TRUCUTURE OF THE LABOUR MARKET INSTITUTIONS

In Hungary employment promotion and unemployment management tasks are fulfilled by a state-run public organisation. The National Employment Service was established two decades ago. As of 1991 state laws regulate the prevention of unemployment and define all services and benefits aiming at alleviating the negative consequences of unemployment. The primary task of the National Employment Service is to achieve the government’s employment policy objectives. In 2011-2012 the labour market management scheme in accordance with the government administration has been restructured. Now the structure and the responsibility of the labour market institutions are the following:

The National Labour Service consists of the following organisations:

• National Labour Office
• Labour centres.

I. National Labour Office

The National Labour Office functions as a central office and acts as the medium-level management body controlling NES centres, and performing the following tasks:

• establishes the internal rules of procedure, regulations and main requirements for labour centres,
• compiles policies and methodological guidelines and make recommendations to assist the professional and administrative services,
• collects and analyses data;

in addition, it has regulatory competences of second instance, and operates and develops the relevant registration and IT systems.

The International and Migration Department of the National Labour Office provides counselling on unemployment benefits available to foreign nationals in Hungary and it also organises and operates the EURES network (European Employment Services) in Hungary.

II. Labour centres

Labour centres are specialised bodies of the capital and county government departments consisting of county organisations or of county (capital) organisations and branch offices.

The county (capital) organisation of the competent labour centre:

• manages and monitors the activities of the labour centre branch offices,
• performs the tasks associated with the operating funds of the Labour Market Fund and assists planning and utilizing the available fund,
• operates the support system of jobseekers and provides support for operating support and service systems.

Main tasks of the approximately 170 NES branch offices are:

• registration of jobseekers,
• performance of tasks for the establishment of eligibility for job,
• searching support forms and the disbursement of the support,
• performing job mediation activities and provide other labour market services,
• fulfilling all tasks related to the establishment and disbursement of various forms of employment policy.

It seems that as a general rule, jobseekers can turn to the branch offices of the labour centre with issues, such as job search, supports, services and employment. The competence of the branch offices, that is, which office will deal with the above-listed issues, depends on the customer’s place of permanent or temporary residence.

Active Labour Market Policy (ALMP) measures¹

Training

Since January 2012 there has been important financing and institutional changes in the area of the vocational training. In the new regulatory framework, employers cannot spend the vocational training contribution on the training of their own employees.

Vocational training contribution provides financing for vocational education

and also trainings in the adult learning system for up to 100% of the costs. The financing of school-based training also changed: the previous cost-based system is being replaced by normative block-funding – 440,000 forints per student per year in 2012.

The National Register of Qualifications was also revised. The aim was to create a unified and module-based system of qualification.

Employment incentives

In 2012, such measures that were taken in order to protect jobs and create new jobs were integrated into the so-called Job Protection Action Plan. In order to assist the action plan several laws have been amended and new taxes and tax incentives have been introduced. The most important ones are the following:

The employment of the career-starters was helped by the so-called Start schemes which were financed by the contribution of employees. Start programmes have been brought into life in order to help certain groups in disadvantageous situations (unemployed workers over 50, women who want to take up paid employment after child care, people who want to take up employment after carer’s allowance, career-starters) find employment and at the same time motivate employers to permanently employ workers belonging to these working groups preferably in large numbers by drawing on tax allowance.

The Start system is currently before closing. Since 1 January, 2013 new Start cards have no longer been issued, although employers can draw on benefits related to Start cards issued earlier while these cards are valid; in case of START card until 31 December, 2014, in case of Start Extra, START Plus and Start Bonus cards until 31 December, 2013.

Although the Start card scheme has been ceased, social contribution allowance (social security benefit) is still available for groups of disadvantageous situation in the labour market. Long-term job seekers, women returning from maternity leave, career-starters or employees over 55 – if they have not claimed any Start cards – can draw on social contribution allowance.

This social contribution allowance affects older workers as well. After each worker over 55 or person employed in unskilled employment (FEOR-08 9. main group) the employer can draw on 14.5% of social contribution allowance. The maximum amount of the allowance is HUF 100,000.

The programme of ’Women 40’ started recently helps the employment of women over 55 and its objective is to promote the employment of job seeker women, whose chance is to take up employment is low due to their age and to help them gain the necessary qualifying time of employment for their retirement as well.

The programme is for women over 55 who have been registered job seekers for at least 6 months and who need maximum 12 months of employment to reach the 40 years of employment.

The duration of the programme is from 15 October, 2013 to 31 December 2014, but the benefit can only be claimed from 1 November to 31 December 2013.

In the programme 100% of the aggregate sum of wage and social contribution tax is refunded for employers employing women in the target group.

When calculating the benefit, the monthly wage can be maximum 125% of the guaranteed minimum wage (HUF 114,000), which is maximum HUF142,500.

Employers who permanently employ job seekers in disadvantageous situation or job seekers with partial work capacity can be supported with wage subsidy by the National Labour Office in accordance with legal requirements. The subsidy is offered for maximum one year and can maximum be 50% of the amount of wage and contribution in case of disadvantageous job seekers and 60% of the amount of wage and contribution in case of people with partial work capacity. People who are job seekers registered by the National Labour Office and have been unemployed for minimum 24 months are eligible for subsidy for one year; the employment of these people can be subsidized for maximum 2 years.

The system of assisting and rehabilitating people with partial work capacity has changed since 2012. Prior to the change of the system people belonging to this group had to undergo a general health survey and their rate of disability and the possibility of rehabilitation was again determined. As a result the number of people eligible for rehabilitation has decreased and their form of assistance has also been changed.

