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EMPLOYMENT AND TRAINING PAPERS
20

Youth Unemployment in Hungary and Poland

Action Programme on Youth Unemployment

Maarten Keune



Contents

Foreword

1. General labour market developments
2.Youth on the labour market
3. Policies addressing youth unemployment
4. Concluding remarks

List of Tables

Foreword

This paper represents a contribution to the ILO's Action Programme on Youth Unemployment being undertaken in the 1996-97 biennium. The Action Programme is intended to: (i) raise awareness amongst constituents concerning the problems associated with the labour market entry of young people; (ii) to improve their understanding of the advantages and disadvantages of the principal policy and programme options for tackling the problem of youth unemployment; and thus, (iii) enhance the capacity of member States to design and implement policies and programmes for promoting youth employment. The Action Programme includes country case studies from all over the world as well as policy reviews concentrating on specific topics within the ambit of the youth unemployment "problem". These studies will be used as the basis for the major output of the Programme, a comparative report on youth unemployment and youth employment policy.

Youth unemployment has increasingly been getting attention in transition countries. More and more it becomes clear that young people are experiencing great difficulties in conquering a position on the labour market and there is fear that large groups of young people will be excluded from employment from the start of their career. In this paper we will present an overview of the labour market situation of young people in two transition countries, Hungary and Poland, with particular attention to youth unemployment and the respective attempts to address this phenomenon. In section 1 general labour market developments in the two countries will be discussed, followed by the youth labour market (section 2), a discussion of the policies implemented in the two countries (section 3) and some concluding remarks.

Gek-Boo Ng
Chief
Employment and Labour Market Policies Branch

1. General labour market developments

In this section an overview will be presented of the labour market developments in Hungary and Poland in the now seven years old transition period. Before doing so some words should be said, however, about the general economic conditions in the two countries. Table 1 presents the annual growth rates of GDP since the start of transition. Both countries suffered severe economic crisis at the start of the transition period, the worst years, with GDP decreases of more than 11 per cent, being 1990 for Poland and 1991 for Hungary.

Table 1
GDP growth rates, Hungary and Poland, 1990-1996

  1990 1991 1992 1993 1994 1995 1996 1996 (1989=100)
Hungary -3.5 -11.9 -3.1 -0.6 2.9 1.5 1.0 86.6
Poland -11.6 -7.0 2.6 3.8 5.2 7.0 6.0 104.5
Source: Hungarian Central Statistical Office; European Economy Supplement C, No.2 June 1997, European Commission, Luxembourg.


This decline was caused by a series of factors, mainly the loss of export markets due to the break-up of the CMEA, declining domestic demand both for investment and consumer goods and competition from imports. In terms of GDP Poland recovered relatively rapidly from this economic shock. GDP started to grow again in 1992 and growth has been getting stronger and stronger over the years and in 1996 Polish GDP surpassed its 1989 level.(1) However, this relative success is also due to the fact that Poland already experienced economic decline in the eighties. Meanwhile, in Hungary growth started only in 1994 and has been very modest since. In 1996 Hungarian GDP is still 13.4 per cent under its level of 7 years ago. These dramatic economic changes have had equally dramatic effects on the labour market.

1.1 Employment and sectoral developments

Since the start of transition a dramatic reduction of (formal) employment has been taking place in the two countries, mainly due to declining production following adverse developments in external and domestic demand, rationalisation of production, etc. In Hungary, employment has been declining continuously since 1989 (see Table 2) and total employment at the start of 1996 was only 72.2 per cent of the corresponding figure on 1 January 1989, meaning a loss of more than 1.5 million jobs in a country with some 10.2 million inhabitants. In Poland the decline in this period was less dramatic but still very strong, at the end of 1995 employment was at 86.1 per cent of the end-1989 level. Also, in 1994 for the first time a slight increase in employment can be observed and in 1995-1996 it further increased, be it very modestly.

