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Changes to higher education, disability pension scheme could bring more Hungarians to labor force

Several hundred thousand Hungarians who are not economically active at present could be brought back to the labor force in the long term with a reduction in the number of people in higher education and a review of the disability pension scheme, Raiffeisen Bank chief analyst told MTI on Tuesday.


The market could create as many as 40,000 jobs on its own this year, but business incentive and public work programs could bring the number to 80,000-100,000, Torok said.

Hungary's new government has said it aims to create a million jobs in ten years. Prime Minister Viktor Orban said in his state of the nation speech on Monday that everybody who is able must work.

Torok said that without incentives, the private sector could create 135,000 jobs by the end of 2013 and 200,000 by the end of 2014. The estimates assume GDP growth of 2.5% in 2011 and 4-4.5% in the following years, he added.

In order for the government to meet its goal of creating 400,000 jobs by the end of 2014, half of these will have to be created with incentives, Torok said.

Hungary's labor force participation rate, at around 55%, is among the lowest in the European Union and well under the EU average of more than 70%,  Torok said. The Czech Republic has about the same population as Hungary but the labor force participation rate there is around 70%, he added.

Of about 10m Hungarians, 3.4m are not economically active, according to the latest employment data from the Central Statistics Office (KSH). Of the 4.2m economically active Hungarians, 462,000 are unemployed.

The number of Hungarians who are economically active could be raised by making changes to the disability pension system and higher education, Torok said. Higher education in Hungary is "overgrown" and has started to be "pruned back" over the past several years, but this will not have an effect on the labor market until 5-10 years from now, he added.

The number of Hungarians who are not economically active is also raised by people who live in disadvantaged parts of the country and cannot find work on the primary labor market,  Torok said. Large numbers of these people, who live mainly in villages, could participate in public work programs organized by the state, he added. (Econews)