Economy 8 June 2023, 6:10am

A Hungarian region has one of the lowest jobless rates in the EU

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A region in Hungary has also been ranked among the regions with the lowest unemployment rates in the European Union. Last year, the region of Central Transdanubia recorded a rate of 1.7%, the third best among the 242 EU regions.

The rate of unemployment in the European Union (for people aged 15-74 years) fell to 6.2% in 2022 from 7.0% in 2021. There are major differences in the U-rate between the 242 EU regions, though.

In 2022, when measures to control the COVID-19 pandemic were being lifted across the EU, the unemployment rate of people aged 15-74 years continued to vary widely across the EU's NUTS 2 regions. The lowest unemployment rate was recorded in the Czech regions of Central Bohemia (1.2%), followed by the region of Prague (1.6%), the Hungarian region of Central Transdanubia (comprising Fejér, Komárom-Esztergom, and Veszprém counties), and the Czech South-East and South-West regions (all three 1.7%).

At the other end of the scale, the highest unemployment rates were registered in the Spanish regions of Ceuta (28.4%), Melilla (21.6%) and Andalusia (19%), followed by the French outermost regions of Guadeloupe (18.6%) and of La Réunion (18.1%).

As for the other regions in Hungary, apart from Central Transdanubia, unemployment was lower than the EU average in five other regions (Pest county, Budapest, Western Transdanubia, Southern Great Plain, Southern Transdanubia).
In Northern Hungary, the rate was 6.2%, the same as the EU average.
Of the eight regions in Hungary, only in the Northern Great Plain did the unemployment rate exceed the EU average, but even there by a marginal 0.1 percentage points (6.3%).

The lowest female unemployment rates were recorded in the Polish region of Wielkopolskie (1.4%), followed by the Hungarian region of Central Transdanubia (1.5%), as well as the Central Bohemia region and Prague both with 1.6% in Czechia.
In this respect, two other regions in Hungary (Pest county and Budapest) were among the top 10 regions in the EU, with female unemployment of 2.1 and 2.2%, respectively last year.
For comparison, the EU unemployment rate was 6.5% for women in 2022. Of the Hungarian regions, only Northern Hungary had a tad higher rate (6.6%).
The only Hungarian region that made it to the Top10 in terms of the lowest male unemployment rates was Central Transdanubia (1.8%), with Central Czechia in the lead (1.0%), followed by two other Czech regions (Southwest and Southeast Czechia), with 1.3% and 1.4% male jobless rates, respectively.
The EU unemployment rate was 5.9% for men last year. Six of the eight regions in Hungary had a lower rate than this, with Northern Hungary (5.9%) matching and only the Northern Great Plain (6.7%) exceeding the EU average.

In 2022, the average unemployment rate for young people aged 15-29 years in the EU was 11.3%, a 1.7 pp decrease over 2021. However, there are marked regional differences in the unemployment rates for young people (see map below), ranging from 1.7% to 42.4% in 2022.

The lowest youth unemployment rates were recorded in the Czech regions of Central Bohemia (1.7 %), South-West (3.1 %) and Prague (3.2 %), the German region of Upper Bavaria (3.3 %) and the Hungarian region of West Transdanubia (3.6 %).

Youth unemployment rates were lower than the EU average in all but one of the Hungarian regions. The rate in the Northern Great Plain, which stands out, was 12.1% last year.

In 2022, the year of the current Eurostat data for the NUTS 2 regions, the unemployment rate in Hungary reached a low of 3.2% between April and June for the 15-74 age group, according to the figures of the Hungarian Central Statistical Office (KSH). Since then, the rate has risen to over 4.0% (4.1%) between December 2022 and February 2023, but has not increased further from there.

In recent months, Hungary's U-rate has practically plateaued, with the latest data released at the end of May showing a rate of 4.0% between February and April. True, that's still an increase of 0.5 percentage points compared to the same period last year.

Overall, despite the economic recession (the Hungarian economy has contracted for three consecutive quarters), the domestic labour market remains stable, with employment at nearly 4.7 million and unemployment at a low level. This may be related to the fact that firms are trying to retain workers, as the cost of downsizing or subsequent recruitment in the midst of a recovery may be higher than the cost of retaining workers in the midst of a lower level of production or services.

Last summer, the labour shortage in Hungary reached unprecedented levels (officially the number of vacancies got up to 100,000, meaning that the estimated demand for labour was several times higher), which slowly started to ease, with firms reducing vacancies in the midst of the recession.

However, the economy is still experiencing labour shortages, and companies fear that they will not be able to find the right workers later if they downsize now. This is a particularly important factor in the fact that unemployment has risen by less than 1 percentage point so far from its trough.

The big question for the next period will be how many firms will have to temporarily suspend or close down their operations in the midst of the recession. This could also have an impact on unemployment trends. However, the good news for workers is that the labour market remains tight, so that those who are made redundant have a good chance of finding another job.

Cover photo: Getty Images