Hungary: Young people and effects of education on employability

This survey data report summarises recent labour market changes for young workers in Hungary, based on the regular and representative Labour Force Survey carried out by the Hungarian Central Statistical Offices (KSH). Every two to four years an extended survey is carried out to discover how youth education, employability and career opportunities have changed in comparison to the previous survey. It also provides some information about labour market experiences. The first part of this report discusses the general problems faced by young people of working age. The second part outlines the effects of recent economic and social changes on the transition of young people from education to the labour market, and describes the characteristics of youth employment.

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Background

In the aftermath of the political changes in 1989 and 1990, when Hungary became a market economy, unemployment – particularly youth unemployment – became a more transparent issue. Before the transition, there was officially no unemployment, only ‘hidden unemployment’ (kapun belüli munkanélküliség) in the large firms. Lifelong employment was promised, almost ‘from the kindergarten until the care home’. In the 1990s, however, it became obvious that unemployment was a serious problem, and the number of jobless has apparently been on the increase ever since, especially among young people. Measures such as extending the period of compulsory education, expanding the capacity of higher education, and introducing social and unemployment allowances and benefits have not been able to halt increasing unemployment among young people or compensate for the economic consequences of their unemployment.

Since 1992, a representative survey on the economic activities of households, the Labour Force Survey (munkaerő-felmérés, MEF), has been carried out. Its aim is to capture a snapshot of Hungarian households’ economic activity, independent of labour regulation data, using international statistical standards and International Labour Organization (ILO) definitions to make data comparable.The quarterly Labour Force Survey sample includes about 38,000 households. Everyone aged 15–74 in these households is questioned.

Additionally, every two to four years an extended survey is carried out. In the extended version, the questions concern young people (15–29 years old), their education, employability and career opportunities. To some extent, it also covers their labour market experiences. The last survey took place in the fourth quarter of 2010, covering the same households included in the Labour Force Survey.

This report focuses on the cohort aged 15–29 and follow the structure of the Labour Force Survey extended survey 2010 (in Hungarian), comparing it with the Labour Force Survey extended survey 2006 (in Hungarian). It will summarise and highlight the main findings on:

  • general information about the economic activities;
  • youth labour market trends;
  • the main characteristics of the transition from education to the labour market.



Youth labour market trends

In 2010, there were 1,880,000 people aged 15–29 in Hungary, representing 27.8% of the economically active population (working as employed or self-employed, or doing any kind of activity earning money) within the age group 15–64. This was 370,000 (5 percentage points) fewer than were in the same cohort in 1998, when there was a population boom. These figures partly reflect an ageing population (an inverted age pyramid) in Hungary.

Between 1998 and 2010, the economic activity rate dropped from 15% to 3.7% in the 15–19 age group and from 60.6% to 44.8% in the 20–24 age group. A slight increase can be observed in the 25–29 age group from 72.8% to 77.2% within this period of time. These figures are partly a consequence of the expansion of the education system, keeping young people at school for a longer period and leading to increasing economic inactivity rates mainly in the 15–19 and 20–24 age groups.

Table 1: Economic activity of 15–64 age group, 1998–2010

Year

Employed

Unemployed

Economically active

Economically inactive

Total

Activity rate

Unemployment rate

Employment rate

 

000s

%

1998

3,676.2

310.4

3,986.6

2,867.9

6,854.5

53.6

7.8

58.2

1999

3,786.3

285.1

4,071.4

2,764.7

6,836.1

55.4

7.0

59.6

2000

3,832.0

263.2

4,095.2

2,745.5

6,840.7

56.0

6.4

59.9

2001

3,849.8

233.9

4,083.7

2,767.7

6,851.4

56.2

5.7

59.6

2002

3,850.3

238.4

4,088.7

2,761.0

6,849.7

56.2

5.8

59.7

2003

3,897.2

238.4

4,088.7

2,694.7

6,836.2

57.0

5.9

60.6

2004

3,874.7

252.4

4,127.1

2,699.2

6,826.3

56.8

6.1

60.5

2005

3,878.6

303.1

4,181.7

2,633.0

6,814.7

56.9

7.2

61.4

2006

3,906.1

316.4

4,222.5

2,593.3

6,815.8

57.3

7.5

62.0

2007

3,897.0

311.7

4,,208.7

2,591.0

6,799.7

57.3

7.4

61.9

2008

3,751.3

328.8

4,177.9

2,616.3

6,794.2

56.7

7.9

61.5

2009

3,751.3

420.3

4,171.6

2,599.4

6,771.0

55.4

10.1

61.6

2010

3,750.1

474.5

4,224.6

2,544.6

6,769.3

55.4

11.2

62.4

Activity and employment by age group

In Hungary the employment rate, especially among young people, is one of the lowest in Europe. Employment among the young has been decreasing since 1998 in parallel to their economic activity rate (Table 2). The intensity of the decrease slowed somewhat at the time of Hungary’s accession to the EU (2003–2006), but the economic downturn has pushed the employment rate down again.

