April 18th, 2017

Work schemes said obscuring unemployment rate far higher than gov’t claims

Economist László Herczog said that unemployment in Hungary is currently at 7%-8% if the calculation is based on professional criteria, as opposed to the officially stated 4%-5%, flattered by adding individuals in work schemes to the number of people properly employed. Herczog also pointed out that weak vocational training and an overcentralized economy are both detrimental to the country’s competitiveness, daily Népszava reports.

Herczog, who works with the Finance Researcher Inc (Pénzügykutató Zrt.) said it is clear that employment has increased in Hungary. It has to be analysed though how permanent and sustainable the increase is. Realistically speaking, unemployment cannot really go below 4% for practical reasons, and the statistics look so bright only because they were “facelifted.” As many as 200,000 low-paid fostered workers are included in the figures, even though such work cannot be considered as real and permanent employment. The Central Statistical Office also includes the people who commute to work abroad in their figures, whose number was 116,000 last year. The lack of professionals in certain areas is also a relatively new phenomenon, due to the half million people who left Hungary to permanently live and work abroad.

The economist said he thinks that Hungary is heading in a very bad direction currently. Globalization is inevitable, therefore instead of fighting it, it would be more beneficial to adapt. That would require modern education, as well as laws that recognize real performance, instead of being based on favouritism. The practice of exclusion becoming more and more widespread in Hungary is also very detrimental to development. The government says they fight for Hungarians to be able to work abroad, but they do not want to receive anyone in Hungary. This will only lead to being excluded from the international job market, only to weaken the possibility for development even more.

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  • FUCeausescu

    Unemployment rate in Hungary when Fidesz took over was almost 12%. Even discounting for the fostered workers, a drop to 7-8% is not bad within the context of where Hungary was in terms of its twin FX bubbles at the time.

    • Yes, truth and statistics…
      2nd quarter 2010 7 664 300 Hungarians were between 15-74 years old.
      4th quarter 2016 7 499 600 Hungarians were between 15-74 years old.
      https://www.ksh.hu/docs/eng/xstadat/xstadat_long/mpal2_01_02_03a.html

      Meaning the Hungarian theoretical workforce has shrunk with 164 700 people in real numbers, who otherwise would be unemployed under Fidesz, or had to move abroad to get jobs…

      • wolfi

        The crazy side of this:
        Even though there are so many unemployed, companies can’t get qualified workers!
        Several examples:
        Hotels and restaurants at the Balaton are getting desperate – their best people have gone or will go to the DACH countries or other part of Western Europe.
        Our young ones told us that their SPAR in Budapest has many “old” people working again – called back from retirement.
        At least they have people working while our TESCO in Keszthely has problems. Our neighbour told us he had to wait more than 20 minutes, some people just left their full shopping carts behind in frustration.
        On that day last week there were only two cashiers working – everybody was supposed to use the automatic system, which many people are kind of afraid of …
        He asked someone or rather complained but the guy from Tesco said: There are no people available (probably because Tesco is not known for high pay).

        The automotive industry also has problems getting qualified workers …

      • FUCeausescu

        Yes, but there are so many other factors that need to be considered. For instance worker participation rate. It was 54% in 2010, while it is over 60% right now.

        http://www.tradingeconomics.com/hungary/labor-force-participation-rate

        Which shows up in the number of people employed data. 2010, 3.7 million, 2016 4.4 million. Even subtracting 200k fostered workers, that is a gain of 500k.

        http://www.tradingeconomics.com/hungary/employed-persons

        Even compared with 2007, before the global crisis hit, Hungary is currently doing much better on this front. Any other bright Mr. Viking objections on the subject?

        • roderickbeck

          The participation reflects the fostered workers. Please pull your head out of your ass. You are a lousy analyst.

          • FUCeausescu

            Having issues with basic math? Or is it basic comprehension? As I pointed out, even subtracting the 200k fostered workers, you still have a gain of 500k employed. So, no it does not reflect the fostered workers. Your comment reflects either complete lack of ability to digest basic info, or desperation to contradict, because it is just too painful to admit to the fact that your ideological indoctrination is being failed by reality.

          • roderickbeck

            If you were a real economist, you would know that productivity determines the standard of living and level of economic development. Instead you are just an amateur just pretending to be a professional. OECD’s harmonized economics statistics are quite clear – zero productivity growth during Orbán’s State Capitalism. The real ideological blinders belong to fools like yourself who reject mainstream economics and wallow in nationalist, populist garbage like pigs in shit.

          • FUCeausescu

            Actually, that is not entirely true. Labor participation also tends to determine living standards. Two incomes in a household instead of one, as well as one income instead of none and so on. Not to mention (again) that the subject of the day here is employment, not productivity.

          • roderickbeck

            Labor force participation is low in Hungary and productivity is non-existent. Choose your poison. Moreover, labor force participation is not a substitute for labor productivity.

          • FUCeausescu

            Most people stop at throwing just one kitchen sink. But I guess you just can’t help it.

