EMCC European Monitoring Centre on Change

Territorial Employment Pacts

Hungary
Phase: Anticipation
Type:
  • Employment incentive
  • Fostering mobility
  • Matching/Networking
  • Territorial coordination
  • Training
Last modified: 03 August, 2021
Native name:

Foglalkoztatási Paktum

English name:

Territorial Employment Pacts

Coverage/Eligibility

It is an available option for counties, cities with county rights, and other territorial units (mostly districts). There are more than 150 pacts at present in Hungary. 

Main characteristics

In the framework of the Territorial and Settlement Development Operational Programme (TOP) nearly  HUF 100 billion (approximately €30 million) has been provided by the European Social Fund and the national government for the programming period of 2014-2020 in order to create and operate Territorial Employment Pacts in Hungary. Counties, cities with county rights and other territorial units (mostly districts) can apply for the grants.

The project relies on two pillars:

  1. Establishing cooperation at regional or local level in order to deal with employment problems and to improve matching between local labour demand and supply. This consists of a widespread partnership including local governments, government offices, chambers, trainers, employers and other actors which is coordinated by the local governments.
  2. After creating the pact, the partnership should cooperate in the preparation of territorial employment strategies and in initiating territorial employment programmes and policies – trainings, wage subsidies, and personalised labour market services for the unemployed, the inactive and for public workers – tailored for the specific needs of local employers and the local workforce.

The main purpose of the pacts is to increase employment, particularly to mobilise and to train disadvantaged and inactive jobseekers.

Funding

  • National funds
  • European funds
  • European Funds (ESF)

Involved actors

National government
Funding, guidance and coordination
Regional/local government
Coordination and cooperation.
Public employment services
Cooperation.
Employer or employee organisations
Cooperation.
Other
Educational institutions, civil organisations, sub-regional associations participate. The funding is also provided by the European Social Fund.

Effectiveness

Currently, more than 150 of these pacts are in place throughout the country. The funding instrument specifies ways to measure the effectiveness of the employment pact, such as the number of jobseekers engaged in labour market initiatives brought about (output indicator), the number of people employed through pacts, or those retaining such jobs over 6 months (outcome indicators). Published data are, however, limited as yet, as the programme concludes in 2023. The engagement rate was recorded at 867 people in July 2018, already surpassing the year-end goal of 750.

Strengths

An important advantage of these pacts is that they rely on local level cooperation. It is also positive that the prominent role of coordinators is given to local governments, which are key figures for local economic development.

In 2018, the government took charge of the technical coordination of projects under the Territorial and Settlement Development Operational Programme (TOP) through the Employment Service Department – Foglalkoztatási Szolgálat Főosztály, FSZF – of the State Secreteriat for Employment Policy, operating first at the Ministry of Finance, but since 2020 at the Ministry for Innovation and Technology. Their services include operating a small information hub (Q&A, good practices, etc.) on the internet for stakeholders.

Weaknesses

The applied methods of improving employment are not sufficiently innovative. Due to the pressure from the central government, the territorial government offices – the main movers within the partnership – tend to focus on mechanically meeting the target indicators linked to the funds received from the relevant Operational Programme. This stifles the willingness to seek new methods.

Furthermore, the county-level and local-level pacts are not coordinated: the counties and the cities/districts focus on the same employers and jobseekers. So the same entrepreneurs, local associations and NGOs are requested to participate in several pacts which causes confusion. According to a late 2018 study, due to the strict financial structure of the Operative Programme funding the pacts did not encourage counties and towns with county rights to harmonise and integrate their development objectives and activities. The agglomerations of larger towns, being in the action scope of the county authorities, were not treated as part of a functional urban area.

Trainings can only be provided by the government offices through a centralised system which is not the best option to serve the changing needs of the entrepreneurs in a flexible way.

Examples

Some early implementations were in Barcs (South-west Hungary), Tatabánya (W), and Miskolc (NE). The Csongrád county pact held successful events presenting local social economy entities to the community. Hajdú-Bihar county has excelled at the umbrella role county pacts are supposed to take, by personally introducing interested entrepreneurs to district-level pact offices. The pact office of Salgótarján (a city with county rights) motivated job fare visitors to interact more by raffling off presents pooled by participant organisations, based on the number of their visits.
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