In the 15–19 age group, lower employment and economic activity rates can mainly be explained by the extension of compulsory education to 18 years, which came into force in 2003. The expanded and more flexible education system, combined with free access for all to higher education, has also increased the inactivity rate in the 20–24 age group, postponing their entry into the labour market.

The activity rate in the 25–29 cohort has slightly increased, rising by 4.4 percentage points between 1998 and 2010. However, the employment rate in this age group also decreased slightly between 2008 and 2009, even if to a much smaller extent than other age groups.

Table 2: Economic activity by age group, 1998–2010 (%)
 

15–19 years

20–24 years

25–29 years

 

Active

Employed

Active

Employed

Active

Employed

1998

15

11

60.6

53.8

72.8

66.7

1999

12.9

9.7

60.8

54.2

74.6

68.9

2000

11.0

8.2

58.8

52.5

75.4

69.9

2001

9.1

7.1

55.9

50.5

75.8

70.5

2002

6.8

5.0

54.8

48.7

75.1

69.9

2003

5.9

4.0

53.0

46.9

75.6

70.4

2004

5.5

3.6

48.4

41.9

76.7

71.7

2005

5.3

3.3

47.5

39.2

77.4

71.0

2006

5.4

3.4

47.0

38.9

77.9

71.2

2007

4.5

2.9

45.6

38.1

78.2

71.6

2008

4.4

2.7

44.7

36.6

78.2

71.1

2009

3.9

2.0

44.2

33.6

77.1

67.7

2010

3.7

2.0

44.8

33.6

77.2

66.1

Activity by educational level

The Hungarian labour market is highly segregated, showing significant differences that align with educational levels. There are more labour market opportunities for those with higher degrees and, as already mentioned, recent changes in the education system have also allowed more people to study for those degrees. While this secures the basis of a knowledge-based society in Hungary, it also creates an oversupply of more highly educated employees and reduces the prestige of vocational education. This, in turn, generates a shortage of well-qualified candidates for specific professions that require vocational education rather than high-school and university-educated workers, particularly in processing, manufacturing and agriculture.

Table 3: Employment breakdown by educational level, 1998 and 2010
 

15–24 years

25–29 years

 

1998

2010

1998

2010

 

000s

%

000s

%

000s

%

000s

%

Less than eight years of education

3.5

0.67

1.1

0.50

2.3

0.48

1

0.22

Eight years of education

90.1

17.21

31.6

14.44

71.6

15.09

31.9

7.05

Vocational education

224.8

42.93

54

24.68

171.5

36.14

97.4

21.53

High school

58.1

11.10

39.8

18.19

51.7

10.89

50.9

11.25

Vocational school with graduation

118.7

22.67

67.1

30.67

100.7

21.22

130.3

28.81

College

23.6

4.51

19.5

8.91

44.6

9.40

81.2

17.95

University

4.8

0.92

5.7

2.61

32.2

6.78

59.5

13.15

Total

523.6

 100

218.8

  100

474.6

  100

452.3

  100

Most workers in the 15–64 age group (87.9%) are employees. Employee status is even more likely in the 15–29 age group: 94.8% are employees; 3.1% run a business as self-employed; 1.5% work members of joint ventures; and 0.5% work as co-workers in family enterprises.

Of those more vulnerable young people with a low level of education who have a job, and particularly young women in this group, most have fixed-term contracts: 45.2% of the 15–19 age group; 23.7% of the 20–24 age group; and 13.5% of the 25–29 age group. Fixed-term contracts are becoming increasingly common (Table 4).

Table 4: Fixed-term employment in the 15–29 age group since 2000 (%)
 

15–24 years

25–29 years

2000*

13.9

7.9

2006*

16.9

8.6

2010

25

13.5

*Source: Labour Force Survey extension 2006, Hungarian Central Statistical Office

Even though there have been political and governmental initiatives to facilitate flexible or part-time employment and to soften the effects of the 2008 crisis, these forms of employment have not taken hold yet. In 2006, part-time employment was 3.8% of all employment (4.7% among those aged 15–24 and 2.4% among those aged 25–29), and there was only a slight increase to 3.9% in 2010.