            1) You falsely claimed that labor participation increase is mainly due to fostered workers.

            2) You claimed that 4.4m-3.7m = 200k.

            3) You falsely claimed that increase of 500k in workers does not contribute to population well-being. In other words, more people having an income is not good for society.

            After making so many stupid statements, most people have the decency to at the very least stop. Some who are especially decent will even admit to being wrong. You just flew right past and kept throwing the kitchen sinks.

            Then you went ahead with bringing in the issue of productivity throughout, while we are discussing an article about employment, then you brought up gdp growth 1995-2015. Wrong topic, irrelevant timeline.

            Now you state that labor force participation is low. If the current rate is low, then perhaps the rate we had before Fidesz can be classified as disastrous.

            So what will you bring up next? The disastrous performance of the national soccer team?

            You really are desperate. Even more than the likes of Mr. Viking.

          • Bowen

            Groan. Do you have to write so much? It’s boring.

          • FUCeausescu

            For you, I will keep it short. You are a clown!

          • Bowen

            I’m guessing no-one really wants to listen to you in real life, so you like to imagine that people are reading your views on here. It’s quite sad.

          • wolfi

            It’s no use trying to “discuss” with FUC* – does he know wht he’s writing about, has he ever been to Hungary in the last years at all?

            Back to reality:

            Everybody knows that Fidesz stats are not worth the paper they’re written on – if they don’t like the results, they just change the parameters.
            And no one really knows how many Hungarians
            a) live abroad

            b) work and live abroad but still have an address in Hungary
            c) work without a contract aka “black workers”
            d) work part time according to their contract but really full time

            e) are officially retired but still work (black …)

            and so on …
            I know people in every category!
            Many houses here suddenly had more occupants over Easter …

          • roderickbeck

            What is clownish is your claim that Hungary’s labor force participation is 60. Worldbank puts it at 54%. http://data.worldbank.org/indicator/SL.TLF.CACT.ZS.

          • FUCeausescu

            What is really clownish is that you did not also notice the world bank stats showing it to have risen from 50% in 2010, to 54% in 2016. So the trend of improvement is still there. An improvement which according to the world bank’s own stats brings this number to levels not seen since 1992. I don’t know what the source of the discrepancy is. Perhaps the World Bank data does not include the fostered workers. At any rate, the trend of improvement is undeniable, even though you cannot get yourself to admit it.

          • Bowen

            Have you ever been to Hungary? (And I’m not talking about nice little holidays.)

          • roderickbeck

            No sensible data would include fostered workers.

          • FUCeausescu

            Regardless, both sets of data show the same thing, namely significant improvement since 2010. No sensible human being could claim otherwise, given the facts.

          • roderickbeck

            The data set shows that Hungarian labor force participation is extremely low. And the most plausible interpretation is that the business recovery caused the participation rate to rise. Not an improvement in underlying conditions.

          • FUCeausescu

            Yes it is low, but according to the World Bank data, it is the highest it has been since 1992. Claiming it is a recovery to any old levels is outright absurd, given that these levels have not been seen since the collapse of communism.

          • roderickbeck

            And since when has Hungary had a 5% unemployment rate? I feel sorry for you. You so desperately want to believe Hungary is on the right track. You don’t live here and you ignore the fact that successful economic development requires about twice what Hungary has averaged. Since 1995 to the present, Hungary has averaged only about 2.4% real GDP per annum growth. Despite a lot of free money from the EU in development funds and agricultural subsidies. Catching up to the developed requires a lot higher growth than 2.4%. Even today almost 30 years since the Wall fell, Hungarian website still cannot handle online transactions. You can order online. You can’t pay online. Now that is a woefully backward country.

          • FUCeausescu

            1995-2015 includes five years in the 1990’s when most of the region suffered from post-collapse. It also includes the aftermath of the mother of all FX debt bubbles which blew up towards the end of the last decade. Since 2010 however, as the data shows, worker participation rate increased to levels not seen since 1992. In addition, the FX debt pile has been worked down or converted. In addition, the debt/GDP ratio declined from 82% in 2010 to 74% currently. Yearly deficits have been kept under 3%, compared with a 7% average during the 2002-2010 period, which was burying Hungary in debt. Since 2013 Hungary’s economy has been growing at a rate that is twice that of the EU average. So, yes, I do think that it is on the right path since 2010. The fact that there is still a lot to be done, does not change this fact. Let us not forget that Hungary was the first country to need an IMF bailout during the crisis, so it is not as if the current government inherited a stellar economy.

          • roderickbeck

            Wrong again, dreamer.

            Real GDP Growth:
            2010: .7%
            2011: 1.7%
            2012: -1.6%/
            2013: 2.1%
            2014: 4.0%
            2015: 3.1%
            2016: 2.0%

            No matter how you try to slice the data, the long term trend growth rate is probably about 1.5% to 2%. IMF puts long term trend growth for Hungary at 1.5%.

            2014 and 2015 growth spurts were driven by accelerated spending and German capital spending.