Table 2
Employment and participation rates, Hungary and Poland, 1989-1996

  Hungary Poland
  Employment
('000)		 Previous year
= 100		 Participation
rate (%)		 Employment
('000)		 Previous year
= 100		 Participation
rate (%)
1989 5505.0 - 85.3 17389.4 - -
1990 5471.9 99.4 85.3 16145.4 92.8 -
1991 5303.9 96.9 84.0 15442.6 95.6 84.9
1992 4796.2 90.4 81.7 15010.9 97.2 83.2
1993 4352.0 90.7 79.5 14761.2 98.3 82.4
1994 4136.4 95.0 76.0 14924.0 101.1 78.8
1995 4045.2 97.8 73.0 14967.9 100.3 n.a.
1996 3974.3 98.2 71.9 15103.0 100.9 n.a.
Notes: Poland is end-of-year data except for 1996 which corresponds to the November LFS.
Hungary is start-of-year data.
Participation rate = labour force as share of working age population.

Source: Central Statistical Offices.


In both countries the decline in employment has been accompanied by strongly decreasing participation rates. Employment losses have not only been translated in increasing unemployment (see section 1.2) but there have also been important outflows to inactivity. This effect should not be underestimated as illustrated by the Hungarian example where participation declined from 85.3 per cent to 71.9 per cent, or by 13.4 percentage points between 1990-1996. This is partially due to the fact that a substantial number of employed pensioners, often the first persons to be laid of in downsizing enterprises, went from employment into inactivity. However, also the number of inactive persons in working age increased from 949,100 to 1,686,700 between 1990 and 1995, among other things because of early retirements, frequently used as alternatives for lay-offs, and because of increasing student numbers in education.(2)

The employment and participation declines have had distinct gender dimensions. The share of women in total employment changed only slightly in both countries: in Hungary from 48.6 per cent in 1989 to 47.5 per cent in 1996; and in Poland from 45.1 per cent in May 1992 to 45.2 in May 1996.(3)However, when taking the Hungarian example again, the participation rate of men declined by 10.9 percentage points between 1989 and 1996 (from 84.7 per cent to 73.8 per cent) while the female participation rate dropped much faster, from 85.8 per cent to 69.9 per cent in the same period, equal to 15.9 percentage points.

Especially in Hungary the industrial structure of employment has been changing profoundly (see Table 3). In the context of the strongly declining total employment it is no surprise that in most sectors the absolute number of employed went down. Only in trade and in consumer and business services employment increased in the period 1989-1996, a clear result of the changing economy, characterised by the growing importance of the service sector. Agriculture and industry have been the sectors where the most employment has been lost. Over the 7 years employment declined by 652,100 in agriculture and by 718,300 in industry and together they account for almost all employment losses in the transition period.

Table 3
Hungary, structure of employment, 1989-1996*

  1989 1996
  No. ('000) Share (%) No. ('000) Share (%)
Industry 1661.7 30.2 943.4 23.7
Construction 364.6 6.6 218.3 5.5
Agriculture and forestry 986.1 17.9 334.0 8.4
Transport, telecommunication 433.0 7.9 334.0 8.4
Trade 622.7 11.3 695.0 17.4
Water Supply 88.3 1.6 40.3 1.0
Consumer and business services+ 299.5 5.4 441.9 11.1
Health, social, cultural services 767.9 13.9 707.3 17.8
Public administration and other public services 281.2 5.2 267.6 6.7
Total 5505.0 100 3974.3 100
+ Including "other material activities".
*The classification used in 1989 are used in this table for comparability. New categories are in use now in accordance with the European Classification of Activities.

Source: Labour Force Accounts.


When looking at the share of the different sectors in employment obviously the share of agriculture and industry declined strongly and trade and consumer and business services increased their participation. However, also the share of health, social and cultural services increased by almost 4 percentage points, and the share of public administration grew from 5.2 per cent to 6.7 per cent, and increase of 28.8 per cent.

As a result of all these changes the structure of Hungarian employment is very much approaching the structure common in OECD countries. This is quite different in Poland as can be seen in Table 4. The most remarkable difference is the enormous size of the agricultural sector in Poland, responsible for 26.1 per cent of employment, compared to 8.4 per cent for Hungary(4) . Agriculture is in fact larger than industry in terms of employment, be it only slightly.

