Study examines effectiveness of territorial employment pacts

To obtain a picture of the operation of Hungarian employment relationships, the National Employment Foundation carried out a study to assess the future of employment pacts. The research followed the publication of numerous European literature reviews on employment pacts, the announcement of related government tenders and of a large-scale educational project targeting the social partners. This article summarises the main research findings and the related debate.

About the study

From January to September 2009, researchers at the University of Pécs (Pécsi Tudományegyetem, PTE) conducted a research project to examine the future of employment partnerships. The research was supported and commissioned by the National Employment Foundation (Országos Foglalkoztatási Közalapítvány, OFA). The main aims of the research were to:

  • identify the common features and the background of key European and Hungarian publications on employment pacts;
  • provide a practical examination and analysis of the operation of existing employment pacts.

Four territorial partnerships were examined. The research findings were presented and discussed at a national seminar held in September 2009.

One of the main goals of the research was to review and publish documents, articles and publications – both from Hungarian and EU-level sources – related to local employment initiatives in order to provide up-to-date and appropriate professional guidance for those concerned and interested, whether they are governmental or local actors, or representatives of state institutions, the social partners or civil organisations. The research project provided a detailed description of the so-called Local Employment Development (LED) model, highlighting its key elements: adaptation, participation, integrated policies, institutionalisation and local activity (for more information, see the European Commission’s Practical Handbook on developing local employment strategies (in Hungarian, 2.1MB PDF). A Territorial Employment Pact (TEP), which is recognised as best practice in the EU, is the contract-based association of local actors in order to explore possibilities for job creation and human resources development in a micro-region or region. The parties to a TEP aim to coordinate the use of local resources, and to produce and execute a collective strategy and action plan for encouraging employment.

Main findings of empirical research

Penetration of partnerships

Over the past three to five years, there has been a significant increase in the number of employment pacts in Hungary. At present, there are 45–50 such pacts; however, it is expected that a further 15–20 pacts will be established in the coming months with support from the EU co-funded Regional Operational Programmes (Regionális Operatív Programok, ROP) and the Social Renewal Operational Programme (Társadalmi Megújulás Operatív Program, TÁMOP), which are managed by OFA. These support pacts operate on various levels – regional, national and micro-regional. The establishment of pacts was also facilitated by training programmes run by the regional network of OFA.

Level of awareness and competence

When looking at the Hungarian pacts from the perspective of awareness and competence, the researchers saw a mixed picture. Some professionals in the field, particularly those working in western Hungary, were trained by innovative Austrian schools of thought about the pacts from a theoretical and practical perspective, and subsequently became devout advocates, supporters and/or initiators of employment partnerships. Others, however, heard for the first time about such a model of cooperation from the abovementioned ROP tender. Later, as a result of the ROP support, many of them took field visits abroad – for example, in Austria, Portugal and Scotland – thus learning about how employment pacts work in practice. The researchers concluded that despite such examples of knowledge exchange, the majority of partners and managers of the pacts still have very little theoretical and comprehensive knowledge about the pacts, which is often mentioned by stakeholders themselves.

Motivation behind initiative

According to the general opinion, the establishment of employment pacts in Hungary was predominantly induced by the announcement of the ROP tender. The interviews only partly confirmed this widespread view. With respect to the primary motivation, five basic sub-categories have been identified:

  • the motivation behind the establishment of some of the pacts was for participants to raise funds rather than implement the concept which had been largely unheard of;
  • the establishment of the pact was motivated mostly by external requirements and did not develop as the participants’ own initiative;
  • the initiators had wanted to resolve employment problems in their region and thus sought funding for it;
  • the partners built on their previous cooperation, but the pact was established directly for the tender;
  • some partners had previously planned to establish a pact and the tender helped to realise this plan (the pact would have been established anyway).

Management of pacts

Research findings also offer a colourful picture in this respect. Employment pacts have been concluded with full-time managers, whereas in other cases managers work part time, which inevitably means that the pact does not receive full attention. In one case, the management was in place only until the funds of the tender lasted. Very few such pacts were established with truly independent management.

Regional role of pacts

The researchers identified some very successful pacts which had been able to form viable cooperation among the partners. Representatives of other pacts consider them to be at an initial stage, albeit still present in the local labour market, or they conclude that the pacts are not able to sufficiently influence employment in the given region. At the same time, it is also common that cooperation among partners continued but not in an official capacity or in the form of a ‘pact’, even if the pact was the source of the cooperation. Researchers identified active and passive groups, as well as ‘latent’ ones which take action if incentives are available.


There is a distinctly unequivocal opinion that without assistance the partners would be unable to maintain the pacts from their own budget, because resources are either missing, unsecured or decreasing. On the other hand, the implementation of the tender is much criticised. A variety of alternatives have been proposed: reliance on self-financing, ensuring sustainability through contributions from the members, self-financing from the revenues of the services provided, reliance on external resources including the local government, employment agencies, regular state funds and tenders. A great number of interviewees suggested that multiple sources of financing should be ensured.

Success factors

Interviewing was supplemented by an overview of the pacts’ documentation. Based on this information, the researchers pinpointed the most important criteria of success and the essential conditions of operation. One of the most important criteria identified is a ‘spirit of partnership’ – that is, mutual confidence, respect and personal relations. It is necessary that the pacts involve the most relevant people. Demonstrating commitment and support is also indispensable. Adequately defined strategic goals, selecting a capable leader and appropriate management organisation contribute to the success of the partnership. The pacts are new formations of employment policy; therefore, communication and social contacts are of high importance.

The following external conditions that were identified are necessary for the successful operation of employment pacts: a supporting social or political environment; a consistent political stand towards employment pacts; a stable financial background; a supporting attitude of key actors of the labour market and employment policy; compatibility with the regional institution system; a flexible framework of conditions; an information system; and controlling.

Debate of research results

At a national seminar held in September 2009, where the final study was presented and discussed, the most intense debate emerged in relation to the financing and the future of the employment pacts. The seminar participants agreed with the assertion that the institutions providing support for the pacts have a responsibility for the operation of the pacts. As the OFA-ROP funding was terminated, employment policymakers who may wish to delegate additional jobs to the network would have to provide further support as well. Such support does not only imply financial assistance but also advice, as well as concrete professional and methodological assistance. The researchers pointed out that, within TÁMOP, support is provided for the establishment of new employment pacts, as opposed to the development of existing and well-functioning ones.

The seminar participants also heavily debated the concept behind the allocation of tasks by employment policy. Some participants highlighted the role of partnerships in the implementation of and ensuring public support to the government’s official employment policy locally. Meanwhile, others claimed that this role would turn the local partnership into a means of distributing state funds, which is in principle contradictory to the original objective of bottom-up initiatives. The parties concluded that while it was crucial that national coordination should be carried out, it has to be done with local needs taken into consideration. The coordinating organisation should offer services to the local partnerships and by no means exercise control over them.

According to other views, on the basis of the original concept, employment pacts are organisations of local collaboration and their main role is to foster effective cooperation between local actors of employment policy. Such cooperation is expected to be self-sustaining in the long run. However, if they are turned into an instrument for fulfilling the government’s goals, they cannot be self-sustained but will need ongoing support.

However, all conference participants shared the view that employment pacts play an important role in employment policy and expressed their confidence in their continued operation.

Gábor Rácz, University of Pécs and László Neumann, Institute for Political Science, Hungarian Academy of Sciences

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment