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A Government representative stated with reference to article 24 of the ILO Constitution that, in 1997, the National Federation of Workers' Councils submitted a representation against the Hungarian Government, alleging non-observance of Conventions Nos. 111 and 122. The representation related to a 1995 government measure. The ILO Governing Body set up a tripartite committee to examine the case. Under individual observations in Part 1A of its Report III, the Committee of Experts on the Application of Conventions and Recommendations discussed this issue under both Conventions Nos. 111 and 122, on the basis of the statements of the Committee and information provided by the Government. The Officers of the Committee requested the Government to express its standpoint regarding those aspects of this issue that were of relevance for Convention No. 122. In 1995, in a situation of financial emergency, the Hungarian Government approved a supplementary budget act requiring, among other things, a reduction in costs provoking lay-offs in higher education. The representation contested the manner in which the measures in question were implemented. The Government admitted that certain unlawful steps were taken in the course of the implementation of the measures concerned, which were likewise pointed out by the Hungarian authorities. It did not wish to plead that these had occurred under the previous Government, as they affected the fate of individuals -- hopefully not irremediably. On the other hand, lessons could be drawn from the issues involved as regards the development of employment policy for the Government in office at the time. Points 1 and 2 of the report of the Committee of Experts summarized some sections of the latest government report on the implementation of Convention No. 122. Under point 3, the Committee of Experts noted the higher labour market participation rate of men than women, and requested the Government to provide further information on measures to promote employment amongst women. The Government representative pointed out that the lower labour market participation rate of women was not a specifically Hungarian phenomenon. According to the OECD (Employment Outlook, 1999), in 1998, among those aged 15-65, the participation rate of women was lower than that of men in most developed countries. In the countries of the European Union, the average difference was 20 per cent. In Hungary, the corresponding rate was somewhat more favourable at 16 per cent, but this occurred at a lower employment level. The lower unemployment rate of women than of men, on the other hand, was a specific, and positive, Hungarian feature: in 1999, the respective annual average rates were 7.5 per cent for men and 6.3 per cent for women. However, the Government remained dissatisfied with the situation and was making efforts to improve it, through job creation and by promoting the employment of women.

He highlighted two of the employment policy objectives for the year 2000 set by Governmental Decree: (1) employment expansion and, in the long-term, attainment of full employment, in accordance with the objectives of the European Union; (2) moderation of labour market discrepancies, in particular by promoting an equal opportunity policy, one of the four pillars of the European Union employment strategy. Over the last few years, the Government had taken the following measures, besides specific programmes and amendments to legal regulations, with a view to reinforcing the principle of equal opportunity for women: protection under labour law; shorter working hours for minors, pregnant women, mothers/parents; improvement of labour market opportunities for women and parents with young children, achieved through the following programmes: teleworking; part-time employment promotion; promotion of potential entrepreneurs; improved labour law protection to parents returning to work from childcare leave; free legal counselling programme launched by the Ministry of Social and Family Affairs to remedy and prevent discrimination at the workplace; authorization of the labour inspection authorities to investigate allegations of violations of the principle of equal opportunity, and the training of labour inspectors. The case in question had encouraged the Government to put through legal amendments to remedy the situation which permitted discrimination arising from differences between the pension eligibility criteria of men and women. Although not directly linked to the issue of discrimination, certain aspects of the same issue also encouraged the Government to take steps to shorten court procedures by substantially raising the courts' budgets. As a result, the duration of labour law proceedings had shortened radically, thus improving the position of workers involved in such litigation. Technical training was provided to job centres so as to enable them to act effectively in cases of possible mass lay-offs.

Further action plans included: the evaluation of the programmes launched to assist women; the extension of those which proved viable, with special regard to the improvement of labour market opportunities for mothers with children and persons near retirement age; encouragement of the social partners and strengthening of cooperation between the Government and social partners; preparation of the appropriate transformation of the system of statistical accounting; adoption by the Government of every equal opportunity directive of the European Union this year. The Government representative had submitted statistical data concerning the development of employment of women over a period of time to the Office.

Point 4 was related to the concerns that arose in the Committee of Experts expressed in respect of the 1998 termination of the Ministry of Labour. This termination had been one of the measures the Government instigated on taking office in June 1998. The first question before the Government concerned the procedures to monitor the effectiveness of its measures to promote economic and social development. In June 1998 the Government reallocated the responsibilities of the former Ministry of Labour as follows: employment policy-making, managing active employment measures, and collective bargaining came under the Ministry of Economic Affairs; issues related to vocational training came under the Ministry of Education; adult training and labour market training, the employment service, passive employment policies, labour law and labour inspection stayed with the Ministry of Social and Family Affairs, who took over the full powers of the former Ministry of Labour. The idea behind the present structure of the Government was that if job creation was to be its most important employment policy objective, it was best served by being firmly grounded in economic policy. His Government was of the opinion that these measures had been justified. Now halfway through its term, his Government was currently evaluating its experience so far in office, and it was probable that corrective measures would be taken in order to increase the effectiveness of the cabinet. His Government would notify the ILO of such corrective measures in due course.

With regard to discussion and procedures of employment-related issues within the Government, in line with Article 2 of the Convention, the Government had established employment policy objectives in a Decree, the implementation of which involved several ministries. These objectives had been fixed for the year 2000 bearing the European Employment Strategy in mind, as well as the guidelines adopted by the European Council. In the same section, the Committee of Experts had also inquired about the way in which the dissolution of the Ministry of Labour affected the consultation process with employers' and workers' organizations and other actors. It could be assumed from the question, that the Committee of Experts was aware of the fact that Hungary had had soundly operating institutional forms of social dialogue ever since the political changes which had taken place within the country. The former national tripartite consultative forum -- the Council for the Reconciliation of Interests -- had been replaced, although its participants virtually unchanged, by the National Labour Council. This forum fully retained the authority held previously by the Council for the Reconciliation of Interests, which included both determining the national minimum wage, as well as tasks provided under the Labour Protection Act, and it also ensured a consultative forum concerning issues related to the world of labour. The Governing Body of the Labour Market Fund operated principally in the field of consultation and was responsible for decisions concerning subjects related to the world of labour. This tripartite body discussed the Government's employment policy objectives and priorities, and decided on the allocation of funds from the Labour Market Fund used to implement employment policy objectives and those to be allocated to active and passive measures; it was also responsible for the allocation of central funds, available for national programmes, and the decentralized financial resources to be channelled to the districts and countries. On a county or district level, the use of these was decided on by the county labour councils, jointly with representatives of local governments. His Government had also created the Economic Council and the National ILO Council. Strategic consultation undertaken in the Economic Council concerned the whole of the economy, and comprised, besides the traditional social partners, other actors, such as the Economic Chambers and the Banking Association. The National ILO Council held a mandate in conformity with the Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144). To the speaker's best understanding, the social partners were satisfied with its performance. It was a great honour for the members of the Council when the Director-General of the ILO participated at one of their sessions during his visit to Budapest in May this year. In compliance with article 22 of the ILO Constitution the Government had prepared a detailed report in 1999 on the implementation of Convention No. 144, describing the new system of collective bargaining. The Council unanimously accepted the report.

In point 5 of its report, the Committee of Experts requested the Government to provide further information in its next report under article 22. The Government had taken note of the Committee of Experts' request, and would be pleased to satisfy it.

The Worker members thanked the Government representative for the detailed information he had supplied and recalled that this was the first time the case had come before the Committee on the Application of Standards although the Committee of Experts had previously commented (in 1993, 1996 and 1998) on Hungary's application of Convention No. 122. The Worker members emphasized the importance of a genuine employment policy in the context of globalization; the need to frame a coherent, integrated and non-discriminatory employment policy; and the significance of tripartite consultation on all employment-related aspects of social and economic policy. The Worker members noted with concern employment developments in Hungary and in particular the comments made by the Committee of Experts on employment policy and its effects on employment in general. The Worker members drew attention to three matters raised by the Committee of Experts in its report. The first concerned the labour market participation rate for men and women. According to information in the Government's report the rate for men was higher than women's. This raised the issue of compliance with Article 1, paragraph 2(c) of the Convention, which provided for a non-discriminatory employment policy. Doubtless, some of the blame could be attributed to social attitudes unfavourable to women workers. However, inasmuch as the complaint against Hungary submitted under article 24 of the ILO Constitution alleged breaches of Convention No. 111 and of Article 1, paragraph 2(c), of Convention No. 122, there were serious indications that discrimination was also due to the Government's employment policy; that was central to the debate. The representation against Hungary concerned the effects of the Supplementary Budget Act of 1995, which provided for a reduction in personnel expenses in institutions of higher education. The Worker members observed that the Committee which had been set up under article 24 of the ILO Constitution and examined the representation was unable for want of sufficient information to reach a firm conclusion. For that reason they agreed with the Committee of Experts that more specific information be requested notably on the actual impact of the 1995 Act on higher education and detailed statistics assessing the respective effects of the Act on men and women. While the Government had furnished information, the Worker members considered that much more detailed statistics were necessary to assess the real impact of the 1995 Act. The third point raised by the Committee of Experts concerned the Government's decision to dissolve, purely and simply, the Ministry of Labour and to distribute its previous functions to various separate ministries, such as the Ministry of Economy, the Ministry of Education and the Ministry of Social and Family Affairs. The Worker members regarded this development as worrying and largely at odds with the provisions of the Convention concerning coordinated employment policies that integrated economic and social issues. The Worker members accordingly supported the questions raised by the Committee of Experts in this respect for it was necessary to establish how the Government managed to fulfil its obligations under Articles 2 and 3 of the Convention and what procedures it had adopted to ensure that its various policy decisions, whether at the planning or implementation stages, had a positive impact on employment. They seriously doubted whether measures had been taken to guarantee a coordinated employment policy. Under the circumstances they wondered whether the country had effective tripartite consultative machinery that could contribute to the framing of a dynamic employment policy following the dissolution of the Ministry of Labour. They feared that dissolution of the Ministry might have a harmful effect on the employment situation in Hungary, for which they expressed deep concern.