            And even 2016 is artificial because it reflects a net inflow of European funds to subsidize Hungarian agriculture.

          • roderickbeck

            1. Mediocre economic performance under Orbán as measured by annual real GDP growth.
            2. Clear degradation of the education system as measured by PISA scores.
            3. Loss of rule of law as exhibited by Lex CEU. That and other legislation undermines investor confidence.
            4. A steadily shrinking population.
            5. A steadily aging population. Long term that will push labor force participation down.
            6. A massive increase in minimum wage.
            7. Virtually no labor productivity growth.
            8. A tight labor market. Hence limited room for growth due to more hours worked.
            9. The highest social tax burden in Europe.
            10. Squandering of EU development due to corruption.
            11. Low research and development spending.
            12. Poor economic performance 2010-2016 relative to other Eastern European countries.
            13. A reputation as a country where the government takes sides and persecutes based on political motivation, not law.

            Feel better now?

          • roderickbeck

            You concluded that Hungary was doing very well because the unemployment rate had dropped since the Great Recession. I rightly pointed that has been zero productivity growth, in order words Hungary is in desperate condition. At that point, realizing your own personal incompetency, you tried to change the topic. Any real economist as opposed to a government cheerleader would focus on the fact that Hungary appears incapable of rapid growth even with huge EU agricultural subsidies and development. The big picture is that Hungary is a failure of economic development and current government has reduced long term trend growth.

          • FUCeausescu

            Wow! You are very delusional.

          • roderickbeck

            The delusion is your idea that Hungary is doing well or catching up to developed countries.

        • roderickbeck

          Hungary is doing terribly. The key factor in economic development is not a falling unemployment rate, but labor productivity, which has been flat.

          2010 30.4
          2011 31.1
          2012 30.9
          2013 31.3
          2014 30.9
          2015 31.3
          2016 31.0

          If you were a real economist and you are clearly not, you would have noticed that labor productivity is stagnating.

          You have also noticed that productivity growth is significant in other Eastern European countries and hence Hungary is falling behind.

          And if you were a real economist and you are clearly not, you would realized that Hungarian growth goes to zero every time the country depletes its EU development funds. That means the country is really fucked.

          • FUCeausescu

            That is nice and all, except this article is about employment growth. Why don’t you save it for the next time that productivity will be discussed?

          • roderickbeck

            Because you claimed Hungary really well when in fact it has averaged only 2.4% per annum real GDP 1995-2015. And its growth collapses every time the government depletes EU development funds. That suggests an underlying malaise that Fidesz has not solved and probably made worse by counterproductive nationalist economic policies.

        • Yes, but there are so many other factors that need to be considered. For instance how Fidesz’ cheat with stats:
          “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”
          http://budapestbeacon.com/public-policy/public-workers-and-hungarians-working-abroad-inflate-hungarian-employment-data/44279

          Of course if everybody moves abroad working, there will be no unemployed left in Hungary…but is it GOOD?

          • FUCeausescu

            Interesting! But the data you cited earlier of a decline in the 15-74 population of 165,000 discredits the claim of up to 500,000 Hungarians working abroad. Let us not forget that Hungary is experiencing natural decline in that population group.

            Also, the article you cited contains a series of obvious false claims. On the employment issue, if you go back to my link, you will see that number of people employed in 2007, before the crisis was only 200k higher than in 2010. Given the increase of 500k not including public works, i’d say it is more than just the recovery effect.

            Disingenuous attempt, to say the least!

          • “the data you cited earlier of a decline in the 15-74 population of 165,000 discredits the claim of up to 500,000 Hungarians working abroad. Let us not forget that Hungary is experiencing natural decline in that population group”

            So,
            1) It is wrong
            2) It is correct
            How do you reconcile those two sentences, one after the other?
            With how much did “the 15-74 population” decline according to you?

          • FUCeausescu

            Don’t know!

            But here is what I do know: When government releases jobs data, it will be broken into: private sector employed + public sector employed + fostered workers + working abroad = 4.4 m. If working abroad was penciled in as being 116k than that is its contribution to the 4.4 m number. In that case, even if the assumed real number is 1 million, or 1 gazillion, the contribution to that 4.4 m number is still going to be 116k. Makes sense?

            That budapest beacon article was either done by some very incompetent people, or they knew exactly what they were doing, and figured the sucker fish will swallow the bait.

    • roderickbeck

      It is called the business cycle and Fidesz was simply lucky.

      • FUCeausescu

        I know that it is a hard thing to swallow when facts will contradict ideological indoctrination, but if you look at the data, even after subtracting the 200k fostered workers, Hungary currently has more people employed than at any time this century so far.

        http://www.tradingeconomics.com/hungary/employed-persons

        Really puts all the rhetoric of the past few years on this site in perspective, does it not?

        • roderickbeck

          I know it is hard for you to pull your head of your ass and recollect that productivity growth is the very definition of economic development. And productivity growth has been flat during Orbán’s reign.

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