Hungarian unemployment rate at 3.4%, lowest level since independence

Hungarian unemployment rate at 3.4%, lowest level since independence
Hungary's unemployment rate fell to a record low of 3.4% in March-May
By bne IntelliNews June 27, 2019

The unemployment rate in Hungary fell to 3.4% in March-May, down from 3.5% quarter-on-quarter and from 3.7% year-on-year, the Hungarian Central Statistics Office´s (KSH) data shows on June 27. According to the Minister of Finance Mihaly Varga, the rate is the lowest since the country´s democratic transition. 

The average number of unemployed persons went down by 10,000 y/y, to 160,000. The number of unemployed persons between the age 15-24 increased by 7,200 to 35,000, with an unemployment rate at 11.1%, up by 2.4 percentage points (pp). The unemployment rate for the group at the age 25-54 recorded a decline by 0.5pp to 3%. 

The average period of unemployment was 13.9 months, with 36.7% of the unemployed people looking for a job for at least one year (long-term unemployment). “The rate of improvement has been slowing due to the depleting potential labour reserve, which is now so low that companies are ready to employ those who were previously labelled unsuitable. Evidence of this can be seen in the decrease in the average duration of unemployment, which dropped to 13.9 months from a record high of 19.7 months in 2013,” said ING Senior Economist for Hungary Peter Virovacz

As daily Hungary Today noted, despite good unemployment statistics data, there still part of the country with a significant number of people not able to find a suitable job. “According to data published by the Nemzeti Foglalkoztatási Szolgálat (National Employment Service), there were 242,000 Hungarians in need of employment by the year’s end. Not surprisingly, 44% of job seekers have only primary education. Meanwhile, the unemployment rate among university graduates is around 6%,” Gabor Sarnyai from Hungary Today reported. 

The minister noted that the number of employed people grew by 800,000 since 2010, adding that the decline of the unemployment rate has been slowing down, however, he hopes that it has not reached its bottom yet. 

“The good economic situation backed up by the government’s economic policy measures in Hungary have led to registering the fourth best unemployment figure in the European Union,” the minister said, as quoted by KSH. The lowest unemployment figure is recorded in the Czech Republic, which reached its lowest level since 1997, at 2.6% in May. 

“We do not see any major improvement in the labour market going forward. We could experience some improvement related to seasonality but we expect the trend to be broadly stable. Skills and regional mismatches will remain an effective barrier in the short-term without a proper policy solution. We see the unemployment rate stabilising around 3.6% for the whole year in 2019. Full employment will push companies to raise wages and increase tech- and efficiency-related capital expenditures,” Virovacz added.