The Employer members stated that this was the first time the case of Hungary was being dealt with by the Committee. They thanked the Government representative for the detailed and comprehensive information he had just supplied to the Committee. They further noted that information contained in the Government's report was relevant for the period May 1996 to May 1998 and hence dealt with a past situation. With regard to the content, the Committee of Experts had examined numbers concerning employment and unemployment rates. It was surprising that, while the potential workforce was growing in the country, the number of economically active persons had declined. There was a decrease in labour supply in response to a decrease in labour demand. The Employer members believed that this was due to the phenomena of extended education and training periods and early retirement. As a result, there was an obvious decrease in the number of economically active persons. Turning to the issue of employment rates for men and women, they noted from the Committee of Experts' comments that the labour market participation rate was higher for men than for women and from the Government representative's statement that the situation was similar in many other countries. They were of the view that evolution in society and different expectations could explain the statistical data provided by the Government which illustrated that the unemployment rate for women was lower than for men.

The Employer members pointed out that the objective of Convention No. 122 was to obtain a comprehensive overall picture concerning employment policy. Economic and social policies were part of government policy, therefore an isolated view on issues concerning employment policy was not possible. They expressed their surprise over the fact that the Committee of Experts had raised the issue regarding the dissolution of the Ministry of Labour. There was, of course, a long-standing tradition regarding the establishment of labour ministries. If the Ministry of Labour had been dissolved, obviously its task had been distributed to other ministries. What was important was that the tasks traditionally carried out by the Ministry of Labour were undertaken by another body. It was therefore of minor importance to which ministry or institution these tasks were distributed. The Employer members believed, however, that the Committee of Experts was more concerned about the manner in which the dissolution had probably affected consultation with employers' and workers' representatives on subjects concerning the coordination of employment policy. In this regard, the Employer members welcomed the information provided by the Government representative to the effect that tripartite consultations were effectively carried out in the country. With reference to the conclusions of the Committee set up to examine the representation made under article 24 of the ILO Constitution, to which the Committee of Experts also referred, the Government should supply additional information in order to determine the effect of the Supplementary Budget Act of 1995 which had been the subject of the abovementioned representation. Since the Government representative had shown his Government's readiness to provide this information, the Committee's conclusions should mainly reflect this aspect. The Employer members concluded that the issue of employment policy was an ongoing duty of each government and that the Committee would certainly come back to these cases.

The Worker member of Hungary indicated that in 1995, more than 10,000 employees were dismissed within some weeks at the higher education institutions in Hungary in connection with the Supplementary Budget Act of 1995 which decreased the staffing costs and the budgetary contributions of these institutions. At the same time, Government Decree No. 1023/1995 prescribed a 15 per cent staff reduction for higher education institutions. This was followed by a Ministry of Culture and Public Education measure also ordering these institutions to undertake the staff reductions. The Government fixed a deadline of only three months for the execution of the staff reduction. The purpose of this mass redundancy was to make savings in the state budget. However, no consultations had been held with the workers' representatives or the universities before taking this decision. The government decision had not been taken with respect to any aspect of an employment policy. With regard to the legal aspects of the case, the Hungarian Constitutional Court had qualified the Decree and the Ministry of Education measures as anti-constitutional and had cancelled them on 22 June 1995, on the grounds that the measures constituted unlawful interference with the autonomy of the universities. However, the staff reduction measures were nevertheless implemented. Moreover, although the Parliamentary Commissioner of Citizens' Rights (the Ombudsman) had asked the Ministry of Education to take the necessary measures to remedy the harm done to the teachers and the researchers concerned, no action had been taken. Finally, in 1997 Parliament ordered the setting up of a special committee to assess the implementation of the whole staff reduction process -- in accordance with the Ombudsman's suggestion -- but this committee was never established. Regarding the social aspects of the case, since the Government had not taken into consideration the employment effects nor the social aspects of the staff reduction measures, the vast majority of the employees concerned had still not obtained any financial, moral or any other kind of remedy. As regards the Government's current employment policy, she pointed out that the social partners were still not involved in the formulation and preparation of national employment policy. In Hungary at the moment, there was no special labour or employment ministry. Employment policy was shared between three ministries. The Ministry of Economy was responsible for reconciliation and employment policy; the Ministry of Social and Family Affairs dealt with social matters and employment policy; the Ministry of Education was responsible for training, retraining and vocational training policy. Consultation with the social partners at the national level was being carried out within several special tripartite or multipartite councils set up by the Government last year. The main new councils were: the National Labour Council; the Council of Economy; the National ILO Council; the Council of Social Affairs; and the Committee for European Union Integration. The trade unions were not perfectly satisfied with this new structure and especially not with its operation.

The Worker member of France observed that over the past few years a good many countries had changed the names of their Ministry of Labour and restyled them Ministry of Employment or Ministry of Employment and Social Affairs. Those changes generally reflected progress towards the implementation of more active employment policies with an accent on the initial and ongoing training of workers, including the long term unemployed, and the integration of young people and women in the labour market. It was an innovative and original step to dissolve purely and simply the Ministry of Labour and reallocate its functions to other ministries. Although Convention No. 22 did not stipulate what structure a government should have, governments had to be structured in such a way as to be able to implement the effective employment policies that the Convention required. In this respect, the treatment of staff in institutions of higher education under the Supplementary Budget Act of 1995 was a cause of particular concern, the more so in so far as training was an essential weapon in the battle against unemployment. According to the report of the Committee of Experts, Hungary plainly had a critical need for an active and coordinated employment policy. Only a very small proportion of the active population was employed. The proportion of long-term unemployed workers was exceptionally high (having risen to nearly 50 per cent, despite a slight drop in recent years) and the average duration that people remained without work was quite long (in the order of 19 months). That suggested high levels of "moonlighting", a lively informal economy and widespread unlawful activities. It therefore had to be asked what means the Government had to carry out effective and coherent policies to reduce unemployment, train workers, generate employment (self-employment or wage earning), etc. and what means it had to follow up these policies and ensure coordination with social policy generally.

Convention No. 122 derived from the ILO's Constitution itself, in particular from the Declaration of Philadelphia which enjoined the Organization to support programmes that promoted productive and freely chosen employment and the raising of standards of living, the reduction of unemployment and the guarantee of a salary sufficient for acceptable living conditions. Convention No. 122 also followed from the Universal Declaration of Human Rights, which said that "everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment". Convention No. 122 required member States to declare and pursue, as a major goal, an active policy designed to promote full employment for all who were available for and seeking work. The measures required and adopted to this effect had to be decided on and kept under review within the framework of a coordinated economic and social policy. Representatives of the persons affected by the measures to be taken, in particular representatives of employers and workers, had to be consulted concerning employment policies, with a view to taking fully into account their experience and views and securing their full cooperation in formulating and enlisting support for such policies. Without question, Hungary greatly needed an active and coordinated employment policy. It had to be asked how such coordination could be ensured when the functions of the Ministry of Labour had been parcelled out among various other ministries. The same question arose concerning consultation and ongoing collaboration with the social partners, areas in which significant gaps seemed to have appeared. It was the role of a Ministry of Labour or a Ministry of Employment and Social Affairs to frame such policies, to coordinate them with other policies and consult and collaborate with the social partners, to draft labour legislation and follow its application, to help the unemployed find work again and take measures that guaranteed suitable unemployment compensation, and to give women equal access to employment. The Hungarian approach was to subordinate social issues to economic ones in denial of their inherent value under the ILO Constitution. It was therefore important for the Government to open consultations quickly with the social partners to examine ways and means to achieve an effective and coherent employment policy in keeping with the aims of the Convention and to comply with its provisions. The right to work was a basic human right since it enabled workers to provide for their own needs as well as those of their family. It was, to be sure, for the Government to choose the most appropriate means of safeguarding that right. In any event it had to protect it. The statistics before the Committee demonstrated that this right had not been implemented. The Worker member appealed, therefore, to the Government of Hungary to frame an active, coordinated and coherent employment policy fully involving the social players and to set up an effective and coherent coordination structure.

