3.6 Integration of young people in the labour market
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Most youth employment measures are part of the Youth Guarantee (referred hereinafter to as YG) system.
Youth Guarantee Active Labour Market Programme
The backbone of the system is the Youth Guarantee Active Labour Market Programme (EDIOP 5.2.1 and CCHOP 8.2.1). The National Employment Service (referred hereinafter to as PES) which implements the guarantee, coordinates the system under this programme. This includes addressing, registration and monitoring of young people and the tasks relating to maintaining contact with the partner organisations involved in the operation of the system. The programme aims to promote the entry of young people under 25 into the labour market by providing wage subsidies, entrepreneurship support and training linked to labour market services such as job search assistance or mentoring.
Youth Entrepreneurship Support Programs
The aim of the GINOP 5.1.10 and 5.2.7 projects (GINOP-5.2.7-18 Fiatalok Vállalkozóvá válásának támogatása és a GINOP-5.1.10-18 Álláskeresők vállalkozóvá válásának támogatása) is to provide support to young entrepreneurs in the disadvantaged regions of Hungary. In the frame of the projects, the applicants can receive professional support to create their business plan, to acquire the skills to start their business and also they get financial support.
The organisations participating in the Youth Guarantee
The organisations implementing the programme are:
- Széchenyi Programme Office (Széchenyi Programiroda Nonprofit Kft.),
- FIVOSZ – National Association of Young Entrepreneurs (FIVOSZ),
- the Hungarian Foundation for Enterprise Promotion (Magyar Vállalkozásfejlesztési Alapítvány),
- Budapest Polytechnics Foundation (Közgazdasági Politechnikum Alternatív Gimnázium),
- OFA NKft. (OFA Nonprofit Kft.).
Under the programme, the organisations provide young people with training to acquire the necessary skills and knowledge to become entrepreneurs and run a business. They can also receive support in creating a business plan, advice and mentoring.
Applying for a non-repayable support
Young people who successfully completed the training and have an approved business plan may submit an application for support of up to HUF 3 million (about EUR 9 594) (EDIOP 5.2.3, EDIOP 5.2.7 and CCHOP 8.3.1), in the form of non-repayable support, to launch their business and to supplement the funding of their costs associated with the start of the operation, with 10% own funds. (In the case of the programme EDIOP 5.2.7 own funds are not required.) Support is provided for the establishment of approximately 6 600 new enterprises within the framework of the programme until 2021.
Tax exemption for below 25-year-olds
In 2021, one main youth related provision was the personal income tax exemption under 25 years from January 2022. The initiative comes from the Operative Council responsible for community revitalisation in Hungary and will cost HUF 130-150 billion (EUR 357-413 million) annually. In 2022, young people under the age of 25, could save a maximum of HUF 65 055 (EUR 163) per month and up to HUF 780 660 (EUR 1 952) in the entire tax year through this measure.
Enabling young people to gain real work experience - Traineeship Programme
In the first half of 2019, a new traineeship training application (GINOP 5.2.4-16 Gyakornoki program pályakezdők támogatására) has been prepared that aims to support the integration of young people with vocational qualifications aged under 25. The aim is to encourage micro, small and medium-sized enterprises (SME) to create internships so that young people can gain real work experience, which can improve their employability and long-term chances on the labour market.
The companies hire the trainees full-time for 9 months with wage subsidy and then continue to employ them for another 4.5 months at their own expense. This programme will increase the participation of young people in apprenticeships, improve their vocational skills and work experience and thus increase their labour market prospects and employability.
SMEs can use the support provided to fund the wages of apprentices and cover the additional costs of employing and training apprentices (mentors' remuneration, physical requirements for the training place). The programme helped at least 4 500 young people gain work experience by 2021. The planned budget of the tender was HUF 30 billion (about EUR 80.7 million) and it is co-funded by the European Social Fund and the budget of Hungary.
A supplementary programme also assisted the successful implementation of the Traineeship programme: Traineeship programme – support services (GINOP 5.2.5-16 Gyakornoki program – támogató szolgáltatások). (For more information on the supplementary programme, see sub-chapter 3.5 Traineeships and apprenticeships)
Direct job-creation programme
Direct job creation outside the Youth Guarantee Programme is not related strictly to youth employment. The role of the Public Work Scheme should be mentioned: the long-term unemployed must work in the secondary labour market in order to get a (lower than minimum wage) salary and the possibility to get state subsidies. Although the explicit aim of the scheme is to help workers return to the primary labour market, young people are not its specific target group, mostly because of the opportunities offered by the YG Programme.
