It turned out that unemployment in Hungary is getting worse and worse

In the past period, the number of unemployed people in Hungary has increased significantly, after, on the one hand, more and more companies are deciding to downsize due to the weakening of the economy, and on the other hand, due to persistently high prices, people who were previously inactive and were not even looking for a job appeared on the labor market. Compared to the low point of close to 3% measured in the spring of 2022, unemployment has now risen to over 4.5% according to the official data of the KSH (ILO unemployed), which means 220-230 thousand unemployed.

Portfolio also requested the so-called self-classified unemployment data from KSH. These numbers are not published, but are assessed every month in the same way as the official unemployment statistics (this is also part of the office’s labor force survey).

The KSH data release revealed that 320,000 people now claim to be unemployed.

A year and a half ago, this number was 60-70 thousand smaller. The interesting thing about self-classified unemployment is that it shows almost 100,000 more job seekers than the official numbers indicate. The difference is caused by the fact that “the determination of the number of unemployed according to the ILO definition is based on strict, objective facts, whereas the number of unemployed according to self-classification is based on the subjective assessment of the interviewee’s life situation,” the office wrote to Portfolio.

The labor force survey is the KSH’s largest continuous population data collection, the purpose of which is to provide comparable data on the country’s labor market situation, employment and unemployment. “Every quarter, we ask approximately 36,000 households to answer our questions,” the office writes. Data-providing households are selected by random sampling in different settlements of the country. Answering is voluntary. According to the ILO definition, an unemployed person is someone who a) does not have a job, b) has been actively looking for a job in the last 4 weeks, and c) would be able to start work within 2 weeks if he found one.

The deterioration of labor market processes is indicated by the fact that self-classified unemployment was last as high as at the beginning of this year in the middle of 2021. Last year, the number of people who considered themselves unemployed was stable under 300,000 for almost the entire year, but in the last few months we have seen an increasing trend. This is certainly not independent of the fact that, on the one hand, the companies announced significant group layoffs towards the end of last year, and on the other hand, more and more people want to take up work. The problem, however, is that the labor market is less tight, the number of vacancies is decreasing, and most companies do not really want to increase the number of employees in the uncertain economic situation. Thus, even though people who were previously inactive appear on the labor market, they still find it difficult to find a job. Their situation is complicated by the fact that they have been away from the labor market for a long time, and the government’s new program tries to support their employment.

However, the problem is that they often live in settlements where it is not easy to find a job, and their qualifications are so low (and their knowledge has worn out during the long period of inactivity) that companies cannot employ them. And in many places (especially where unemployment is increasing anyway) there is no hiring at all. As a result of last year’s recession and this year’s ailing economy, the country’s east-west divide is becoming increasingly visible again.

The Beveridge curve, which measures the tightness of the labor market, also shows that a gradual relaxation was generally observed in recent quarters, as fewer vacancies were associated with rising unemployment.

However, the various unemployment data are somewhat contradictory. Every month, the Ministry of the Economy presents that, based on the data of the National Employment Service (NFSZ), the number of job seekers is particularly low, and no upward trend can be identified. However, the service only sees those who register with them.

Since the situation is deteriorating based on the data of the KSH, the difference between the unemployment data of the NFSZ and the KSH that existed for many years has disappeared: the data of the employment service do not show a deterioration, while the survey of the office indicates an upward trend, both self-classified and official (ILO -unemployed) based on data.

Based on our conversations with labor market experts, the picture emerges that those who register in the NFSZ database are mostly those who expect that the state office will help them find a job or that they can receive unemployment benefits. However, they are few. Those who were previously inactive and appear on the market like that, will not really register. Neither do the young unemployed, as they are much more likely to look for a job on the Internet than to browse the offers of the employment service. Thus, the service’s data on jobseekers in these months should be treated with reservations, since the increase in unemployment does not take place in a “classic” way, so there are not only job losers, but also previously inactive and young entrants.

Overall, it can be said that the unemployment rate has increased substantially in recent months, but the current economic weakness has so far shaken the labor market much less than previous recessions. At the same time, it can also be seen that more than 300,000 of our compatriots consider themselves unemployed, which is a higher number than the official data (220-230,000) reflect.

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