The Worker member of Romania stated that although this Committee was examining the case of Hungary for the first time, the Committee of Experts had already formulated three observations regarding the application of this Convention by Hungary and underlined the importance of Convention No. 122 for workers. The fact that the labour market participation rate was lower for women than for men was a violation of Article 1, paragraph 2(c), of the Convention. The second point raised by the Committee of Experts in its observation concerned the representation presented under article 24 of the ILO Constitution. The representation related to the application of the Supplementary Budget Act of 1995 which had resulted in the mass dismissals of employees of institutions of higher education. As regards the third point raised by the Committee of Experts, namely the pure and simple dissolution of the Ministry of Labour, he considered the situation to be unacceptable. The negative effects of such a decision on the consultation process between the social partners could already be foreseen.

A Worker member of Italy stated that it was quite clear that employment policy and social dialogue remained a major problem in Hungary with no adequate and effective strategies especially to fight long-term unemployment and enhance equal opportunity programmes to include women in the labour market and promote job creation in the emerging sector. The so-called growth promotion strategy indicated in the Committee of Experts' report could not succeed due to structural mistakes within the government measures and total lack of social dialogue. The first structural problem was linked to the splitting of the Ministry of Labour. This fragmentation of responsibilities and lack of effective coordination represented a major handicap for effective employment programmes. Such programmes needed a higher synergy in the monitoring, planning and implementation stages, especially to face long-term unemployment and to adapt vocational training to match market supply and demand. It would appear that there was still a lack of an appropriate investment policy in areas with higher unemployment in order to create better conditions in terms of infrastructure to attract productive investments. There appeared also to be a lack of appropriate social measures to support affected workers and help them to find new jobs. This critical situation also risked producing a high emigration of young unemployed persons towards neighbouring countries thereby creating a critical social situation which would undermine economic and social stability. A joint coordinated socio-economic employment plan within the Government and at all levels of public administration needed to be defined with the full inclusion and participation of employers' and workers' organizations in the search for adequate solutions. Such social dialogue, however, was not implemented even though a national labour council and other bodies existed on paper. Empty institutions needed to be clearly restructured in order to develop a joint employment pact between the Government and employers' and workers' organizations. Moreover, an effective employment policy had to be promoted jointly with respect for core labour standards. This lack of implementation of adequate employment policies and plans had been sharply criticized by the European Committee and the Economic and Social Committee of the European Union in more than one report, in view of employment in the European Union (EU) and the entry of Hungary in the EU. The most significant example of the lack of such an employment policy in Hungary was the dismissal of more than 10,000 employees in the higher education institutions due to budget restrictions. No consultations with the union and, above all, no social measures had been taken to help the workers find new adequate jobs. The Government should therefore promote a fundamental change of strategy to be verified by this Committee. A joint task force between all interested authorities and social partners both at the national and local levels should be set up with the support of the ILO MDT, thus taking advantage of European programmes and positive experiences in social dialogue.

The Government representative acknowledged the statements by the Worker member of Hungary. However, he recalled that the issues raised dated back to 1995 and therefore concerned the previous administration. He stressed that the new administration had learned from the mistakes of the prior Government. As far as the functioning of a coordinated employment policy was concerned, it did not depend on the existence of a Ministry of Labour. He noted that the distribution of powers was a matter for the Government and that coordination must take place at the government level. In his Government's view, it was imperative that the issue of employment policy be handled correctly and that it must form part of the Government's policies as a whole. In conclusion, he stated that the coordination of employment policy as well as tripartite consultations were functioning correctly.

The Worker members took note of the information furnished by the Government representative. They asked that he transmit all the information requested to the Committee of Experts so as to conclude the representation presented against the Hungarian Government under article 24 of the ILO Constitution. They noted that the Government was preparing reforms to its statistical data management and invited it to keep the Committee of Experts informed of any developments in this regard. Regarding the issue of employment policy, they emphasized that it was not the name of the competent ministry which was important but rather the substance of the policy to be implemented as well as consultations between employers' and workers' representatives. They requested the Government to take advantage of ILO technical assistance in order to establish a truly coordinated employment and social policy.

The Employer members believed that the Government representative had already supplied comprehensive information on this case to the Conference Committee and indicated that the Committee's conclusions should request the Government to keep the Office fully informed on all employment policy matters in future reports to the Committee of Experts.

The Committee noted the detailed information, including statistics, supplied by the Government representative, and the discussion which followed. It was concerned by the continuing low rate of employment in the country, particularly for women, and the effect of the employment policy on women. It noted, however, that the Government had adopted a policy of promoting economic growth which was expected to have the effect of increasing employment opportunities, and hoped the Government would provide detailed information on the effect of this strategy. It also hoped the Government would submit additional information on its efforts to increase the labour market participation of both men and women. The Committee noted the dissolution of the Ministry of Labour and the redistribution of its functions. It expressed the hope that the Government would furnish the detailed information requested by the Committee of Experts on the effects of this decision on employment and on the promotion of economic growth. This should include information on the effect of this move on ensuring that a coherent employment policy was pursued, as well as on consultations with employers' and workers' organizations and other forms of social dialogue. It asked the Government to ensure that employment policy in conformity with the Convention was assured, and that social dialogue was not compromised.

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The Committee notes the Government’s report received in October 2009 including its replies to the 2008 direct request. The Committee has also benefited from an analytical contribution by the ILO Subregional Office in Budapest.

Articles 1 and 2 of the Convention. Employment trends. The Committee notes the Government’s increased effort to integrate its labour market and employment measures with the socio-economic policies under the National Action Programme 2008–10, despite the fiscal challenges resulting from the global financial crisis. The Government reports an employment rate of 56.7 per cent in 2008 and of 55.1 per cent between January and March 2009. The unemployment rate has increased from 7.9 per cent in 2008 to 9.7 per cent in the first three months of 2009, such that the unemployment rate in March 2009 was 0.9 per cent higher than the European Union’s average rate. In 2008, there was considerable reduction in some public sector industries, including health care, utilities, telecommunications, and postal services, as well as in the construction industry due to the end of a building boom. Mass redundancies have also risen sharply since the third quarter of 2008 due to the global crisis, affecting 29,200 persons between April and October of 2008. The Committee requests the Government to provide information in its next report on policies and programmes promoting full employment and how these policies and programmes will translate into productive and lasting employment opportunities for the unemployed and other categories of vulnerable workers affected by the crisis.

Implementation of active labour market measures. In this respect, the Committee notes that the number of participants in the Government’s Active Labour Market Programmes has increased by more than 20 per cent since 2007 as a result of improvements in the management of public employment services and the programmes’ capacity to meet individual needs. In 2008, 191,000 persons participated in the programmes, which included a labour market training, wage subsidy, and public works. In 2007, the Government launched the Social Renewal Operative Programme to increase employment by: (i) providing assistance to the disadvantaged groups through labour market programmes, regional labour centres, targeted contribution allowances, and support of civil organizations; (ii) increasing employee adaptability through restructured vocational and adult training, on-site training courses, development of social partners’ capacities, increased transparency in the field of employment, and lastly, new measures to incentivize employers against dismissals during the economic crisis through contribution allowances. Despite the Government’s active measures and efforts to align its employment policy with the economic crisis, the Committee notes that the employment indicators have continued to fall. The Committee invites the Government to provide information on improvements in the Active Labour Market Programmes’ design by focusing on policy objectives rather than types of measures. In this regard, the Committee would appreciate reviewing information on impact estimation and cost-benefit analysis of the pilot labour market programmes and the programmes’ coverage rates of vulnerable groups.

Equitable regional development. The Committee notes the steps taken to address the regional disparities in development under the Cserehát Programme. It also notes the Government’s efforts to commit more resources to the employment centres in the disadvantaged regions under the framework of the New Hungary Development Plan. The Committee invites the Government to include in its next report information on the impact of the regional development policies adopted to generate employment in the low-income areas. In this connection, the Committee reiterates its interest in examining information on the specific labour market situation of the Roma population, focusing on the group’s employment and earnings.

