Hungarian unemployment drops to yet another new record

Hungarian unemployment drops to yet another new record
By bne IntelliNews July 28, 2016

Hungary’s unemployment rate fell to 5.1% in April-June, data from statistics office KSH showed on July 28. The reading is 0.4pp lower than in March-May and represents yet another new record low in a recent series.

The tightening labour market is welcomed by the government, pushing as it does consumption, which is expected to continue support the economy after stuttering industry and construction produced a remarkable slowdown in Q1. On the other hand, it is becoming apparent that labour shortages in Hungary, and across the region, could now offer significant risks to investment and growth.

The number of unemployed Hungarians aged 15-64 fell to 233,300 in the second quarter of the year, from 272,300 in January-March. The ratio of long-term unemployed in the jobless total, however, slightly increased. Hungarians who have been looking for a job for over a year now make up 49.5% of the total number out of work, versus 48.9% recorded in the first quarter. 

The employment rate in the country stood at 66.4% at the end of June, above the 66% at which it had ended May. The Central Statistics Office reported 4.343mn people were employed between April and June, including 232,200 on the government's public works programme.

Overall, there were 142,000 more people employed in Hungary than a year earlier. The number of unfilled jobs is the highest on record, and in parts of western Hungary - in particular around the auto-making hub off Gyor - unemployment is approaching just 1%.

The number of Hungarian emigres hit historically high levels in 2014 and 2015, and the growing shortage of skilled labour is now seen as a significant risk to investment and economic growth. In the meantime, the government appears in danger of tying itself in knots over whether foreign workers could mean a solution for labour shortages.