In absolute terms, there were 226,500 unemployed in Hungary in July-September, 600 less than in June-August and down by 66,200 from the same period a year earlier. Analysts told MTI that falling unemployment has a positive effect on economic growth in the short term through growing wages, but labour shortages could become an impediment to growth in the medium term.

Unemployment could fall close to 4.6% by the end of this year, they added. ING Bank chief analyst Péter Virovácz noted that the number of job-seekers was now practically level with the number of fostered workers.

He said the labour shortage is likely to worsen in the coming years, as some 8,000 jobs are to be added in the automotive and related industries in 2017- 2018 alone. Big companies could leech labour from small and medium-sized firms, causing the productivity gap between big and small companies to widen, he warned.

Takarékbank analyst Gergely Suppan said the data show the new jobs were created in the private sector and that the number of Hungarians working abroad was down by 1,000.

He put the full-year jobless rate at 5.3%. Péter Cseresnyés, state secretary in charge of jobs at the economy ministry, welcomed the figures and said government measures such as the job protection scheme, were behind the improvement.

He noted that youth unemployment data also show improvement, keeping the jobless rate in this age group below 13%, compared to its rate of 30% in 2010.

Republished with permission of Hungary Matters, MTI’s daily newsletter.