Marmol Research Budapest
Silvia Borbély Graduate job search, Hungary
Some hypotheses
- Hypothesis: The growing demand for graduate labour force depends on spatial diffusion of entrepreneurial activities (which furthermore depends on various factors like geographical situation of distinct regions, infrastructure (highways, transportation network), local government policy, etc. and mainly skilled labour force. There we may set a "circulus vitiosus": the more and best (adequately) skilled labour force has a region or area the more would need (due to the growing spatial density of the enterpreneurial activities.)
- The graduate job search and job finding depends highly on the strategy of multinational companies in Hungary. The major graduate job seekers in Hungary are the TNC. The concentrated knowledge basis in some geographical territories influences highly positively the TNC's decision to put part of their R+D activity to the region. It leads to the paradox that the major is a so called knowledge basis (the major is the number of universities and graduated professionals on the required profession) in a given area, the major is the chance for the graduate to obtain a job. Hypothesis: in a small country of transition like Hungary, where the increase of GDP is due in great extent to the activity of foreign investors and transnational companies, the chances of university graduates depend on great on the TNC-s strategies and development plans. From the point of view of graduates the analysis of TNC-s strategies, employment practices and hiring methods have high importance.
- During the transition period different forms of private and public, direct and indirect forms of job hiring and job searching methods have been developed. Hypothesis: As regards the university graduates, the direct search and contacts seems to be more relevant and successful (for example regular job "burses" held at the major universities, contacts through family and friends, advertisements at the universities, professional or students' journals, Internet, etc.).
- Hypothesis : there are differences among the university graduates in their job searching as well as chances (that is job search with positive result, term of job searching) according to the type of their profession. There would be need to public help in case of diplomas characterised by low "market value".
National labour market
The restructuration of the Hungarian economy according to the world market needs and to meet the world market competition, the opening and liberalisation of the Hungarian market has started already during the eighties. The privatisation of industry and banking sector has been carried out during the nineties. A strong growth of industrial production has been started in the middle of the eighties, accompanied by improvements in the labour productivity. Following 3-4 years of decrease of production and different branches of economy since 1997 GDP growth has averaged more than 4.7 per cent. The intensive growth of some industrial branches as well as the increase of service sector neutralised in some extent the effect of the growing productivity concerning the labour demand. The driving force of the industrial growth are the modern, highly sophisticated branches (like computer industry, software industry, car industry, in the services the banking and insurance sector).
Labour demand and supply
The transition period - that is the decrease of production, the mass bankruptcy of firms, the privatisation and the need to rise the productivity to become competent - in Hungary was characterised by an increasing and long standing unemployment until the middle of the 1990-ies. The unemployment patterns display distinct professional, regional, gender, age and minority differences which have serious implications for economic and social policies.
After 1989, the Hungarian labour market rapidly became competitive. The unemployment rate grew rapidly during the first phase of transition period (decline of old industries), in 1993 it reached its peak (13,2 percent). During the second phase (the restructuring of industry, growing services, etc.) the unemployment rate has been constantly decreasing, and in 1997 it started to be only one-digit number (9,5 per cent). The unemployment rate in 1999 was 7,5 per cent and in the second quarter of 2000 it fell to 6,5 per cent. In 1999, the number of working age population (15-64 years) was 6803 thousands and 3811 thousands persons were employed. It means that the activity rate is very low, 56 per cent, 52,5 per cent in case of women and 68 per cent in case of men. In 1999 almost 435 thousands persons were registered as unemployed. The youth unemployment is much more serious than the adult (12,4 per cent in 1999), but it concerns mainly the young population who does not continue the studies or the secondary and professional school leavers.
Notwithstanding, the incidence of long-term unemployment still remains close to 50 per cent. In the first half of 2000 the employment growth has slowed, expanding by around 0,6 per cent on a year-over-year basis. Taking into consideration the permanent incidence of long term unemployment and the slowing rise of employment despite strong GDP growth, it may be suggested that the unemployment rate may be approaching its structural rate. (OECD (2000), p. 29)
The overall demand for young professionals in the main centres (Budapest and its agglomeration, Western-Transdanubia) of Hungary has been increased, meanwhile the demand for middle age or older, low trained labour force in crisis areas (that is the former areas of heavy industry and mining) dramatically decreased.
The labour force includes a substantial amount of skilled workers and employees with a higher degree of education. The level of education is above the average for the Central and Eastern European region. Consequently, the wage-levels in Hungary are also above the average Central European levels. Yet, the wages still lag far behind those of Western Europe. Employees tend to be committed to the interest of the company. Strikes occur only sporadically and are more often a result of domestic political issues than of labour conflicts.
