Unemployment in Hungary – The Effect of the Economic Crisis

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I. Introduction

One of the most serious problems in Hungary is the unemployment. People are trying to find solutions to beat the unemployment but yet those efforts were hopeless, and they are still fighting to create job possibilities for the unemployed people. The economic crisis which occurred all over Europe brought a big change on the whole world. Because of the actual economic crisis the people are getting to lose their existential safety and the subsequent upon this it can occur depression, retreat from the society and violence.

The loss of our workplaces, the debts, and the bankruptcy of a company can attack the individual’s identity which causes a lurch of their whole identity. Because of this a psychical crisis can evolve. The men are suffering more of this depression than the women, because it is their task to supply the whole family, in contempt of the fact that this time more women can lose her job than man. It has a big affect on the financial section, and the labour market as well.

We can say that this crisis has started in 2007.The unemployment has an affect not just the individuals but their family by an appreciable financial and psyche encumbrance. The rate of unemployment has increased and it is still increasing month by month. Fortunately most of the people can see the light in the end of the tunnel in the year 2010. It seems that we can get out from this chaos which soured our everyday life in this period.

II. The Review of the history of unemployment

In the socialist Hungary the rate of the employed people was complete, but it does not mean that everyone has a job more rather that everyone has a workplace. At that time it was compulsory to have a workplace if somebody could not prove, that person was punished by the state. Because of the world economy and the political procedures, at the end of the 1980’s an economic collapse has occurred in the socialist countries which carried their political system’s breakdown as well.

Then the number of the so called “hidden unemployed” has increased, and the labour supply has decreased. The “hidden unemployment” means – straightly not presented in the work statistics. At the end of the 1980’s there was a change in the Hungarian system what we calls “the change of regime”, and we could experience its positive and negative impacts as well. This was the start of the problems in Hungary.

In the beginning of the 1990’s Hungary lost the 1/3 of its export market which caused the moderation of the production and it also cut down the labour market. Because of this the whole labour market was totally changed. After the change of regime between 1989 and 1992 the 30% of the workplaces has ceased, therefore almost 1 million people has lost their jobs. In Hungary the registrated unemployed people number has culminated in the February of 1993.According to authoritative datas the number of the unemployed people were 705032, which means the unemployed rate was 13, 6%.The growth in the unemployment was last until 1995 then from 1996 we could experience a continuous setback.

Fortunately from the end of the 1990’s a dynamic growth has eventuated – the Gross Domestic Product (GDP) risen at an annual rate at about 4% to 5,5%. The employed people’s number started to increase, therefore the number of workplaces increased and the unemployed people’s number with the unemployment rate are decreased. As the table shows from 2000 the number of unemployed people’s rate started to increase constantly. At first, this growth was restrained but by the time it came more and more dynamic. In 2000 Hungary was not really touched by the effects of the slow advance. Its economy was developed forcefully, the national incomes has risen by 5, 2%.

It exceeded countless of developed countries’ number. The gross wages has increased by 13, 5% as compared with the past year. Those employees monthly wage who was working for a company with more than 5 people was about 87 645 HUF. Within this, the manual workers (blue-collar workers) average wage was 61 930 HUF, the intellectual workers (white-collar workers) salary was 121 779 HUF. In contempt of the Hungarian bloomy economy the labour market and the employed people’s rate just developed humbly.

Thereinafter here are the main reasons of the unemployment after 2000. First of all because of the immigrants there was a rise in the foreign employees. They generally fulfill the same job for lower salary, than the Hungarians did so that is why the employer prefers to hire the foreigners. The line infantry and the civilian duty have also ceased, which was continuously employ more than 10 000-20 000 people. The labour market’s structure has rearranged and the so called “structured unemployment” evolved which means that the employment and the unemployment are exist collaterally side by side. We can decline this type of unemployment by re-training and with the change of the education, but both of them are very money and time exigent task.

The mostly endangered companies which can suffer from unemployment can be first of all those women who are pregnant, second group who are older than middle-aged, third the low qualification people, fourth the permanent unemployed, fifth the old offenders, and finally is the gypsies.

In Hungary the so called “seasonal unemployment” was also presented. The seasonal unemployment refers to the change of seasons. It exists in any field or industry what is depending on the weather. For example, at spring time at the beginning of the agricultural works the number of the unemployed people use to reduce, but in the summer after the school year it is getting to increase.