Youth employment. The Government indicates that Hungary’s chronically lower employment level compared to the European Union’s average can be partly attributed to the low participation of young people in the labour market. The Committee notes that only about 20 per cent of those between 15–24 are employed, while the European Union’s average for the same age group is 39 per cent. This gap in the employment rate has increased in the period between
2007–08 due to a further decrease in youth employment. The Start Programme, introduced in 2005, aims to increase youth employment opportunities by providing contribution allowances to employers when hiring an employee with a Start Card, which are issued only to career starters under 25 or 30 depending on their education level. The number of young persons employed with Start Cards has steadily increased since the programme began, from 3,561 in 2005 to 38,334 in 2007 and to 40,750 in 2008. The Committee notes that the total youth unemployment level is nevertheless much higher, at 84,000 unemployed young workers. The Committee invites the Government to provide detailed information in its next report on the results achieved in terms of the creation of jobs for young persons through the Start Programme and other measures adopted, including evaluations of the impact of these measures on the long-term integration of young persons into the labour market.

Education and vocational training. The Government reports on further restructuring of the Regional Integrated Vocational Training Centres since 2008 under the framework of National Development Plan II, based on the evaluation of 16 centres founded before 2007. The restructured centres aim to provide more cost-efficient training that is better adjusted to the regional labour market and more connected to the performance of duties. The Government indicates that the Regional Development and Training Committees were given more power in 2008 so that decisions regarding the Regional Vocational Centres are now made at the regional rather than the ministerial level to improve the coordination between vocational training, regional development and the labour market. The Committee notes with interest that the Hungarian Chamber of Commerce and Industry has the power to appoint the president of the examination board and organize vocational competitions for students. The Committee also notes that employers are requested to employ students who spend more than 50 per cent of their training period with them. Financial assistance is reduced for business associations that do not provide their own practical training, while micro- and small enterprises receive a higher level of vocation-related contribution from the Government. In response to the crisis, the Government has introduced a new measure that combines contribution allowances to employers who choose reduction of employees’ work time over dismissal and training of the affected employees during their newly freed time. The Committee invites the Government to provide information on the impact of the measures mentioned above on enabling a better alignment of vocational education and future labour market needs. The Committee would appreciate examining relevant data on the demographic trends of the labour aggregates, as well as skills supply and demand, possibly at sector level.

Article 3. Participation of the social partners. The Government indicates that the social partners have been involved in the national implementation of the Lisbon Strategy through the National Council for the Reconciliation of Interests, a tripartite forum that includes nine employers’ and six workers’ organizations. The Committee invites the Government to continue to provide information on the social partners’ participation on employment policy formulation and implementation, focusing on mid-term reviews of employment and training programmes.

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1. Implementation of an active employment policy. The Committee takes note of the comprehensive information provided in the Government’s report received in September 2007 in reply to the Committee’s 2006 direct request. The Government reports that, in 2006, the labour force participation rate was 62 per cent, which was eight percentage points lower than the average rate of the member States of the European Union.  The employment rate increased between 2005 and 2006 from 56.9 per cent to 57.4 per cent. From 2002 to 2007, the number of persons employed in the agricultural sector fell from 240,900 to 190,800 persons, while persons employed in industry fell from 1,319,900 to 1,269,400 persons. In this time, the number of employees in the service sector increased from 2,309,800 to 2,469,900 persons. Only 4.9 per cent of wage earners have been engaged in agriculture, while 32.3 per cent and 62.8 per cent were engaged in the industry and service sector, respectively.

2. The Government continues to pursue its employment policy targets set forth in the Lisbon Agenda of the European Union, and seeks to pursue Active Labour Market Programmes aimed at countering the impact of structural adjustments.  Many of these programmes take the form of wage subsidies to employers (15.5 per cent of participants), public works (29.1 per cent of participants) and labour market training (approximately one-third of all programmes). In particular, the Hungarian Public Employment Service (PES) adopted a strategy to achieve the targets set forth in the National Action Plan for Employment for the period 2004–10. This strategy envisages: (i) the strengthening of the administrative capacity of the PES to deliver on its core functions, including the implementation of active labour market programmes; (ii) the definition of performance objectives to improve service delivery; and (iii) a workplan to implement the strategy. The Committee notes that the progress report on the implementation of the aforementioned strategy indicates improvements in the functioning of the PES towards a client- and outcome-oriented service. The Committee requests the Government to provide information in its next report on the impact these active labour market programmes have had on workers affected by structural adjustments and other disadvantaged groups. In this regard, the Committee hopes that the Government will be able to provide information in its next report on the progress made towards achieving the employment policy targets set under the current National Action Plan for Employment.

3. Equitable regional development. The Committee notes that there are marked disparities in the labour market situation experienced in the Western and Central counties, and that experienced in the Eastern counties. The Eastern counties experience unemployment rates which are almost double the national average (14.5 per cent in 2006). The Government indicates that the Cserehát Regional Development Model Programme seeks to address the complex development of the region with cross-border cooperative efforts addressing employment, human resource development, improvement of the conditions of education, improvement of access to social and healthcare services, dissemination of IT technologies, reinforcement of community initiatives, and the creation and activation of internal resources for the local economy. The programme embraces ten geographical micro-regions with approximately 100 settlements and a population of around 100,000 people. One-third of the resources expended under this programme were used to finance small local projects which aimed to mobilise the local society and to improve their development faculties. The Committee notes that 40 per cent of the 100 preferred local applicants were Roma organizations, or belonged to projects that were implemented for local Roma communities as target groups. The Government indicates that the coaches contributing to the programme have already started to provide assistance to the most segregated Roma population so as to enable their integration into the labour market. The Government is requested to continue to provide information on the steps taken, with the involvement of social partners and representatives of other affected groups, to enhance balanced development across the regions. Furthermore, the Government is requested to provide information on the impact of the programmes on the Roma population, in terms of employment and earnings of the beneficiaries.

4. Youth employment. The Government indicates that the labour market situation is highly influenced by age. The Committee notes that employment indicators slightly improved for prime-age and older workers, while the employment rate of young people decreased from 30.7 per cent in 2001 to 21.7 per cent in 2006. The National Employment Service pays special attention to the situation of young people, in particular career starters, with a view to improving their chances of entering the labour market.  The Government indicates that this objective is well served through the guidance provided to young people on the selection of their career, vocation and school, in addition to services and support provided in assisting such young persons in identifying the most suitable jobs and workplaces. The Committee further notes that since October 2005, the Government has been supporting the labour engagement of career-starting young people within the framework of the START Programme through the provision of allowances from the associated public dues. In the framework of this programme, 11,030 business entities engaged 17,209 career starting young people between October 2005 and the end of March 2007. In addition to this support, 804 business entities relied on allowances from social insurance contributions, thus ensuring the employment of 1,201 employees. The Committee requests the Government to continue to report on the impact such measures have had on improving the employment opportunities of young persons in the labour market.

5. Education and vocational training. The Government indicates that in 2006, 23 per cent of the 101,413 persons who were registered as career-starting jobseekers had just left school. From this group, 15,064 persons had secondary school vocational qualifications, 6,574 persons held higher-education qualifications, and 2,000 left with no qualifications. The Government indicates that the specialized training system was restructured in order to reduce fragmentation in the institutional system. The restructured training system is expected to ensure that participants obtain specialized qualifications which respond to labour market demands, facilitate job-seeking and start-up enterprises.  The Government indicates that it has taken, or plans to take, a number of measures to foster a closer relationship between the specialized training curriculum and the economy. In this regard, Act CXIV of 2006 modified certain legislative acts concerning specialized trainings and adult education, and established a legal framework for the broadening of the scope of competence of business chambers and other bodies which represent business interests. It is envisaged that the Chamber, together with other bodies which represent business interests, will play a significantly increased role in the control of the practical elements of such training, as well as professional examinations. Furthermore, representatives of business entities have participated, and will continue to participate, in the development of the National Training Registry (NTR), which will establish professional and examination requirements. The Government also indicates that, within the framework of the Social Renewal Operative Programme, it is continuing the “One Step Ahead” Programme and a grant application procedure has been announced for the development of competencies required for the preservation of jobs. The Committee would appreciate receiving information on the impact such measures have had on improving coordination between education and training policies and prospective employment opportunities. The Government is also requested to report on mechanisms that are put in place, in cooperation with social partners, to ensure coherence between education and adult training policies and to provide disaggregated data on the results of school-to-work transition measures.

