Labour markets, human capital and inequality

Economic Survey of Hungary 2010: Raising education's contribution to growth


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The following OECD assessment and recommendations summarise chapter 4 of the Economic Survey of Hungary published on 11 February 2010.




How to raise education outcomes?

Hungarian educational policies and institutions are capable of combining good educational outcomes and a relatively efficient use of resources. Costs relative to GDP are at about the OECD average, while younger school pupils perform above average in internationally comparable assessments. But 15 year-olds register only average performance in the Programme for international student assessments (PISA), and the proportion of adults with tertiary qualifications, though rising, is still low. More worryingly, the school system does not adequately prepare vocational school leavers for the labour market. Hence, the government should be ready to reform the system to further improve educational outcomes and cost efficiency.

The Hungarian school system possesses features usually associated with good outcomes, notably a high degree of local autonomy. However, many municipalities are too small to provide good educational facilities for all students in their district, and the government actively encourages small municipalities to form associations with each other so as to share facilities and/or combine kindergartens, primary and secondary schools. Scope remains for further mergers/associations among municipalities to improve education efficiency. The “National Assessment of Basic Competencies” provides a benchmark for individual school performance, but the supervision of the tests and their dissemination leave something to be desired. To improve their reliability, the proportion of national assessments invigilated by independent inspectors should increase and, to improve their utility, a higher proportion of individual school results, preferably adjusted for the socio-economic background of the students, should be coded and disseminated in a timely fashion.

Teacher quality is an important factor influencing educational achievement. In Hungary, the quality of incoming teachers appears to be lower than those in other professions. Recent reforms require new entrants to spend up to three years acquiring knowledge in their specific topic area, followed by up to two years studying teaching-related issues and as trainee teachers. Entry criteria and courses taught in teacher training institutions should be independently assessed. Hungarian teachers are paid less than teachers in most other countries (Figure 4), even allowing for lower per capita GDP, but they also have a lower teaching burden. In the longer term, the ratio of actual teaching relative to the total statutory working time should be raised. The resulting gains in efficiency could be used either to reduce the number of teachers or increase the relatively low salaries of teachers, or a combination of both.

Teachers’ salaries relative to teaching experience1
In equivalent US dollars, 2007 2

1. Annual teachers’ salaries (after minimum training) in public institutions in lower secondary education. Data for Belgium and the United Kingdom is an average of regional data available.
2. Using purchasing power parities.
Source: OECD (2009), Education at a Glance 2009.

The employment rate for youth (age 15 19) was the lowest in the OECD area in 2008, which is in part explained by the longer compulsory schooling period (gradually increased to the age of 18). Some 60% of vocationally trained workers are either not in employment, or in fields that do not correspond to their professional qualifications. To improve the usefulness of the courses taught, school leavers should be traced in their first years after school to gain feedback on the relevance of their vocational training.

A high proportion of Hungarian students are enrolled in two types of vocational schools after the end of the 8th grade. The OECD recently published an in-depth analysis of the vocational education and training system in Hungary. The government should implement the policy recommendations of the OECD report. As practical training provided on school premises is of uncertain quality as well as limited in quantity, the policy to favour practical vocational training in regional integrated vocational training centres and in workplaces (apprenticeship system), rather than in the vocational schools should be continued. In addition, given the poor record of the vocational training schools in preparing students for the labour market, the government should strengthen them, for example by offering a similar education standard as in vocational secondary schools in order to offer all vocational students the same teaching resources, and adequately prepare all interested students to sit for the matura examination.

Tracking (i.e. selecting students into different types of school on the basis of their assessed performance and expressed preferences) is widely believed to lead to greater efficiency in teaching, despite lack of evidence. Several OECD countries have moved away from early tracking in recent decades, and no country has moved in the opposite direction. The movement towards de-tracking was influenced by the finding that early tracking tended to perpetuate existing socio-economic differentials. In Hungary, tracking can occur at age 14. As in most OECD countries, tracking should start at the earliest at age 15.

Many Roma adults have low educational attainment – some did not even complete primary education – and on average, systematically lower achievement than the rest of the population. Policies have moved away from concentrating Roma students in “gypsy schools” towards encouraging Roma integration with the rest of society from the earliest possible age. Research shows that integrating young children from different ethnic backgrounds in pre school raises the probability that they will remain longer in education after the minimum age limit, and reduces social prejudices in both directions. It is therefore desirable to encourage Roma parents, for example through financial incentives, to send their children to pre-school for longer than the compulsory period. The special pre-schooling support for disadvantaged parents introduced by the government in January 2009 is a positive step in this direction.

In 2005, tertiary education switched to the Bologna system. The 2010 in-depth review may reveal some quality issues since major reforms combined with the rise in enrolments have put the tertiary system under strain. The government should ensure that subsidising failing institutions and faculties is conditional on rapid improvement. The authorities should improve financial incentives to provide tertiary studies that match forecast labour market needs and tighten the conditions under which students continue to receive free tuition, while extending ways of defraying the living expenses of students from poor families. Although numbers of tertiary graduates are rising, the proportion opting to study the kinds of science subjects important for innovation has diminished. Hungary has by far the lowest proportion of science graduates among OECD countries. The authorities should continue to prioritise the allocation of finance to subject areas conducive to innovation and thus economic growth. 


How to obtain this publication


The complete edition of the Economic Survey of Hungary is available from:

The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.


Additional information

For further information please contact the Hungary Desk at the OECD Economics Department at

The OECD Secretariat's report was prepared by Margit Molnar and Colin Forthun under the supervision of  Pierre Beynet. Research assistance was provided by Desney Erb.




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