Public workers and Hungarians working abroad inflate Hungarian employment data

January 31, 2017

Photo: mno.hu

Official statistics clearly show that unemployed people engaged in public works and Hungarians working abroad were primarily responsible for the statistical decrease in unemployment since Viktor Orbán and Fidesz returned to power in 2010.

According to a booklet recently sent to every Hungarian household touting the government’s achievements of the past six years, 700,000 jobs have been created in Hungary since 2010. Furthermore, the Central Statistical Office (KSH) published the latest employment figures on Monday showing the number of those employed or actively seeking employment increased to 4.4 million, while the unemployment rate fell to 4.4 percent.

“The data is misleading”

Conservative online mno.hu notes that using 2010 as a benchmark year for calculating job creation is disingenuous and misleading.

“The effect of the economic crisis reached its greatest depth in 2010 in terms of employment data, however this was merely the result of a temporary contraction,” mno.hu says. “Companies reacted with layoffs to the financial crisis or to the temporary fall in demand for the products they manufacture or services they provide. As the crisis passed, jobs previously eliminated were brought back, which is to say that the government is using transitional year 2010 data as the basis for calculating the creation of 700,000 jobs.”  mno.hu points out that in 2009, the year after the global financial crisis, employment stood at 3.78 million people, or 70,000 more than in 2010.

Prior to the labor market reforms of 2011, on average 30-50,000 people were engaged in public work annually, mostly in the form of seasonal summer work. However, the cabinet “‘nationalized’ public work employment” so that essentially those engaged in public work no longer count as being unemployed, “because they also got work from the government in winter,” further distorting statistics.

Five-fold increase in public workers

According to the latest KSH data, the number of people engaged in public works has increased five-fold over the past six years, up to 218,000 at the end of last year. “If we add this figure to those officially unemployed, then the rate of unemployment is presently at 8.8 percent,” writes mno.hu, noting that “public workers are essentially unemployed people who receive wages for performing communal work designated by the local government or the state bodies, which do not count as real, market-based workplaces.”

Number of Hungarians working abroad understated

Further distorting the statistics are Hungarians working abroad, notes the conservative daily. KSH treats them as Hungarians residing in Hungary but working abroad. Official records suggest 116,000 Hungarians are currently working abroad, but the real ratio is much larger, according to mno.hu. One estimate puts them at between 350,000 and 500,000, meaning that the number of Hungarians working jobs in Hungary is overstated somewhere between 234,000 and 384,000.

Using 2009 as a benchmark year for calculating changes in unemployment and discounting the 218,000 people engaged in public works as well as Hungarians employed abroad means the actual number of jobs created over the past six years is somewhere around 150,000.

According to portfolio.hu, over the past six years, at most some 280,000 market-based jobs have been created. That’s 40 percent of the official figure the government is using to tout the unemployment-busting qualities of its profligate spending on public work schemes most experts consider to be utterly wasteful. Between 2010 and 2016 the government spent more than HUF 1.3 trillion (USD 4.5 billion) on public work schemes, to which it has budgeted HUF 325 billion (USD 1.1 billion) for 2017.

According to the business online, it is difficult to measure the ratio of foreign workers because they are much more difficult to reach, for even if they officially reside in Hungary, they spent most of their time abroad. In the case of public works programs, it is not possible to talk about market-based workplaces because they earn on average just HUF 80,000 a month, substantially less than the official minimum wage, and are paid by the government.

Labor shortages

However, according to mno.hu, low wages have caused so many Hungarians to seek their fortune abroad that there is now a critical shortage of labor in a number of sectors, especially in the industrial processing industry. Labor shortages are far less pronounced in neighboring Romania and even in the three other Visegrád 4 countries of Slovakia, Poland, and the Czech Republic.