and Tóth (2003) compare a thorough medical survey of 1980 (Complex National Morbidity Survey, Komov) with a self-rated health survey from 1994 and the demographic survey entitled “Turning Points of our Lives” of 2001. The latter two surveys show improving trends for both sexes in the age groups of 40–49 years and especially 50–59 years.

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market conditions on disability claims, suggesting that the Roma minority are disadvantaged due to their places of residence as well as discrimination. As a consequence of the state budget deficit it was often recommended that social expenditure should be decreased20 . The regulations on disability pensions were first tightened in 1997–1998 with the aim to ensure that disability pensions were paid in accordance with the claimant’s actual state of health. The new act was put into practice in January 1998, when disability pensions ceased to be granted on a permanent basis and some of the previously acquired entitlements were also reassessed as temporary. Temporary entitlement was tied to more frequent medical assessment than before. Disability pension thus became a less secure source of income as a result of the new regulations. No further reforms were introduced until 2008, however, and the share of disability pensions has increased in early retirement as the statutory age of retirement had been raised and the conditions on claiming old age pension before the standard retirement age become more restricted. In 1993 the Salva Vita Foundation21 – one of the most important NGOs in this field - was established with the mission of contributing to the creation of social equality for people with intellectual disabilities and building a multicoloured, inclusive society. The emergence of this kind of organization indicated the growing awareness of the disability issue and need for social inclusion of the disabled. The different Workplace Training Programmes of the Foundation prepare students and adult with disability to work in integrated employment. Supported employment programme started in 1996, during which Salva Vita’s professionals started to find jobs for their disabled clients in the open labour-market. The Disability-Friendly Workplace Award was initiated by the Salva Vita Foundation with the aim to promote the encounter of job seekers with disabilities and those employers who are ready to employ them. The award is granted jointly by the Ministry of Human Resources, the American Chamber of Commerce in Hungary, the EFQM Hungarian Partner and the Salva Vita Foundation, for employers who meet the tender criteria. In 1994, there was draft legislation developed to ensure proper rights and equal opportunities for disabled people, and preparation was made to develop the concept of vocational rehabilitation. At that time the major stress was put not on rehabilitation but rather on the transformation of other elements of state administration and the system of passive measures. In 1995, the public administration reform had the aim of transforming the system of disability pensions, and the benefits for people with reduced work capabilities among other aims also to strike a financial balance in health and pension insurance systems. In the course of this work, it turned out very quickly that the basic criterion for the transformation of passive measures was to provide work opportunities for the workforce that had dropped out of the system of benefits, or had not been integrated into the transformed system. Initiatives at the time in connection with the situation on the labour market, the high rate of unemployment, and the lack of conditions remained unsuccessful.

In 1997-98, in the framework of the economic and social transformation, issues like equal opportunities for disabled people, medical, labour conditions and institutions for vocational

20 47 The 1995 World Bank report on Hungary, for instance, recommended tighter regulations on disability pensions as the most efficient means to reduce social insurance fund deficits in the short term provided that a substantial proportion of workers thus excluded from the disability pension scheme found employment in the formal labour market. 21 http://salvavita.hu/en/

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rehabilitation in the framework of the pension reform were put on the top of the social agenda. Unemployment was on a slow, year-by-year decrease in that time, which gave a chance for the rehabilitation of inactive people. In 1997 a service experiment was introduced in three county-level job centres that were in varying conditions, to facilitate the establishment of the framework, and the organised, methodological conditions for this service. The Parliament set the direction of the planned changes by its Decree 75/1997. (18. 07.) on transforming the system of social insurance and social benefits for people with reduced work capabilities, and for disabled people.

Act IV./1991. on the promotion of employment and unemployment benefits (Employment Act) introduced a provision as of 1st January 1998 that the State Employment Service shall provide the service conditions for the rehabilitation of people with reduced work capabilities. To facilitate the above, the following was defined: a) without sectoral bias, an obligation on all employers of more than 20 persons to employ employees with reduced work capabilities to the extent of 5%, or failing that, to pay rehabilitation contribution; b) use of the fund generated from contributions received in a decentralised (county-level) application system.

Further basic pieces of legislation were introduced in the spring of 1998: acts on the legal status and support of public utility (non-governmental company in the public interest) organisations, on the rights and equal opportunities of disabled people, significant amendments in the Labour Code, as well as in health and taxation provisions to facilitate equal opportunities and the rehabilitation of people with reduced work capabilities. The act on public utility organisations classified all rehabilitation related activities - employment, training or the facilitation of the employment of disadvantaged groups on the labour market - into the category of public utility, and enhanced public utility activities. This laid the foundation of the establishment of a relationship between rehabilitation institutions and non-governmental organisations. The National Disability Council was established as the advisory body of the Government. As an important means of coordination, in the end of 1999, the National Disability Programme was drawn up and announced, which set out the mid-term tasks in relation to equal opportunities. There was an Action Plan reviewed on an annual basis attached to the programme.

In the context of a changing labour market situation, the labour market organisation started to build the service system of vocational rehabilitation in 1998. This kind of system was unprecedented in Hungary and it had to be developed simultaneously with the introduction of the concerning legislation. The institutional system met these conditions in a framework of decentralised operations within a central programme to facilitate the employment of unemployed people with reduced work capabilities. As a major conditions in the employment of customers with reduced work capabilities, the act on adult education has been providing extra support to promote lifelong learning for disadvantaged groups since 2002: each year the training of a defined number of unskilled adults and disabled people can be financed by the state.

There was also the above mentioned incentive system introduced: Pursuant to the employment act, from 1998 each employer employing more than 20 employees was obliged to employ employees of reduced work capabilities to the extent of at least 5% (quota), and failing that, to pay rehabilitation

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contribution on the missing part of this quota.22 In 2012 less than 2% of the enterprises, approximately 10-11 thousand enterprises fell into this category.

The accreditation system of employers employing employees with reduced work capabilities was introduced in 2005, the achievable qualification levels ( basic certification, rehabilitation certification and advanced certification for sheltered organisations) were determined via an accreditation procedure, operated by the Employment Service with the involvement of labour experts specialised in this field. The certifications were pre-requisite for subsidisation from July 2007. Related to the subsidisation system, there was a regulation providing for investment sources to facilitate the employment of persons with reduced work capabilities. A small amount of de minimis subsidy can be granted as a general rule, and there was also an alternative application option for sheltered organisations based on the EU's employment supporting provision (from 2005). The supported investments were the cost of the necessary alteration and rebuilding of the workplace in order to make it suitable for employees with reduced working capacities.

Job centres dealt with almost 47,000 registered customers with reduced work capabilities in 2005, and placed almost 1/3 of them in jobs. Vocational rehabilitation has become integrated into the organisational, management and service system of the public employment service. There are rehabilitation work groups working at the county-level job centres, and rehabilitation job placement officers working at local units and Rehabilitation Information Centres (RIC) in the local Employment offices.

The disabled’s opportunity for better social inclusion was also enhanced by the fact that Act CXXV/2003 on equal treatment and the promotion of equal opportunities was brought into effect. The Equal Treatment Authority started its activity in autumn 2005. Hungary ratified Article 9. of the European Social Charter on the actual application of the right to career counselling in 1999, and ratified its Article 15. on the right of physically or mentally disabled people to vocational training, rehabilitation and re-integration into the society in 2005.

In 2005, programmes aiming at the dissemination of good practices by the Ministry of Employment and Labour Affairs, and the Employment Service, equal access programmes by the Public Employment Service, the Human Resource Operational Programme supported by the European Social Fund, and innovative civil projects within the framework of the EQUAL programme have been implemented. The Committee on Employment and Social Affairs of the European Union in its document entitled "Disability is a horizontal priority in the European Employment Strategy" highlighted some Hungarian practice as a good practice , e.g. extra support given to disabled people in adult training (22-23. guidelines); the integrated service practice of the Public Employment Service (19. guideline); state subsidy given for the dissemination of good practices used by non-governmental organisations (16. guideline).

The medical assessment of disability even in the middle of the first decade of the millenium assessed the systemic reduction of work capabilities, and did not assess employability on the basis of the remaining capabilities. And the construction of a consistent terminology to indicate disabled groups and groups with reduced work capabilities came years later. Several years later, from January

22Act CXCI of 2011 on assistance for people with partial work capacity and the amendment of certain acts raised the limit to 25 employees and the amount of contribution from 177 thousand HUF/person/year to 964 thousand HUF/person/year

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200823 complex assessment was introduced to promote the complex rehabilitation of persons with changed working capacity. It was different to the old procedure in terms of its fundamental approach. Instead of concentrating on health impairment, the new assessment system focuses on preserved capacities, mapping abilities that can still be used and issuing an opinion on the chances of successful employment rehabilitation.

3.1.2. The labour position of the disabled in the crisis and after crises period (2008-2013)

In December 2011 the Equal Opportunities of Persons with Disabilities non-profit Ltd.24 was established by the Hungarian State. The function of the new organization is to ensure that the process of providing fully equal opportunities to persons with disabilities is supported by trained, devoted and competent professionals. In the implementation of its professional programmes, there is a close cooperation with disability related advocacy and professional organisations as well as the domestic and international professional community working in the field, with a view to gaining the widest possible public acceptance for disability affairs and by following the principle “nothing about us without us”.

At present there are three different available data sources to estimate the number of disabled people:

1. The 2011 Census of the Hungarian Central Statistical Office – the latest available data

Since answering the questions regarding disability and chronic diseases was not mandatory, 89 per cent of the population answered. In 2011 the number of persons with disability was 457 thousand, i.e. the 4.6 per cent of the population. Some of them indicated more than one disability, altogether 561 thousand which means that one hundred disabled person get 123 disabilities. More than 70 per cent of the disabled persons are older than 50. The largest group (232 thousand people), the physically handicapped (with limitation of motion) belong to the group of the elderly, more than 80 per cent of them are above 50 years. 56 % of the disabled does not have more than primary school education (8 years). The educational level of persons, (altogether a startlingly high number: 1 million 648 thousand), who professed themselves to be chronically ill is lower in general, with the note that there are less chronically ill person in the better schooled younger age-groups, (77 percent of them are above 50 years).25

According to the findings of European Health Interview Survey (EHIS), 2009 Hungarians are in the second worst position regarding their health in the EU (based on self-assessment). The proportion of people thinking that their health is bad is approximately 20% in Hungary, while the EU average is just above 9%.26

23 http://norsa.gov.hu/complex-assessment-of-persons-with-changed-working-capacity 24 http://fszk.hu/english-introduction/ 25 http://www.ksh.hu/docs/hun/xftp/idoszaki/nepsz2011/nepsz_03_00_2011.pdf Population Census 2011, 3. National data. HCSO, 2013. 26 http://www.ksh.hu/docs/eng/xftp/stattukor/eelef09.pdf

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2. The statistics of National Office for Rehabilitation and Social Affairs (NORSA)

Since 2012 major transformations and developments have been taking place in the field of complex rehabilitation and social services in Hungary. The new system of regulations27 and institutions addresses the long-standing issues connected to the high number of individuals receiving services, the high social security and budgetary costs of these and the low level of employment activity of persons with disabilities and handicapped individuals. The benefit system for persons with changed working capacity, as well as the organisational structure of employment - focused rehabilitation, have been transformed, and new rehabilitation authorities have been established. The National Office for Rehabilitation and Social Affairs (NORSA) also undertakes the basic examination and care review of persons with disabilities, as well as the social employment aptitude test and review and the comprehensive rehabilitation aptitude test and review from 1 July 2009. The data show that, both the number of claimants and the number of those claimants who were not suggested for vocational rehabilitation, has been decreased from 2002. This is partly because of the relative prosperity in the pre-crisis period and the austerity measures after the crises. From 2010 this was part of the present government “make work pay” policy.

Figure 15. The number of new claimants and clients not suggested for vocational rehabilitation and the unemployment rate

Source: http://norsa.gov.hu/statistics

27 http://norsa.gov.hu/about Act CXCI of 2011 On Allowances for Persons with Disabilities and the Amendment of Certain Legislation , Ministry of National Resources Decree 7/2012 (II. 14.), Government Decree No 95/2012 (15.V.) on the Definition of Powers and Responsibilities of the National Office for Rehabilitation and Social Affairs and of the Policy Administration Services for Rehabilitation falling under the Professional Authority of the National Office

Diagram comparing the number of new claimants and clients not suggested for vocational rehabilitation with unemployment rate

1981-2013

0

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34

3. Persons with changed work ability on the labour market, 2011. – Hungarian Central Statistical Office report on the LFS supplementary survey28

The information used in the data analysis based on self-assessment or self-categorization and the comparison with administrative data sources is limited.

The labour market position of persons with changed work ability is very unfavourable, in the 15-64 age category there were 767 thousand people with changed work ability and only 185 thousand belonged to the active group (of which 139 thousand were employed and 46 thousand were unemployed). Their activity rate was 24,1%, while the activity rate for the group with unchanged work ability was 67,8%. The employment rate for the group with changed ability was 18,1%, the unemployment rate was 24,9% compared to the 60,8% and 10,2% in the case of the group with unchanged work ability.

The changed work ability primarily is characteristic to the age groups above 45 years. Under the condition of generally low level of employment, the changed work ability in younger age goes together with the stronger intention to searching for job and to get back to the labour market, that is it predisposes to unemployment. While late in life, because of the earlier failure, evolves a resignation associated with the absence from labour market, and causes a permanent, irreversible labour market exclusion.

The remarkably low, 18,1%, employment rate of the 15–64 years people with changed work ability does not improve along with the increase of the education level. The employment rate even in the group of people with high education, is 31,0%, and hardly exceeds the employment rate of healthy population with no more than primary school education (29,2%).

The group of persons with not more than primary school education level persons with changed work ability is mainly inactive. More than four fifth of them, 83,3% are inactive, and the proportion in the groups with higher educational level also is high, more than 60%.

Table 9. Population with changed and unchanged work ability by different attributes 2011

Aged 15–64

number of person with changed work ability

number of person with unchanged work ability

population ratio of person with changed work ability %

Altogether 766 823 5 925 684 6 692 507 11,5

From which:

By gender

Male 353 595 2 940 824 3 294 419 10,7

Female 413 228 2 984 860 3 398 088 12,2

28 http://www.ksh.hu/docs/hun/xftp/idoszaki/pdf/megvaltmunkakep.pdf

35

By economic activity

Employed 139 035 3 605 637 3 744 672 3,7

Unemployed 627 788 2 320 047 2 947 835 21,3

Source of data: Central Statistical Office, http://www.ksh.hu/docs/hun/xftp/idoszaki/pdf/megvaltmunkakep.xls

Figure 16. Population aged 15-64 , with changed and unchanged work ability by educational level and economic activity 2011

Source of data: Central Statistical Office, http://www.ksh.hu/docs/hun/xftp/idoszaki/pdf/megvaltmunkakep.xls

Those living with health problems and disabilities and find their prospects uncertain or hopeless in the local labour market are more prone to avail themselves of the available, generally small, social benefits referring to their state of health. As a consequence of that, in the disadvantaged regions the proportion of inactive persons with changed work ability is higher. In regions where there are more vacancy and job offer, persons with changed work ability also have higher chance for (re)integration to the labour-market. The most disadvantaged region is Northern Hungary (especially Nógrád and Borsod-Abaúj- Zemplén counties), where the employment rate 13% for the group of people with changed work ability.

Figure 17. Population aged 15-64 , with changed and unchanged work ability by regions and economic activity 2011

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0

Employed withchanged work

ability

Employed withunchanged work

ability

Unemployed withchanged work

ability

Unemployed withunchanged work

ability

Inacitve withchanged work

ability

Inactive withunchanged work

ability

less than primaryprimarylower secondary vocationalupper secondarytertiary

36

Source of data: Central Statistical Office, http://www.ksh.hu/docs/hun/xftp/idoszaki/pdf/megvaltmunkakep.xls

The final conclusion of the report is that the opportunities for people with changed work ability are limited, from ten persons only two works and typically those with no serious health problem. With suitable measures (transport organization, atypical employment forms) at least 100 thousand people would be given the opportunity for a meaningful, complete life. For those for whom the society today only ensures the narrow means.

During the years of 2009 and 2010 to improve the labour market inclusion of persons with disability the following policies and measures were implemented and or maintained (Frey, 2011):

Incentives for the employment of people with disabilities

According to Article 41/A of the Employment Act, in businesses with more than 20 workers, no less than 5% of the workforce must be people with disabilities (quota). If they fail to meet the quota they must pay a rehabilitation contribution for the missing headcount (in 2010 this was 964,500 forints/person/year). The contribution must be paid quarterly and in advance, based on quarterly workforce statistics.

