The data confirm that the turnaround on the labour market is a persistent trend, with the rate of employment back at pre-criss levels. Even excluding seasonal impacts, some 20,000 people found jobs in the private sector (at companies employing at least five people) in the first five months of the year.

The number of employed (full time jobs) totalled 2.73 million in the national economy in May 2010, the KSH reported today. Since employment figures hit rock bottom at the end of 2009 the number has been rising constantly and the growth has now reached almost 100,000. The public work programmes may account for no more than 40,000 jobs and seasonality for about another 40,000, but the rest (20,000-30,000) was put together by the private sector.

The phenomenon is surprising because a rise in the employment rate follows the restart of economic growth (Q1 in Hungary’ case) with a two-quarter delay. The latest numbers show that this time it happened faster despite the fact that the Hungarian labour market is considered a traditionally rigid market and the corporate sector remained very composed during the crisis, i.e. the extent of layoffs was not as large as the gravity of the recession would have justified.

As for the supply side of the labour market, we have seen a welcome change over the past few years, namely that those who lost their jobs chose not to withdraw into inactivity but kept looking for jobs. The relatively high activity rate most likely contributed to the faster recovery in employment. The bottleneck here is the demand side, though, which makes it even more interesting how fast employment is rising in the economy that continues to be characterised by shrinking domestic demand and is still driven by exports.

We need to note, however, that the private sector is just starting to be what the public work programmes were. In this regard we need to highlight that a lot of economists believe it is not merely the restart of GDP growth that marks the end of the crisis but a lot more things, with a growth in employment being high on the list.

2010.06.09 09:13
Hungarian GDP did grow in Q1, KSH confirms (2)

The favourable processes on the labour market are confirmed not only by today’s statistics, but also by numbers published by the Public Employment Service (PES or ÁFSZ in Hungarian).

For the first time since the onset of the global financial crisis, the number of registered job seekers has dropped in Hungary in May 2010 and in June it reached the lowest level in the past 12 months.

Needless to say, labour market processes are fragile, as debt problems in the developed world keep concerns about a rebound alive; and there are lots of uncertainties about the Hungarian government’s economic plans and manoeuvring room. At the same time, the corporate sector is becoming ever more cautious in its wage policy and both the ex-bonus wage index and the gross wage change came in low in May.

This means wages in the public sector are worth 2-3% less every month than a year earlier due to the wage freeze. But with the supplementary pay received early this year public sector employees will probably earn more this year than in 2009.

Gross wages in Hungary dropped 0.9% year on year in May, against a growth of 1.1% in April and the 3% consensus forecast and well below the bonus-affected March growth figure of 9.4%, the Central Statistics Office (KSH) has reported on Friday.

Private sector wage growth slowed to 1.9% from 5.2% in April, while the ex-bonus figure watched by the central bank (NBH) fell to 3.6% yr/yr. "

Source: Portfolio Online Financial Journal