Unemployment

Trends between 2000 and 2010 in youth unemployment are similar to the overall unemployment figures for the Hungarian labour market. The main shift was that the reason for the young people’s economic inactivity was more likely to be unemployment and not being at school. This shift was ‘only’ significant in the years of the crisis 2008–2010.

In 2010, 155,000 unemployed people were aged 15–29, 8.2% of the potential workforce in that age group, and 18.7% of the economically active population. These figures demonstrate the vulnerability of that age group in the labour market. The differences in unemployment rates among the different age cohorts are significant. Even if the unemployment rate among the 15–19 age group is high (45.7%), their share in the population’s economic activity rate is low, so this does not significantly influence the overall unemployment rate.

The number of unemployed in the 20–24 age group (70,000 individuals) and the 25–29 age group (76,000) is quite similar. The unemployment rate among the 20–24 age group (25.1%), however, is 10.8 percentage points higher than in the 25–29 age group.

In common with the workforce as a whole, unemployment among less well-educated young people is higher than among more highly educated under-30s (Table 5). However, young people with higher education also have to face unemployment because there is an oversupply of job-seekers with diplomas in the labour market. Among graduates aged 20–24, 22% are unemployed, compared to 8.5% of graduates aged 25–29.

Table 5: Unemployment breakdown by educational level
 

15–24 years

25–29 years

 

1998

2010

1998

2010

 

000s

%

000s

%

000s

%

000s

%

Less than eight years of education

3.5

4.10

1.3

1.64

1.7

3.91

0.8

1.06

Eight years of education

25.8

30.21

21.7

27.40

14.5

33.33

18.2

24.07

Vocational education

34.5

40.40

20.5

25.88

16.6

38.16

19.1

25.26

High school

8.4

9.84

11.8

14.90

3.9

8.97

9.5

12.57

Vocational school with graduation

11.7

13.70

16.6

20.96

4.9

11.26

14.9

19.71

College

1.2

1.41

5.5

6.94

1.5

3.45

8.8

11.64

University

0.2

0.23

1.7

2.15

0.5

1.15

4.2

5.56

TOTAL

85.4

99.88

79.2

99.87

43.5

100.23

75.6

99.87

Long-term unemployment is less relevant for young people, tending to affect older age groups. In 2010, however, 42% of young people aged 15–24 had been unemployed for longer than 12 months; in the 25–29 age group, this rate was 10.4 percentage points higher at 52.4% (Figure 1). This trend is continued into the older age groups.

Figure 1: Long-term unemployment rate among young people, 1998–2010

hu1207011d.tmp00.jpg

Inactivity

In comparison to 1998, the proportion of inactive young people has changed significantly. In the 15–19 age group, it increased by 11.3 percentage points; in the 20–24 age group, it grew by 15.8 percentage points; and in the 25–29 age group, it dropped by 4.4 percentage points.

In 2010, when asked about the reason for being inactive, most of the respondents aged 15–19 years (95.9%) answered that they were still studying.

Almost 82% of the respondents aged 20–24 years answered that they were still studying, and 6.9 % said they had family commitments and child-care responsibilities. Only 3.3% said they couldn’t find a job, while 2% said they were not willing to work.

Of respondents aged 25–29 years, 39.8% answered that they were taking care of their children; 27.2% said they were still studying; 10.3% could not find a job; 6% did not want to work at all; and 6.3% referred to their deteriorating health.



Transition from education to the labour market

During the last decade, the prestige of higher degrees and access to higher levels of education have risen as a direct consequence of the raising of the compulsory school-leaving age and the resulting increase in the number of students. In parallel with this, the expectations of the labour market have grown. Employers increasingly seek much better-qualified workers, while new entrants look for better opportunities and salaries.

Participation in education

In 2006, 42.1% (810,000) of the 15–29 age group had been in the education system at some time in the previous 12 months. By 2010, this rate had increased to 51.1% (907,000). The trend was observable in all age cohorts, but the most significant increase – 13.7 percentage points – was among the 20–24 age group.

An important observation is that 14,000 people (0.8%) in the 15–29 age group had not completed eight years of education and were no longer studying. Among those who had completed eight years of education within this age group, 25% were no longer studying (9% of the 15–29 age group).

In 2010, 95% of the 15–19 age group were in school, and 98.5% of them were registered as inactive. Among the 20–25 age group, 53.5% were studying and 89.9% were registered as inactive. Almost 10% of the 25–29 age group said they were studying, 68% were inactive and 26.7% employed.