Main elements of the system promoting the employment of disabled workers

The accreditation of companies employing workers with disabilities has been in place since November 2006.29 This consists of the job-focused assessment of the company. The accreditation certificate can be issued for a different period at any of the three assessment levels, and the process is managed by the Employment and Social Office. Accreditation has been a general requirement to access public subsidies since July 1, 2007.

Support to employers

1. Support to the long-term employment of disabled workers. The current system has both statutory and discretionary components. The first includes the wage subsidy to the employment of disabled

29 Regulations: 176/2005. (IX. 2.) Government Regulation; 14/2005. (IX. 2.) Ministry of Employment and Labour Regulation: 26/2005. (XII. 27.) Ministry of Employment and Labour Regulation; for detailed information see: www.afsz.hu

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0

Central Hungary

Central Transdanubia

Western Transdanubia

Southern Transdanubia

Northern Hungary

Northern Great Plain

Southern Great Plain

Inactive with unchanged work abilityInacitve with changed work abilityUnemployed with unchanged work abilityUnemployed with changed work abilityEmployed with unchanged work abilityEmployed with changed work ability

37

people30. It is possible to reimburse the wage of personal assistants at the workplace31 pro-rata based on the time spent in assisting the individual in work, up to 100% depending on the support needs of the individual (people who provide social, mental health or health care support are not eligible for the subsidy).

2. Wage subsidies for the employment of disadvantaged jobseekers that are available for employers of people in certain life situations (such as young entrants, people caring for children or immediate family members, people aged over 50 years or people with a low level of education) can also be claimed for the employment of jobseekers with partial work capacity in these groups, regardless of the level of their work capacity.32 The subsidies can be claimed with the Start Cards that will be discussed later.

3. Capital investment aid for the employment of people with partial work capacity: this scheme is part of the system of employment aids and promotes the employment of people with disabilities by contributing to capital investment.33 Funding is allocated through open competition from the Rehabilitation Sub-Fund of the Labour Market Fund for the employment of people with disabilities. The aim of the regulation was to promote the development of the work environment suitable for people with living with disability.

Employers who meet the criteria receive the assistance for workplace inclusion according to the rules of de minimis state aid. Aid for vocational rehabilitation is awarded according to the relevant EU rules on employment aid for sheltered companies. Aid for the creation of new jobs within both schemes can only be given for workers with less than 50% work capacity. Aid can be repayable and non-repayable or a combination of both.

4. The possibility of preferential treatment of businesses employing workers with disabilities in public procurement.34 Under certain conditions set out by the law there is a possibility or an obligation to limit the scope of potential suppliers, contractors or service providers to sheltered companies where more than 50 per cent of the workforce has a partial work capacity, or companies that provide

30 Wage subsidy can be paid from the de-centralised employment fund of regional job centres to employers that employ disadvantaged people. Wage subsidy can also be paid to those employers who continue to employ disadvantaged workers who are at risk of redundancy. The subsidy is paid at a rate of up to 50% of the wage and contributions, 60% for people with disabilities, with the following conditions: – employment will be maintained for at least the duration of the subsidy, and – workers in similar jobs have not been made redundant within the 12-month period up to claiming the subsidy, and – will not be made redundant while receiving the subsidy. As a general rule wage subsidy can be paid for up to 12 months, and 24 months for people who have been registered as jobseekers for at least 24 months. 31 Workplace personal assistants are individuals who are employed by the employer of the disabled worker to provide direct job-related assistance or coaching to the individual (but this does not include performing the job itself). 32 Act 123 of 2004 on promoting the employment of young entrants, unemployed persons aged over 50, people returning to work after caring for a child or a family member and on graduate work placements; 31/2005. (29. 09) Ministry of Finance Regulation on the conditions of use of the Start Card, claiming the reduced contribution rates and the detailed rules of financial reporting. 33 Ministry of Labour Regulation no. 6/1996 (16. 07) on employment aid and aid to mitigate the effects of employment crises 34 Act 129 of 2003 on public procurement, article 17/A; 302/2006. (23. 12) Government Regulation on the conditions of preferential treatment of sheltered companies in public procurement.

38

vocational rehabilitation for people living in social care institutions and where more than 50 per cent of the employees have a disability.

5. Subsidies for collective vocational rehabilitation. This grant scheme gives compensation to sheltered companies for their expenses and to non-profit companies employing people who cannot participate in the open labour market for rehabilitation-related expenses.35

Service users of social care institutions can be involved in two new forms of employment: vocational therapy, and vocational rehabilitation (under a fixed-term contract of employment) – jointly referred to as institutional employment. Institutions can use external companies in the vocational rehabilita-tion of service users.

Incentives for employees

There have been two types of assistance in the rehabilitation system since January 1, 2008. People with disabilities who are capable of working and who meet the criteria set out by the law are paid a Rehabilitation Allowance, while those who are not capable of working receive Disability pension.

The Rehabilitation Allowance can be paid to persons who:

– have reduced work capacity of 50–79% and due to their long term condition cannot be employed in their previous job or in a similar job without vocational rehabilitation,

– they are out of work, or

– their earnings are no less than 30% lower than the average earnings in the four months up to the loss of work capacity, and

– they are, or can be made, capable of working, and

– have accumulated enough years of service based on their age to qualify for a disability pension.

People receiving Rehabilitation Allowance must co-operate with the job centre and sign an agreement. The rehabilitation plan forms part of this agreement, it sets out the direction of vocational rehabilitation and identifies rehabilitation services and supports based on medical, social and vocational need. The implementation of the plan means that rehabilitation is successful.

In 2010 an 2011 the there were also measures aiming to develop the existing work capacity of people with reduced work capacity by providing adaptations and adequate services and facilitate their return to work or continued employment (Busch and Cseres-Gergely 2012).

The primary aim of rehabilitation is to develop existing skills and competencies of people with reduced work capacity that can prepare them to move on to work. It can also help to combat discrimination arising from prejudice or lack of information. After successful rehabilitation people can take up work on the open labour market or in special settings. If implemented adequately, rehabilitation can also increase the independence of people with reduced work capacity, who can perform at the same level as non-disabled workers, and this can increase the level of employment in the long run without increasing public expenditure. Scharle (2011) compared different forms of

35 177/2005. (02. 09) Government Regulation and 15/2005. (02. 09) MoEL Regulation. 39

sheltered employment and rehabilitation in Hungary and found that the wage and other subsidies of sheltered workshops do not significantly improve the employment prospects of participants while the rehabilitation services of non-profit providers do.

The distinction between sheltered employment and rehabilitation in Hungarian practice is as follows:

1. Sheltered employment: covers those sheltered work measures that have the aim of preparing people for integration into the open labour market: for example the physical adaptation of the workplace, both building and equipment, or the provision of mentors or other specialist assistants. Two types of organisations can provide sheltered employment in Hungary: sheltered workshops and accredited rehabilitation employers.36 It is a requirement for both types of organisations that a large proportion of their workforce has a reduced work capacity. The government provides two types of support towards the cost of rehabilitation: wage subsidy that can cover from 40 to 100 per cent of the wage and contributions, and assistance to work placement, job retention, vocational rehabilitation and the provision of assistants at the workplace. The other type of rehabilitation support is a cost reimbursement: the partial reimbursement of allowable and approved expenses directly related to the employment of people with reduced work capacity that the employer would not have incurred with the employment of non-disabled workers. This can be claimed by sheltered employers only. Job centres make the decision about the payment of rehabilitation wage subsidy.

2. Rehabilitation: covers measures providing guidance, training and development that help participants to adjust to their disability or condition, develop competencies that prepare them to move on to work, and find and retain a suitable job and workplace. Rehabilitation is supported via European Union programs and ad hoc grant programs for non-profit organisations. The SROP priority project 1.1.1 Promoting the rehabilitation and employment of people with reduced work capacity provides services and support to help labour market (re-)integration and job retention. The priority project is implemented by the public employment service. The process of rehabilitation is closely related to the payment of rehabilitation allowance37 that is paid for those with a 50–79% loss of work capacity. (People with a loss of work capacity between 50–79% are eligible for rehabilitation allowance for the length of rehabilitation – up to three years. The amount of this is 120% of the disability pension the claimant would be entitled to, and no less than 120% of the minimum rate of disability pension. To be eligible for the allowance people have to participate in vocational rehabilitation and cooperate with the employment service. )

Earlier the accreditation of employers of people with reduced work capacity was carried out by the Employment Office since its introduction (on November 1, 2005). As of January 1, 2011 this,

36 Accredited employers are those that have received a special accreditation to employ people with reduced work capacity. There are different levels of accreditation (basic or rehabilitation, and high level or conditional.) 37 For people who are not suitable for rehabilitation, disability pension is the alternative. People are entitled to disability pension if they have enough qualifying years and lost more than 79% of their work capacity, or between 50 and 79% of their work capacity and they cannot be rehabilitated. For accident-related disability pensions previous contribution payment is not necessary. A further condition is that claimants are out of work or if they work they are earning less than twice the disability pension or less than the statutory minimum wage. The starting pension is based on the length of the qualifying period. Disability pensions are increased in the same manner as the old age pensions. If the re-assessment of disability finds that the loss of work capacity is less than 79%, entitlement to disability pension stops.

40

together with other activities related to the payment of public subsidies, has been the responsibility of the National Rehabilitation and Social Office (NRSO) together with other public bodies.

Main legislation: Government regulation no. 177/2005. (02. 09) on Public Subsidies for the Employment of Workers with Reduced Work Capacity; Ministry of Employment and Labour (MoEL) regulation no. 15/2005. (02. 09) on the Activities of the Employment Office in Relation to Rehabilitation; Government regulation no. 176 /2005. (02. 09) on the Accreditation of Organisations Employing Workers with Reduced Work Capacity and the Inspection of Accredited Employers; and MoEL regulation no. 14/2005. (02. 09) on the Procedure and Requirements of the Accreditation Process.

New legislation: Government regulation no. 121/2011. (15. 07) Amending Government Regulation no. 177/2005. (02. 09) on Public Subsidies for the Employment of Workers with Reduced Work Capacity; Government regulation no. 332/2010. (27. 12) Amending Certain Government Regulations in Relation to the Activities of the National Rehabilitation and Social Office; Ministry of National Resources (MoNR) regulation no. 46/2011. (15. 07) Amending MoEL Regulation no. 15/2005. (02. 09) on the Assessment of Eligibility for Public Subsidy for the Employment of Workers with Reduced Work Capacity; MoNR regulation no. 25/2010. (30. 12) Amending Certain Ministerial Regulations in Relation to the Activities of the National Rehabilitation and Social Office; Act 84 of 2007 on Rehabilitation Contribution, Government regulation no. 353/2010 on Pension and Accident-Related Pension Increases.

On-line resources: http://www.munka.hu/engine.aspx?page=ma_tamogatas&switch-content=ma_tamogatas_megvaltozott_munkakepz_091026&switch-zone=Zone1&switch-render-mode=full;

http://www.orszi.hu/html/pdf/tajekoztatok/Megvaltozott_munkakepesseguek_foglalkoztatasanak_

tamogatasa_2011.pdf; http://www.orszi.hu/index.php?ID=76

In 2012 there were also changes in both the regulation and institutional framework of vocational rehabilitation and health impairment assistance (Busch, Cseres-Gergely and Neumann 2013). A new form of subsidy for workers with partial work capacity introduced in 2012 was the rehabilitation card that exempts employers from the social contribution tax on wages of up to twice the minimum wage. People who were receiving group 3 disability pension or regular social assistance on 31 December 2012, or were assessed as suitable for vocational rehabilitation or employment with long-term subsidy after 1 January, 2012 are eligible for the card. People within five years from state pension age and those who were receiving group 1 or 2 disability pension on 31 December, 2012 are not eligible. As of 1 July, 2012 people with partial work capacity who are self-employed or individual members of a business are also exempt from the payment of social contribution on their income38. Its rate is equal to the discount provided by the rehabilitation card. It should be noted that as of 2012 the assistance is paid on the basis of potential employability for employees, however for employers in the latter group it is paid according to the degree of impairment.

38 2 And further groups set out by the Act as eligible. 41

As of 2012 employers with a minimum of 25 employees must meet the employment quota for disabled workers as opposed to the previous limit of 20 employees. Workers with partial work capacity are counted in the quota if their loss of work capacity is at least 50% or the degree of their Whole Body Impairment is not less than 40%. For any unfilled quota employers must pay a penalty of HUF 964,500 per position per year.

People with partial work capacity, who have been found suitable for vocational rehabilitation by the comprehensive assessment, can qualify for rehabilitation assistance. This new form of assistance replaces a range of previous benefits including the rehabilitation allowance, disability and accident-related pensions, regular social assistance, temporary assistance and the health impairment allowance of miners. The National Office for Rehabilitation and Social Affairs (NORSA; in Hungarian: Nemzeti Rehabilitációs és Szociális Hivatal, NRSZH) was established on 1 January, 2011 and is responsible for the accreditation of companies employing people with partial work capacity and the administration of public assistance and subsidies (in the case of wage subsidy for vocational rehabilitation this is limited to technical assistance). On 1 July, 2012 a network of new rehabilitation management authorities was established under the supervision of the NRSZH and under the scope of municipal and county government offices. Their area of competence are identical with those of government offices (includes Pest county in Budapest). Tasks previously carried out by three different authorities (NRSZH, government offices and jobcentres) have been delegated to the new rehabilitation management authorities from 1 July, 2012. National Pension Insurance directorates remain responsible for the payment of rehabilitation benefits The 19 rehabilitation management authorities operate in approximately 100 local offices (customer services) with 620 staff. Their main objective is to help people receiving rehabilitation assistance to return to the labour market. They provide the same range of services that the employment service provides on the basis of Ministry of Economy decree 30/2000 (15 September). For job brokerage services they use the database of job centres.

People claiming rehabilitation assistance must take part in public works if their health status allows. Vocational rehabilitation and sheltered employment are financed from wage subsidy and cost compensation appropriations set out in the budget act. These were 11.7 billion forints and 24.5 billion HUF respectively in 2012. The NRSZH will be the beneficiary of the new SROP Project 1.1.1 that will be implemented in cooperation with the rehabilitation management authorities. The other EU-funded programme – that is coming to an end – is still managed by the employment service

Legislation: Act CXCI of 2011 on assistance for people with partial work capacity and the amendment of certain acts; Government decree 327/2011 (29 December) on procedural rules for assistance to people with partial work capacity; Ministry of Human Resources decree 7/2012 (14 February) on comprehensive assessment; Ministry of Human Resources MHR decree 8/2012 (21 February) on vocational rehabilitation experts; Government decree 95/2012 (15 May) on the National Office for Rehabilitation and Social Affairs and the responsibilities and jurisdiction of rehabilitation management authorities under its management; Government decree 238/2012 (30 August) amending Government decree 177/2005 (2 September) on public assistance to the employment of people with partial work capacity.

On-line resources: nrszh.kormany.hu; kormany.hu

Discrimination on labour market against people with disabilities

42

According to a comprehensive study on the discrimination on labour market (Lovász 2012) the discrimination against people with disabilities over time is incompletely documented: there are also few comparable data available on their labour market activity39. Censuses have collected data on the activity of people with disabilities, and, within the framework of the annual CSO Labour Force Surveys of 2002, 2008 and 2011, supplementary surveys gathered data on the labour market situation of those who live with a permanent disability or illness. According to the latter group of surveys, the working-age population with disabilities has shown a growing tendency to employment; yet even in 2011, barely half was employed. The proportion of employees with disabilities is very low in all sectors, and in the civil and public sector it is even lower than the national average (about 1 per cent, while it is about 2 per cent in the private sector) (Simonovits and Koltai, 2011b). We have no information available on wage differentials of the disabled. As with older workers, this low labour market participation is explained by reasons from the supply and demand. On the supply side, the relatively easy access to disability pensions is responsible; on the demand side, low levels of education40 and discrimination are the causes. According to the household surveys of the past few years, the extent of discrimination is considerable. In the Equal Treatment Authority survey, after origin and age the most frequent perceived reason for discrimination is disability. Almost 8 per cent of the total population perceived disability-related discrimination in the year prior to the survey. According to half of the population, disability-related discrimination is frequent (Neményi et al., 2011). In the EU-MI DIS survey, 50 per cent of the total population of the same skilled and experienced jobseekers believed that disability was a disadvantage, while the EU average was 41 per cent (Sik and Simonovits, 2009). According to a study by the social research organization TÁRKI , people with disabilities typically face some form of discrimination – most of them (20 per cent) on the labour market (Bernát and Hajdu, 2011). During CV testing in hiring, there was less feedback given to people with disabilities. Men with disabilities received feedback only 19 per cent of the time, while in other groups the feedback rate ranged from 20 per cent to 29 per cent (Simonovits, 2009).

