Observation (CEACR) - adopted 1995, published 83rd ILC session (1996)

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

1. With reference to its previous observation, the Committee notes the Government's report for the period ending June 1994, which contains a description of the developments in respect of employment and unemployment and describes the main features of the employment policy pursued by the Government.

2. According to the data provided by the Government and the information contained in OECD surveys, the recession flattened out in 1992 and has been replaced since 1993 by a modest recovery in growth, reaching an estimated growth rate of 2 per cent in 1994. After peaking at 13.6 per cent of the active population at the beginning of 1993, the unemployment rate has fallen regularly to around 11 per cent at the end of the period. However, in addition to the fact that it has been accompanied by a significant decrease in activity rates, particularly among workers over 50 years of age, this decline in unemployment has particularly benefitted the least affected regions and has accentuated regional disparities: from around 9 per cent in Budapest and the North West of the country, the unemployment rate exceeds 20 per cent in the North East. The higher incidence of long-term unemployment (42 per cent of total unemployment, as against 14 per cent at the beginning of 1992), as well as the unemployment rate of young persons and the least skilled workers, are all worrying characteristics of the structure of unemployment.

3. However, the development in the unemployment situation is only a partial reflection of the impact of economic changes on the labour market. The level and structure of employment have undergone rapid modification over recent years. Total employment fell by nearly 25 per cent between 1989 and 1994 (40 per cent in agriculture), despite the creation of jobs, particularly in small enterprises. The Government is aware of a new fall in employment, associated with an increase in the number of inactive persons among the population of working age, thereby jeopardizing the budgetary situation. The Committee would be grateful if the Government would continue to supply information on developments in trends in the active population, employment, unemployment and underemployment.

4. The Government considers that, due to the recession in the principal economic sectors and aggravated by redundancies carried out in the context of structural reforms, unemployment has become a massive and lasting phenomenon, in respect of which the scope of political action is necessarily limited. It states that, in the context of the social market economy that it intends to introduce, the State refrains from intervening directly in the free interplay of economic laws, including the labour market, but that it takes economic and social policy measures which have the effect of promoting employment. The Government refers in this respect to the measures adopted to support exports, promote entrepreneurship and investment, education and training. The Committee would be grateful if the Government would supply more detailed information in its next report on these measures, as well as on the main characteristics of its general economic policy in fields such as monetary and budget policies, and prices incomes and wages policies. Recalling the allegations concerning the insufficient level of integration of employment objectives with other economic and social objectives, to which it referred in its previous observation, the Committee hopes that the Government will provide a more detailed description in its next report of the manner in which all of these measures, adopted "within the framework of a coordinated economic and social policy", contribute to promoting full, productive and freely chosen employment "as a major goal", in accordance with Articles 1 and 2 of the Convention.

5. In parallel with the measures adopted to create the conditions for the development of a market economy, the Government has used various labour market and employment policy instruments to combat unemployment and its social consequences, particularly in the most affected regions. Although the Government has emphasized the significance of the resources allocated to financing such measures, the Committee regrets in this respect that it has not been provided, as it was in the previous report, with information enabling it to assess the scope and effectiveness of these measures. It requests the Government to provide any available evaluation of the results achieved through such measures in terms of the lasting integration of their beneficiaries into employment. The Committee also requests the Government to provide full information on the action taken as a result of the ILO technical cooperation project on employment policies for transition (Part V of the report form).