Table 4
Employment structure, Poland, 1995

  Number ('000) Share (%)
Agriculture, forestry and fishing 3848.6 26.1
Industry 3765.9 25.6
Construction 840.8 5.7
Trade and repair 1858.3 12.6
Hotels and restaurants 193.5 1.3
Transport, storage and communication 844.8 5.7
Financial services 256.1 1.7
Real estate and business activity 563.7 3.8
Public administration 384.8 2.6
Education 852.2 5.8
Health care and social work 1011.0 6.9
Other public, social and personal services 324.5 2.2
Total 14735.2 100
Note: Data are average for the year.

Source: Labour Force Survey.


In general, when the same classification of branches is used the share of all branches except for agriculture and industry is larger in Hungary than in Poland. Interesting differences are for example the relative size of public administration, accounting for 2.6 per cent of employment in Poland while for Hungary this figure is 7.0 per cent and also education is quite a bit larger in Hungary, 8.7 per cent compared to 5.8 per cent in Poland. A specific feature of interest is the share of employment in the public and private sector. Privatisation has been viewed as one of the major instruments in the transition to a market economy and has become an objective in itself. In Hungary, in 1995 the share of the public sector (public organisations, state enterprises and local government enterprises) fell to 47 per cent of total employment and the share of employment in co-operatives to 4 per cent. Private sector employment reached 37 per cent in the same year and the share of the mixed sector 12 per cent.(5)

In Poland (see Table 5) private sector employment accounted for 62.4 per cent of total employment in 1995. The participation of the private sector was especially high in agriculture, construction, trade and repair, and hotels and restaurants, all with a share of over 80 per cent. Interesting is that in industry the public and private sector were still equally important(6) and that the public sector was dominating the financial services. Although in both countries the tendency is clearly towards a growing private sector, the public sector is still quite large and diminishing slower than many expected.

Table 5
Public and private sector employment in Poland, 1995

  Number ('000) Share within sector (%)
Agriculture, forestry and fishing
- public sector
- private sector		 4045.9
135.9
3910.0
3.4
96.6
Industry
- public sector
- private sector		 3728.8
1845.0
1883.8
49.5
50.5
Construction
- public sector
- private sector		 827.4
157.8
669.6
19.1
80.9
Trade and repair
- public sector
- private sector		 1903.1
111.6
1791.4
5.7
94.3
Hotels and restaurants
- public sector
- private sector		 185.9
29.0
156.9
15.6
84.4
Transport, storage and communication
- public sector
- private sector		 838.1
614.4
223.7
73.3
26.7
Financial services
- public sector
- private sector		 268.2
170.7
97.5
63.6
36.4
Real estate and business activity
- public sector
- private sector		 554.3
203.2
351.1
36.7
63.3
Public administration
- public sector
- private sector		 381.3
381.0
0.3
99.9
0.1
Education
- public sector
- private sector		 896.4
871.6
24.8
97.2
2.8
Health care and social work
- public sector
- private sector		 1003.4
962.6
40.8
95.9
4.1
Other public, social and personal services
- public sector
- private sector		 335.1
140.3
194.8
41.9
58.1
Total
- public sector
- private sector		 14967.9
5623.2
9344.7
37.6
62.4
Note: End-of-year data.

Source: Year Book of Statistics


1.2 Unemployment

Naturally, the above discussed developments have resulted in unemployment, a phenomenon virtually unknown during the previous system(7) and in both countries it started to rise quickly after 1989. Registered unemployment reached its peak in Hungary in February 1993, with the unemployment rate being 13.7 per cent, representing 705.000 unemployed. Afterwards it declined again slowly until June 1995 when it reached 10.1 per cent and later it stabilised between 10.2 per cent and 11.5 per cent. As shown in Table 6, Labour Force Survey (LFS) unemployment, calculating unemployment figures according to the ILO definition, has normally been slightly below registered unemployment but it has been following a similar trend.

Table 6.
Unemployment data from the register and the LFS
Hungary, 1992-1996

  Registered
unemployment		 LFS*
May 1992
November 1992		 9.7
11.9		 9.1
9.7
May 1993
November 1993		 13.4
12.2		 11.2
10.9
May 1994
November 1994		 11.7
10.4		 10.1
9.7
May 1995
November 1995
11.3
10.4		 11.4
10.7
May 1996 10.7
9.9
* 'May' means the second quarter of the respective year in the case of the LFS while 'November' stands for the fourth quarter.