The latest changes in legislation

Retirement before the statutory pension age was abolished in Hungary after 1 January, 2012, and early retirement pensions were replaced by non-pension benefits. Alongside the transformation of old age pensions, the system of disability pensions also underwent changes. Disability pensions were replaced by benefits for people with partial work capacity. To qualify for these benefits the health status of the claimant must be 60% or under and they: – have had social insurance for at least 1,095 days during the five years prior to application, – are not in employment; – are not receiving regular financial assistance. The benefit can take the form of rehabilitation assistance if the claimant has been found suitable for vocational rehabilitation or disability assistance if they are not recommended for vocational rehabilitation. Claimants must be awarded disability assistance even if they are suitable for vocational rehabilitation but they are no more than five years from the old age pension age. Main legislation

39 See the analysis of the 2011 CSO Labour Force Survey earlier in this section. 40 The low level of education itself may be a consequence of discrimination: in addition to the demotivating impact of lower anticipated wages, discriminatory practices in public education can lead to discrimination. Children with special needs are taught in typically segregated, separated institutions; this often means lower-quality education. It is particularly common in the case of children of low-educated parents not to get access to proper development (Havas, 2009).

43

Act CXCI of 2011 on assistance for people with partial work capacity and the amendment of certain acts; Government decree 327/2011 (29 December) on procedural rules for assistance to people with partial work capacity. In view of the increasing burden on the budget, international organisations recommended the tightening of conditions of entitlement as early as the beginning of the 1990s41. The new, 2012 regulation regarding disability pensions seems to fulfil this request. Although there are other problems left to solve. On the one hand, the old system needed to be restructured in order to reduce incentives to leave the labour market permanently and rise in disability claims, on the other hand, alternative solutions need to be offered to those with low chances of finding secure jobs in the primary labour market. The first two components of the system which already has been introduced in several European countries are aimed at reducing incentives: tighter regulations on eligibility conditions and a reduction in benefit amounts. The third component would offer an alternative: active labour market policies or social services which enhance productivity and employment prospects. The first two steps already have been taken but the do not know much about the third; the effective labour market policies leading back to the open labour market.

3.2. THE POSITION OF MIGRANTS ON THE LABOUR MARKET

3.2.1. The labour position of the migrant in the pre-crisis period (2000-2007)

Table 10. Stock of foreign population by nationality in Hungary Thousands Of

whichWo-men

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 (%)

Romania 45,0 47,3 55,7 67,5 66,2 67,0 65,8 66,4 72,7 76,9 73,5 44

Germany 7,7 7,1 7,4 6,9 10,5 15,0 14,4 16,7 18,7 20,2 21,9 48

Ukraine 9,8 9,9 13,1 13,9 15,3 15,9 17,3 17,6 17,2 16,5 15,4 54

China 6,8 6,4 6,8 6,9 8,6 9,0 10,2 10,7 11,2 11,8 12,1 45

Serbia 8,4 7,9 8,3 13,6 8,4 8,5 13,7 13,7 11,5 10,7 8,7 47

Slovak Republic

2,2 1,5 2,5 1,2 3,6 4,3 4,9 6,1 6,4 7,3 8,1 60

Former Yugo-slavia

.. .. 4,1 .. 3,7 4,2 3,5 3,3 5,7 5,8 4,7 46

Austria 0,8 0,8 0,8 0,5 1,5 2,2 2,6 3,0 3,7 3,9 4,1 37

Russian Fede-

2,0 1,8 2,2 2,6 2,8 2,8 2,8 2,9 3,3 3,5 3,8 65

41 Provided that a substantial proportion of workers thus excluded from the disability pension scheme found employment in the formal labour market.

44

ration

United States

.. .. .. .. .. 1,9 2,3 2,4 3,1 3,3 3,4 45

Vietnam 2,2 2,1 2,4 2,5 3,1 3,1 3,0 3,3 3,1 3,1 3,3 50

Poland 2,2 1,9 2,2 2,2 2,4 2,7 2,6 2,8 2,5 2,7 2,8 62

Former USSR

5,1 5,7 4,0 5,1 3,0 3,1 2,7 2,6 3,0 3,0 2,7 69

United Kingdom

0,7 0,9 1,0 0,4 1,5 1,9 2,1 2,4 2,4 2,5 2,6 33

France 0,6 0,7 0,8 0,3 1,3 1,5 1,5 2,2 1,9 2,1 2,3 40

Other countries

22,8 21,9 19,0 18,3 22,5 23,0 25,1 28,3 31,4 35,8 38,3

Source: International Migration Outlook 2013 - © OECD 2013

Table 11. Immigrants in Hungary by sender country, thousands

EU15 Romania Ukraine Serbia Slovakia Other

European China Other Together

1990-1994 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1995 11,8 68,4 3,5 15,3 0,2 23,7 3,5 11,7 138,1 1996 13,0 65,7 4,4 16,2 0,5 22,6 4,3 13,3 140,0 1997 14,7 61,6 5,6 15,4 0,6 22,6 6,6 15,3 142,5 1998 16,4 62,1 7,2 14,3 1,0 23,0 7,8 16,5 148,3 1999 17,3 57,4 9,9 15,2 1,6 22,7 8,3 17,9 150,2 2000 17,9 57,3 11,0 15,6 1,7 22,2 8,9 18,5 153,1 2001 11,7 41,6 8,9 12,7 1,6 16,7 5,8 11,0 110,0 2002 12,2 45,0 9,8 12,0 2,2 16,5 6,8 11,9 116,4 2003 11,6 47,3 9,9 11,7 1,5 16,2 6,4 11,2 115,9 2004 12,1 55,7 13,1 12,4 2,5 15,2 6,8 12,4 130,1 2005 9,7 67,5 13,9 13,6 1,2 16,2 6,9 13,0 142,2 2006 18,4 66,2 15,3 12,1 3,6 15,0 8,6 15,3 154,4 2007 25,4 67,0 15,9 12,6 4,3 15,7 9,0 16,2 166,0 2008 25,5 65,8 17,3 17,2 4,9 15,4 10,2 18,3 174,7 2009 30,7 66,4 17,6 17,0 6,1 16,6 10,7 19,3 184,4 2010 33,6 72,7 17,2 17,2 6,4 17,5 11,2 21,9 197,8 2011 36,5 76,9 16,5 16,3 7,3 18,4 11,8 23,2 206,9

Source: CSO Demographic Yearbooks based on Home Office data. Note: Data for January. Figures were revised between 2000 and 2001 and invalid residence permits were deleted from the database. Figure 18. Migratory trends

45

Per 1 000 population

1. Based on "mirror" statistics, that is the number of Hungarian citizens registered as immigrants in the host countries. 2. Estimate. Source: Eurostat (2013), "Population and Social Conditions", Eurostat Database, December and SEEMIG (2013), “South East Europe and Hungary – Migratory Trends”, South East Europe Transnational Cooperation Programme. 3.2.2. The labour position of the migrant in the crisis and after crises period (2008-2013)

Hungary is not a major destination for international migrants. At the end of 2011 there were 207 600 foreigners in Hungary, a slight decline compared to 2010 and representing 2% of the overall population. 80% of the immigrants are Europeans, predominantly from neighbouring countries, and most are ethnic Hungarians. Long-term migration to Hungary (as defined by residence of at least one year) continued to decline in 2011, to 22 500, 6% less than 2010 and 37% less than the record level observed in 2008. This trend reflects the economic crisis, which hit Hungary hard from 2009-10. Romania has been the leading country of origin of immigrants over the past decade, although its share in long-term inflow declined from 50% in 2001-02 to 26% in 2011. The other main countries of origin were Germany (11%), Ukraine (6%) and the Slovak Republic (5%). Immigration from China is more limited but has been growing. The total number of foreign workers was 22 400 in 2011 (10 500 work permits issued by the National Employment Office for non-EEA migrants, and 11 800 registrations by EEA migrants). This was 8% fewer than in 2010, reflecting the poor employment situation. The main countries of origin of migrant workers were Romania (28%), China (14%), Ukraine (12%), and the Slovak Republic (7%) (OECD 2013).

As for the past tendencies, immigration into Hungary began rapidly after the transition and was more significant than in other East European countries. Refugees arrived in large numbers, and the primary source of migration was ethnic Hungarians, citizens from neighbouring countries who had Hungarian as their mother tongue.42 Migrants coming from Romania, Ukraine, Serbia and Slovakia practically have been ethnic Hungarians. After the rapid initial influx, the level of legal immigration stabilized; so, too, did the composition, with most migrants arriving from neighbouring countries. The level of Hungarian immigration does not significantly differ from other East European

42Immigration figures are regularly published in the Demographic Yearbook of the Central Statistical Office. Based on information from the public

administration bodies, we are able to trace the foreign nationals legally staying in Hungary. Only the stock data and the immigration data are adequate for a reliable analysis; net emigration, however, cannot be established from available data, due to the inaccuracy of data on outflow (see Table 4.4 of the Statistical Annex).

0

1

2

3

4

5

6

7

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012² 0

1

2

3

4

5

6

7

8Immigration to HungaryEstimated emigration from Hungary to European countries¹

46

countries, with migrants accounting for only a few per cent of native citizens (a substantially lower level than in most West or South European countries) (Hárs, 2012).

The relatively low immigration, largely of ethnic Hungarians from neighbouring countries – may be reinforced by the 2011 law, as it gave them easier access to Hungarian nationality, with about 100 000 people benefitting. The low immigration reflects the language barrier, but also until 2013 the lack of a national immigration strategy and possibly a relatively high incidence of xenophobia (Hárs and Sík, 2008; Hárs, 2009). More recently, the deterioration of the socio-economic situation and certain measures affecting more heavily foreign-owned companies, such as some special taxes on specific sectors, may also have weighed on high-skilled immigration (OECD, 2014). Table 12. Migrants' labour market situation in Hungary Average Labour market outcomes 2000 2005 2010 2011 2001-

2005 2006-2010

Employment/population ratio Native-born men 62,6 63,0 60,2 61,0 63,0 62,3 Foreign-born men 69,4 72,3 69,2 71,1 72,0 72,4 Native-born women 49,4 50,9 50,4 50,5 50,3 50,5 Foreign-born women 49,8 54,3 62,4 54,7 49,8 57,5 Unemployment rate Native-born men 7,3 7,1 11,7 11,1 6,4 8,9 Foreign-born men 3,5 3,0 7,6 8,9 2,4 5,8 Native-born women 5,8 7,4 10,8 11,0 5,7 8,9 Foreign-born women 4,8 6,4 7,4 10,1 6,5 7,9 Source: International Migration Outlook 2013 - © OECD 2013

The data show that the unemployment rate of migrants in Hungary slightly better than, or approximately the same as, the unemployment rate of the general population. The less certain labour market position of the migrants is indicated by their higher proportion in temporary employment. Amongst them there is on an average more than twice the ratio of the persons in temporary employment compared to general population. Between 2002 and 2011, on an average 7 per cent of the general population and 15 per cent of the migrants were in temporary employment. The migrants have never been target groups of any labour market policy in Hungary. The prerequisite of residence permit or other official certificates usually is a work permit which means a work contract, in that way the unemployed migrants do not have the right to stay in the country and will not raise any labour market policy issue. Besides they did not have the opportunity to get early retirement or disability pension which was often the solution for native-born population. 3.3. THE POSITION OF YOUTH ON THE LABOUR MARKET 3.3.1. The labour position of youth in the pre-crisis period (2000-2007)

47

The youth, specifically young entrants under the age of 25 years have been also defined as one the disadvantaged groups on labour market from the 1990s43. From the early 1990s the educational level of the newer cohorts gradually increased and higher education improved the labour market position of young people (although for the young with low level of education the unemployment rate was permanently high). Recently the expansion of higher education in Hungary has slowed down and Hungary might not meet the expectations of the Lisbon CEC 2000 Strategy (Guidelines 23. Expand and improve investment in human capital. and 24. Adapt education and training systems in response to new competence requirements.)44 The present transformation in public education45 from September 2012 reduced the school-leaving age from 18 to 16 and encourage young people to go to vocational school until age of 16 and then leave the education and start work. The effect of these new regulation probably will become visible of the increasing youth unemployment rate. Table 13. Population by education and age group in Hungary as a percentage of population in the same age group Age group, years

1990 2001 2011 1990 2001 2011 1990 2001 2011 1990 2001 2011 Not even the first grade of general (primary) school completed

At least the 8th grade of general (primary) school completed

At least secondary level with final examination

University, college, etc. with degree

10–11 1,7 0,9 0,8 12–14 1,2 0,8 0,6 15–19 0,6 0,6 0,3 94,0 93,7 96,1 20–24 0,7 0,4 0,4 96,8 97,9 98,4 40,2 50,9 68,1 25–29 0,8 0,5 0,5 96,5 97,9 98,3 40,7 45,0 66,6 13,4 14,8 28,0 30–34 0,7 0,5 0,4 96,3 97,8 98,5 38,9 44,9 60,6 13,2 15,3 28,0 35–39 0,7 0,6 0,4 96,4 97,5 98,5 39,7 44,6 53,5 13,2 16,1 23,1 40–44 0,8 0,7 0,4 95,2 97,0 98,4 40,6 42,2 51,3 13,8 14,9 20,0 45–49 1,0 0,6 0,6 90,6 97,4 98,0 32,4 42,5 49,3 12,4 14,4 19,4 50–54 1,4 0,6 0,6 81,2 96,7 97,6 24,7 44,5 46,4 8,8 14,3 17,4 55–59 1,4 0,8 0,5 67,5 93,7 98,0 19,4 38,4 45,4 8,2 13,9 16,2 60–64 1,3 1,0 0,5 50,3 86,7 97,6 16,7 29,3 47,3 7,0 9,5 15,8 65–69 1,2 1,0 0,6 36,7 73,7 95,6 13,0 22,8 42,8 5,3 8,5 16,4 70–74 1,6 0,8 0,8 33,2 60,8 90,6 12,0 19,9 32,9 5,3 7,5 11,8 75– 4,1 1,2 1,2 23,0 40,5 70,4 7,7 14,3 23,1 3,6 5,1 9,5 Total 1,2 0,7 0,6 78,1 88,8 95,1 29,2 38,2 49,0 10,1 12,6 19,0 Source: Hungarian Central Statistical Office http://www.ksh.hu/nepszamlalas/tables_regional_00 Table 14. Employment and unemployment rates in Hungary and in the EU by age and education Employment rates, 2012, % Unemployment rates, 2012, %

43 Decree No 6/1996 (VII. 16.) MüM (Ministry of Labour) on aid for promoting employment and on the aid that can be provided from the Labour Market Fund for the management of employment crises 44 Source: European Commission, 2007 45 2011. évi CXC. Törvény a nemzeti köznevelésről [The Act 2011. CXC. on national public education]

48

Area Area Age, education Age, education EU-27 Hungary EU-27 Hungary 15-24 together 32,9 18,6 15-24 together 22,8 28,1 primary 19,6 5,1 primary 30,3 44,7 secondary 43,5 29,3 secondary 20,0 25,5 tertiary 54,5 54,4 tertiary 17,9 18,9 25-49 together 77,5 74,8 25-49 together 9,9 10,2 primary 60,7 48,4 primary 19,1 25,3 secondary 79,3 77,5 secondary 8,8 9,9 tertiary 86,5 83,7 tertiary 6,2 4,2 50-64 together 58,6 48,8 50-64 together 7,4 8,4 primary 43,7 28,2 primary 12,6 17,4 secondary 61,3 51,2 secondary 6,7 8,0 tertiary 75,7 69,0 tertiary 3,7 3,4 15-64 together 64,2 57,2 15-64 together 10,6 11,0 primary 44,0 26,5 primary 18,6 24,9 secondary 68,1 62,5 secondary 9,6 10,7 tertiary 81,8 78,7 tertiary 6,1 4,5 Source: Hungarian Central Statistical Office , Eurostat (Compiled by Zsolt Hargitai)46 Table 15. Unemployment rate (ILO) by gender and education, %

Year Men Women

prima-ry or less

lower secondary vocational*

upper secon-dary

tertiary together primary or less

lower secondary vocational*

upper secondary

tertiary together

1992 16,4 12,0 7,6 3,2 11,1 12,5 10,6 6,6 2,0 8,9

1993 20,3 15,0 9,7 2,9 13,5 14,6 12,8 8,1 3,2 10,4

1994 18,4 13,3 7,9 4,0 12,1 13,9 11,0 7,6 2,0 9,4

1995 18,8 13,1 7,0 3,1 11,6 12,7 10,4 7,1 2,8 8,7

1996 18,3 12,1 6,8 2,8 10,9 12,6 10,9 7,5 2,9 8,8

1997 16,9 10,6 5,9 1,6 9,6 12,6 8,7 6,0 2,2 7,8

46 We thank Zsolt Hargitai, councellor in the Ministry for National Economy, State Secretariat for Employment Policy, Department of Employment Programs, for his help.