6. Article 3. Participation of social partners. The Government indicates that, following the half-time review of the Lisbon Strategy in 2005, an inter-ministerial workgroup was established to frame the national action plan for the Lisbon Programme, to continuously monitor the related measures, and to prepare progress reports to be submitted each year. The permanent members of the said workgroup are the Ministries that shoulder the responsibility for the three chapters of the Action Plan. The Government indicates that while social partners are not directly involved in the activities of the workgroup, professional issues connected with the Lisbon Strategy and development policy are invariably discussed at the National Interest Reconciliation Council (NIRC). The Committee also notes that a subcommittee was also established within the NIRC, which serves to make arrangements for consultations concerning the preparation of the National Strategic Reference Framework and for discussions on professional issues relating to the domestic enforcement of the Lisbon Strategy. The Committee requests the Government to continue to provide information on the manner in which consultations on the matters covered by the Convention are ensured, including any examples of the questions addressed or the decisions reached on employment policy through the tripartite boards and committees that exist in the country.

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1. Implementation of an active employment policy. In relation to its 2003 direct request, the Committee notes, as indicated by the Government in the report received in November 2005 that, despite significant fluctuations in the labour market in 2003, employment increased by 51,000 persons and inactivity decreased by 74,000 persons in the same year. It notes, however, that a period of stagnation followed in 2004 during which the number of employed persons decreased by 1.5 per cent, mostly affecting workers in micro-enterprises. Likewise, between 2003 and 2004, the number of workers employed in two of the country’s largest economic sectors (processing and industry) decreased. The Committee notes, however, that the opposite trend appeared in the services sector, which added 100,000 jobs in 2003 and 15,000 more in 2004. It notes the Government’s indication that increased economic competition and the demands of modernization have resulted in fluctuations and considerable restructuring of the labour force. The Committee asks the Government to continue to provide information on the measures taken to reduce the impact of structural adjustment on workers and to ensure the reinsertion of displaced workers into the workforce (Articles 1 and 2 of the Convention).

2. The Committee notes the Government’s statement that Hungary is lagging behind other EU Member States in meeting the employment targets set out in the European Employment Strategy. Most notably, the Government’s report shows that the national employment rate in 2004 stood at 56.8 per cent, whereas the intermediate EU target for 2005 was 67 per cent in overall employment. This gap between the current employment rate and the EU target has led the Government to consider the expansion of employment levels as the most important priority of its employment strategy. In this regard, the Committee notes that the Government’s report contains customized employment targets for the whole of the working population (63 per cent by 2010), for women (57 per cent by 2010) and for older people (37 per cent by 2010). The Committee hopes the Government will be able to provide information in its next report on the progress made towards achieving these targets.

3. In its report, the Government indicates that one of its priorities is to support the expansion and growth of existing companies. In so doing, the Government plans to promote the creation of jobs in these firms by gradually decreasing labour costs, reinforcing the employment potential of SMEs and by creating a predictable financial and legal environment. The Government also intends to review current labour law rules and regulations as an important component of this strategy. The Committee therefore invites the Government to specify what effect these legislative reforms have had on generating employment in the country.

4. The Committee refers to its 2001 direct request on the application of the Employment Service Convention, 1948 (No. 88), and notes that the Government is undertaking reforms to its public employment service to develop the job brokerage system and strengthen cooperation with regional and local actors to improve the employment situation in the most disadvantaged areas. The Committee also notes the Government’s revision of the unemployment benefit system in order to encourage job searching and to strengthen the role that such benefits play in preventing withdrawal from the labour market. The Government is requested to provide information in its next report on the progress of these initiatives and their impact on promoting productive employment.

5. Overall and sectoral development policies. Referring to its previous comments on Convention No. 88, the Committee notes from the Government’s National Action Plan on Social Inclusion that there are significant labour market inequalities between the country’s regions, with the highest rates of unemployment in Eastern Hungary. It also notes that, despite the investment of significant resources in regional development, the experiences of the past years have shown that most of the backward regions have been unable to overcome their disadvantages. It notes from the National Reform Programme for Growth and Employment that a number of measures are planned in an effort to reduce these disparities, including the negotiation of 28 territorial employment pacts setting out local development and employment initiatives, along with a special programme for the Cserehát region. In addition, the extension of public employment services is a positive step towards addressing the inactive populations in disadvantaged regions. The Committee hopes the Government will provide more detailed information in its next report on the design and implementation of these programmes, paying specific attention to their effectiveness in reducing regional employment inequalities.

6. Labour market policies for young people. The Committee notes from the Government’s report that the recent decrease in employment primarily affected young people and that it is increasingly difficult for young workers to find jobs. As evidence of this trend, in 2004, the number of working youth between the ages of 20 and 24 fell by 47,000. The Government explains that the employment challenges facing young people persist due to a shortage of jobs and a lack of qualifications corresponding to the needs of the labour market. As a means to address this situation, the Committee notes the START programme described in the Government’s National Reform Programme for Growth and Employment, which provides incentives to employers to hire young people starting their first job by reducing social security contributions. It also notes the Government’s intention to develop employment services which focus on young people. The Committee requests the Government to provide details on the results of the above measures to facilitate access to employment among young people, as well as its strategy for improving young people’s skills to better match the needs of the labour market.

7. Ethnic minorities. The Committee notes from the Government’s National Action Plan on Social Inclusion that indicators for employment, education, health, income and living conditions of the Roma population are far below the comparable indicators for the non-Roma population, with only half the rate of employment and three to five times the rate of unemployment. The Committee recalls that the Government adopted a set of medium-term measures to promote the social integration of the Roma, including actions on education, training and employment. The Government further indicates its participation in the Decade of the Roma (2005-15) initiative in partnership with other European nations, which likewise includes measures on education and employment. The Committee would appreciate receiving further information on the implementation of these programmes, as well as any assessment of their impact on employment promotion for the Roma.

8. Consultations with the persons affected. The Committee notes with interest the recent National Reform Programme for Growth and Employment (2005-08), undertaken in accordance with the EU’s Lisbon Strategy and based on the country’s earlier National Action Plan for Employment (2004) (NAP). The Committee notes that the NAP sought to create an Inter-Ministerial Committee for Employment to guide the implementation and monitor the progress of the Action Plan and that representatives of the social partners would participate in this body’s work. The Government is invited to provide details in its next report about the Inter-Ministerial Committee’s current status along with information on its activities related to the implementation and review of Hungary’s current employment policies. In particular, please indicate the manner in which representatives of workers, employers and other affected groups are consulted on the formulation, implementation and evaluation of employment policies and programmes (Article 3).

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1. Articles 1 and 2 of the Convention. The Committee notes the information contained in the Government’s reports for the period ending May 2003. The Government indicates that GDP growth has remained at approximately 4 per cent since 1997. In 2002, due to factors including the global economic downturn, GDP growth slowed down to an estimated 3.3 per cent. Employment continued to shift from the production sector to the services sector. In 2000, the employment share by broad economic sector for Hungary was 6.5 per cent in agriculture, 33.7 per cent in industry and 59.8 per cent in services. The unemployment rate decreased to 7 per cent for males and 5.6 per cent for females. The youth unemployment rate also dropped to 12.1 per cent. The declining trend in the number of economically active persons has stabilized and the activity rate is gradually picking up again. The Committee asks the Government to continue to provide information on the impact of restructuring of employment and the reinsertion of displaced workers.

2. The Committee notes the Government’s adoption of a medium-term set of measures for the improvement of Roma living standards. The Government estimates that the unemployment rate of the Roma minority remains at around three to five times that of the non-Roma population. The new set of measures include programmes, training and employment benefits with the objective of reducing unemployment, remedying the marginalized social situation and reducing labour market disadvantages of the Roma. The Committee would appreciate receiving further information on the make-up of these benefits and programmes as well as any assessment on their impact on employment promotion for the Roma communities.

3. The Government indicates in its report received in October 2003 that employment creation is one of its main tasks. In this connection, Hungary has joined the objective of the European Union of raising the employment rate to 70 per cent by 2010. Achieving this objective will require the creation of 1 million additional jobs (a 14 per cent increase) in the long term and the creation of about 300,000-400,000 new jobs in the medium term. The Government indicates that it intends to achieve these targets by increasing flexibility in the labour market and promoting an employment-friendly environment. The Government notes this target and hopes that the Government will be able to report on progress to achieve this objective in its future reports.

4. With reference to its previous comments, the Committee notes that the report does not contain any further information on the fragmentation of the administrative responsibilities in the field of employment between different ministries (Ministry of Economic Affairs, Ministry of Social and Family Affairs, Ministry of Education). It therefore repeats its request to be kept informed of the coordination achieved between the different ministries concerned when deciding and reviewing the measures to be adopted for attaining the objectives of an active employment policy, in consultation with representatives of employers’ and workers’ organizations and other sectors concerned, as required by the Convention. The Committee also notes that the Government report does not contain any evaluation of the outcome of its employment policies and programmes. Please supply information on the measures taken to keep employment promotion policies and programmes under review within the framework of a coordinated economic and social policy.

