Hungarian employment rate reaches same level as at time of regime change in relation to population

Employment used to be low for a long time 

After the change of regime, one of the most serious economic problems was unemployment. In a sense, the problem had existed even earlier, although it was called “in-gate unemployment” then, which meant that 

companies employed more workers than they would actually need. 

At the time of the regime change, there were 4.9 million employees according to the Central Statistical Office (KSH); however, the population was still 10.4 million. After 1990, employment began to fall sharply, and the downward trend continued until 1996 reaching a low point of just 3.6 million people working in that year. 

This was followed by an upturn after today’s economic structure began to take shape, competitive sectors emerged, and working capital started to flow into the country. However, the growth of employment was not dynamic, it stopped from time to time and then during the 2008 crisis it fell back again. 

After the crisis, in 2010, the number of people in work was 3.8 million, not much higher than the low point in 1996.

Global recovery 

In the years after the crisis, most of Europe was struggling with significant unemployment problems, with particularly high rates in the southern countries, exceeding 20 percent in some cases. A significant change began around 2014, at the start of a global economic recovery, leading to extremely rapid growth in employment in the most developed countries as well as in our region.

The following years saw such a sharp increase in employment that in the most developed large economies, such as the USA and Germany, 

full employment in the economic sense appeared, which was even surpassed in our region with some sectors facing labour shortages, which greatly contributed to an increase in real wages.

Disappearing unemployment 

Labour shortages did not mean that the number of able-bodied people willing to work was lower than the number of jobs available, but that jobless people were either living in geographically different locations from job opportunities (in less developed regions or in small settlements), or they did not have the qualifications that were in demand. 

Nevertheless, the number of employees steadily increased as higher salaries and other benefits, such as housing benefits, helped to increase mobility, meaning that many people were already prepared to take jobs farther from home. So gradually 

the unemployment rate has fallen to record low levels since the change of regime. 

Number of people in work is at a 30-year high despite emigration

It should also be noted that free employment in the European Union became available for Hungarian citizens in 2004 in some member states, of which Great Britain seemed the most attractive. Since 2011, there have been no restrictions whatsoever on working in any member state of the EU or those of the European Economic Area and Switzerland, so many people have taken advantage of this opportunity since then, although the exact figures are not known. 

However, the favourable employment figures cannot be attributed to the large number of people working abroad, 

as already more than 4.7 million people were working in Hungary in August this year, which is only 200 thousand less than at the time of the change of regime,

while the population has shrunk by more than 600 thousand since then. Thus, surprisingly, the employment rate is higher in relation to the population than at the time of the regime change (it is true, though, that the higher retirement age also plays a role in this). 

Limits to further growth 

Overall, the number of people in work has increased by 900 thousand since 2010, which is

not far from the one million target set at the time. 

Shrinking labour supply may already hamper further growth, while potential further wage hikes may boost retraining and mobility, and the narrowing of the wage gap may, over time, lead to the return of people working now in other EU countries for much higher wages.