Trends across generations

There are no data from which conclusions can be drawn about the effect the educational level of mothers has on the likely educational level of their children. There are data, however, that show a high correlation between the educational level of fathers and their children, even though the extent of education has risen significantly.

Table 6: Level of completed education across two generations (%)
 

Fathers

Children (not studying at the time of survey)

Primary education, first stage of basic education; no more than eight years of education

22.1

19.1

Secondary/professional education; vocational education

47.9

23.3

Secondary/education, minimum entrance requirement for tertiary education: graduation

18.5

37.8

Tertiary education: diploma

10.4

19.8

Don’t know

1.1

0

A further observation concerning the influence of the educational level of fathers is that 51.5% of young people whose fathers completed no more than eight years of education also complete no more than eight years. Only 2.7% of them manage to remain in education long enough to get a diploma at tertiary level. Among those whose fathers had vocational education, 43.5% become graduates and 12.7% earn a diploma. Among those whose fathers were graduates, 51% also become graduates and 35% earn a diploma. Where fathers earned diplomas, 62.5% of their children also earn a diploma.

Effect of location on employability

The data show that the place where young people live also has a significant effect on their level of education. Hungary’s capital, Budapest, has the highest rate of young people aged 15–29 with either a diploma and who are graduates (64.8%). In smaller cities, this rate is only 53.2%. In 2010, 42.7% of the 15–29 age group living in villages had completed no more than eight years of education, and only 7.6% had a diploma.

Table 7: Level of completed education by location, 2010 (%)
 

Villages

Towns

Budapest

Primary education, first stage of basic education; no more than eight years of education

42.7

34.5

29.5

Secondary or professional education; vocational education

16.7

12.3

5.7

Secondary education, minimum entrance requirement for tertiary education: graduation

32.9

40.3

45.5

Tertiary education: diploma

7.6

12.9

19.3

Skills to enhance employability

Other skills, beyond educational attainment, are becoming more and more important in the labour market.

One of these skills is knowledge of foreign languages. Among young people who had already had a job, 15% stated that knowing a foreign language had helped them ‘somewhat’ to find employment and a further 8% stated that it had helped them significantly. For 7.8% of them, it had been a requirement for their job. When asked about language skills the last time they were looking for a job, 66% of the currently employed, about 50% of the currently unemployed and 60% of the currently inactive young people knew a foreign language.

When asked about educational level the last time they were looking for a job, 25.1% said that vocational education was required, and for 12.1% of them, vocational education had significantly helped them to find a job. Of those who had jobs, 14% had received vocational education but said it had not helped them to get a job; 41.5% had no vocational education before being employed.

Information technology (IT) skills are highly likely to have improved among young people during the last decade in Hungary. It has become an important part of education, and access to IT tools and resources has become part of everyday life. Among young people, the proportion of those who had no IT skills decreased from 41.4% in 1998 to 19.6% in 2010. This means that more than four-fifths of them had such skills, but 63.3% of these said that IT skills had not made it easier for them to find work. The survey data show there are relatively more men who possess IT skills (4.1 percentage points more than women) in the 15–29 age group, but these skills are more likely to have contributed to the employment of women (3.5 percentage points more than reported by men).

Work experience

In the fourth quarter of 2010, almost the half of the 15–29 age group (891,000) had had some kind of work experience. Two-thirds of these had paid employment at the time of the survey. The other third was composed of those who had some work experience but were not working at the time of the survey. They had worked before, but no longer than three months and mainly during summer holidays or on a casual basis.

Around 885,000 people in this age group had no work experience at all. In all three cohorts, the rate of women with no work experience was higher. The most significant difference was within the 20–24 age group, where the proportion of women without any work experience was 6.8 percentage points higher than for men.

Table 8: Employment alongside studies, 15–29 age group, 2010
 

Employed

%

During school years and holidays

43.4

Only during school years, but regularly

13.2

Only during school years, but occasionally

12.2

Only during holidays, but regularly

9

Only during holidays, but occasionally

22.1

Note: Total slightly less than 100% due to rounding-up

Finding a job

The majority (55%) of young people with some work experience had found a job through personal connections such as parents, relatives or friends. Another 20.2% found a job through the internet or media announcements. Only 7.1% reported that they received help from the public employment services to find work. Job-seekers with higher education seem to be less likely to use personal connections (46.3%), with a higher proportion finding jobs through media announcements and the internet (28.5%). In contrast, around half of young people with less than eight years of education found their jobs through the public employment services.