5. Article 3. In its report received in November 2002 the Government makes reference to the statement of the workers’ spokesperson made at the tripartite National ILO Council concerning the lack of legal definition for the category of self-employed. In its reply the Government spokesperson promised to examine the statement in the National Interest-Reconciliation Council. The Committee requests that the Government continue to provide information on the tripartite consultations and manner in which representatives of workers, employers and other groups are consulted on the formulation, implementation and evaluation of employment policies and programmes.

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1. The Committee recalls the discussion that took place at the Conference Committee in May-June 2000 and its request for further information on the effect of the Government’s strategy to promote growth and increase employment opportunities and to ensure the coherence of employment policy in light of the dissolution of the Ministry of Labour. In particular, the Conference Committee asked the Government to ensure promotion of employment in conformity with provisions of the Convention, in particular the provisions of Article 3 pertaining to consultations.

2. In this regard, the Committee notes the Government’s report for the period July 1998-September 2000. It observes the detailed statements of the workers’ and government representatives at the National ILO Council in its meeting of 2 October 2000 when the report was discussed. The workers’ representatives drew attention to, inter alia, regional imbalances in employment promotion, most importantly the unemployment rate in eastern Hungary. They remained concerned that the Government, without previous consultation, had fragmented the administrative responsibilities in the field of employment between different ministries (Ministry of Economic Affairs, Ministry of Social and Family Affairs, Ministry of Education). The government representative indicated that the aim of the new institutional management of employment policy was its integration into economic policy. The Ministry of Economic Affairs is responsible for comprehensively shaping and elaborating the strategy of employment policy; the Ministry of Social and Family Affairs is responsible for equal opportunities, vocational rehabilitation and labour health and safety; and the Ministry of Education is in charge of vocational training and supervision of the regional centres for workforce development and training. The Committee would appreciate being kept informed of the coordination achieved between the different ministries concerned when deciding and reviewing the measures to be adopted for attaining the objectives of an active employment policy, in consultation with representatives of employers’ and workers’ organizations and other sectors concerned, as required by Articles 1, 2 and 3.

3. Article 1. The Government states that GDP grew by 4.9 per cent in 1998, 4.5 per cent in 1999, and 6.2 per cent in the first half of 2000. About 20 per cent of GDP is produced in the informal economy. Employment increased and unemployment decreased. The participation rate rose from 57.8 per cent in 1997 to 59.9 per cent in 1999, with 49.4 per cent for women and 62.5 per cent for men. However, it still remains high due to availability of early retirement and young people staying in school longer. Employment increased from 52.7 per cent in 1997 to 55.7 per cent in 1999, mainly due to increased participation rather than decreased unemployment. Employment has increased among older workers (50-59) due to a decrease in early retirement. Employment grew in the service sector and declined in industry and agriculture. Growth in unemployment came from firms exposed to global economic pressures or inclined to substitute technology for labour. Long-term unemployment decreased to 3.2 per cent of total unemployment. But the average period of unemployment remained high, at just below 18 months, due to the generally low level of qualifications of the unemployed. Unemployment among youth (15-24) decreased from 14 per cent in 1997 to 12 per cent in 1999, due to activation measures. The relatively high rate of youth unemployment is due to the fact that many more young people are staying in school, and that a better measure is the ratio of unemployed to total youth population.

4. The Government has changed its goal from decreasing unemployment to increasing employment. The Government emphasizes intensive job search in its labour market policy. It provides jobseekers with job search assistance including job search training, transportation costs, and allowances during the job search training. Unemployment benefits are more closely linked to job search efforts or participation in training. The duration of benefit has decreased from 360 days to 270, but with the possibility to extend the limit if the person is participating in a training programme. Social assistance for the unemployed has been eliminated, and replaced by a guarantee of 30 days of employment with the local government authority.

5. The Government states that there is no data on employment trends for Roma because legislation prohibits filing the details of the ethnic background of jobseekers. However, it estimates that the employment rate for Roma is one-half that of non-Roma and the unemployment rate is three to five times higher. The Government states that these poor comparisons are due to the fact that the Roma tend to live in economically depressed areas, but prejudice in hiring also is a factor. The Government is devising a long-term strategy for labour market integration. The objective is to develop agriculture, local economies, and social, health and housing programmes, as well as launching an anti-discrimination campaign. Please continue to provide information on progress made in promoting employment for the Roma communities.

6. Article 2. Further to discussions of the Conference Committee in 2000, the Committee requests information on the procedures adopted to ensure that the principal measures of employment policy are decided on and kept under periodical review within the framework of a coordinated economic and social policy.

7. Article 3. The Committee notes the statement of the workers’ spokesperson made at the tripartite National ILO Council. The workers’ spokesperson draws attention to, inter alia, regional imbalances in employment promotion, most importantly the unemployment rate in eastern Hungary, which is four to five times higher than in the western region. Please continue to supply information on measures taken to ensure more balanced regional employment growth.

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The Committee notes that the Government’s report has not been received. It must therefore repeat its previous comments which read as follows:

1.  The Committee notes the information contained in the Government’s reports for the periods ending May 1996 and May 1998. The Government indicates that the total potential workforce is growing in Hungary, yet there has been a decrease in labour supply in response to a decrease in labour demand. The decrease in demand is due to massive reductions in agriculture and industry. The decrease in supply is due mainly to increases in early retirement and the rate of post-secondary education. The shrinking of the employed population stopped at the end of 1996, but the overall level remains very low. The number of economically inactive persons has been consistently growing, as the employed labour force decreased from 50 per cent in 1990 to only 36 per cent in 1996. Furthermore, the duration of unemployment has increased to an average of 19 months in 1998. The long-term unemployed as a percentage of total unemployment reached 54.4 per cent in 1996, but dropped slightly to 49.8 per cent in 1998. However, youth unemployment has decreased, the result of a targeted active labour market policy.

2.  The Government explains that it has moved from a crisis-oriented management strategy to a growth-promoting strategy. Its objectives include increasing the number of workplaces, promoting structural adaptation of the workforce, assisting in the prevention of unemployment, and reintegrating the unemployed and inactive populations. The Committee notes the programmes adopted to this end, including: training of various targeted groups, increasing the availability of training, providing financial assistance to employers with liquidity problems to avoid closures, assistance to unemployed persons wanting to set up their own business, support to organizations providing public benefit employment, and funding for travel costs for long-term unemployed accepting work involving a substantial commute. The Government has also changed the condition for receipt of unemployment benefit, to encourage the unemployed to accept jobs without risking loss of benefit in case the job does not last.

3.  The Committee notes that the labour market participation rate is higher for men than for women. According to the Government’s report, this is in part because of social attitudes. The Committee recalls that under Article 1(2)(c) of the Convention ratifying States undertake to provide the fullest possible opportunity for each worker to qualify for, and to use his skills and endowments in, a job for which he is well suited, irrespective of, inter alia, sex. The Committee would appreciate receiving further information on what measures the Government has taken to achieve this important objective of the Convention, and statistical information on their impact on promoting employment amongst women, as requested in the report form under Article 1 of the Convention.

4.  The Committee also notes that the Government has dissolved the Labour Ministry, and has parcelled out its previous functions to various separate ministries, such as the Ministry of Economy and the Ministry of Education. The Committee asks the Government to supply detailed information on the procedures adopted to ensure that the effects on employment of measures taken to promote economic development or other social objectives receive due consideration, at both the planning and the implementation stages. Please also explain how the principal measures of employment policy are decided on and kept under periodical review within the framework of a coordinated economic and social policy, as requested in the report form under Article 2. It would also appreciate further information on how the dissolution has affected consultation with workers’ and employers’ representatives as well as with representatives of other sectors of the economically active population, and what measures have been taken both to ensure that the views of these groups are taken into account in formulating economic and social policies and to enlist their support for such policies, as requested in the report form under Article 3.

5.  Lastly, the Committee notes the conclusions, approved by the ILO Governing Body, of the committee set up to examine the representation alleging non-observance of the Convention made under article 24 of the ILO Constitution bytheNational Federation of Workers’ Councils (NFWC). In its conclusions, the Committee considered that there was not sufficient information to make a determination regarding the effect of the Supplementary Budget Act of 1995, requiring a reduction in personnel expenses in the institutions of higher education, on the Government’s declaration and pursuance of an employment policy in accordance with the Convention. The Committee asks that such information be included in the next report.

