Hungary: Closure of national employment office

Hungary’s National Labour Office (NMH) was abolished in January 2015 by the government as part of radical changes to the Hungarian Public Employment Service. The Government said the NMH, which managed the service, was not building an effective bridge between employers and job seekers. The social partners were not consulted on the changes.

Background

Viktor Orbán's government (in power since 2010) began a profound restructuring of the Public Employment Service in 2011. Some 20 county labour centres and 170 branch offices were amalgamated with county government offices. The labour centres had been prestigious state authorities with distinct responsibilities at county level, and were managed and coordinated by the Central Employment Office (FH). They have now become one of 17 departments run by the local government offices.

The Public Employment Service was also renamed the National Employment Service (NSZF). The prime mandate of the service remained the same:

  • to assist job seekers and employers;
  • to implement various active labour market measures;
  • to support the unemployed.

The Central Employment Office (FH), under the direction of the Ministry for National Economy, continued to manage new labour centres. However, the centres' direct dependence on FH was weakened as they were now also under the aegis of the county government offices, and were becoming more embedded in local government policies and actions.

The management and operational structure of the National Employment Service became even more complex in mid-2011, when the Ministry of the Interior took charge of public works programmes and began working directly with county labour offices in planning and running such programmes.

Bodies merged to meet budget targets 

In 2012 the FH, the health and safety inspectorate (OMMF) and the National Institute of Vocational and Adult Education (NSZFI) were merged to form the National Labour Office (NMH). The office remained under the supervision of the Ministry for National Economy, while the county-level branches of the health and safety inspectorate were attached to the county government offices.

This overall integration was done primarily for budgetary reasons; the money saved by cutting staff numbers at central and county levels was intended to help the government achieve its budget deficit reduction objective for 2012.

It was a huge change. NMH had:

  • been the central body of the national network;
  • coordinated the overall professional and technical development of NFSZ;
  • worked out the service delivery procedures, methodological guidelines and professional recommendations for providing a good quality national service;
  • run central labour market schemes;
  • coordinated, if not implemented, the employment and training programmes financed from EU funds;
  • been responsible for issuing work permits to third-country nationals;
  • been the Hungarian partner of the European Employment Service (EURES);
  • provided labour market statistics on collective agreements, salaries and wages;
  • coordinated the outsourcing of labour market services;
  • acted as the licensing body and a partner of private job placement agencies.

NMH had also housed the secretariat for sectoral social dialogue committees and was responsible for the Labour Arbitration and Mediation Service (MKDSZ).

Restructuring in 2015

In January 2015 the Orbán government, which had been re-elected in 2014, launched the State Reform II programme (in Hungarian) which includes measures to:

  • simplify public administration;
  • reduce fees for services provided by government offices;
  • introduce career path models for civil servants.

The NMH was closed on 1 January 2015. The Ministry of the National Economy took charge of:

  • employment and labour market-related activities, safety at work and overall labour inspection;
  • labour centres (although they remained part of the local government offices);
  • a new department, the National Office for Vocational and Adult Training (NSZFH).

Responsibility for occupational health and work hygiene issues was taken over by the government’s Chief Medical Officer (ÁNTSZ) under the aegis of the Ministry of Human Capacities (EMMI).

The Ministry of the Interior kept its direct managerial power over public works programmes administered by county labour centres and branches.

As reported by newspaper Origo, the government said it had been forced to close NMH and share out its remit because it was not building a bridge between employers and job-seekers (in Hungarian). In a formal statement, the government said the restructuring would increase the efficiency of labour market processes, and help keep unemployment low (in Hungarian). It added that a new structure was needed to help the government achieve its target of full employment.

Opinion of social partners

Social partners were not consulted on the closure of the NMH. Péter Pataky, President of MaSZSZ, the biggest Hungarian trade union confederation, said social partners had been told verbally, after the decision was taken, at a meeting of the Permanent Consultative Forum of the Competitive Sector and the Government (VKF). However there was no opportunity to debate either this issue or the restructuring of the multipartite National Economic and Social Council (NGTT).

The Vice President of the Hungarian Trade Union Confederation (MaSZSZ), Tamás Székely, said in a newspaper interview that the closure showed the government was ignoring the need for control of workplace safety (in Hungarian), and said there had been an increasing number of workplace accidents.

National employer organisations have so far not commented.

Commentary

All EU Member States have a public employment service and many are being reorganised as governments seek to improve their effectiveness. However, there have been frequent and profound structural changes to Hungary's relatively new service, the NFSZH, in recent years, without allowing much time for staff to adjust and develop new operational mechanisms. This has meant the expected benefits of the changes could not be achieved.

The latest restructuring, which has included the abolition of NMH and the dispersal of its power and responsibilities, has meant the loss of a traditionally strong and centralised employment service management. County labour centres now receive instructions from various ministries. There are likely to be difficulties in providing a consistent national service especially in:

  • labour centres whose professional management had to date been uniformly defined; 
  • the capacity for labour inspection, which has been shrinking.

The ministries concerned (the Ministry of the Interior, the Ministry of Human Capacities and especially the Ministry of the National Economy) also face challenges; they are supposed to combine their strategic and policy-related responsibilities with new operational tasks, and to take on considerable administrative and managerial tasks that do not fit naturally into their portfolios.

Without a central body, international cooperation will also become more difficult. For example, it will be hard for Hungary to take part in meetings of the heads of Europe's national public employment services or of the World Association of Public Employment Services (WAPES). Engaging in mutual learning in the framework of the Public Employment Services Network or of the Partnership between Employment Services (PARES) will also be difficult.

It is not yet known how much this restructuring of NFSZ will contribute to the implementation of the Council of the European Union country-specific recommendations on the Hungarian PES. The 2014 CSR, for example, called for the strengthening of well-targeted active labour market policy measures (420 KB PDF) through swifter introduction of NFSZ's client profiling system, and putting in place the planned youth mentoring network .

It should, however, also be noted that the social partners, except for some trade unions, have not paid much attention to the abolition of NMH and restructuring of NFSZ.

 

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