Hungarian labour market getting tighter

Since the turn of 2023-24, there have been growing signs that the deterioration in the labour market caused by the recession has been reversed. In the spring months, the average number of people employed in Hungary (excluding those in public works and those commuting outside the borders) was 4,576,000, just below the peak of last autumn.

The labour market has been characterised by a gradually strengthening economic cycle since the end of the coronavirus crisis, to the extent that employment has reached a new peak. At first, even the economic downturn did not halt this process, as the labour-scarce environment of many years made firms "labour hoarders", i.e. they were wary of laying off workers even when their order books might have required it.

Then, at the end of 2023, the deterioration started, with employment falling slightly and unemployment rising. This is a process that is clearly coming to an end, as the labour market seems to be strengthening more and more.

The same processes can be observed in unemployment too:

What is a stable trend across economic shocks and jitters is the rise in economic activity. The average activity rate in the spring is 68.1%, a new high. Although the monthly shift is certainly more due to seasonal reasons, looking at the longer trend we can say that an increasing share of the working-age population is participating in the labour market.

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