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Analysts say that success of gov't back-to-work program uncertain

The success of government measures to encourage unemployed Hungarians to rejoin the labor force is uncertain, analysts told MTI.

Hungary's updated Convergence Program submitted to the European Commission on April 15 stipulates the reduction of the eligibility period for unemployment benefits from the current 270 days to 90 days as well as the elimination of 90-day job-seeking assistance following expiration of unemployment benefits and decrease of wage supplements currently paid to unemployed people who have participated in public-work programs.

The government plans to encourage those who lose unemployment benefits to rejoin the workforce through the creation of 220,000 jobs for unskilled workers each year as part of a new public-work program and the review of qualification conditions for granting disability pensions in order to steer 100,000-150,000 of Hungary's current 350,000 disability pensioners back to the labor market either through part-time work or as part as the government's public-work program.

Analyst Gergely Suppan of Takarékbank said it remains to be seen how many people are able to rejoin the labor force through employment as part of public-work programs, adding that he is awaiting the publication later this month of further details regarding the government's proposed changes to Hungary's labor market. Suppan remarked that the purpose of many of the announced changes appears to have been to reclassify expenditures in order to make them eligible for European Union support, noting that EU funding will compensate for some of the government's proposed reduction in employment expenditures, including those related to employment of those who lose unemployment benefits in public-work programs.

Researcher Judit Adler of economic-research institute GKI also said that more details are needed in order to make an accurate assessment of the government's proposed changes to the labor market, noting that it is not yet known if employer or employee contributions will be reduced. Adler commented that the average time spent on unemployment in Hungary last year was precisely the 90 days to which the period of benefit eligibility would be reduced under the government plan. The GKI researcher stated that public-work programs serve to improve employment data, though do not necessarily lead to jobs on the primary labor market.