Graduate labour market
The data of Ministry of Education refers 1997, when 23554 persons graduated in Hungary. Among them around 38 per cent, that is 8843 persons graduated at the universities (MBA) and 62 per cent, that is 14708 persons graduated at college-level (BA) (in Hungary it is called high school). 4800 graduated obtained a diploma on any technical area (engineering), 1430 from them received university diploma (MBA). At the major Technical University in Hungary, in the Technical University of Budapest graduated 901 persons.
In 1999 in Hungary there were around 10 thousand graduated unemployed, but only around their 25 per cent (2500-3000 persons) had university diploma (MBA), that is only 0,57 per cent of the total number of unemployed proved to be graduated at university.
During 1998 the number of registered unemployed among the graduated carrier starters (both BA and MBA) oscillated among 700 and 2500, the great majority of them had NA (college graduation). In September 1998 the percentage of graduated among the carrier starters was 6,5 per cent. In September 1998 900 recently graduated persons in the technical-natural sciences fields registered itself as unemployed, among them 200 with university graduation. The main reason to register itself is to gain time to search job and to obtain some funds for any course (mostly language course) from the labour centre.
There is a short supply of higher educated financial and marketing personnel. Trained managers, capable of working in the new business environment, are also in demand. The disequilibrium in the Hungarian labour market is mostly due to the structural change towards a more service-oriented economy. The curriculum of schools and universities has changed dramatically and a new generation of graduates and adequately skilled people is entering the market. Moreover, a major adjustment in relative wages seems to have taken place already.
The newest phenomenon in Hungary is the high demand (and short supply) of graduates from technical universities. The demand is the highest for graduated in informatics and electrical engineering. More than half (54 per cent) of newly graduated engineers find work in the Research and Development, 10 per cent in the production and 6 per cent in trade. One third of the newly graduated goes to a small company, and the others to firms with more than 500 employees and to transnational companies like Ericcson, Nokia, Pannon GSM, IBM, Graphisoft, Samsung, etc. (Magyar Hirlap (06/12/2000))
National graduate unemployment rates
|
January 1999. |
January 2000. |
Change |
||
|
In value |
In % |
|||
|
Registered unemployed |
434692 |
432090 |
-2602 |
-0,6 |
|
Carrier starter (undergraduated and graduated together) |
29106 |
27222 |
-1884 |
-6,5 |
|
Under 26 years |
88719 |
84464 |
-4255 |
-4,8 |
|
Man |
245680 |
241826 |
-3854 |
-1,6 |
|
Woman |
189012 |
190264 |
1252 |
0,7 |
|
Blue collars |
363283 |
359978 |
-5907 |
-1,6 |
|
Intellectual workers (white collars) |
71409 |
72112 |
703 |
1,0 |
|
Without profession |
211477 |
209171 |
-2306 |
-1,1 |
|
Unemployed graduated |
10181 |
10990 |
809 |
7,9 |
|
Unemployed with university diploma (MBA) |
2600-3000 |
|||
|
Among |
||||
|
Registered first time |
12674 |
11928 |
-746 |
-5,9 |
|
Registered long time* |
113161 |
104463 |
-8698 |
-7,7 |
|
% of long-term unemployed(%) |
26,0 |
24,2 |
-1,8 |
- |
|
Average number of registered days for unemployed (days) |
269 |
259 |
-10 |
-3,7 |
Source: Hungarian Statistical Office (2000)
Note: In Hungary the "graduated" has at least MBA or equivalent. The scope of "carrier starter" naturally is much wider as among them we may find the "secondary school leavers" and the so called "high school leavers". In the Hungarian system the secondary school is equivalent at the US high school (it means 12 years altogether), and the high school in Hungary is equivalent to the colleges in the US, meaning 3 years of study following the secondary school and ending with a BA diplome.
Main graduate job search practices
The main graduate job search practices differ somewhat from the not graduate search. There in general lacks the public agency, the new (university) graduate does not go in general to a so called public local labour market centre to look for job (although would have right, and the network is well developed, there operates 13 county level centres, and centres in the districts of Budapest as well.)
The most preferred way to seek and find a job for the recently graduated is the informal way, through the family, friends and any other acquaintances (friend of friend…), that is the "informal, oral way".