49

1998 14,6 9,1 5,9 2,2 8,5 11,6 7,8 5,8 1,8 7,0

1999 14,3 8,2 5,0 1,5 7,5 10,5 8,0 5,2 1,3 6,3

2000 13,4 7,7 4,8 1,6 7,0 9,1 7,4 4,9 1,5 5,6

2001 13,6 6,4 4,3 1,2 6,3 8,4 6,4 4,0 1,6 5,0

2002 14,1 6,2 4,0 1,4 6,1 9,3 6,5 4,4 2,4 5,4

2003 13,6 6,6 3,9 1,6 6,1 10,5 7,2 4,4 1,9 5,6

2004 14,3 6,4 4,1 1,7 6,1 10,3 8,0 5,3 2,9 6,1

2005 15,6 7,4 4,9 2,3 7,0 13,0 9,8 6,7 3,1 7,5

2006 17,3 7,0 5,2 2,7 7,2 15,8 10,1 6,4 2,8 7,8

2007 18,4 6,8 5,1 2,4 7,1 16,0 9,4 6,2 3,3 7,6

2008 19,8 7,6 5,3 2,3 7,6 17,5 9,5 6,9 3,2 8,1

2009 24,4 10,6 7,7 3,8 10,3 21,6 12,4 7,7 4,1 9,7

2010 26,9 12,1 8,4 4,9 11,6 22,8 12,6 9,5 4,5 10,7

Source: CSO LFS. The Hungarian Labour Market – Review and Analysis 2012. IE-HAS, 2012, Budapest Tables 5.2. and 5.4. * Completed a vocational secondary school that does not offer a school leaving (A level) certificate. Note: using weights based on the 1990 census until 2000. The classification of levels of education was slightly modified in 1999. BPDATA http://www.bpdata.eu/foglpol20/2012hut02_10 3.3.2. The labour position of youth in the crisis and after crises period (2008-2013)

In 2000 youth unemployment rate was twofold of the general population’s (6,6 and 12,3 %) by 2012, with gradually worsening situation in both group, the difference had grown approximately threefold (11 and 28,1%). The reality probably worse than that, since young people are leaving the country, and try to find a living in foreign countries. While official emigration statistics are unavailable, an estimated 200 000 Hungarians were working abroad in 2011, with a significant increase in 2012. Labour emigration especially involves health sector employees and youth. In 2011, 2 000 physicians requested professional certificates required for their employment abroad. The main destination countries are Germany, Austria and the United Kingdom (OECD 2014). The increasing unemployment and inactivity of youth is becoming a serious issue not only in general across the OECD but in Hungary also. In 2012, in Hungary about 29% of native-born youth (15-24) are not in employment, education or training (NEET), versus 25%, for foreign-born youth. (The data indicates the relative insignificance of the issue of migration in Hungary. Migrants’ labour market position is better, partly because they are more mobile to move on, partly because they are not allowed to stay in Hungary without certifying that they have formal contract of employment.) The share of youth not attached to the labour market has increased between 2008 and 2012, for native-born Hungarian (by approximately 4 percentage points).

50

Figure 19. NEET rates by place of birth in selected OECD countries, 2008, 2011 and 2012 Percentage of the 15-24 population who is unemployed or inactive and not in education, nor in training

Notes: The OECD average was calculated on the countries for which data are available for the entire period (i.e. excludes Turkey and Switzerland). The results for NEET in Europe are overestimated because they are based on three quarters, including summertime, when under declaration of school enrolment of students is commonly observed. Unlike the classical definition of the NEET, the unemployed who are currently in education or training are considered as NEET. Sources: European countries: Labour Force Surveys (Eurostat), Q1-Q3 2008, Q1-Q3 2011, Q1-Q3 2012; United States: Monthly Current Population Surveys, 2007 and 2012. The ratio of temporary employees amongst the youth has been gradually increased from 2000, when it was 12.7 % until 2010 when it reached the highest level and was 24.9 %, then it dropped slightly and was 22.4 in 2012. In the general population the ratio of temporary employees was between 6.9 and 9.4 % during this period and was almost less than a half of the youth’s. It can be interpreted as the general characteristic of the entrants but also as the first step on the carrier of the new precariat class. The Precariats - a growing number of people across the world living and working precariously, usually in a series of short-term jobs, without recourse to stable occupational identities or careers, stable social protection or protective regulations relevant to them. The two most involved groups in the Precariats are the migrants and the youth47. Making ends meet by relying on a seemingly endless round of unstable, precarious jobs is becoming a common experience for young people in the whole world these days. The International Labour Organization also uses the concept of precarious work: “We can arrive at a definition of precarious work which unifies these diverse forms by defining it as the negation of the ILO’s definition of the “standard employment relationship”, described as full-time work, under a contract of employment for unlimited duration,

47 http://www.greeneuropeanjournal.eu/precariats-world/

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CHE DEU NLD DNK GBR AUT USA FRA NOR FIN LUX HUN CZE OECD SWE IRL SVN PRT ITA BEL ESP GRC TUR

2012 2008 2011

51

with a single employer, and protected against unjustified dismissal.”(Rossman 2013, p25)48 A new Labour Code was passed by the Hungarian government in December 2011. The code partially came into force in July 2012, taking full effect on 1 January 2013 after a six-month transition period. It replaced the Labour Code 1992, which was introduced immediately after the democratic transition from state socialism. The expectation of the government is that the law will make employment more flexible, cheaper and more market-compliant. However, it has been criticised by unions. The new Act according to its critics made dismissals arbitrary, and employees are at the mercy of employers. As an effect of the new labour regulation the temporary employment might decrease because dismissal will be easy in the case of standard employment relationship.

In order to mitigate the labour market situation of the youth, in 2005 the Start Programme was launched and until the end of May, 2009 approximately 122,000 young people got the Start Card – 33,600 of these had higher education (Frey 2011). Besides permanent prioritization of the youth in active labour market policies, after the crises in complement to other instruments, a “First Job Guarantee” programme was launched in 2012 and extended in 2013 to facilitate the labour market integration of young people. In the programme, PES centres select first-time jobseekers and place them into selected companies. Their wages are fully government financed for six months up to 150% of the minimum wage, with since 2013 an obligation of further employment for at least three months. Of the more than 7 000 participants in 2012, around half were still employed after the end of the wage subsidy. The benefits of personalised support for first-time jobseekers is appreciated by the experts, but they also stated that, by mobilising scarce PES resources it may come at the expense of other jobseekers if the capacity of the PES is not increased. As deadweight costs of such schemes can be important, good targeting is essential, but also difficult. Higher-skilled people may not need such high wage subsidies and some lower-skilled ones may need to train first before working, or to combine the two. Extending the scheme to vocational apprenticeships could be interesting in this respect. In any case, the full government financing seems excessive as it gives job centres the power to offer free labour to selected companies (with only a short obligation for further employment). Reducing the amount of wage subsidy would mitigate this issue, while also lowering the fiscal cost of the scheme, as well as perhaps giving companies greater incentives to invest into participants (OECD 2014).49

The impact of crisis on the employment of young people

In April 2013 the government of Hungary in the “National Reform Programme 2013 of Hungary”50 summarized the governmental measures taken to reduce of unemployment and the labour market reintegration of young people. Besides the above mentioned “First Job Guarantee” programme there was an EU (ESF= European Social Fund) co-financed programme, first announced in 2012, supporting young people between 18-35 to become entrepreneurs, which continued in 2013. The programme supported the acquisition and development of entrepreneurial knowledge and skills (financial knowledge, business plan, marketing, legal environment, etc.) and secured non-refundable assistance for young entrepreneurs for the start up, as well. Beyond that, after the start up the programme provides professional advice and mentoring to maintain the enterprise. The first

48 http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---actrav/documents/publication/wcms_216282.pdf 49 http://dx.doi.org/10.1787/eco_surveys-hun-2014-en 50 http://ec.europa.eu/europe2020/pdf/nd/nrp2013_hungary_en.pdf

52

trainings under the programme started in the first half of 2013, while support to new start ups was available in the second half of the year. In addition, there was launched apprenticeship-type programmes (also co-financed by ESF) encouraging the employment of young people and facilitating the transition from vocational training to employment, the primary purpose of which was, in addition to promoting direct job creation, to facilitate the utilisation of first vocational qualifications acquired in training in the school system, to help young people obtain work experience at an early stage and to thereby enhance their subsequent employability. The civil employment programmes also continued in 2013 in an ESF co-financing scheme. At the sectoral level, the government tried to improve the employment conditions of young people, including the Resident Physician Support Programme which aims to promote young candidate medical specialists to find job at Hungarian health service providers and to reduce brain drain in the health care sector.

3.4. THE POSITION OF ELDERLY WORKERS ON THE LABOUR MARKET 3.4.1. The labour position of the elderly in the pre-crisis period (2000-2007)

Table 16. Employment rate by age group Aged 15-64 Aged 20-64 Aged 15-24 Aged 55-64

men

women

together

men

women

together

men

women

together

men

women

together

1990

78,5 63,5 71,0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

1991

72,2 59,1 65,5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

1992

64,0 52,3 58,0 70,

7 56,9 63,6 37,1 33,7 35,4 33,

3 14,3 22,9

1993

60,3 49,4 54,7 66,

8 53,6 60,0 36,2 32,7 34,4 26,

5 9,5 17,1

1994

59,8 48,0 53,7 66,

5 52,2 59,1 35,5 31,9 33,7 24,

1 8,0 15,2

1995

59,8 46,0 52,7 66,

8 50,3 58,3 34,4 29,0 31,7 24,

4 7,5 15,0

1996

59,8 45,5 52,4 66,

6 49,9 58,0 35,5 27,1 31,3 23,

6 8,4 15,1

1997

60,0 45,2 52,4 66,

3 49,4 57,6 37,1 28,2 32,7 23,

5 8,4 15,1

1998

60,3 47,3 53,6 66,

3 51,3 58,6 37,5 30,6 34,1 25,

9 9,6 16,7

1999

62,2 48,9 55,4 68,

2 53,1 60,4 37,8 30,4 34,1 29,

6 11,3 19,3

2000

62,7 49,6 56,0 68,

8 53,9 61,1 36,0 28,8 32,5 32,

8 13,1 21,9

2001

63,0 49,8 56,2 68,

9 54,1 61,3 34,4 26,9 30,7 34,

1 14,9 23,5

2002

62,9 49,8 56,2 69,

0 54,3 61,4 31,2 25,8 28,5 35,

4 17,6 25,6

2003

63,4 50,9 57,0 69,

6 55,5 62,4 29,7 23,7 26,7 37,

9 21,8 29,0

200 63, 50,7 56,8 69, 55,3 62,1 26, 20,8 23,6 38, 25,0 31,1

53

4 1 2 3 4 2005

63,1 51,0 56,9 69,

2 55,6 62,2 24,4 19,2 21,8 40,

5 26,8 33,0

2006

63,8 51,1 57,3 69,

9 55,7 62,6 24,5 18,8 21,7 41,

4 27,1 33,6

2007

64,0 50,9 57,3 70,

2 55,5 62,6 24,2 17,8 21,0 41,

7 26,2 33,1

2008

63,0 50,6 56,7 69,

0 55,1 61,9 23,2 16,8 20,0 38,

5 25,7 31,4

2009

61,1 49,9 55,4 67,

0 54,4 60,5 19,9 16,3 18,1 39,

9 27,0 32,8

2010

60,4 50,6 55,4 66,

0 55,0 60,4 20,0 16,6 18,3 39,

6 30,1 34,4

Source: 1990-1991: The Hungarian Labour Market – Review and Analysis 2002. IE-HAS, 2002, Budapest pp. 277-278.; 1992-2010: CSO LFS

Instead of unemployment – early retirement

The data show that, the lowest point of the employment of elderly workers were in the middle of the 1990s. In this period of time, as a side effect of the economic transition half million job was lost. The decrease of employment did not cause primarily the increase of unemployment, but the most dramatic change was registered in the growth of inactive people among the population in the active age. In a 2007 year study (Augosztinovics and Köllő 2008) the situation was depicted where large numbers of people chose early retirement as an escape from imminent or expected job loss. The incidence of early retirement remained high after the transitional recession, despite the gradual rise in the statutory retirement age and the abolishment of the special early pension scheme previously introduced to ease labour market tensions. Despite the gradually stricter regulation, the practice of escaping into inactive status was widespread, e.g. of the cohort born between 1945 and 1959, 23 per cent had retired by 2005 – when they were 46 to 60 years old. The significance of the education is shown in the distribution of pensioners within the cohort: the ratio of pensioners was only 8 per cent among graduates, 20 per cent among people with secondary education and 35 per cent among people who had only completed 8 years of primary education. People with low level of education are overrepresented not only in amongst unemployed but in the inactive group also. Low levels of education are also accompanied by an increased risk of poor health (Tahin, Jeges and Lampek, 2000; Remák, Gál and Németh, 2006), which is partly related to physically more demanding work activities (especially in unskilled jobs, done by people with low levels of education) and partly to lifestyle.51

The most important factor behind this phenomenon is that the pension programme provided a relatively high and secure income compared to potential – insecure – wages. The choice of early retirement was not constrained by “penalty” deductions in the old-age pension scheme and in the case of disability pensions was facilitated by the – well documented – tacit consideration of poor labour market prospects in the evaluation of claims.

51 Józan (2001) argues that the high level of mortality is primarily explained by lifestyle, specifically, by unhealthy diets (in addition to smoking, alcoholism and lack of physical exercise). A lesser role is attributed to the quality of health services and the harmful effects of the environment.

54

The trends in elderly workers employment can be explained by reasons of both demand and supply. On the supply side, the trends are mainly due to changes in retirement regulations; on the demand side, lower educational levels, lower production and discrimination against older workers shaped their employment. It shows the importance of the supply side that older-worker activity rose after 1998, as the pension age gradually increased. For older workers it is more difficult to return to the labour market, and studies on unemployment benefits suggest that the chance of being employed decreases markedly with age (Galasi and Nagy, 2002). In the years after the transition, the labour market prospects of older workers fell drastically. The rapid spread of modern technology and corporate governance methods devalued their knowledge, gained before the transition, compared to those workers whose knowledge was more appropriate to the new situation. But the impact of this sudden reduction in relative productivity faded within 10 years, according to estimates, as newer cohorts of older workers came through, with more appropriate education and work experience (Lovász and Rigó, 2010). The deterioration in the labour market situation of older people was also reflected in wages. Kertesi and Köllő (2002) estimated that, in terms of wages, 20 years of labour market experience resulted in a reduction of 4 percentage points between 1989 and 1992, and 7 percentage points between 1989 and 1999. The growing wage disadvantage of older workers was partly a result of the devaluation of knowledge gained before the transition: the relative productivity of skilled older workers declined significantly compared to that of younger workers, and by 1999 there was no significant difference between them and unskilled workers (Kertesi and Köllő, 2002; Lovász and Rigó, 2010).52

Training and lifelong learning of the elderly

Lifelong learning can play an important role in fostering mobility across occupations and sectors, and enhance the labour market position of elderly workers, but it is poorly developed in Hungary . In 2011, only 14% of the unemployed were in training. Incentives for companies to train their staff were reduced in 2012, as the possibility of fully deducting training costs from the vocational training contribution (a 1.5% employer contribution on wages) was eliminated, except for apprentices. Additional EU funds have more than replaced this subsidy in 2012-13, although they may also involve more administrative costs. The significant size of the informal economy may also hamper lifelong learning, as informal employers have less incentive to train workers (OECD 2014).

Figure 20. Adults in education and training

52 For the period 1992–99, using three distinct models (unskilled, young-skilled, old-skilled), Kertesi and Köllő (2002) carried out estimates of differences in wages and productivity. Lovász and Rigó (2010) estimated differences in productivity using similar methods for the period 1986–2008, also dividing the unskilled group into two, by age.

55

1. Firms offering formal training programmes to their permanent, full-time employees. Data for 2008 for Turkey; 2005 for Germany, Greece, Ireland, Portugal and Spain.

2. Participation in formal and non-formal education and training by 25-64 year-olds. Per cent of population in same age group.

