Unemployment rate keeps rising in Hungary
In Dec-22-Feb23, the Central Statistical Office (KSH) counted 4.69 million people in employment, which is a lower figure than in the previous months. For the first time since spring last year, the number of people employed fell below 4.7 million on a three-month average basis.
The deterioration in trends can also be observed on the domestic primary labour market. The figure of 4.69 million includes those working abroad for a short time (102,000) and those in public works (69,000). While the number of people in public works has been falling slowly, the number of people working abroad started to rise again, as Hungarians have begun to move abroad again after the lifting of COVID-19 restrictions.
Excluding workers abroad and those in public works, 4.52 people worked in Hungary in Dec22-Feb23. The peak seen earlier in the year was 30,000 higher than the current figure, and the last time we saw a lower employment level was last spring. The fall in employment is partly linked to seasonal effects and partly to the deteriorating performance of the Hungarian economy as the country slid into recession.
Against this background, it is not surprising that the unemployment rate is also rising steadily. In the period under review, the KSH recorded an unemployment rate of 4.1%, higher than the 3.8% recorded in the same period last year and substantially higher than the rate close to 3% seen last spring. This brings the number of unemployed to nearly 200,000 on a three-month average basis.
As the graph above shows, the jobless rate has been rising steadily since last spring. One could blame seasonal factors for the higher unemployment in winter, but this is only partly true. In particular, seasonal effects become minimal during periods of labour shortages, when, in theory, those who only have seasonal jobs in the summer find themselves in employment very quickly. This means that seasonally adjusted unemployment is also rising substantially.
Overall, the decline in employment and the rise in unemployment are due to the fact that the domestic economy has slipped into recession, domestic demand is falling and companies have become more cautious. The number of vacancies has been steadily reduced since last summer, with a number of companies imposing a freeze on staffing levels and the data also show that redundancies have started.
However, businesses are downsizing much more cautiously than in the Covid period, as they expect the economy to perform better in the summer months and know that recruitment has become a longer and more difficult process in recent years - hence the need to retain workers - as labour shortages reach unprecedented levels. But even so, the coming months will be difficult, and it will certainly take time for employment to grow and unemployment to fall.
Cover photo: Getty Images
