Reforms for Stability and Sustainable Growth: An OECD Perspective on Hungary (Chapter 5 - Employment and Social Policies: Making Formal Employment More Attractive)
Hungary has one of the lowest employment rates in the OECD. This partly reflects the amount of unregistered activities, but various work disincentives also play a role. The relevant features include the welfare benefit system, family policies, and a relatively high minimum wage. This chapter discusses options for labour market policy to increase labour utilisation in Hungary while also improving the conditions for formal employment. Progress is being made to limit access to disability benefits, via encouraging rehabilitation. Also, there have been changes to the unemployment benefit system as well as in sickness pay rules. This chapter discusses ways to support these changes by creating an effective system of public employment services (PES) and private subcontracting arrangements. On family policies, this chapter suggests measures to improve the balance between work and family life, including by raising the provision of childcare facilities and a system of childcare vouchers which would help to widen choices. Assessment also suggests a need for increasing employment opportunities for low skill workers by keeping minimum wages moderate. This chapter also discusses policies for promoting better co-ordination between the minimum wage system and taxation so as to avoid poverty traps
Long abstract