Source: Eurostat (2013), "Population and Social Conditions: Lifelong Learning - LFS data", Eurostat Database, December and World Bank (2013), Enterprise Surveys, www.enterprisesurveys.org.

Labour marker discrimination of the elderly

In a comprehensive survey on the labour market discrimination of the elderly workers in Hungary (Lovász 2012) it was stated that disadvantages in employment and wages cannot be regarded as a measure of discrimination in the case of the elderly, since productivity (experience, knowledge, and physical performance) change with age. However, the shock of the transition in itself worsened the labour market chances of this worker cohort and may have led to further prejudice-based discrimination. This is indicated by Daxkobler’s (2005) research, which examined stereotypical attitudes towards older workers by evaluating job applications and by interviewing Hungarian human resources managers and other senior personnel. The research indicates that the attitude to older workers is not necessarily negative, but those who are significantly younger than the older applicant tended to have more negative attitudes towards older workers. According to public surveys, there is major labour market discrimination against the elderly. In the European Union Minority and Discrimination Survey (EU -MI DIS ), 67 per cent of people said that old age means disadvantage; and Hungarians equate age with disadvantage more strongly than the people of any other EU Member State (Sik and Simonovits, 2008). Some 16 per cent of those who were asked during a supplementary study to the Central Statistical Office’s (CSO ) annual Labour Force Survey of 2008 had experienced discrimination in job search and dismissal, mostly on account of age (Sik and Simonovits, 2011). According to a recent Equal Treatment Authority survey, age is the second most common factor leading to discrimination: more than 10 per cent of the population had witnessed age-related discrimination. For more than half of the population, age-related discrimination is ‘very’ or ‘fairly’ widespread (Neményi et al., 2011).

3.4.2. The labour position of the elderly in the crisis and after crises period (2008-2013)

CZE EST

DEU

GRCHUN

IRL

POL

PRTSVK

SVNESP

TUR

0 10 20 30 40 50 60 70 80

0 2 4 6 8 10 12 14 16Participation in education and training, 2012²

Firms offering formal training, 2009¹

0 10 20 30 40 50 60 70 80

56

The impact of crisis on the employment of the elderly

The relative better employment performance of older workers was a general experience during the crisis (OECD, 2013), while during earlier recessions (in the 1970s, 1980s and early 1990s) older workers tended to withdraw from labour market, this time they have stayed in the labour force and even increased their participation following the crisis. The postponed retirement decisions, and the increasing austerity regarding early retirement and disability pensions all might have had a role in this process. The unemployment rate of the elderly an average was several per cent lower than the general population’s during and after the crises, and was only a quarter of the youth’s. There were only few active labour market policy programmes53 for the elderly besides the general prioritization described already in 1996 in the “Decree No 6/1996 (VII. 16.) MüM (Ministry of Labour) on aid for promoting employment and on the aid that can be provided from the Labour Market Fund for the management of employment crises “. 54 It seems to be a Hungarian specific feature that status at risk concerning old age is defined from the age of 50 which rather young compared to the generally used 55.

3.5. ADDITIONAL INFORMATION ON THE POSITION OF OTHER RELEVANT

VULNERABLE GROUPS ON THE LABOUR MARKET

THE ROMA

3.5.1. The labour position of Romas in the pre-crisis period (2000-2007)

Roma people are Europe’s biggest ethnic minority. Most Roma are EU citizens but many face prejudice, intolerance, discrimination and social exclusion in their daily lives. They are often marginalised and generally live in poor socio-economic conditions.55 The proper implementation of good national, regional and local integration policies is guided by an EU Framework for National Roma Integration Strategies by 2020 that was set up in the spring of 2011. In May 2012, the EU published a progress assessment.56 In 2012, in Hungary 69 per cent of the respondents rated the effectiveness of efforts to integrate the Roma : „Non-effective”.57

As it has been already mentioned in the general introduction in Hungary the number of Roma is estimated to be anywhere between 300 000 to 800 000. In the latest Population Census in 2011 there were 315 583 persons who professed themselves to be Roma (responding to this

53 The “Start Extra” active labour market policy scheme which opened on July 1, 2007 provided the largest discount for employers on wages. The target group of this scheme were jobseekers aged over 50 years and low-skilled people. By May 2009 more than 14,000 individuals had a Start Extra card (Frey 2011) 54 According to the decree a disadvantaged jobseeker is any person who: 1. has not attained an upper secondary educational qualification or its equivalent, 2.is older than 50 years when taking up employment, or 3. is a young entrant under the age of 25 years, 4. has been registered as unemployed with the PES for more than 6 months, 5. living in his own household as the only adult with one or more dependents, 6. has been receiving maternity, child-care related or carer’s benefits within, the previous 12 months, or 7. has spent time in a penal institution within the previous 12 months. 55 http://ec.europa.eu/justice/discrimination/roma/index_en.htm. 56 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52012DC0226:en:NOT. 57 Special Eurobarometer 2012

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questions was not compulsory).58 According to the Census data only 1.4 per cent of the Roma population have degree (tertiary level of education) while 17.1 per cent of the Hungarians have tertiary level of education. 23 per cent of Roma and 5 per cent of Hungarians are not able to complete even the primary education. On the labour market only 24.2 per cent of Roma find job. 44 per cent of those who are in employment work as an unskilled worker.

The main problem regarding the description of the Roma’s labour market situation is that there are no official statistics that quantify the scale of Roma unemployment and there are no labour market intelligence systems to provide sophisticated analysis of the configurations and patterns of Romani unemployment or employment in Hungary (neither in Bulgaria, Czech Republic, Slovakia or Romania) (ERRC 2007). The most robust dataset that quantifies the scale of Roma unemployment is a result of a survey, published by the United Nations Development Programme (UNDP) in 2002 and was based on self-declarations by 5,500 Roma who took part in a survey conducted by UNDP and the International Labour Organisation (ILO).59

The lack of statistical data according to the ERRC (European Roma Rights Center) makes impossible to plan, implement and monitor governmental measures: “The current black-hole in demographic and labour market statistics in the countries included in the ERRC research means that it is virtually impossible for governments to accurately manage or resource either the problem or the solution of ensuring access to employment for Roma. It makes it impossible to monitor equality in employment or to prove indirect discrimination. The absence of statistics allows governments to remain passively unaware of the extent or severity of Roma unemployment; arguably one of the most serious, and growing social and economic problems that is affecting many countries. The lack of accurate statistical data interferes with financial accountability and the effective application or monitoring of labour market programmes as Government organisations are unable to: target resources at the most concentrated and entrenched problems; measure participation rates; or manage or account for the outputs and results stemming from public investment.” (ERRC 2007, p 52)

There is an other approach of this issue, Janky and Pogátsa (2013) argue, that contrary to often voiced opinion, Central Europe has not really made a serious attempt at Roma emancipation. Because no one will ever accurately measure the number of Roma in these countries as the category of “Roma” is a very fluid one based on outside and inside ascription, social status, etc., and not a rigidly objective ethnic distinction. “This problem of numbers in itself exposes the dishonesty of public relations exercises such as the Roma Decade of Inclusion. How were policy makers ever going to monitor and assess the success of Roma inclusion if they did not even know the size of the population that was to be affected?” (Janky and Pogátsa 2013) They stated, that the only certain results of the, so called, ‘Roma integration’ initiatives was that they fuelled resentment among non-Roma populations. Their recommendation is to implement a colour-blind general welfare regimes to create social mobility for poor citizens.

Figure 21. Employment rates among the Roma population by age and educational attainment, 1984, 1989, 1993, 2003

MEN WOMEN

58 Source: Population census 2011, The Hungarian Central Statistical Office 59 findings of the survey conducted by the United Nations Development Programme and the International Labour Office are found in UNDP, Avoiding the Dependency Trap, A Regional Human Development Report, Bratislava, 2002.

58

Note: Full-time students and pensioners are excluded from the reference groups.

Source: Representative Roma Surveys of 1993 and 2003. In: Kertesi, Gábor (2010): Roma employment at the turn of the millennium. An analysis of the nationwide representative Roma survey of 2003

Figure 22. Evolution of employment between 1984 and 2003 among the generation aged 20–39 in 1984 (percentage of the cohort in employment in each year)

MEN WOMEN

59

Source: Representative Roma Surveys of 1993 and 2003, total population: quasi-longitudinal age cohort based database created from the large-scale nationwide surveys specified in Footnote.60 In: Kertesi, Gábor (2010): Roma employment at the turn of the millennium. An analysis of the nationwide representative Roma survey of 2003

In Hungary the employment rate of the Roma population had started to decrease some years before the transition (before 1990), and it has decreased further until now. 61 Whereas before 1985 there was no significant difference between the employment rate of Roma and non-Roma men, the difference had increased to about 40 per cent by 1994.62 This was caused, in part, by the low education of the Roma, and by a fall in the demand for unskilled labour; and the role of employer prejudice also made an impact. In order to estimate the extent of discrimination, Kertesi and Kézdi (2011a) separated out the total difference in employment explained by education, region, household size and number of children – and an additional (unexplained) element. According to the results, observable characteristics explain between a third and a half of the total difference. The most important explanatory factor for men is difference in education; for women, the number of children is also significant. Low education is also partly a consequence of discrimination.63 On the one hand, lower anticipated wages may be demotivating to study further; on the other hand, it is well documented that anti-Roma discrimination has contributed to school segregation64, which, in most cases, has led to poor-quality education for Roma children (Lovász 2012).65

3.5.2. The labour position of Romas in the crisis and after crises period (2008-2013)

According to OECD documents (OECD 2014) Hungary has the highest rate in the OECD of social segregation in primary and secondary schools, measured on the basis of parental occupation (Jenkins et al., 2008). As a result, there are large variations in the performance of pupils across schools and only relatively low within school variation. In particular, schools in small settlements (below 3 000 inhabitants) have much poorer performance than others (OECD, 2010c). Segregation reflects both social inequalities across the country, including an overrepresentation of the poor and the Roma in rural areas, and the relatively widespread practice of schools to select pupils on the basis of their academic record. Selection can start at the entry to primary school and 90% of pupils

60The samples used were from the Micro Census of 1984, the HCSO Household Panel of 1987 and 1989, the Census of 1990, the HCSO Household Panel of 1991 and the HCSO Labour Surveys of 1992 and 1994. The third quarterly wave of the OCSH Labour Survey of 2003 was used here. 61 Kertesi and Kézdi (2011a) examined the development of the Roma population’s labour market situation, based on representative surveys in 1993, 1994, 2003 and 2007. 62 Based on the Hungarian Career Survey of the Educatio Kht in 2007, 35 per cent of working-age Roma men and 82 per cent of non-Roma men in the sample were employed; for women, the proportions were 24 per cent and 71 per cent, respectively (Kertesi and Kézdi, 2011a). 63 Kertesi and Kézdi (2010a) map the situation countrywide. According to their results, segregation in schools is significant; more segregation takes place based on ethnicity than on being disadvantaged. On segregation by residence, see Havas and Zolnay (2010). There is also an estimate of the long-term benefits of investing in ‘catch-up’ policies: based on Kertesi and Kézdi (2006), the discounted present value of future state budget gains of investing in early education is HUF 19 million; even the most cautious estimate is at least HUF 7–9 million forints. The basis for this estimate is that better-educated people contribute higher amounts to the state budget and/or receive less in benefits from it. 64 Kertesi and Kézdi (2010a) map the situation countrywide. According to their results, segregation in schools is significant; more segregation takes place based on ethnicity than on being disadvantaged. 65 Kertesi and Kézdi (2011b) showed that the current significant difference in Roma/non-Roma test results almost disappears, if the variables describing the pupils’ family circumstances are taken into account.

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are in schools which are in a position to select students (Havas, 2009; OECD, 2012d). Segregation may have increased over the past decade, as the number of schools with Roma majority among pupils has increased (European Commission, 2013).

In the case of the Roma, it is difficult to estimate wage differences accurately, since ethnicity is not included in most surveys, but the estimations based on several surveys put it on the average about 30 per cent. According to Kertesi and Kézdi’s (2011a) estimation, the wages of Roma are about 30 per cent less than those of non-Roma; but the role of selection bias is important here, since their sample covered Roma who were better educated than average Roma. There is no estimate for the difference in wages between Roma and non-Roma that is comparable to the estimate for the difference between the sexes, but the difference is reckoned to be nearly double that between men and women. Wage differences in the case of Roma and non-Roma men have not changed over time: in both 1993 and 2007 the difference was approximately 30 per cent; in the case of women, it increased from 30 per cent to 40 per cent over the same period. Observable characteristics explained two-thirds of the difference in 1993; in 2007 the figure was rather higher, indicating a reduction in discrimination. Surveys examining perceptions and attitudes suggest that the degree of discrimination is extensive. Based on the Equal Treatment Authority representative survey, four fifths of the Roma population consider discrimination against Roma to be prevalent, and every second person believes the extent of the problem has grown in the past five years. Nearly one-fifth of the population indicated that they had witnessed discrimination against Roma in the past 12 months (Neményi et al., 2011).

According to the results of the EUMIDIS survey in 2009, 65 per cent of the whole population believed that a darker skin colour is a disadvantage in getting a job (EU average: 42 per cent). In Special Eurobarometer66, in 2012, the equivalent data were: in Hungary 64 per cent, EU27 average 39 per cent. One third of the Hungarian Roma perceived discrimination in job search, which is (together with the Czech Roma) the top value in the examined countries. Based on the TÁRKI survey for 2009, 14 per cent of the Roma perceived discrimination in hiring or dismissal in the previous 12 months (Sik and Simonovits, 2009). This is also confirmed by research conducted in 2006 to test discrimination in the first stage of the hiring process. In testing by telephone, the positive feedback ratio was about 12 per cent higher for non-Roma people (judging by their names). Employers openly told 18 per cent of the Roma that the reason for rejection was their Roma origin. In testing by CVs with photos, a Roma appearance reduced the chances of feedback by about 8 per cent (compared to non-Roma) (Simonovits, 2009). The attitude surveys show that discrimination against the Roma declined in the 1990s, but has increased again in the past few years (Enyedi et al. 2004; Medián, 2009).

In a summary on disability pension (Scharle 2008) it was introduced how the factors which contributed to disability pension claims (e.g. decreasing demand for unskilled workers, low educational level, poor health and discrimination of older workers) affect the Roma population of Hungary even more severely, with the various factors reinforcing each other. Kertesi (2000) analysed detailed work histories from the Roma survey of 1993–1994 and found that the proportion of pensioners had already significantly increased in the period from 1984 to 1989 among the older Roma population (men aged 45–54 and women aged 45–49). The Roma survey of 2003 showed no signs of trend reversal at the end of the millennium. The incidence of early retirement among the

66 http://ec.europa.eu/public_opinion/archives/ebs/ebs_393_en.pdf 61

Roma had been stabilised by 2008 the proportion of pensioners below the statutory retirement age remained around 9 per cent among men and 8 per cent among women (Kertesi, 2004).

The general health of the Roma population is poorer than the national average (Mladovsky, 2007, Kósa et al, 2007) partly because a greater proportion of Roma work in occupations causing health damage (Kertesi, 2000) and partly due to the fact that health care services are less accessible to the Roma population because of their disadvantaged position in terms of place of residence, financial circumstances and, on occasion, ethnic discrimination (Gyukits, 2000).