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1. The Committee notes the information contained in the Government's reports for the periods ending May 1996 and May 1998. The Government indicates that the total potential workforce is growing in Hungary, yet there has been a decrease in labour supply in response to a decrease in labour demand. The decrease in demand is due to massive reductions in agriculture and industry. The decrease in supply is due mainly to increases in early retirement and the rate of post-secondary education. The shrinking of the employed population stopped at the end of 1996, but the overall level remains very low. The number of economically inactive persons has been consistently growing, as the employed labour force decreased from 50 per cent in 1990 to only 36 per cent in 1996. Furthermore, the duration of unemployment has increased to an average of 19 months in 1998. The long-term unemployed as a percentage of total unemployment reached 54.4 per cent in 1996, but dropped slightly to 49.8 per cent in 1998. However, youth unemployment has decreased, the result of a targeted active labour market policy.

2. The Government explains that it has moved from a crisis-oriented management strategy to a growth-promoting strategy. Its objectives include increasing the number of workplaces, promoting structural adaptation of the workforce, assisting in the prevention of unemployment, and reintegrating the unemployed and inactive populations. The Committee notes the programmes adopted to this end, including: training of various targeted groups, increasing the availability of training, providing financial assistance to employers with liquidity problems to avoid closures, assistance to unemployed persons wanting to set up their own business, support to organizations providing public benefit employment, and funding for travel costs for long-term unemployed accepting work involving a substantial commute. The Government has also changed the condition for receipt of unemployment benefit, to encourage the unemployed to accept jobs without risking loss of benefit in case the job does not last.

3. The Committee notes that the labour market participation rate is higher for men than for women. According to the Government's report, this is in part because of social attitudes. The Committee recalls that under Article 1(2)(c) of the Convention ratifying States undertake to provide the fullest possible opportunity for each worker to qualify for, and to use his skills and endowments in, a job for which he is well suited, irrespective of, inter alia, sex. The Committee would appreciate receiving further information on what measures the Government has taken to achieve this important objective of the Convention, and statistical information on their impact on promoting employment amongst women, as requested in the report form under Article 1 of the Convention.

4. The Committee also notes that the Government has dissolved the Labour Ministry, and has parcelled out its previous functions to various separate ministries, such as the Ministry of Economy and the Ministry of Education. The Committee asks the Government to supply detailed information on the procedures adopted to ensure that the effects on employment of measures taken to promote economic development or other social objectives receive due consideration, at both the planning and the implementation stages. Please also explain how the principal measures of employment policy are decided on and kept under periodical review within the framework of a coordinated economic and social policy, as requested in the report form under Article 2. It would also appreciate further information on how the dissolution has affected consultation with workers' and employers' representatives as well as with representatives of other sectors of the economically active population, and what measures have been taken both to ensure that the views of these groups are taken into account in formulating economic and social policies and to enlist their support for such policies, as requested in the report form under Article 3.

5. Lastly, the Committee notes the conclusions, approved by the ILO Governing Body, of the committee set up to examine the representation alleging non-observance of the Convention made under article 24 of the ILO Constitution by the National Federation of Workers' Councils (NFWC). In its conclusions, the Committee considered that there was not sufficient information to make a determination regarding the effect of the Supplementary Budget Act of 1995, requiring a reduction in personnel expenses in the institutions of higher education, on the Government's declaration and pursuance of an employment policy in accordance with the Convention. The Committee asks that such information be included in the next report.

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The Committee notes that the Governing Body, at its 270th Session (November 1997), entrusted to a tripartite committee the examination of a representation made under article 24 of the ILO Constitution by the National Federation of Workers' Councils (NFWC), alleging non-observance of the Convention by Hungary. In accordance with its usual practice, the Committee is suspending its comments on application of the Convention pending the adoption by the Governing Body of the conclusions and recommendations of the above-mentioned committee.

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1. With reference to its previous observation, the Committee notes the Government's report for the period ending June 1994, which contains a description of the developments in respect of employment and unemployment and describes the main features of the employment policy pursued by the Government.

2. According to the data provided by the Government and the information contained in OECD surveys, the recession flattened out in 1992 and has been replaced since 1993 by a modest recovery in growth, reaching an estimated growth rate of 2 per cent in 1994. After peaking at 13.6 per cent of the active population at the beginning of 1993, the unemployment rate has fallen regularly to around 11 per cent at the end of the period. However, in addition to the fact that it has been accompanied by a significant decrease in activity rates, particularly among workers over 50 years of age, this decline in unemployment has particularly benefitted the least affected regions and has accentuated regional disparities: from around 9 per cent in Budapest and the North West of the country, the unemployment rate exceeds 20 per cent in the North East. The higher incidence of long-term unemployment (42 per cent of total unemployment, as against 14 per cent at the beginning of 1992), as well as the unemployment rate of young persons and the least skilled workers, are all worrying characteristics of the structure of unemployment.

3. However, the development in the unemployment situation is only a partial reflection of the impact of economic changes on the labour market. The level and structure of employment have undergone rapid modification over recent years. Total employment fell by nearly 25 per cent between 1989 and 1994 (40 per cent in agriculture), despite the creation of jobs, particularly in small enterprises. The Government is aware of a new fall in employment, associated with an increase in the number of inactive persons among the population of working age, thereby jeopardizing the budgetary situation. The Committee would be grateful if the Government would continue to supply information on developments in trends in the active population, employment, unemployment and underemployment.

4. The Government considers that, due to the recession in the principal economic sectors and aggravated by redundancies carried out in the context of structural reforms, unemployment has become a massive and lasting phenomenon, in respect of which the scope of political action is necessarily limited. It states that, in the context of the social market economy that it intends to introduce, the State refrains from intervening directly in the free interplay of economic laws, including the labour market, but that it takes economic and social policy measures which have the effect of promoting employment. The Government refers in this respect to the measures adopted to support exports, promote entrepreneurship and investment, education and training. The Committee would be grateful if the Government would supply more detailed information in its next report on these measures, as well as on the main characteristics of its general economic policy in fields such as monetary and budget policies, and prices incomes and wages policies. Recalling the allegations concerning the insufficient level of integration of employment objectives with other economic and social objectives, to which it referred in its previous observation, the Committee hopes that the Government will provide a more detailed description in its next report of the manner in which all of these measures, adopted "within the framework of a coordinated economic and social policy", contribute to promoting full, productive and freely chosen employment "as a major goal", in accordance with Articles 1 and 2 of the Convention.

5. In parallel with the measures adopted to create the conditions for the development of a market economy, the Government has used various labour market and employment policy instruments to combat unemployment and its social consequences, particularly in the most affected regions. Although the Government has emphasized the significance of the resources allocated to financing such measures, the Committee regrets in this respect that it has not been provided, as it was in the previous report, with information enabling it to assess the scope and effectiveness of these measures. It requests the Government to provide any available evaluation of the results achieved through such measures in terms of the lasting integration of their beneficiaries into employment. The Committee also requests the Government to provide full information on the action taken as a result of the ILO technical cooperation project on employment policies for transition (Part V of the report form).

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1. The Committee notes the Government's report for the period 1990-92, which provides detailed information in reply to its previous comments and encloses a communication from the National Federation of Hungarian Trade Unions.

2. In order to evaluate the general situation and recent trends in the employment market, the Committee has also examined studies and data available at the Office or contained in OECD reports and surveys. The Committee notes that economic activity dropped further during the period under consideration. The decline in production, which stood at 0.2 per cent in 1989, rose to 3.3 per cent in 1990 and 10 per cent in 1991. The OECD forecast that it would be limited to 4 per cent in 1992. As a result of the fundamental structural reforms required by the transition to a market economy and the collapse of the former trading system, job losses were most marked in agriculture and construction but also to be found in commerce and industry. The contraction of public sector employment has only partly been offset by the development of private sector employment which, admittedly, is not fully reflected in official statistics. Consequently, the unemployment rate rose from 1.6 per cent in 1990 to 7.5 per cent in 1991; the OECD forecast 13 per cent by the end of 1992. Unemployment especially affects workers in the high-activity age groups and with the most limited education, and is also concentrated in certain regions of the country. Lastly, the length of unemployment is tending to increase and more than 50 per cent of the jobless have been unemployed for more than six months.

3. In its report the Government provides substantial information on active labour market policy measures to cope with the high and rising unemployment. The implementation of community services and public works employment programmes is decentralized and financed by the employment fund, and these programmes are being extended to new categories of beneficiaries. However, they are only a short-term solution for a low skilled labour force. Thanks to the loans scheme for establishing or taking over enterprises, some 40,000 jobs have been maintained or created. Although the conditions for such loans have been made more flexible, the lack of available financial resources and the lack of qualifications and knowledge of market conditions on the part of the persons concerned were, in many cases, an obstacle to the establishment of viable enterprises by unemployed workers. In addition, it would appear that particular attention should be paid to developing vocational training and retraining programmes for the unemployed. The Committee would be grateful if in its next report the Government would provide detailed information on measures taken in this area and the results obtained.