The second most preferred method is the so called "job burse". In the two best-preferred universities (economics, business and technical studies (informatics)) the demand (the companies) and the supply regularly meet on the so called "burses", and the so called "Carrier Forum" has a permanent office in the building of the University of Economics of Budapest. In these labour burses not only the graduated but also the students close to the graduation may find their present sponsors and future job places. Another method of the "in-university" job search to go to the student organisation room, frequently the same student organisation within the university offer this service for the students. The demanders (companies) frequently put their call also in the information desks of the university and the students' bulletins.
The other important - outside university - source for job seekers are the different type of the media, the written and the electronic way. The daily newspapers, the specialised advertising papers the professional papers. In the Internet or the advertisements or registering to a searching system may be useful.
After the transition to market economy in Hungary has appeared the private job agencies, among them the foreign agencies too (like Manpower, Workplus, Neumann, etc.).
The National Labour Centre (in the II. district of Budapest) has a new initiative: a human service, called "Employment Information and Counselling", where the job seeker may in one place find the offers of all labour centres, newspapers, advertisements of other agencies and receive advises. The services follow German patterns. Another initiative of the National Labour Centre is the so called EUROFIT (European Employment Integration Counselling) in the city of Szeged, offering information already also on EU jobs. The long term objective is to organise such counselling in every county.
Institutional set up regarding employment regulation
There are several laws regulating the labour market, like the Act XXII on Labour Code (1992) and its amendments, the Act IV. of 1991 on the unemployment benefit amended in 1994 by Act CV. and in 1995 by Act LII, the Act III of 1993 on social assistance.
The Labour Code establishes the employment relationships, the content (chapters) of the labour contracts, the termination of employment relationship, the working time, and other conditions of work. For the graduates and other carrier starters is important that a term of probation may be established in the contract; this term shall be at least 30 days but cannot exceed three months.
Labour market bodies
The provisions for the unemployed and the costs of operating and developing the labour market organizations are to be financed by the Solidarity Fund. The National Labour Centre, and the county (metropolitan) labour centres, as budgetary organs shall manage the Solidarity Fund. The Ministry of Labour (Labour Code, article 43.) shall determine the detailed rules of the management of the Solidarity Fund.
The Labour Market Fund Steering Committee (MAT) is tripartite body of self-governing nature. Its founding meeting was held on January 16, 1997. It administers the Labour Market Fund.
Formerly the Labour Market Committee’s (the power of which is granted by the Act 4/1991 on the promotion of Employment and provisions for Unemployed) duty was to administer the employment funds. But decision making on passive/active employment measures became more and more complex.
Until the beginning of 1996 the following (un)employment related funds existed:
* Solidarity Fund for the Unemployed
* Employment Fund
* Training Fund
* Rehabilitation Fund
* Wage Guarantee Fund.
In January 1996 the Labour Market Fund - as a state fund – has been created through the merger of the above mentioned employment and training related funds. The merger of these funds brought into existence a common administrative body too, that is the National Labour Market Council, a tripartite body, comprising 3 representatives for each parties. It had the right to make decisions, to give opinion and to make proposals. It was a temporary forum.
Labour Market Steering Committee
Since January 1, 1997 the rights and obligations related to the Labour Market Fund are exercised by the Labour market Fund steering Committee. It is like a self-governing body: although the law vests the Minister of Labour with disposal rights over the fund, the Minister exercises this right jointly with the Labour Market Fund Steering Committee. In the Committee each negotiating group has six persons.
The rights of Labour Market Fund Steering Committee are:
- to make decisions
- to put forward decisions
- to give opinion
- to evaluate
- to request information
- to initiate inquiries
in relation to the Labour market Fund or its certain subfund,
- to make proposals on the Labour Market Fund’s annual budget
- to give opinion on unemployment benefits system, active employment policies, etc.
The National Labour Centre is the central body of the labour market organisation and directs the labour centres. The labour centres are the local organs of the labour market organization and fulfil the tasks arising from determining, paying and supervising unemployment benefits and subsidies for the prevention of unemployment and the subsidies furthering employment.
Local and regional Labour centres perform like job agencies, but practically mainly for less skilled labour. The school leavers may take part in the centrally financed active labour market programs through the local labour centres. They must be registered in the so called Youth Office of the Labour centre. The young carrier starters may to apply for funds to cover the expenses of a course for retraining, the labour centres evaluate the request.
There is a high demand of certain graduates, meanwhile there is low demand for others. The active labour market programs (covering for example the expenses of a second diploma) should be cover not only the secondary or secondary professional school leavers (as it happens in practice today) but also the university graduates.
Sources:
Eurotrend (1998) Labour and employment, Budapest
Magyar Hirlap (06/12/2000)
OECD (2000) Hungary, OECD Economic Surveys, 2000 november)