Wage and recruitment subsidies aiming at fostering youth employment in the private sector
The 'Support of the entreprises' employement' ('Vállalkozások munkaerő támogatása') was a governmental initiative to provide non-refundable support to workplaces which employ registered job seekers under 25 or who has been registered as a job seeker at least for a month. The employer was able to receive this support for 6 months for reducing the social contribution tax (paid by the employer).
Special target groups
Employment measures under the YG Programme are specifically targeted at NEET young people, but instead of focusing on low-skilled and long-term unemployed youth, support depends on individual needs:
'With regard to the heterogeneity of the target group, the content of support is differentiated according to individual needs. The package of measure(s) and service(s) offered to the young person is based on an individual action plan, drawn up by a member of the YG mentor-network in cooperation with the client, comprising the responsibilities of the client as well.' (Hungary's National Youth Guarantee Implementation Plan)
A key document regarding employment of Roma people is the National Social Inclusion Strategy 2030 (Magyar Nemzeti Társadalmi Felzárkózási Stratégia 2030). The Strategy states that the employment possibilities of Roma youth is worse because they have lower levels of education and the rate of early school leavers is higher among them. In 2019, the rate of unemployed Roma youth (30.5%) and other young people (10.4%) among 15-24 year olds showed wide disparities. (For more information on the National Social Inclusion Strategy, see sub-chapter 4.3 Strategy for the social inclusion of young people)
National Youth Strategy
'Reduced or flexible working time may be a means of enhancing labour market integration. To achieve this, both the employer and the employee should be motivated. A special programme must be designed to help the reintegration of young people who have been excluded from the labour market by retraining and through the establishment of a new type of motivation system (both on the employer’s and the employee’s side).' (National Youth Strategy 2009-2024)
The related partial objective is the following:
'To encourage the employment of youth in part-time and atypical forms of employment and to increase the motivation of employers for hiring career starters.' (National Youth Strategy 2009-2024)
'The main feature of the Code is the loosening of provisions and thereby, the creation of external flexibility for employers. Dismissal protection has been traditionally at a very low level, and sanctions for the unlawful termination of employment have been further limited. The Labour Code emphasises the importance of individual employment contracts and collective agreements by increasing individual and collective autonomy.
[…] Internal flexibility has also been increased. The working time regulation is as flexible as possible within the frame of the EU Working Time Directive, using this rather as a ceiling instead of a minimum level. The regulation provides employers with great flexibility, for example with the possibility of using 300 hours of overtime a year and cutting overtime costs when there is a sudden surge in labour force demand.' (Risak-Kovács, 2017)
Within the specific objectives of NYS, the priority of reconciling work and family life appears alongside the promotion of starting a family and raising children. The Strategy states that,
'We need labour market regulators that facilitate the compatibility of family life and work and make atypical employment possible for families having children, especially in a certain life stage of parents with small children. Special attention should be paid to ensuring life path and carrier planning opportunities for women having children.' (National Youth Strategy 2009-2024)
The action plan of NYS for 2016-2017 aims also
'to support employment forms that help reconcile work and private life through promoting flexible employment and the reduction of employer contributions for employees with children, employed part-time.' (Hungary's National Youth Guarantee Implementation Plan)
Programmes within the Youth Guarantee system are all European Social Fund co-funded, with the national budget funding added. In addition, the budget of the Youth Guarantee Active Labour Market Programme (EDIOP 5.2.1) includes all funds available to Hungary under the Youth Employment Initiative. Until 2020, a total of about HUF 200 billion (about EUR 6 396 million) was available to finance the guarantee.
The budget estimate for tax redemption related to the Job Protection Action Plan for 2017 was between 143 and 147 billion (about between EUR 469 and 482 million). (2017. évi költségvetés)
All ESF co-funded programmes under the YG system are monitored closely by the Ministry for Economic Development (Gazdaságfejlesztési Minisztérium) in line with EU requirements. Regular audits are carried out by the Directorate General for Audit of European the Fund, the European Commission and the European Court of Auditors.