Source: National Labour Centre and CSO.


The turnover of unemployment in Hungary has been very low with average monthly inflows of below 1 per cent of the labour force in the past four years and monthly outflows of below 5 per cent of the register in 1992-94 and 8.6 per cent in 1995. This has led to a growth of the average unemployment duration. In 1992 53 per cent of unemployed were registered for less than 6 months, a number which rapidly decreased to reach 32 per cent in 1995. In the latter year long-term unemployment (longer than 1 year) had grown to 50.6 per cent.

Contrary to most other Central and East European countries unemployment in Hungary has been lower for women than for men. Looking at LFS data, the female unemployment rate has been persistently lower than the male rate and in 1995 male unemployment was 11.3 per cent compared to 7.5 per cent for women. This lower rate for Hungarian women has several reasons, among them their more rapidly declining participation rate, the fact that industries dominated by male workers have suffered more from the economic crisis in the country than those dominated by women, the increasing importance of the service sector, and because women are more willing to accept low wages, insecure jobs and inferior working conditions.(8)

Characteristic of unemployment in Hungary is the exceptionally high unemployment rate for the Gypsy (Roma) community, amounting to for example 38 per cent in 1993. The Roma's were often the first to be laid off when enterprises started to downsize, have a much lower average education level than the rest of the Hungarian population and are also actively being discriminated against.

Table 7
Regional unemployment rates in Hungary
1990-1996 (31 December of respective years)

Country 1990 1991 1992 1993 1994 1995 1996*
Budapest 0.3 2.6 5.7 6.3 5.4 5.7 5.7
Baranya 2.0 9.1 13.5 12.3 11.1 11.6 12.3
Bács-Kiskun 1.5 11.3 15.6 14.8 11.4 10.1 11.0
Békés 2.0 12.6 16.4 15.2 14.2 12.9 14.2
Borsod-Abaúj-Zemplén 3.5 13.9 18.6 19.9 15.6 16.6 18.2
Csongrád 1.5 8.3 11.7 11.1 9.7 9.0 9.3
Fejér 1.9 7.7 11.8 11.9 10.4 10.2 10.3
Gyôr-Moson-Sopron 1.0 5.7 8.0 7.8 6.9 6.5 7.5
Hajdú-Bihar 1.5 9.4 14.4 16.3 14.2 13.7 15.6
Heves 2.7 10.8 14.8 13.8 12.3 12.4 13.7
Komárom-Esztergom 1.2 8.3 14.0 13.4 11.4 10.7 12.3
Nógrád 4.2 16.1 19.0 19.7 15.5 15.4 16.6
Pest 1.0 8.4 11.1 9.6 7.2 7.4 7.8
Somogy 2.4 8.9 11.1 11.3 10.5 11.9 12.5
Szabolcs-Szatmár-Bereg 4.5 16.4 22.4 18.7 18.5 18.8 19.2
Jász-Nagykun-Szolnok 2.3 12.9 17.4 16.1 14.5 14.5 14.8
Tolna 2.7 11.7 14.2 13.8 12.1 11.7 13.6
Vas 0.6 5.9 8.4 8.8 7.3 7.1 7.5
Veszprém 1.6 9.0 11.7 11.5 10.3 10.0 9.7
Zala 1.4 6.8 9.3 9.9 9.1 9.4 9.9
Total 1.7 8.5 12.3 12.1 10.4 10.4 11.0
* September 1996.

Source: The Ministry of Labour.


A last feature of unemployment in Hungary is its uneven distribution among the various regions (see Table 7). The unemployment rate in Budapest was 5.7 per cent in 1996 while in the highest unemployment county it was 3.4 times higher (19.2 per cent). Moreover, counties with a relatively high unemployment rate in 1992 continue to have high unemployment in 1996 and do not seem to be able to substantially reduce the gap with the leading areas of the country. When analysing smaller areas the differences in unemployment are even more pronounced and they have been remarkably stable since 1990.(9)

