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Measures aim to return pensioners to labor market

Initiatives

The Hungarian government is considering allowing pensioners to return to work in order to ease the labor shortage in the economy. Meanwhile, the falling unemployment rate could lead to lower labor market contributions, state news wire MTI reported.

Hungaryʼs National Competitiveness Council, a body of business leaders and experts established to make recommendations to the government, discussed incentives for adult education and labor market improvements on Thursday.

Only slightly more than 6% of Hungarian adults are in further education programs, and council members would like to see more adults in such programs, Minister for National Economy Mihály Varga told MTI. Such programs should be tailored to the needs of the labor market and involve government offices as well as business chambers, he added.

The council will also submit a recommendation to the government in late October on ways to ease re-entry onto the job market for pensioners, Varga said. So far, 36 pensionersʼ cooperatives have been established since lawmakers approved the legal framework for their operation, he noted. Now the aim is to make it similarly easy for individual pensioners to return to work without being members of a cooperative, he added.

Meanwhile, László Domokos, the head of the State Audit Office (ÁSZ), suggested that due to the low unemployment rate, the labor market contribution (a social security contribution payable by employees), should be lowered from 1.5% to 0.5%.

In an interview with pro-government daily Magyar Idők, Domokos explained that the labor market contribution was introduced as a type of solidarity tax, to help finance unemployment benefits at a time when the unemployment rate was above 10%. With unemployment around 4%, workers should enjoy the benefit of a reduction in the rate, he added. Such a reduction could increase average monthly wages by HUF 2,000, he noted.

Pensioners to get growth premium

In related news, MTI reported that Hungarian pensioners will get a HUF 12,000 year-end premium because of the countryʼs strong pace of economic growth, Varga said at a retirement home in Budapest on Thursday.

In the spring, Varga promised pensioners a year-end premium if GDP growth exceeds 3.5% and the deficit target is met. First-half GDP growth reached 3.6%, the latest data from the Central Statistical Office (KSH) show.

Last year, Hungarian pensioners were each awarded HUF 10,000 worth of food vouchers as a year-end bonus.

Pensioners will get an additional top-up in November because the rate of inflation has exceeded the earlier projection, Varga announced. That top-up will average HUF 12,000 per pensioner, he added.

Hungaryʼs government raises pensions each year by at least the rate of inflation. It projected annual average inflation of 1.6% in this yearʼs budget, but the rate reached 2.4% in January-September, MTI noted.

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