In his analysis of labour market chances, Kertesi (2000) concluded that early retirement was a dominant form of exclusion from the labour force, which is explained by low levels of education and poor health on the one hand and by labour market discrimination against the Roma on the other. Unfortunately the expansion and stabilisation of government financed public works schemes has led to an increase in the instability in Roma employment rather than facilitating return to the primary labour market, which indicates the failure of the approach to rehabilitation services (Kertesi, 2004). This was reflected in the striking gap between transition rates: while the average annual exit and entry rates are under 10 per cent for the Hungarian population with low levels of education, the corresponding rates are around 25 to 30 per cent for the Roma minority. The incidence of disability claims was not specifically a problem of the Roma: the scale of the problem was far too large to be explained by a decline of the employment rate in the Roma population. The number of people receiving disability pension under retirement age was over 460,000 in 2003, while Kertesi’s (2004) data suggest that the number of Roma pensioners under retirement age was at most 50,000 in the same year. In a comprehensive assessment of Roma employment policies (Fleck and Messing 2010) it was found that functional defects of Roma employment programs were general. The authors, in the course of their investigation, did not encounter any programs that could be considered exemplary in every respect. In many cases, initiatives were not only ineffective but, in fact, also counter-effective. In other words, contrary to the proposed objectives, they contributed to the welfare-dependence and defencelessness of the permanently unemployed, reinforced the existing patron-client system in local communities, and further deteriorated the stereotypical view of unemployed Roma people by the majority society. In addition they found evidence supporting the view that the employment situation is basically unrelated to ethnicity but has to do, rather, with educational, residential and regional issues, the support of people suffering disadvantages in the labour market appears to be more justified than support of people based on their ethnicity. Every problem should be addressed where they emerge: problems of employment arising from a disadvantaged situation ought to be remedied by reducing disadvantages, instead of turning them into issues of ethnicity. Difficulties characterizing the majority of Roma are fairly complex in nature: their situation is determined by a low educational level, discrimination, socio-economic exclusion, territorial isolation and the conjugate effects of all these factors. Thus it seems to be appropriate to resolve the situation by treating all the problems manifesting in a particular crisis zone in a comprehensive manner, i.e. by prioritizing compound methods that are relevant for each problem suffered by the specific target group. Public policies seemed to have developed in this direction after 2002, when efforts were made to reach marginalized populations that were overwhelmingly, though not entirely, Roma. 4. THE CRISIS, POLICIES IN THE CRISIS AND THE EFFECT OF THE CRISIS ON THE VULNERABLE GROUPS

The effects of the recession across groups of workers

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Figure 23. Percentage change in employment by workforce group from 2007Q3 to 2011Q3,(1) age 15-64

Figure 24. Percentage change in employment by workforce group from 2007Q3 to 2011Q3,(1) age 15-64

Figure 25. Percentage change in employment by workforce group from 2007Q3 to 2011Q3,(1) age 15-64

-30 -20 -10 0 10 20 30 40

Hungary

CEEC²

OECD Europe²

Age group 55-64 Age group 25-54 Age group 15-24

-10 -5 0 5 10 15 20 25 30

Hungary

CEEC

OECD Europe

Employment type: Regular Employment type:Temporary

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Figure 26. Percentage change in employment by workforce group from 2007Q3 to 2011Q3,(1) age 15-64

Figure 27. Percentage change in employment by workforce group from 2007Q3 to 2011Q3,(1) age 15-64

-30 -20 -10 0 10 20 30 40

Hungary

CEEC²

OECD Europe²

Level of education(4) High Level of education(4) Medium Level of education(4) Low

-15 -10 -5 0 5 10

Hungary

CEEC²

OECD Europe²

Sector of activity Services Sector of activity ConstructionSector of activity Manufacturing

64

1. 2008Q3 to 2011Q3 for sector of activity due to the change to NACE Revision 2 classification in 2008. 2. Weighted averages. CEEC covers the following Central and Eastern European countries: Czech Republic, Poland and Slovak Republic. OECD Europe covers all European OECD countries (excluding Turkey by sector of activity). 3. Regular is the difference between temporary employees and total employment. 4. Based on the International Standard Classification of Education (ISCED97): ''Low'' covers pre- primary, primary and lower secondary levels of education (0-2); ''Medium'' covers upper secondary including post-secondary non-tertiary education (3-4); and ''High'' covers tertiary education including advanced research programmes (5-6). Source: Eurostat (2012), ''Labour Force Survey'', Eurostat database, January.

The responses to the crisis in Hungary compared to policies applied in the European Union were summarized in the ’Hungarian Labour Market. Review and analysis 2010’ by Frey (2010), from now we are going to follow her description67. The most important statement of the report is that crisis management as in the context of developed countries did not happen in Hungary. However, there was crisis management in the sense that Hungary successfully avoided bankruptcy with the help of the IMF loan and Parliament adopted the necessary budgetary restrictions. The Government and the Central Bank signed an agreement on a 20-billion euro loan package with the European Union, the International Monetary Fund and the World Bank in November 2008. In this Hungary pledged to implement measures to increase fiscal stability and reduce the budget deficit, and also implement long postponed structural reforms68 These limited Hungary’s room for manoeuvre in crisis management. The Government – in accordance with the Convergence Programme – prepared the National Action Plan for Growth and Employment in November 2008. (Government of the Hungarian Republic, 2008.) The response to the national recommendations of the European Economic Recovery Plan should have been prepared as an attachment to this document, however there was no scope for pro-growth, stimulatory measures further increasing the budget deficit, and the Government decided to address the issues

67 For more detail see: http://www.econ.core.hu 68 Fiscal measures, structural reform: .Spending cuts (freeze on nominal salaries in the public sector in 2009, taking away the 13th month salary from public sector workers, capping the 13th month pension at 80,000 forints,* restricting access to early retirement, postponing the new indexation of social expenditure, corresponding cuts in the budgets of ministries), adopting an act on budgetary responsibility, new rules on financing local governments, extending the statutory powers of the Financial Supervisory Authority and the Central Bank to emergency interventions, an injection of 600 billion forints to strengthen liquidity and capital resources of banks.

-4 -3 -2 -1 0 1 2 3 4 5

Hungary

CEEC²

OECD Europe²

Gender Total Gender Women Gender Men

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by the reallocation of sources within the budget and extra-budgetary instruments. The European Council considered this unsatisfactory. The EU’s assessment on Hungary’s implementation of the Lisbon Strategy Structural Reforms in the context of the European Economic Recovery Plan states the following: “The National Reform Programme (NRP) for 2008–2010 does not reflect a clear coherent strategy for the medium-long term. …The following challenges remain important for Hungary: poor R&D performance, state aid, the uncertainty of the regulatory environment, weak incentives to work and to remain in the labour market, slow progress in the implementation of the integrated employment and social services system, and undeclared work.” (CEC, 2009b.)

The Government69 decided to address the employment effects of the recession by reallocating resources with the budget to job protection schemes. The Ministry of Social Affairs and Labour spent nearly 18 billion forints national funding on these in 2009. These schemes had a three-fold objective:

– maintaining the operation of businesses in order to protect jobs;

– facilitating the transfer and re-employment of redundant workers with a new employer;

– if redundancy cannot be avoided, supporting the individual – also by upgrading his/her skills – to

find a new job.

The main forms of assistance were:

– subsidy towards labour costs – wage and contributions,

– introducing short-time work,

– assistance towards training and re-training expenses,

– the provision of labour-market services,

– assistance towards the cost of commuting and housing.

Out of the 18 billion forints, 7 billion were distributed to employers by the National Employment Fund which supported more than 18,000 workers to remain in work and thus protected nearly 34,000 jobs. The NES scheme however had to be suspended as early as March instead of its planned closure on November 30, 2009 because the budget was exhausted. Nonetheless in February 2009 the Programme “For the Protection of Jobs” implemented by the Public Employment Service was launched. The budget for this scheme was 10 billion forints which lasted until September 14. During this time more than 27,000 workers were supported and the subsidies paid to employers helped to protect nearly 48,000 jobs. After national resources were exhausted, EU funding was made available to mitigate the employment effects of the recession by re-programming the New Hungary Development Plan:

– a financial package of 1.4 billion forints for SME-s for working capital loans, microloans, loan

guarantee – allocated;

– orders worth 1.8 billion forints to the construction industry;

69 In April 2009 a new Government formed with the specific mandate of crisis management. It’s Programme entitled “Managing the Crisis and Building Confidence” was adopted by Parliament and identified the following objectives: immediate actions to address the short-term effects of the crisis; long-term improvement of the budgetary balance; promoting sustainable growth; and restoring confidence.

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– 20 billion forints allocated to the 4+1 integrated job retention and training schemes that –

according to estimates – will provide assistance to the preservation of more than 50 thousand

jobs.

The working time regulations were also reviewed in order to provide greater flexibility to adjust working hours to the fluctuations of demand resulting from the crisis. The Hungarian employment policy had been committed to improving the employability of unemployed and inactive people and promoting the labour market integration of disadvantaged people even prior to the economic downturn. Labour market participation in Hungary is especially low by international comparison, and therefore this objective remained valid despite the economic crisis.

The third part has presented new initiatives to increase employment and labour market participation in Hungary.

The main reasons behind the poor employment indicators are the dependency traps generated by the large welfare systems – such as pension and child care – and the crisis managing Government initiated structural reforms that in the long-run will reduce the number of people dependent on transfers that keep them away from the labour market.

Examples:

– Encouraging the labour market participation of women by shortening the eligibility period of parental leave schemes.

– Promoting the activity of older workers by introducing changes in the pension system.

– Gradual reallocation of the tax burden to transform undeclared work into formal employment and reduce labour costs.

Willingness to work should also be encouraged by short-term measures. These include extending the requirement to cooperate with the public employment service to a larger group of long-term jobseekers which took place in the “Pathway to Work” scheme.

Contribution relief schemes for employers hiring disadvantaged people are also an important instrument to improve their prospects on the labour market.

4.1. THE POSITION OF THE DISABLED ON THE LABOUR MARKET IN THE CRISIS

Several structural reforms have been introduced to promote employment in the long run, to make work attractive for the inactive. Besides the pension system, the structural reforms affected the disability pension system and the social benefit system also. As a major element, work incentives have been strengthened to improve long-term sustainability and increase labour market participation. The following steps have been made: withdrawal of early pension schemes; phasing out early pension-like benefit and disability pension-like benefit (transitional rules); changing disability pensions to rehabilitation benefits and simplifying the system (reducing the number of benefit types to two); strengthening employability aspects and the role of vocational rehabilitation (focus on remaining work capacity); persons with reduced work capacity may receive labour market services and can claim the newly introduced Rehabilitation Card. This new form of subsidy for

67

workers with partial work capacity was introduced in 2012 and exempts employers from the social contribution tax on wages of up to twice the minimum wage.

During the crisis because of the above mentioned reasons (scarcity of resources), there was only few targeted programmes for this group. One of the five mainstream EU-funded active labour market programmes (ALMPs) organised within the framework of the Hungarian Social Renewal Operational Programme (SROP) was the Rehabilitation and improvement of employability of disabled people (SROP 1.1.1). This specific ESF co-funded project (SROP 1.1.1) focused on supporting the rehabilitation and employment of people with changed working capacity to improve their employability and promote their integration in the labour market though personalized services and complex support. The aim of the programme was to reach the entire group of the disabled receiving rehabilitation subsidy. The elements of the programme were: a personalised combination of subsidies and services: vocational rehabilitation, including covering the costs of training and vocational education; psychological counselling; coaching; covering commuting and other related costs of working; wage subsidies; etc. Duration of the programme: 1 Mar 2008 – 28 Feb 2013. (Programme entry: 16 Jun 2008 – 31 Dec 2010, Programme exit: 10 Feb 2009 – 31 Oct 2012 periods in the NLO database). 10 911 persons participated in the programme and Scharle (2013) found that uneducated participants of the SROP 1.1.1 were 26-30 % point more likely to be reemployed than their comparable peers who did not participate in the programme. Regarding the length of employment, two-thirds of those who received a wage subsidy for 1-3 months and about half to one-third of those who received it for a longer period lost their jobs after exhausting the subsidy (Scharle 2013).

On the one hand the structural changes, the reform of disability pension and the system of rehabilitation reduced the absolute number of people on disability pension and also the number of new claimants for disability provisions. On the other hand the number of participants – 10 911 persons during 5 years seems to be low compared to the number of people with changed work ability (in 2011 it was altogether 766 823, and of which only 18,1 per cent was employed).

In an interview conducted with the representative of an employee organization the decreasing number of sheltered workplace and employment of people with changed work ability was explained primarily with market causes: on the shrinking market the products and services produced by disabled cannot be sold any more.

Excerpt from an interview:70 ’The position of the disabled was improved by the accession of Hungary to the European Union because after 1 May of 2004 there was an obligation to meet the European norms and expectations. On the other hand the situation of the disabled worsened because as a result of the technological development many vocations – traditionally regarded as disabled vocation such as: telephone operator or masseur – became obsolete. The period from 2010 when the people on disability pension had to attend the Rehabilitation Centres where their eligibility was re-examined was Taigetos for those people, in that time the disabled were assigned scapegoats, the National Rehabilitation Institute usually did not respect the dignity of people.’

70 Because several interviewees wanted to be anonymus and asked us to make them unidentifiable, we chose not to indicate anything with the excerpts about them. The list of respondents can be found at the end of that document in the appendix.

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4.2 THE POSITION OF MIGRANTS ON THE LABOUR MARKET IN THE CRISIS

During and after the crises migrants were not target group of any policies. The number of legal economic immigrants decreased slightly as a consequence of the economic recession. The number of refugees has increased but they usually do not enter the Hungarian labour market and most of them try to migrate further to other part of Europe.

Excerpt from an interview: ’The migrants – are not a problem. There are few of them and they come because they found a job. Judging by their socio-demographic composition they are not in a bad position, even though they might suffer some discrimination.’

Excerpt from an interview: ’Whom can we regard as migrant? People from third countries, who were born abroad. They have various legal status but they are integrated enough. … Of course there are groups which are more vulnerable. Refugees are different, their status is almost criminal category. They have harder life. They will undertake any job in order to legalize their labour market position. They are very defenceless and we know little about them. … The labour market of Hungary has been very averse, when a migrant was let in he was given total labour market freedom but it was rigorous at the entrance. And this averse labour market worsened the situation a lot, but did not cause much trouble, there were no unemployed migrants because they had to go back anyway. It applies even now to those who are obliged to have work permit. The labour market of Hungary has been shrinking, the flexibility has increased (it is easy to hire and dismiss) – the comparative advantages of migrant manpower (i.e. that they are flexible) ceased to exist, this can be solved with local people as well. ’

4.3. THE POSITION OF YOUTH ON THE LABOUR MARKET IN THE CRISIS

According to the data and our interviewees this group suffered the largest loss during the crises and even in 2012 their employment situation did not improve a lot. In the interviews it was often mentioned that the crisis more or less made an impact on every labour market group and the more peripheral was a group position before the crisis the higher was the chance to lose it. First workers who were employed illegally lost their job, later those who were employed under precarious work relationships including direct “temporary” contracts (which can become “permanently” temporary), “seasonal” contracts (which can flourish year round), agency work and other forms of outsourced, in direct, third party or “triangular” relationships which obscure the relationship with the real employer; bogus self-employment as “independent contractors”, abusive “apprenticeships”, “internships” etc. Besides the above mentioned the most vulnerable peripheral labour market groups were the uneducated workers in unskilled jobs, people who lived in deprived regions and did not get support for commuting to work. The specific problem of the youth unemployment is not losing the job but not getting the very first one. Young people in growing number have not been able to acquire any work experience and the lack of work experience in itself is a severe obstacle to get employed. The average unemployment rate in the group 15-24 aged in the first quarter of the year was in 2008 -20.2 per cent; in 2009- 25.2 per cent; in 2010- 27.7 per cent; in 2011 – 26.8 per cent; in 2012 -27.8 per cent; in 2013 – 30.5 per cent71. There have been

71 Source: Central Statistical Office http://www.ksh.hu/docs/eng/xstadat/xstadat_infra/e_qlf033.html

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significant differences depending on the educational level. While with primary education the unemployment rate generally more than 40 per cent, with tertiary education is under 20 per cent. It is important to note that the permanently high unemployment level exist under the condition of continuous effort made by various labour market programmes (e.g. Start Programme or First Job Guarantee Programme) to improve the employment situation of that group.

4.4. THE POSITION OF ELDERLY WORKERS ON THE LABOUR MARKET IN THE CRISIS

The relative better employment performance of older workers was a general experience during the crisis (OECD, 2013), while during earlier recessions (in the 1970s, 1980s and early 1990s) older workers tended to withdraw from labour market, this time they have stayed in the labour force and even increased their participation following the crisis. The postponed retirement decisions, and the increasing austerity regarding early retirement and disability pensions all might have had a role in this process. The unemployment rate of the elderly an average was several per cent lower than the general population’s during and after the crises, and was only a quarter of the youth’s. There were only few active labour market policy programmes72 for the elderly besides the general prioritization described already in 1996 in the “Decree No 6/1996 (VII. 16.) MüM (Ministry of Labour) on aid for promoting employment and on the aid that can be provided from the Labour Market Fund for the management of employment crises “. 73

To sum up it can be stated, that although the absolute level of employment of the elderly is low in Hungary compared to EU or OECD data but at least the situation did not worsen during the crisis in this group, in fact after a slight decrease in 2008 the employment level got better while the unemployment rate increased from 4.2 per cent in 2007 to 8,7 per cent in 2011 and started to decrease in 2012 (then was 7,9 per cent).

Our interviewed experts usually pointed out that although the elderly are the only group which could preserve and sometimes improved slightly its labour market position we do not know at what cost it came because of the crowding out effect - when elderly people occupy the positions on the labour market and that way do not let young people enter.

