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1. Labour market situation in the country

2. Main concepts

Labour market situation in the country

Changes caused by the political transition

The changes brought about by the end of communism had a serious impact on the specifics of employment. Various imponderables complicated the transition from education to the labour market. Career planning and achieving goals, also taking into account global processes, is a very complex task.

Changes in the education system and social and economic changes have significantly altered the conditions for starting an individual life. Nevertheless, the length of time spent in the education system has increased, leading to an inflation of qualifications that shifts the differences upwards.

According to the data of the Hungarian Central Statistical Office [Központi Statisztikai Hivatal (referred hereinafter to as HCSO)] from 2022, the number of unemployed has decreased in recent years. The employment is increasing mainly in the sectors affected strongly by the consequences of the Covid-19 epidemic (restaurants, accommodation and retail) (HCSO, 2022).

Trends of youth employment and unemployment

The main available data sources on youth employment and NEET youth can be found in the general labour market data published by the HCSO. According to the HCSO data from the beginning of 2022, the rate of unemployed youth under the age of 25 was about 10% (HCSO, 2022).

Trends in youth employment and unemployment are not significantly different from regional trends: until the 2008 crisis, the youth unemployment rate was below the EU average, then it increased slightly until 2012. From 2012 onwards it improved at a rapid pace, approaching pre-crisis levels and falling below the EU average in 2014 (20.4% compared to 22.2% for the EU average) reaching 16.7% in the third quarter of 2015.

The average share of NEET young people under 25 dropped to 11% in 2016, below pre-crisis levels and the EU average (11.5%). The NEET rate remained unchanged in 2019 (11%) but slightly increased in 2020 (11.7%) and decreased again in 2021 (10.6%). Data available for 2019 show that the unemployment rate of Hungarian young people under the age of 25 dropped to about 11.4% (compared to the about 14.4% EU average) but it increased to 13.5% in 2021 but it's a general trend in the EU countries.

The employment rate of young people

The employment rate of young people in Hungary has been historically very low compared to the EU figures; the employment rate of the 15-29 year olds increased above 40% in 2014 and has reached 47.1% in 2019 which is a return to the pre-crisis level in contrast to the lowest point of 34.8% in 2011 (HCSO, 2004-2019).

The employment rate of young people between the ages of 15 and 24 was 27.5% compared to the 32.7% EU average in 2021. The rate of those who are employed part-time is very low in the society as a whole and it is not different with young people, either.

According to the latest HCSO data from 2022, the employment rate of under 15-24 year old young people was about 27% in the first half of 2022 and it has not changed significantly compared to 2021 (HCSO, 2022).

The employment possibilities of young people

The employment possibilities of young people have changed notably in the recent years. According to the secondary analysis of Eurostat data, the Oeconomus Economic Research Foundation (Oeconomus Gazdaságkutató Alapítvány) found that the proportion of those who work alongside their studies increased significantly between 2009 and 2016. It is important, because young people who gained work experiences during their higher education studies are less likely to become unemployed after they obtain their degree. In Hungary, the government policy ensures also that young people have the opportunity to gain work experience during their higher education studies through the mandatory internship included in the Act CCIV of 2011 on National Higher Education (2011. évi CCIV. törvény a nemzeti felsőoktatásról) (Németh, 2021).

Youth entrepreneurship

According to the Global Entrepreneurship Monitor, conducted in Hungary in 2021-2022, the typical entrepreneur in Hungary is between the ages of 25-44. The study states that young people under 25 may feel insecure about starting a business and they do not believe they have the appropriate knowledge and skills for that (Budapest Lab, 2022).

In 2013 the rate of self-employed young people was only 4% of the total employment. This was one of the lowest rates in the EU, and the rate actually decreased between 2008 and 2013 both in relative terms (from 4.5 to 4.0 per cent) and in absolute terms (from 34.1 to 26.8 per 1 000 people). Although young people have positive attitudes towards self-employment and entrepreneurship, the detailed analysis indicates that for most young people employment (especially in international companies) represents the generally accepted positive vision for the future in the labour market.

The low risk appetite, the widespread fear of failure, the unpredictable economic situation (with the frequent changes in the tax system and government bureaucracy), the lack of effective teaching on the skills/competencies required for entrepreneurship and the predominantly negative opinions about entrepreneurship in society are all factors that contribute to these rates.

The current trend of more and more young people working in start-ups and the growing visibility offer the opportunity for attitudes and motivation to change in the long term. According to the most recent youth research [Hungarian Youth 2020 (Magyar Fiatalok 2020)], 19% of the 15-29-year-olds consider to become an entrepreneur in a few years.

Main concepts

The term 'youth' may refer to various age groups, depending on the context and the data examined. The National Youth Strategy 2009-2024 (Nemzeti Ifjúsági Stratégia 2009-2024) referred hereinafter to as NYS)] analyses the 15-29 age group based on the youth researches but in its indicators, it refers to the activity rate of the 15-34 age group. The HCSO in its recent analysis refers to the 15-24 year olds (HCSO, 2022). The National Employment Service (Nemzeti Foglalkoztatási Szolgálat) publishes data on the <19 year olds, the 20-24 year olds as young while presenting employment (PES, 2020).

Recently, there is a special attention to the age group of 15-24 because of the spreading of the Youth Guarantee Programme which also made the NEET acronym well known. It should be mentioned that – due to the nature of entrepreneurship which requires more experience – the target group of the largest non-state organisation, the National Association of Young Entrepreneurs (FIVOSZ) is the 18-40 year-olds.

The National Youth Strategy 2009-2024 (Nemzeti Ifjúsági Stratégia 2009-2024) indicators related to employment (and independent existence) of youth are the following:

• the activity rate of 15–34 year-olds,
• number of registered unemployed career starters,
• the ratio of employees within the group of youth who are not students or pensioners,
• the time period between the date of school-leaving and the first day of employment in youth groups with different qualifications,
• the ratio of youth aged 15-29 living in households independent of their parents to those who aspire to live independently
• the ratio of young entrepreneurs to all young people who are not students or pensioners.