4. The Committee also notes the information on the application of Act No. IV of 1991 respecting promotion of employment and its subsequent amendments. In order to maintain a balanced budget at a time of rapid increase in expenditure for unemployment benefit, a solidarity fund made up of contributions from employers and workers is used for the payment of unemployment benefit, while the Employment Fund uses its resources obtained from the budget to finance active measures for training and employment promotion. Furthermore, decentralized institutions are responsible for designing and implementing employment policy at local labour market level and for organizing consultation of the social partners for this purpose.

5. According to the National Federation of Hungarian Trade Unions, however, the views expressed by workers' organizations in the tripartite consultation process are not taken into consideration by the Government. More generally, the above organization considers that the obligations laid down in the Convention are only partly fulfilled. The employment policy is not targeted on the objectives laid down by Article 1 of the Convention, owing, in particular, to the lack of a genuine industrial policy and inadequate coordination of employment objectives with the other economic and social objectives. The Committee notes these allegations, and asks the Government to specify in its next report how employment objectives are linked to other economic and social objectives, in accordance with Article 1, paragraph 3, of the Convention, and how, in consultations with representatives of the persons affected by employment policy measures, and particularly representatives of employers and workers, full account is taken of their experience and views, in accordance with Article 3.

6. The Committee has been informed that, since August 1991, an ILO technical cooperation project has been implemented, entitled "Employment policies for transition in Hungary". The project coverage includes overall economic policies and employment creation, incentives for job creation programmes for the unemployed, the employment effects of restructuring and privatization, and the development of a database and information on employment. In the view of the Committee, the project, which is now in its final phase, is likely to contribute to more effective application of the Convention. The Committee would be grateful if the Government would indicate the measures taken as a consequence of the project and the results obtained (point V of the report form).

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The Committee takes note of the information supplied by the Government in reply to its previous comments. During the period under review, the report shows that the country experienced big changes in the context of the accelerated transformation of the economy into a market system; consequently, the country is entering a period of large restructuring of the labour market. The Committee would be grateful if the Government would provide information on the situation, level and trends of employment, unemployment and underemployment, both in the aggregate and as they affect particular categories of workers such as women, young persons, older workers and disabled workers. It would also be grateful if the Government would indicate generally the extent to which the active employment policy pursued meets the requirements of the Convention with regard both to the objectives defined (Article 1 of the Convention) and to the methods of application (Articles 2 and 3). Please provide additional information on the following points:

1. The Committee notes the information on the various programmes funded or supported by the Employment Fund. It would be grateful if the Government would continue to provide information on the development of these programmes, the special difficulties encountered and the effect on employment and income, including as regards measures for training and retraining and, more generally, for the co-ordination of education and training policies with prospective employment opportunities.

2. The Committee notes the information on the type of work assigned in the community employment scheme, and on the conditions of employment. It notes in particular that the Government considers it necessary to create jobs of higher prestige. Please continue to provide information on the development of this scheme stating the measures that have been taken to make work as productive as possible.

3. The Government's report indicates that 9,000 persons, most of them individual small entrepreneurs, received entrepreneurial credit (meaning as many new jobs as beneficiaries), and that this credit was extended nationwide from November 1988. Please provide general information on the effect on employment of the recent measures concerning companies and enterprise agreements.

4. The Committee notes the information on the programmes to ease strains in employment, launched in crisis areas, and notes in particular that extra financial support is available in case of redundancy which is expected to involve 6,500 jobs. It would be grateful if the Government would provide information on how these programmes have affected job creation and on the extent to which the above financial assistance has been used and has enabled the surplus manpower problems in the regions concerned to be overcome.

5. The Government provides information on the wage regulation mechanism set up in 1989, on the question of minimum wage fixing particularly in connection with inflation, and the wage reform process under way. The purpose is to ensure that, after the period of transition, the level and increase of wages will be determined exclusively by economic and market conditions, primarily through consultations between representatives of employers and workers.

The Committee would be grateful if the Government would continue to supply information on the wage reform now in process and on developments in the price and wage fixing or negotiation system.

6. The Committee notes with interest the information on the participation of workers' and employers' representatives, particularly in the work of the National Council for Reconciliation of Conflicts, on the dispute settlement bodies for specific issues, and on their consultation in the formulation of various employment policy measures. It notes that the Government is studying the means of developing the activities of the above National Council, which is the main co-ordination and consultation body for the most important questions of the national economy affecting workers and employers. It would be grateful if the Government would continue to provide information on consultations held with representatives of the sectors concerned by measures to be taken, particularly within dispute settlement bodies (national and regional), and with regard to matters concerning retraining, transfers, social guarantees and the protection of workers whose employment has been terminated (Article 3).

7. With regard to the information on the introduction of an unemployment benefit system and on the reorganisation of employment services, the Committee would be grateful if the Government would refer more particularly to these matters in its report on Convention No. 2 concerning unemployment.

8. Lastly, the Government's report refers to the drafting of an Employment Act under which the measures envisaged will be financed by contributions from employers and workers as well as by allocations from the state budget. The Committee would be grateful if the Government would provide information on developments with regard to the above draft and to provide a copy of the text as soon as it is adopted.

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The Committee has noted the information provided in reply to its previous direct request. The Government has pointed to the long-term decrease in demand for labour and growing inequality in regional and professional labour markets. A system is being worked out to solve the problem of reallocation of labour that has become redundant due to restructuring or a decrease in numbers employed. The strategy of employment policy aims at creating an employment system which does not, in the first place, aid those losing their jobs in the form of unemployment benefit but which helps their re-employment. The Committee has also noted the specific measures described in the report. It would be grateful if the Government would indicate the manner in which the active employment policy pursued meets the requirements of the Convention as laid down in Article 1, paragraph 2(b) and (c). Please supply further information on the following specific points:

1. The Committee notes that the Government has established an employment fund designed to provide unemployment benefits for workers displaced under certain conditions, finance retraining and support employment-creation schemes. The Government states in its report that the major role in improving chances for re-employment is played by retraining. In 1984, 144; in 1987, 1,200; and in the first half of 1988 more than 7,000 people received retraining aid. The Committee trusts the Government will continue to provide detailed information on the operation of the employment fund, including data on the expenditure by category.

2. The Government indicates in its report that finding employment for people with low-level education or for unskilled workers is the most important problem and that, for this reason, public work is supported. The Committee notes the data supplied for the first half of 1988 on the average number of people employed for public work. Please supply details of the nature and type of work assigned and the conditions under which people are employed, taking into account the objectives and terms of the Convention (Article 1, paragraph 2). More generally, and as requested by the report form, please provide information on any measures taken to co-ordinate education and training policies with employment prospects.

3. The Committee notes the policy concerning early retirement of workers. Please indicate the impact on employment. Please describe the measures taken to meet the needs of other particular categories of workers, such as women and disabled workers.

4. The Committee notes that since July 1988 a restarting credit was introduced in three counties. Its aims are to encourage people who have lost their jobs or probably remain unemployed to create private enterprises or join such businesses, thus solving employment problems on their own. Please supply further information on the employment-creation impact of the restarting credit. Please also indicate whether measures have been taken or envisaged in order to extend the operation of the restarting credit to other counties.

5. Further to its previous comments, the Committee notes that the employment problems of smaller regions have been somewhat reduced by state support of investments aimed at creating new jobs. Please provide details of any programmes to reduce the employment tensions of certain regions, including depressed areas and regions affected by crisis industries.

6. Please provide information on any new legislative or other measures affecting the application of the Convention, such as the implementation of a wage reform and the establishment of the National Council for the Reconciliation of Conflicts. Please state whether special difficulties have been encountered in attaining the policy employment objectives of the 1986-90 Five-Year Plan. Please supply information on the impact on the labour market of the Plan of austerity adopted on 14 July 1988, which is mentioned in the document submitted to the Committee on Employment of the ILO Governing Body (November 1988).

7. Please describe the measures taken by the State Office for Labour and Wages to collect and analyse information on trends in the labour market and on the impact of the new measures adopted by the Government on employment (Article 2).

8. Please indicate how the employment services assist workers in finding employment appropriate to their skills, in the context of the current increase in the demand for them. Please indicate what measures are taken or envisaged to encourage labour mobility.

9. Please supply information on the manner in which representatives of the persons affected by the measures to be taken are consulted and on the action taken by employers' and, in particular, workers' organisations, concerning retraining, transfers, social guarantees and protection for workers whose employment has been terminated.

10. Finally, the Committee notes with interest from the report that the Government discussed further development of the means of promoting employment policy with an ILO mission, which filed a report under the heading "Economic Reform and Employment in Hungary". Please indicate the action taken or envisaged as a result, as requested under Part V of the report form.