4.5. THE POSITION OF OTHER RELEVANT VULNERABLE GROUPS ON THE LABOUR MARKET IN THE CRISIS – THE ROMA

72 The “Start Extra” active labour market policy scheme which opened on July 1, 2007 provided the largest discount for employers on wages. The target group of this scheme were jobseekers aged over 50 years and low-skilled people. By May 2009 more than 14,000 individuals had a Start Extra card (Frey 2011) 73 According to the decree a disadvantaged jobseeker is any person who: 1. has not attained an upper secondary educational qualification or its equivalent, 2.is older than 50 years when taking up employment, or 3. is a young entrant under the age of 25 years, 4. has been registered as unemployed with the PES for more than 6 months, 5. living in his own household as the only adult with one or more dependents, 6. has been receiving maternity, child-care related or carer’s benefits within, the previous 12 months, or 7. has spent time in a penal institution within the previous 12 months.

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According to an OECD paper in Hungary even in 2012 the labour market could be characterized by the old permanent problems: ’Notwithstanding weak labour demand, various structural factors explain weak activity rates, including: i) underdeveloped flexible forms of employment (including part time); ii) family policies that do not encourage the labour market participation of women, in particular those with young and/or several children; iii) the second highest share of disability benefit recipients in the working-age population in the OECD; iv) low overall educational attainment and an education system insufficiently attuned to labour market needs, contributing to youth non-employment; v) large disincentives to work at older ages; and vi) the widespread labour market exclusion of the Roma (Kierzenkowski 2012, p 14).

Besides the Public Work programme during the crisis there were two programmes which might have targeted the Roma, one of them was: ’Improvement of Employability of the Disadvantaged’ (SROP 1.1.2.). This programme lasted from 1 January 2008 until 30 April 2011 (Programme entry: 1 Jan 2008 – 31 Dec 2010, Programme exit: 15 Jun 2008 – 31 Dec 2011) and the number of participants was 57 894. The elements of the programme were: A personalised combination of subsidies and services: labour market counselling, mentoring, vocational training and wage subsidies. The target groups of that programme were: the uneducated (having primary education or less), school leavers, people aged above 50, parents with young children, the long-term unemployed, those at risk of long-term unemployment. The Roma were not designated as primarily target group however they were prioritized inside the other target groups.

The other one was : ’One step ahead!’ (HRDOP 3.5.3 & , SROP 2.1.1) the duration of the programme: HRDOP 3.5.3: January 1, 2006 – Dec 31, 2008; SROP 2.1.1: September 1, 2007 – November 4, 2009; SROP 2.1.1/B: December 15, 2009 – December 30. In this programme there were 23 088 participants involved. The elements of the programme were: Vocational training in high-demand vocations or opportunity to complete primary education. During their training participants also received cash transfers. The target group of the programme were: the uneducated (having at most elementary school degree) those with outdated vocational qualifications. The Roma were not specified in this program and were not prioritized either.

Table 17. Details of the programmes

’Improvement of Employability

of the Disadvantaged’

(SROP 1.1.2.)

’One step ahead!’

(HRDOP 3.5.3 & , SROP 2.1.1)

Entry period of the programme 2008-2011 2006-2010

Number of Participants (according to the data of National Employment Office)

57 894 23 088

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Number of Roma participants (according to the Project Progress Reports)

3 797 n/a

Number of Roma participants (according to the estimations of Budapest Institute)

4 636 2 899

Total budget, million HUF 53 041 18 376

Cost per participants, HUF/capita 916 174 795 911

Ratio of employed* 81% 63%

Cost per employed programme participants, HUF/employed capita

1 131 079 1 263 350

How many months public work would be financed from the cost of one employed participant? (at 2013 prices) month/capita

13,8 15, 4

*Ratio of participants compared to the total number of participants who found job during the programme or within 6 month after the programme

Source: Budapest Institute http://budapestinstitute.eu/uploads/BI_almp_eval_20131018_exec_sum_Hun.pdf

In the case of SROP 1.1.2. the most striking data is the extremely low level of Roma participation: 4636 persons, compared to the size of the target group (200-300 thousand in Hungary) or the number of participants – 58 thousand. The programme accessed the Roma with the least efficiency in the regions which are populated with Roma in the largest ratio and where their labour market perspectives are the worst. The Roma completed the trainings with the same ratio of success compared to non Roma participants still 180 days after the training the odd finding them in employment was half of those non-Roma (16% vs 32%).

Although the lack of individual level ethnic data is an obstacle to assess these programmes real impact on Roma labour market perspectives, based on the estimations it can be stated, that these programmes increased the probability of finding employment approximately by 40 % points. The positive effect of the programmes is significant on the long-term unemployed as well, and it is also considerable on those who did not receive wage subsidies.

The Roma face high job insecurity and labour market marginalisation as reflected by a significantly higher unemployment rate, longer jobless spells and less stable jobs as a result of a relatively higher concentration in seasonal employment (in the agriculture and construction sectors) and their wider participation in short-term public employment schemes (Kertesi and Kézdi, 2011a). The latter play a heavy role in Roma employment, but seem to corner Roma workers into a low-level segment of the labour market and entrench their social marginalisation and dependence on such programmes (Kertesi, 2010; Fleck and Messing, 2010).

In 2009 to promote labour market recovery the authorities put significant emphasis on direct job creation through public work programmes as a temporary substitute for insufficient labour demand. A large programme “Pathway to Work” targeted at long-term unemployed (more than 100

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000 affected per year) was introduced in early 2009. The aim was to identify those long-term unemployed who had the physical capability to work and make financial support for them conditional on their participation in public works organised by local authorities. The programme was terminated in early 2011. A new public employment scheme has been launched since then (managed by the Ministry of Interior since June 2011), characterised by a higher enrolment rate and a high prevalence of part-time and short-time (2-3 months) employment (220 000 people but 100 000 full-time equivalents in 2011), a fixed budget (of 0.2% of GDP in 2011, around half of the expenditure on the previous programme), and a stronger involvement of local authorities in its funding. The objective is to create strong financial incentives to resume work by providing a higher income than social assistance, but a lower one than the minimum wage. Between September and December 2011, unskilled workers could earn 73% of the minimum wage for full-time work and this ratio increased to 77% in 2012.

The programme is essentially centred on low-skilled, low value-added jobs and manual tasks. Even though training to obtain a vocational qualification has been offered to some participants, an insufficient provision of such opportunities is a concern given the participation of disadvantaged groups with depreciated human capital and skills (such as long-term unemployed and former disability pensioners). Moreover, the recent shortening of the duration of unemployment benefits from nine to three months risks increasing inflows to the scheme, especially if other active measures fail to ensure labour market reintegration. Subsidised public sector employment may entrench dependence on such programmes as reduced job search and re-employment support preclude mobility into non-subsidised jobs (OECD, 2010b).

Evidence derived from a large number of empirical studies (a meta-analysis) suggests that subsidised public sector employment programmes are the least effective form of active labour market policies, whereas training programmes are associated with positive medium-term impacts (Card et al., 2010). Empirical evidence for Hungary shows that various public works schemes experimented in the past have failed to improve the employability of participants and to provide a foothold in the open labour market (Fleck and Messing, 2010; Budapest Institute 2011a). Therefore, the effectiveness of the public works programme should be fostered by providing significantly scaled up training and skill-upgrading services for participants so as to ease their transition to the primary labour market.

Excerpt from an interview: ”The public work will not increase the employment level, on the contrary it rather decreases because it is… , for example ignominious. Somebody who already has been public worker will not be employed. So, it does not improve the employment, though it seems not to be the aim [of the government] but that they do not idle away their time at home.”

Excerpt from an interview:’ I am not ab ovo against the public work. But I think public work should not be organized in a way that there are x people who need job and then I assigned them public workers and drive them out to the side of ditch regardless of the fact that there is work or not. There is no substantial work but they improve the employment statistics now, if I am right. Public work should be organized when there is a specific social problem which can be solved that way. Further problem of the public work is that it is not productive by its nature. It is done by unskilled workers, and it cannot be productive from the first. Contrary to the rhetoric of the government the experience shows that public work will not lead back to the real labour market, or 5-10 per cent might be able to get a job afterwards. My problem with the present public work is that they pay less than the minimal wage. I cannot see any

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basic cause of that. There is a reasoning that it is more than the social benefit, and that is true. But work must be compared with work! And those public workers do work alike. And in this case the fact that the state is the employer and customer is not important. The negative impact of that is that companies have an interest in employing public workers. It often leads to dismissing people and back-employing them again as public workers.’

Excerpt from an interview: ’In the National Regional Development Strategy there is no any endeavour to match the regional development, social issues and employment policies. There was a weak trial several years ago that where the motorway was built there should have been employed registered unemployed but the employers attacked this concept immediately so as not to work with that groups. So this cannot work, probably cannot be dealt with active labour market policies. And the present public work is extremely interesting in this interpretation, because in the last 20 years this is the first programme which move this social stratum … we do not know what will be after that, because this amount is not much, but it moves people in large numbers while it does know what to do with the characteristics of local labour market.’

Excerpt from an interview:’ The Public Employment Service should be prepared for specific clients’ preferences but instead of the improvement of the individualized services they want to buy the tranquillity by money. The other problem is that instead of serving the unemployed they provide human resources management services to the employers.’

5.1. FACTORS AFFECTING THE POSITION OF VULNERABLE GROUPS - Governmental Policies

The labour market situation, besides the actual economic circumstances were shaped by several determining policies and governmental measures. Amongst them the expansion of community public work is the one of the most important. It has improved the employment statistics (as more than 100 thousand people fall into the employed category), meet several expectations but is highly debated, especially on the ground that public work will not lead people back to the open labour market employment.

According to a comprehensive description (Frey 2009): „From the point of view of employment policy, community public works schemes have the following purposes: to – increase the number of job vacancies offered by the job centres; – test the work-readiness of jobless people; – provide income to those who are no longer eligible for unemployment assistance; – in the absence of other opportunities, provide a possibility to earn entitlement to unemployment assistance and pension; – provide a job opportunity for those who have no chance of finding a normal (non-supported) job; and – give the opportunity to gain work experience and in this way improve the job prospects of the individual. Employers who hire unemployed people to carry out community public works can claim back 70% of their direct labour expenses if they do not get payment for the work carried out. In public work schemes two types of projects can be supported: on the one hand those projects which undertake the mandatory task of local governments, and on the other hand those that carry out non-mandatory tasks with direct relevance for the local community. Contributing only 30% of the costs to the project can still be difficult for the more deprived local governments and regional labour councils

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can decide to increase the rate of funding from the decentralised Employment Sub-Fund to 90% for these local governments. If the source of funding is the central budget of the Labour Market Fund, the Management Committee of the Labour Market Fund can also set this rate at 90% for a period of 2 years. Community public works projects can only employ registered jobseekers placed by the employment service, and under a contract of employment. Employment should be additional, meaning that the headcount should increase in comparison to the previous month. The maximum duration of employment in community public works for a jobless person is 1 year. This can be repeated within 2 years if the person at the time of placement is not eligible for job-search (unemployment, entrepreneurial) benefits. The employment of jobseekers aged over 45 years can be subsidised for up to 1.5 years and jobseekers aged over 50 years for up to 2 years in public work projects in the field of health and social care, culture, education or the protection of the environment. If Roma people are employed in a community public work project, it is not required to increase the headcount. The rate of the subsidy in this case can be up to 90% of the direct labour cost for a period of up to 2 years. The following costs are eligible in community public work projects: wage and contributions, work wear and protective clothing, tools and equipment, and transportation of workers and the costs of additional management tasks. There are significantly more men than women in community public works projects. The share of young people aged under 25 years is considerably lower than in total unemployment. In contrast the participation of people aged over 50 years is on the rise. The majority of people in community public works have lower secondary or less education. For them this type of employment is really the last resort to have a regular paid job. As a result of low educational attainment, most people in community public work projects perform tasks related to local community infrastructure that require low qualifications. Most of them (76.6%) still carried out work related to community infrastructure in 2007. Structures were also unchanged in other types of jobs. This is partly why the concept of community public work was heavily criticised, most markedly by Gábor Kertesi. Kertesi argued that public work is not suitable to help Roma or other people in extreme poverty to emerge from the underbelly of society. “It gives them jobs but the social context surrounding it – on purpose or not – is such, that in the longer term it consolidates the inner characteristics and external relations that recreate their need for help. Roma people – and others – who live in poverty suffer most because of the lack of regular earnings and the income they live on depends on others; they are vulnerable in their relations with the authorities, and the jobs they do are considered inferior in local communities. The types of welfare employment exactly reflect these patterns: they offer random and short term jobs; consolidate dependency on benefits; increase vulnerability towards public authorities; and force people into jobs according to negative stereotypes that are humiliating. (…) What would be the alternative? Meaningful projects that promote social integration – if managed well – will help people out of the hopeless existence in the underbelly of society.” (Kertesi, 2005, p. 191) The stated aim of public work74 is to promote development and renovation projects, especially in the fields of infrastructure-development and protection of the environment, and the provision of public services in regions lagging behind that are suitable to reduce territorial disparities and unemployment by offering job opportunities for the unemployed and those who are no longer eligible for assistance. Funding is available upon submission of a proposal, mostly from the state budget. From the perspective of employment policy employment in public works has the following purposes: to – involve people who have adequate experience or training and are ready to work in on-the-job training, combining training and work;

74 199/2008. (VIII. 4.) Government Regulation on support for public works projects.

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– offer a “larger-scale” solution in local areas where local governments are the only employers; – promote corporate social responsibility towards the problem of unemployment (cooperation, financial contribution); – promote coordination and cooperation of local governments to tackle unemployment at the level of micro regions; In public works projects at least 40% of the workforce has to be claiming regular social benefit since 2008. Community service work is regulated by the Social Act. This provides that local governments organise employment to improve the labour market situation of jobless people. This can be either public work, community public work or community service work (referred to as “employment organised by the local government” below). The duration of this is at least 30 days, except if it casual work with the log book where the relevant rules apply. The maximum duration of uninterrupted employment is 12 months in community service works. Local governments can claim support to organise community service projects. The rate of this is set each year in the Budget of the Republic of Hungary. The funding is ring-fenced and can only be used to organise community service projects. If not all local governments use their funding, the remaining money can be reallocated to local governments needing extra funding. The Pathway to Work programme starting in 2009 offers community employment to people claiming regular social assistance who are able and willing to work. One of the sources of funding will be the community public works budget of local governments that will be reallocated to community service projects. Community public works projects can only receive support if they are implemented by voluntary organisations. Local governments can hire 3,000 people whose job will be to organise community employment projects. Local governments in cooperation with the local job office must prepare a community employment plan. Some have expressed concerns regarding the viability of this scheme because experiences so far suggest the community employment rarely leads to jobs on the open labour market.” The direct job creation, the largest active measure of Hungarian labour market policy in 2012 – similarly to the previous year – was employment in public works. Bush, Cseres-Gergely and Neumann (2013) summarized the characteristics of changes in this field: „This includes short- and longer term public works, national public works projects and Start-work demonstration projects at the level of small regions. The main features of the programme remained by-and-large unchanged apart from working time which increased more than four hours per day in the majority of projects in 2012 – based on experiences from 2011. It also includes mobility assistance for public works as well as assistance for businesses to employ people claiming out-of-work assistance [the actual Hungarian benefit is called “foglalkoztatást helyettesítő támogatás” (fht), translated as Employment Replacement Support]; however neither of these has been claimed (in the first case the incomplete regulatory framework might have contributed to this). Public works programmes continue to be managed by the Ministry of the Interior, the Ministry for National Economy is responsible for managing the public works appropriation of the National Employment Fund (in Hungarian: Nemzeti Foglalkoztatási Alap, NFA; previously the Labour Market Fund, LMF in Hungarian: Munkaerő-piaci Alap, MpA) and undertaking financial commitments, and job centres are responsible for the contracting and payment of public works employers and employees. Funding comes from the public works appropriations of the National Employment Fund, and the appropriations of the SROP 1.1.2/1.1.4 programmes – for related training programmes. The demonstration programmes that had started in 2011 continued in 2012: in the 94 small regional Start-work demonstration programmes more than 1,600 settlements and approximately 66,000 workers participated in the first eight months of the year (National Labour Office data). There are seven different types of public works programmes that local councils can take part in: 1) Agricultural projects – animal husbandry, crop cultivation or both (provision of machinery, seedlings, polytunnels etc. for participants), 2) Maintenance of dirt roads used for agricultural purposes, 3) Drainage,

