Observation (CEACR) - adopted 1993, published 80th ILC session (1993)

Employment Policy Convention, 1964 (No. 122) - Hungary (Ratification: 1969)

1. The Committee notes the Government's report for the period 1990-92, which provides detailed information in reply to its previous comments and encloses a communication from the National Federation of Hungarian Trade Unions.

2. In order to evaluate the general situation and recent trends in the employment market, the Committee has also examined studies and data available at the Office or contained in OECD reports and surveys. The Committee notes that economic activity dropped further during the period under consideration. The decline in production, which stood at 0.2 per cent in 1989, rose to 3.3 per cent in 1990 and 10 per cent in 1991. The OECD forecast that it would be limited to 4 per cent in 1992. As a result of the fundamental structural reforms required by the transition to a market economy and the collapse of the former trading system, job losses were most marked in agriculture and construction but also to be found in commerce and industry. The contraction of public sector employment has only partly been offset by the development of private sector employment which, admittedly, is not fully reflected in official statistics. Consequently, the unemployment rate rose from 1.6 per cent in 1990 to 7.5 per cent in 1991; the OECD forecast 13 per cent by the end of 1992. Unemployment especially affects workers in the high-activity age groups and with the most limited education, and is also concentrated in certain regions of the country. Lastly, the length of unemployment is tending to increase and more than 50 per cent of the jobless have been unemployed for more than six months.

3. In its report the Government provides substantial information on active labour market policy measures to cope with the high and rising unemployment. The implementation of community services and public works employment programmes is decentralized and financed by the employment fund, and these programmes are being extended to new categories of beneficiaries. However, they are only a short-term solution for a low skilled labour force. Thanks to the loans scheme for establishing or taking over enterprises, some 40,000 jobs have been maintained or created. Although the conditions for such loans have been made more flexible, the lack of available financial resources and the lack of qualifications and knowledge of market conditions on the part of the persons concerned were, in many cases, an obstacle to the establishment of viable enterprises by unemployed workers. In addition, it would appear that particular attention should be paid to developing vocational training and retraining programmes for the unemployed. The Committee would be grateful if in its next report the Government would provide detailed information on measures taken in this area and the results obtained.

4. The Committee also notes the information on the application of Act No. IV of 1991 respecting promotion of employment and its subsequent amendments. In order to maintain a balanced budget at a time of rapid increase in expenditure for unemployment benefit, a solidarity fund made up of contributions from employers and workers is used for the payment of unemployment benefit, while the Employment Fund uses its resources obtained from the budget to finance active measures for training and employment promotion. Furthermore, decentralized institutions are responsible for designing and implementing employment policy at local labour market level and for organizing consultation of the social partners for this purpose.

5. According to the National Federation of Hungarian Trade Unions, however, the views expressed by workers' organizations in the tripartite consultation process are not taken into consideration by the Government. More generally, the above organization considers that the obligations laid down in the Convention are only partly fulfilled. The employment policy is not targeted on the objectives laid down by Article 1 of the Convention, owing, in particular, to the lack of a genuine industrial policy and inadequate coordination of employment objectives with the other economic and social objectives. The Committee notes these allegations, and asks the Government to specify in its next report how employment objectives are linked to other economic and social objectives, in accordance with Article 1, paragraph 3, of the Convention, and how, in consultations with representatives of the persons affected by employment policy measures, and particularly representatives of employers and workers, full account is taken of their experience and views, in accordance with Article 3.

6. The Committee has been informed that, since August 1991, an ILO technical cooperation project has been implemented, entitled "Employment policies for transition in Hungary". The project coverage includes overall economic policies and employment creation, incentives for job creation programmes for the unemployed, the employment effects of restructuring and privatization, and the development of a database and information on employment. In the view of the Committee, the project, which is now in its final phase, is likely to contribute to more effective application of the Convention. The Committee would be grateful if the Government would indicate the measures taken as a consequence of the project and the results obtained (point V of the report form).