Abstract
This paper was prepared as an assessment of labour market developments in Hungary. It reveals the serious depression of demand in the Hungarian labour market. The number of unemployed began to grow in a dramatic way in 1991. Labour economists agree this unemployment cannot be considered either structural or frictional according to the terms familiar in Western economies. It is a consequence of the very high labour hoarding during the communist regime which has been reduced by the economic and social transformation. The general recession and drastic market losses have also contributed to many redundancies. In the emerging market economy, the debt-burdened state could not maintain its enormous subsidies to deficit-producing firms; under market pressure firms cut their workforce. The high labour force participation rate has been maintained with so-called "unemployment within factory walls", and relatively low work intensity. Due to the recession the decrease in production significantly hit employment in general, especially in the enterprise sector.
Social and economic development over the first years of transition has shown that the market economy of Hungary has emerged in a difficult economic situation burdened with heavy social costs of transformation, therefore "market-oriented" policy measures elaborated in the Western European context can prove to be not only ineffective, but even to have adverse effects. The authors of this analysis therefore recommend that labour market programmes and policies in operation in Western countries should be implemented with caution in Hungary and take into account the specific conditions, very limited available resources, the lack of experience and skills in their implementation, and the breadth of institutional problems to be solved. Such policies and interventions should also clearly distinguish between short-term and long term priorities, possibilities and effects.
Table of Contents
1. Development tendencies in the national labour market
2. The development of labour market institutions
3. Unemployment and the unemployed
4. Regional differences in employment and unemployment
5. Flows in the labour market
7. The National Labour Centre and its network
8. Assessment of the labour market programmes
9. Policy recommendations
Appendix
Maps
Bibliography
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