3.6 Integration of young people in the labour market
On this page
On this page
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). PES (National Employment Service) 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, training linked to labour market services such as job search assistance or mentoring.
Youth Entrepreneurship Support Programs (Fiatalok vállalkozóvá válását támogató programok)
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 Enterprise Development Foundation (Magyar Vállalkozásfejlesztési Alapítvány),
- Budapest Polytechnics Foundation (Közgazdasági Politechnikum Alternatív Gimnázium),
- OFA NKft. (OFA Nonprofit Kft.).
Within the framework of the programme, the organisations provide young people with training in which they can acquire the necessary skills and knowledge to become an entrepreneur and run a business. They can also receive support in creating a business plan, advice and mentoring (EDIOP 5.2.2, 5.1.9 and 'Start a Business at Home, Youngster!').
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 came from the Operative board responsible for restarting community life in Hungary and will cost HUF 130-150 billion (EUR 357-413 million) annually.
Enabling young people to gain real work experience - Traineeship Programme (Gyakornoki program)
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 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 apprenticeship training, improve their vocational skills and work experience and thus increase their labour market prospects and employability.
SMEs can use the support provided to finance apprentices' wages and cover the additional costs of employing and training apprentices (mentors' remuneration, physical requirements for the training place). The programme will help 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 assists 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 schemes
Direct job creation outside the Youth Guarantee Programme is not related strictly to youth employment. The role of the Public Work Scheme has been 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. Though the explicit goal of the scheme is to help the workforce get back to the primary labour market, young people are not its target group, mostly because of the possibilities of the YG Programme.
Wage and recruitment subsidies aiming at fostering youth employment in the private sector
Besides measures of the YG Programme, the Job Protection Action Plan should be mentioned as state provision. The Action Plan offers targeted tax allowances for employers employing disadvantaged target groups, among others young people and career starters under 25.
Another programme is the 'Support of the entreprises' employement' ('Vállalkozások munkaerő támogatása') which is a governmental inititative to provide non-refundable support to workplaces which employ registered jobseekers under 25 or who has been registered as a jobseeker at least for a month. The employer is able to receive this support for 6 months for reducing the social contribution tax (paid by the employer).
Special target groups
In terms of employment measures within the YG Programme NEET young people are of course specially targeted, 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 Felzárkóztatási Stratégia 2030). The Strategy states that the employement possibilites 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 huge differences. (For more information about 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 [Nemzeti Ifjúsági Stratégia 2016-2017. cselekvési terve] also aims
'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.'
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) incorporates the total funding available to Hungary from the Youth Employment Initiative. Until 2020, in total approximately HUF 200 billion (about EUR 6 396 million) is 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). (Törvényjavaslat Magyarország 2017. Évi központi költségvetéséről)
All ESF co-funded programmes under the YG system are monitored closely by the responsible Ministry of Finance (Pénzügyminisztérium) in line with EU requirements. Regular audits are carried out by the Directorate General for Audit of European Fund, the European Commission and the European Court of Auditors.