There are three more types of unemployment the structural, the frictional and the cyclical. The structural unemployment is resulting from changes which occurred in the economy. These changes simultaneously open new positions for trained workers. Frictional unemployment is when people moving between jobs, careers, and locations. Cyclical unemployment can happen when the unemployment rate goes to the opposite direction as the Gross Domestic Product growth rate. So when GDP growth is negative unemployment is high.

III. The situation in nowadays

In the past one year the ambition for job was drastically decreased. Although there are job offers, but the problem is that these are not appropriate for most of the people, because they do not want to degrade and in contempt of their higher education they do not want to get a job, which is in the lower scope of activities and they prefer to choose the aids. A lot of people because of the economic crisis wants to train themselves, and learn more to get a degree, because they rely on that if this economic crisis will finish they can get a better job in the future. The Hungarians mostly like place for further learning is Germany, where the number of the studying people is about 27, 3 %, but Austria, and Great-Britain is also very popular. Those people who are more qualified are less affected by the economic crisis, but we still could not avoid the rise of the unemployment rate.

In the last three month in the past year the unemployment rate was 10, 5 %. According to this data the unemployment rate has stopped in January, 2010. Although it was exceed the measured data in the last period in 2008 which was about 8%. Last year in December according to the registered datas the number of the jobseekers was 604, 6 thousand person, which as compared to November it means 4, 2% of increase and to set against 2008’s December the increase was 26, 7 %. Unfortunately these shocked datas not just appeared in Hungary.

The ILO says that the labour market closed a very bad year all over the world. In 2009 the total number of the fired people was 27 million. Within this in North-America, Japan, and West-Europe the unemployed people’s number grown by 4 – 4 million, while in Asia, Africa and Near-East the employed people’s rate was stable. One of the study of the ILO shows that we need a global work agreement to turn back these processes. The most important task is to set back the increase of the unemployment and to solve it we need a strong political determination.

In the first quarter of the year 2010 at the age group from 15 to 74 the annual employed people’s number was 3 million 719 thousand, the number of the unemployed people’s number was 498 thousand which meant a 11, 8 % unemployed rate. In this analyzed period the 61, 9% of the people between the year from 15 to 64 appeared in the labour market. In the season from January to March in 2010 the 15 – 64 years employees number was on the average 3 million 688 thousand, it was less with 48 thousand people than one year before.

The 15-74 years people’s unemployment number was 498 thousand, it was more with 95 thousand person than in the last year. The 11, 8 % value of the unemployment rate has exceeded the previous year’s rate with 2, 1 %. The men’s unemployment rate risen by 2, 6 % the women’s by 1, 7 %. The 16, 4 % of the unemployed people are out of from the labour market at the age group from 15 to 24.

In October Schmitt Pál held an interview about the situation in Hungary. He said that the global economic crisis hit Hungary when the domestic economy was weak and because of this a country had a doubled crisis. Therefore it is much harder to Hungary to get out of this situation. “We had to ask help from the ITM, they offered us 25 billion HUF. “ It was very important for the country, because it helped for a certain time. He also said that now the country’s more important task is to create workplaces. “With all of the economic actions, all, what we do it for the economic development; we have to concentrate on to create workplaces.

From the viewpoint of our future this is the most important. The government wants to create 1 million workplaces within 10 years to reach the other member states of the European Union like Checz Republic and Portugal.” For the question that how can create workplaces for the 10 % of the population he answered that the half million Hungarian small- and medium enterprises has taken almost 70% of the Hungarian workplaces. If they would employ just one employee our problem would be semi-solved. According to the statistics of employment it shows remarkable variances. The worst situation is in North-Hungary, where the unemployment rate is 15%; the best is in the middle of the country, where the rate is just 6%.

The unemployment of the minority

This is also an important question in Hungary nowadays, because the minority takes according to my opinion a lot from the total population. Unfortunately there is one problem what the government cannot handle. The problem of the gypsies. In Hungary there are a lot of gypsy families who are living from aids, and they do not want to work. Naturally there are some exception who are e.g. running a company, but they just want to get easy money, and they are not educated enough. A lot of people say that if we want the gypsies to work we need to reanimate the traditional gypsy professions.

IV. Conclusions

As my research shows it seems that the Hungarian situation is not hopeless, but the country still needs to make efforts to stabilize the country. First of all we need to get out of this economic crisis. This will be the hardest task, but the first strong step. I hope that the country can solve this crisis within one year in 2011. After according to the promises of the politicians they have to create enough job possibilities and workplaces. They have to give jobs to the minority as well, because many of them are not willing to work.

Most of the people say that first there will be stagnation in the unemployment rate and hopefully after it will goes back slowly.

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