About the ILO in Hungary

Rapid growth and a strong labour market mask  inequalities

However, the catching-up process is slower than in other Visegrad Group (V4) countries. While Hungary’s per capita income was at 43% in 1991, in 2020 it was at 74% of the EU average, lower than in other V4 members. Its GDP growth rates (5% in 2018 and 2019) were among the highest in the EU before the Covid-10 pandemic, mainly driven by private consumption, investments (particularly in manufacturing), and EU funds. Hungary’s high integration in global manufacturing value chains led to a deep recession in the first year of the pandemic (-5%, 2020), but supported the strong recovery (+7%) in 2021 because of fast growth in global trade.

Said labour shortages remain the most pressing challenge, especially as the economy and the labour market seem to recover relatively quickly from the recession. Policy responses to the labour shortage focus on prolonging working lives and working hours. Recently, Hungary has also began granting more and more short time working visas to foreign workers, while restrictions on the employment of foreign citizens were relaxed.

However, one avenue that remains underexplored, and poses a challenge in its own right, is the considerable gender employment gap (83% male employment rate vs 72% for women). Pockets of labour market exclusion and higher unemployment also exist in the rural North, among the Roma population of the whole country, and among young people.

A key challenge of social policies before and during the pandemic has been the missing adequacy and low coverage of social assistance and unemployment benefits. The duration of unemployment benefits is the shortest in the EU at maximum three months. Active labour market policies mostly focus on public works programmes that do not have a strong track record in reintegrating unemployed in the labour market. Outreach to those excluded from the labour market is weak. Income inequality still remains below EU average but has been rapidly increasing during the last decade.

The ILO in Hungary

The ILO has assisted Hungary in its economic and labour market transformation and in its accession to the EU in 2004. Main areas of work included establishing and strengthening social dialogue and tripartism and examining the effects of privatization and transition, supporting the development of new active labour market programmes including vulnerable target groups, modernizing labour legislation, adopting international labour standards, and supporting pension reform and a sustainable social security system.

 Text last edited on 03/22