“A new form of subsidy for workers with partial work capacity introduced in2012 was the rehabilitation cardthat exempts employers from the social contribution tax on wages of up to twice the minimum wage. (minimum wage in 2014 HUF101,500).People who were receivinggroup 3 disability pension or regular social assistance are eligible for the card.

People with partial work capacity who are self-employed or individual members of a business are also exempt from the payment of social contribution on their income. Its rate is equal to the discount of the rehabilitation card.

As of 2012 employers with a minimum of 25 employees must meet the employment quota for disabled workers as opposed to the previous limit of 20 employees. For any unfilled quota employers must pay a penalty of HUF 964,500 per position per year.

People with partial work capacity who have been found suitable for vocationalrehabilitation can qualify for a range of benefits includingthe rehabilitation allowance, disability and accident-related pensions, etc.”

The institutional system of rehabilitation has also been changed. The National Office for Rehabilitation and Social Affairs was established in 2011 and it is responsible for the accreditation of companies employing people with partial work capacity and the administration of subsidies.

In 2012 a network of new rehabilitation management authorities was established under the supervision of municipal and county government offices. National Pension Insurance directorates remain responsible for the payment of rehabilitation benefits. Today there are 19 rehabilitation management authorities with approximately 100 local offices employing 620 people. Their task is to help rehabilitated people find employment in the labour market.

People claiming rehabilitation assistance must take part in public works if their health status allows. Rehabilitation and sheltered employment are financed from

the budget. These were HUF 11.7 billion and HUF 24.5 billion respectively in 2012.

There were no changes in the area of job protection and job creation subsidies.

However a number of new tax credit schemes were created to counter the effect of new income tax regulations that can be regarded as a form of job protection subsidy.

The largest active measure in the Hungarian labour market policy is employment in public works. By introducing the programme of public works the Government’s main objective was to help the unemployed return to the labour market. The aim is that the unemployed returned to the labour market earn a wage rather than live on an allowance; the wage is less than the minimum wage but more than the amount of the allowance. There were about 290 thousand participants in the public works programme in 2012, but it seems that exact figures are not known. The maximum net wage of the participants was HUF 49,453 in case of unskilled work, and it was HUF 63,404 in case of skilled work. In 2013, 250,000 people entered the programme. The estimated cost of the programme increased in 2013 and reached HUF 153,8billion. In 2013 participants of the programme could be employed maximum for 6 hours per day and maximum for 5 months per year. Local councils organize public works and call in people, who are deprived of the Employment Replacement Support if they reject the offer.

Passive Labour Market Policy measures

Supports

Job seekers’ allowance and assistance

The job seekers’ allowance can be paid to a job seeker,

-who is a job seeker and has at least 360 qualifying days within three years before job seeking

-who does not receive income from other activities, is not in employment

-who is not an entrepreneur

-who wants to take up work but independent job seeking was unsuccessful

-who cannot be offered appropriate employment by the local labour centre.

The allowance equals 60% of the contribution base, but the amount cannot be higher than the daily amount of the minimum wage valid on the day of entitlement.

The minimum entitlement period for job seekers’ allowance is for 36 days, and the maximum is 90 days.

If the person entitled to the job seekers’ allowance is employed minimum 4 hours per day for an indefinite period before the allowance period ends, the 80% of the remaining amount of the job seekers’ allowance is paid as a lump-sum at the claimant’s request.

The rules of employment replacement support:

Within the framework of the National Public Employment Programme the wage replacement allowance for active population not in employment is replaced by the employment replacement support.

The amount of employment replacement support is the minimum amount of the prevailing old-age pension. The retention of local governments is 20% of employment replacement support.

The right to entitlement is determined by the local governments on the basis of social conditions but claimants must take part in job seeking more actively than previously.People receiving employment replacement support must still co-operate with their local labour centres in order to find employment.

Those who request the support must accept the work –including public works – offered by the labour centre regardless of their education or qualifications. They must acceptparticipation in training or labour market programmes. A new requirement of entitlement is about keeping the residential area tidy and this can be decreed by local governments.

The eligibility for Employment Replacement Support must be revised every year.During the year of disbursement the person eligible must prove that he or she was employed – including simplified employment, public employment, and voluntary work of public interest -.for at least 30 days a year. The eligibility is also fulfilled if the person took part in labour market training or programme for more than 6 months. The obligatory participation in mandatory trainings for job seekers under 35 without elementary education has been cancelled.

Pre-retirement job seekers’ benefit

Pre-retirement job-seekers’ benefit is paid to a person who:

-is a job seeker

-wants to take up work but independent job seeking was unsuccessful and could not be offered an appropriate job by the local labour centre.

-is within five years of reaching retirement age on the day of submission

-has been receiving job-seeker benefit for at least 45 days, and the period of payment of benefit comes to an end, or their job-seeker benefit was terminated due to employment and he/she is not entitled again to job-seeker benefit,

-and the period of payment of benefit comes to an end, shall reach retirement age within 3 years after the termination of the job-seeker benefit,

-has a sufficient contribution period for retirement.

-is not receiving benefit prior to retirement age, service benefit for armed forces, life annuity for ballet artists, or transitional annuity for miners,

The amount of the pre-retirement job seekers’ benefit is 40% of the minimum wage.

The pre-retirement job seekers’ benefit can be paid until the person becomes entitled to the old-age pension or for benefits for persons with changed working capacity.