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4) Clearing up illegal landfill sites, 5) Organic and renewable energy production (for example switch over to bio boilers, the production of grass, shrub and log briquettes etc.), 6) Maintenance of public roads, 7) Winter and other “meaningful” employment (for example preservation, drying and pickling of vegetables and fruits, making pasta, maintenance of local council buildings etc.). Agricultural programmes run throughout the year while other programmes typically last for five months. One person can participate in only one programme at a time. The deadline for local councils to set up new Start-work demonstration projects was extended until 1 July, 2014. Changes in legislation make it possible for Start-work demonstration projects (mainly agricultural projects) to become self-supporting and establish social cooperatives, and under certain conditions equipment purchased in demonstration projects can be transferred to social cooperatives. Currently the aim is to establish social cooperatives over the next two years; the elaboration of details is still underway. There are approximately 300 social cooperatives in Hungary and around 40 demonstration projects might become self-sustaining and turn into social cooperatives in the future. Main legislation: Act I of 2012 on the Labour Code; Government decree 375/2010 (31 December) on assistance for public works programmes; Act CVI of 2011 on public works and on the amendment of public works related and other legislation; Government decree 169/2011 (24 August) on the Employment and Public Works Database; Government decree 170/2011 (24 August) on wage setting and guaranteed wage in public works employment. On-line resources: belugyminiszterium; nfsz” 5.2. Structural Changes

Another decisive governmental activity was the area of structural changes. Since the

Hungarian employment level is very low in European comparison, and its increase has been a major target for years of various governments, in the rhetoric of the new Orbán government (from May 2010) it also plays an important role. To increase the employment level with 1 000 000 workers is still the declared prime objective, a solution to a number of fundamental problems. In a paper for the European Commission, Albert (2013) summarized the recent structural changes influencing labour market situation: „Policy makers consider employment to be the best way out of poverty (including child poverty) in the long run. So the main challenge is the increase of labour market participation, especially with regards to certain disadvantaged groups, such as the low-skilled, the elderly (50+), young career starters, women with small children, and the disabled. Targeted measures focus primarily on these disadvantaged groups. Several structural reforms have been introduced to promote employment in the long run, to make work attractive for the inactive. The structural reforms affected 1. the pension system, 2. the disability pension system and 3. the social benefit system. As a major element, work incentives have been strengthened to improve long-term sustainability and increase labour market participation. Since the transition the pension system has gained a role in tackling social problems: there has been a high inflow rate into disability schemes and a widespread use of early retirement options, thus measures have been introduced to raise the effective retirement age to improve the sustainability of the system and increase employment. So as to achieve this, the following steps have been made: - withdrawal of early pension schemes; - phasing out early pension-like benefit and disability pension-like benefit (transitional rules); - changing disability pensions to rehabilitation benefits and simplifying the system (reducing the number of benefit types to two)

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- strengthening employability aspects and the role of vocational rehabilitation (focus on remaining work capacity); - persons with reduced work capacity may receive labour market services and can claim the newly introduced Rehabilitation Card (it provides social security contribution exemption for the employer) so as to support their labour market integration. According to the government, the benefit system did not encourage work and kept the active population permanently away from the labour market. The aim of the reform has been: to provide work opportunity for the long-term unemployed/inactive instead of social assistance to improve long-term sustainability and promote employment (the best way out of poverty). The new system offers two types of assistance: for those who are capable of work (in 2012 called employment substituting benefit) and for those who are not (called regular social assistance) so as to provide increased work incentives, improved efficiency of social assistance and to strike a better balance of individual rights and responsibilities. In order to activate those capable of work, three directions have been outlined in the Hungarian Work Plan75: (1) the promotion and reinforcement of employment in the open labour market: through active labour market policies (ALMPs), tax/contribution allowances, increasing labour market flexibility; improving competitiveness of the labour force, enhancing LLL participation, job creation etc. (2) strengthening the social economy, social cooperatives – temporary form of employment, aimed to lead to open labour market in the long term (3) public works – for those who currently cannot find a job in the first two pillars the state provides for their temporary employment. To strengthen active labour market policies, to support activating measures aimed at successfully integrating job-seekers into the open labour market, the government claims to have reinforced services and supports available for job-seekers. The government strengthens ALMPs which deliver positive results by reallocating available ESF resources to the most successful ESF co-funded programmes implemented by Public Employment Service (PES) and non-governmental service providers. They introduced decentralised, comprehensive labour market programmes for the employment of disadvantaged people (SoROP 1.1.2 and 1.1.4) The main target groups are the low-skilled, young career starters, older people (50+), and parents returning to the labour market after parental leave, those at risk of long-tem unemployment including the Roma. Regarding the development of the Public Employment Service, its capacity and effectiveness is to be strengthened (SoROP 1.3.1). To increase the flexibility of the labour market, a new Labour Code (in effect from July 2012) promotes flexible forms of employment and flexible workplaces, ease the return of young parents to the labour market and support companies to flexibly adjust working hours. Employers should employ part-time employees with a child under 3 returning from parental leave upon request of the employee. There is a contribution allowance available for employers after the employment of those returning from parental leave. The new features of the Labour Code include among others the extension of trial period for new employees from 3 to 6 months; enhancing the flexibility of working time by extending the possibilities of short-time and overtime (36-44 hours); the employer’s unilateral discretion to offer paid leave instead of complement for employees working extraordinary overtime. Trade unions and experts fear of growing insecurity for the employees. To tackle youth unemployment the government continues existing measures: targeted tax allowance for employers who employ young career starters (START programme), strengthens ALMPs with young job-seekers being a specific target group, and support the acquisition of work experience. New planned measures, co-funded by ESF are a programme supporting business start-ups for young people (18-35) (financial support for starting an enterprise, supporting the acquisition of entrepreneurial skills, professional counselling and mentoring); an internship-type programme

75 Accepted by the government on May 24 2011. Magyar Munka Terv http://www.kormany.hu/download/e/a7/40000/Magyar_Munka_Terv.pdf

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facilitating the transition of young people from education to employment with wage subsidy, support for mentoring, counselling; supporting employment programmes of NGOs for the labour market integration of young people, in particular disadvantaged careerstarters. An on-going modernisation of the education and training system aims to improve skills of the labour force. By the development of vocational and adult training (new legislation), improves the quality and labour market relevance of vocational training to increase competitiveness. Preparatory vocational training may begin in the 9th grade, rules of vocational examination have changed. The regulation strengthened the dual practical training elements, increased the role of national chambers of commerce, continued the development of career guidance system and several adult training programmes (co-financed by ESF) for low-skilled disadvantaged adults aimed at acquiring basic or vocational education responding to labour market needs, for the development of language and IT competences and in-company trainings to foster adaptability of companies (resources have been raised). So as to foster job creation, the government intended to improve business environment, support technology development, support job creation at SMEs (especially if disadvantaged people are employed) - national resources for this purpose doubled in 2012 compared to 2011. Targeted social security contribution tax allowances are provided to employers to boost labour demand for certain disadvantaged groups. The most important tax reliefs targets are young career starters (START programme since 2005 ~38 000 persons monthly), people registered as job-seekers for more than 3 months, or those returning from parental/care leave (START Bonus programme as of 2012 ~50 000 persons monthly) and disabled workers (2012). As of 2013, in the framework of the Job Protection Plan, employers’ social security contributions will be significantly reduced in case of employing the most disadvantaged less competitive people.

Policy makers see the need for integrated implementation; however, in practice only certain elements have been implemented. Although the pronounced emphasis on work incentives and conditionality may well generate labour supply, by itself it cannot generate labour demand. The significant decrease of available provisions worsen social exclusion. The promised improvement of the services of the PES cannot yet be supported by empirical evidence, although it is an established target that job-seekers are to receive a personalised integrated set of services (labour market services, wage subsidies, support for self-employment, general and vocational training, etc.)

Between 2008-2011 more than 58 000 disadvantaged job-seekers have been involved in ESF co-financed comprehensive labour market programmes, 35% stayed in employment 180 days after completion of programme. For the period between 2011-2015 more than 100 000 disadvantaged job-seekers are planned to be involved in the programme; for this purpose approx. 86 billion HUF /301 million EUR is available (nearly twice than in previous period). An additional 20 billion HUF /70 million EUR is planned to be allocated (pending on ongoing amendment of the Social Renewal OP)76. As of 2013 the government planned the introduction of new tax credit targeting the lowskilled to support the employment of those furthest from the labour market77. There are smaller scale targeted labour market and training programmes for the particularly disadvantaged (Social Renewal ESF OP priority 1 and 5).

The development of the social economy is an ESF co-funded programme. There is a new public work scheme combined with training/competence development to provide jobs also for long-term unemployed/inactive people who are not able to enter to the primary labour market. The proclaimed aim of the public work program is to promote long-term integration to the competitive labour market through activation (temporary job in a protected work environment) and support to acquire basic competencies. The amount of public work wage is higher than that of social assistance,

76 Calculated with a 285HUF/EURO rate 77 After the submission of the present report the government announced that as of 2013, in the framework of the Job Protection Plan, employers’ social security contributions will be significantly reduced in case of employing the most disadvantaged less competitive people (the 5 target groups include young people under 25 and career starters; older people (above 55); the low-skilled; the long-term unemployed; and mothers wanting to re-enter the labour market after parental leave)

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but lower than the official minimum wage. In order to facilitate better administration, there is a common database of the PES and local governments to follow persons eligible to social assistance. The planned number of participants in public work in 2012 is 200 000 people. For the activation of those not capable of work, the beneficiaries of regular social assistance have to co-operate with the family assistance service. The allowance is conditioned on co-operation, and the co-operation agreement is concluded between the beneficiary and the service about the integration programme of the beneficiary. Its elements are training programmes, mentoring services and skills improvement programmes. Description and assessment of the impact and cost effectiveness of measures introduced or planned

In May 2012 the number of registered job seekers was 534 600 based on data from the PES. Only 11% of job seekers (59 000) received job seeking allowance (27.4%, 159 900 people in 2011), and half of them (277 000 people) received no cash provision whatsoever (as compared to 41.4%, 243 300 people in 2011). Almost another half, more than 230 000 received the minimal amount of employment substitute benefit of 22 800 HUF. 60% of new jobs in May was supported by the state. The number of those involved in public work was well above 100 000 (in April 102 000 based on data from the CSO). One quarter of job seekers have been looking for a job for more than a year. The number of those receiving job seeking allowance decreased dramatically over the past year as in September 2011 the maximum duration of this provision was decreased to 3 months. As compared to 2011 the proportion of those without any provision grew by 6.5%, and that of those receiving some kind of a social provision by 8.5%. Registered job seekers dominantly (2/5) still have only primary school degree or less, and another third has vocational education. During the past 3 years both the number of those with tertiary and secondary education increased among job seekers78.

Although the transformation of the public work system, the reform of the system of social benefits and the restrictions of the disability pensions are expected to lead a number of people in active age back to the labour market, thus out of poverty, however so far neither employment figures nor poverty indices have improved significantly, on the contrary, these latter clearly worsen. Although the relative poverty rate remained almost the same, but under decreasing amount of the threshold, the rate of those living in severe material deprivation increased (from 17.6% in 2008 to 21.6% in 2010), and people living in households with very low work intensity remained stable (12% in 2008, 11.8% in 2010). The rate of children living in households with very low work intensity has grown from 11.1% in 2008 to 13.8% in 2010 which is still the second highest amount among the Member States.”79 The adequacy of benefits mentioned can be questioned: their value is decreasing and the criteria for take-up are getting stricter and more work-oriented. In 2012, neither the NRP (National Reform Programme80) nor the NSR (National Social Report81) tackles the problem of undeclared work, although the significant rise of the minimum wage may increase it. There is clearly a need for access to enabling and individually tailored services, but significant improvements have not been experienced so far. The present obligation for jobseekers prescribes only a monthly visit to the Employment Service and seems quite inadequate to provide the necessary support for finding a job. Although the capacity building of the National Employment Service is mentioned in the NRP, the details are still not shared.”

78 2012. June 21: http://www.portfolio.hu/gazdasag/munkaugy/felmillio_allaskereso_toredeke_kap_munkanelkuli_jaradekot.169079.html?utm_source=index_main&utm_medium=portfolio_box&utm_campaign=portfoliobox 79 http://ec.europa.eu/social/keyDocuments.jsp?policyArea=750&subCategory=758&type=0&country=0&year=0&advSearchKey=SPCNationalSocialReport&mode=advancedSubmit&langId=en 80 http://ec.europa.eu/europe2020/pdf/nd/nrp2012_hungary_en.pdf 81 http://ec.europa.eu/social/keyDocuments.jsp?policyArea=750&subCategory=758&type=0&country=0&year=0&advSearchKey=SPCNationalSocialReport&mode=advancedSubmit&langId=en

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Excerpt from an interview: ’There is no expansion in employment in Hungary, so these policies are not effective either. There is not so much change compared to the pre-crisis period. These programme do not have proper impact study either. There are no new programmes, these programmes were before

also, only financial rearrangement happened.’ Excerpt from an interview: ’There is not so much opportunity for being creative regarding labour market

policies, there are several methods and then we try to rotate it.” Excerpt from an interview: ’The labour market experts in Hungary were trained by the best international

organizations from the beginning of the 1990s. They know the methods, have the skills and the experience, but it always have to be taken into account that all the problem of the education system and the difficulties of the economy of a country cannot be solved only by labour market policies especially with the remains of the budget.’

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APPENDIX

List of interviewees

Experts, social partners and representatives of vulnerable groups

REPRESENTATIVES OF REGIONAL AND/OR NATIONAL GOVERNMENT AND OTHER POLITICAL PARTIES WITH COMPETENCES IN LABOUR POLICIES

Name Position Institution 1 Judit NAGY,

Zsolt HARGITAI Councellors Ministry for National Economy, State

Secretariat for Employment Policy, Department of Employment Programs

2 Sándor ÁDÁM Deputy Head of Department

Ministry for National Economy, State Secretariat for Employment Policy, Department of Employment Programs, Planning and Monitoring

3 Judit SZÉKELY, dr. Last position (up to 2010) : State secretary responsible for employment and training, earlier researcher

Ministry of Social Affairs and Labour

4 László HERCZOG dr. minister (up to 2010) Ministry of Social Affairs and Labour INTERNATIONALLY OR NATIONALLY RECOGNIZED ACADEMICS IN THE FIELD OF LABOUR POLICIES

AND VULNERABLE GROUPS Name Position Institution 1 Gyula NAGY, PhD Lecturer Corvinus University of Budapest, Department

of Human Resources 2 Lajos BÓDIS, PhD Senior lecturer Corvinus University of Budapest, Department

of Human Resources 3 László NEUMANN Researcher Hungarian Academy of Science, Institute for

Political Science – Center for Social Sciences REPRESENTATIVES OF EMPLOYER ORGANIZATIONS, EMPLOYEE ORGANIZATIONS AND NATIONAL

LABOUR UNIONS WITH DEPTH KNOWLEDGE OF THE SITUATION OF VULNERABLE GROUPS Employer Organizations

Name Position Institution 1 András NAGYIVÁNYI

dr. Vice president ÉVOSZ (Épitési Vállalkozók Országos

Szakszövetsége – National Federation of Building Contractors)

Unemployed Association Name Position Institution 1

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National Labour Unions Name Position Institution 1 Melinda KELEMEN Sociology expert LIGA, Democratic League of Independent

Trade Unions REPRESENTATIVES OF NATIONAL ASSOCIATIONS OR NGOS DEFENDING THE RIGHTS OF

VULNERABLE GROUPS (DISABLED PEOPLE, YOUNG PEOPLE, MIGRANTS, OLDER WORKERS). Name Position Institution 1 Katalin GREGOR Head of department The Equal Treatment Authority

http://www.egyenlobanasmod.hu/cikkek/ebh-hatosag

2 Marianna NAGY dr. President, civic legal aid activist

Magyar Antidiszkriminációs Közhasznú Alapítvány – Hungarian Public Benefit Foundation Against Discrimination http://www.mada.hu

ADDITIONAL EXPERTS Name Position Institution 1 Edit FÜLÖP ex-researcher, last

position: chief counsellor

Ministry of Employment Policy and Labour

2 Ágnes SIMONYI, PhD Researcher Hungarian Academy of Sciences, Institute of Sociology, Research Group of Sociology for Organisation and Work

3 Tibor Bors BORBÉLY-PECZE, PhD

Counsellor Public Employment Service

4 Judit LECHNERNÉ VADÁSZ

retired, last position: Rehabilitation counsellor

National Employment Office

5 Károly BUTORA Official in charge of allowance

National Employment Service Investment Incentives Department

6. Edit DÉKÁN Official in charge of allowance

National Employment Service Investment Incentives Department

7. Ágnes HÁRS PhD senior researcher Kopint-Tárki Institute for Economic Research Co.

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