Mobility

One-third of young people say they would not commute on a daily basis to get a job or to obtain a better job. One-fifth would not accept a job far away from their place of residence, even if the employer were to reimburse travel costs. These figures demonstrate Hungarians’ relative immobility, even among young people. Only 45.2% of young people consider mobility as a real possibility for improving their labour market position, and 72% of them would require some kind of financial compensation for doing so.

Choosing a job

Another interesting finding shows that half of the respondents had no choice about their current or last job. Some 39.1% reported that this had been their only employment opportunity. Just 28.3% had found a job within their profession or occupation. Almost 6% had a choice, but decided to take the job nearest home. Only a quarter of the respondents had a real choice: 9% wanted to work at the particular employer, 8.7% found the job opportunity interesting, and 6.6% found the wages attractive at that particular workplace.

Changing job

Just over 85% of the respondents with a job did not want to change it, which is not surprising since for half of them their current job had been the only available job opportunity, one they had to accept or become unemployed. Those who did want to change their job (14.7% of all respondents) were looking for a post that matched their qualifications or skills (27.5%), others were looking for better salaries (26.8%), and more than one-fifth were looking for a more secure and stable workplace (22.8%). Only 10% stated that there was no career opportunity at their current workplace.

Young people with university degrees were less likely to change jobs, and only one-third had done so. One reason for this could be that more than half of those with a diploma (55.5%) had a job that matched their education or what they considered to be their profession. As a whole, 25.7% declared they had a job that corresponded to their profession and education.



Commentary

It is interesting to note that male and female youth employment or lack of employment is not discussed separately, even where there are data available. These data show significant differences. Another interesting point is that only the educational background of fathers is observed, and not the influence of both parents or other people in the household on youth education and activity. This is noteworthy as Hungary has had a dual-earner family model for more than 50 years, and women are mainly responsible for children’s upbringing and education.

Demographic forecasts suggest that the number of economically inactive people will increase as the population ages, and therefore it will be important to closely monitor young people entering the labour market. There are arguments for and against the expansion of the education system in Hungary, and young people must also consider the possibilities and obstacles offered by the varying length of their education. It is a great challenge to society at large, and especially the government, to adjust to the needs and the jobs on offer in the labour market, to make young people more employable, and to engage employers’ interest in their training and development.



Methodology

Since 1992 a national representative survey on the economic activities of Hungarian households has been carried out, the munkaerő-felmérés (MEF) (Labour Force Survey). The objective is to collect data about the economic activity of households independently of labour regulation data, using international statistical tools and ILO definitions to make data comparable.

Every two to four years an extended survey is carried out. In some extensions, the questions concern young people (15–29 years old), their education, employability, and career opportunities.

Survey name: A fiatalok munkaerő-piaci helyzete [Young people in the labour market]

Institution: Hungarian Central Statistical Office

Type of organisation: Governmental

Editions: Q4 2010 (published October 2011), Q4 2006 (published 2007), Q4 2004 (published 2005); other editions published every two to four years since 1996.

Next edition due: 2015

Objectives: To collect data in order to outline:

  • the economic activity of young people;
  • their transition from the education system to the labour market;
  • the labour market and how it affects young people.

Territorial scope: National

Population: 9,985,772 as of 1 January 2011

Sample: The sample is multistage and stratified. Participation is rotated, and a household entering the programme completes the survey for six quarters and then quits the programme. Each of the household members aged 15–74 is questioned.

The quarterly Labour Force Survey sample includes about 38,000 households, and adjusted weighting is used for projection of the data results to the entire labour force. The linearised jackknife method is used for the calculation of the sampling error.

The last survey was conducted in the fourth quarter of 2010. The projected population covered by the survey was 1,775,718; 4.9% of young people answering the Labour Force Survey had not filled in the extended survey.

Surveys: Standardised questionnaires

Location of interviews: At home

Subjects considered in the questionnaire: Sociodemographic characteristics, transition from educational systems, labour market opportunities, first work experiences of young people aged between 15 and 29.

Bibliographical references: At the website of the Hungarian Central Statistical Office (KSU)

Website: 2010 extended survey available in Hungarian online at http://www.ksh.hu/docs/hun/xftp/idoszaki/pdf/ifjusag_munkaero_piac.pdf .

Questionnaire: Available in Hungarian online at http://www.ksh.hu/docs/hun/xftp/idoszaki/pdf/ifjusag_munkaero_piac.pdf, pp. 178–180.

Zsuzsa Rindt, Solution4.org

EF/12/83

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