In Poland, although employment losses were more limited than in Hungary and economic recovery started earlier in the decade, registered unemployment peaked later and at a higher level. The highest unemployment rate, 16.7 per cent (2.950.000 persons), was reached in the first quarter of 1994, a year later than in Hungary. Afterwards, it declined slowly but continuously and at the end of 1996 the unemployment rate was 13.6 per cent (see Table 8). Polish Labour Force Survey unemployment has been differing substantially from registered unemployment in some instances. In November 1992 LFS unemployment stood at 13.7 per cent compared to 13.6 per cent for registered unemployment at the end of the same year. However, at the end of 1994 registered unemployment stood at 16.0 per cent while LFS unemployment had remained much lower, 13.9 per cent in November of that year. This may have to do with problems of over-registration due to unclear regulations particularly concerning deregistration of persons finding a job or leaving the labour force.(10)

Table 8
Unemployment in Poland,
1990-1996 (as of 31 December)

  1990 1991 1992 1993 1994 1995 1996
Total 1126.1 2155.6 2509.3 2889.6 2838 2628.8 2359.5
- Men 552.4 1021.5 1170.5 1382.3 1343 1180.2 983.9
- Women 573.7 1134.1 1338.8 1507.3 1495 1448.6 1375.6
Unemployment rate 6.3 11.8 13.6 16.4 16 14.9 13.6
Source: Year Books of Statistics, data of National Labour Office.


Table 8 also shows that female unemployment has consistently been higher than male unemployment and the share of women in total unemployment climbed to 58.3 per cent in 1996. Data from the Labour Force Survey show that unemployment for men moved between 11.4 per cent and 15.0 per cent in the period 1992-1995, while for women the lower and upper limits in the same period were 14.0 per cent and 17.0 per cent. According to Góra, the labour market position of women is much worse than that of men. Their inflow rate into unemployment is on the same scale as for men (2.1 per cent and 2.4 per cent respectively in 1994) but outflow rates are much lower (30.5 per cent for males and 26.4 per cent for females in 1994) while the outflow-to jobs rate is even worse in comparison, 20.4 per cent for men in 1994 and 13.2 per cent for women in the same year.(11) Concerning long-term unemployment, at the end of 1995 982,174 persons or 37.4 per cent of registered unemployed had been looking for a job for more than one year. At the end of 1996 long-term unemployment had decreased in absolute terms to 968,653 but in relative terms is had grown to 41.0 per cent of unemployed.(12) This is still much lower than in Hungary, probably because the Polish economy managed to halt and even reverse the decline in employment.

Concerning the regional differences in Poland similar observations can be made as in the case of Hungary. In some regions (e.g. certain large cities) unemployment has been far under the national average from the outset of transition and has remained much below this average until today (see Table 9). On the other hand, in regions like Olsztynskie and Suwalskie unemployment has been high from the start and has remained far above the national average.

Table 9
Unemployment rates in selected regions,
Poland, 1990-1996

Region 1990 1996
Warszawskie 2.1 4.3
Krakowskie 3.4 6.4
Poznanskie 3.5 6.2
Koszalinskie 9.5 25.1
Olsztynskie 10.2 23.8
Suwalskie 11.5 25.4
Poland 6.1 13.6
Source: National Labour Office.


Before concluding this section mention must be made of the informal sector. Since the start of transition in both countries there has been an enormous increase in unrecorded activities. Estimates of the contribution of this sector to GDP range from some 20 per cent to 35 per cent. Whatever its exact magnitude, the informal sector has had strong implications for the labour market as well. Estimating this impact is rather difficult, though, and no reliable surveys are available. Informal activities often consist of second (part-time) jobs, of working a private plot or small trade.

2. Youth on the labour market

In this section we will analyse the developments on the youth labour market during the transition period and take a closer look at the background and determinants of youth unemployment. The term youth refers in principle to the population group of between 15-24 years old and whenever possible, further distinction will be made between teenagers (15-19) and young adults (20-24). Also the groups of school leavers and new entrants to the labour market will get specific attention although they do not always consist 100 per cent of young people. However, because the available statistical material does not always permit the use of these categories, alternative groupings will be presented in some cases.

2.1 Demographic developments and economic activity

Due to the post-war baby-booms, in both countries the share of young people in the population has been increasing during the transition period, in Hungary from 13.9 per cent in 1990 to 15.8 per cent in 1996 and in Poland from 14.0 per cent in 1990 to 15.4 per cent in 1995.(13) As a result, the size of the working age population has been on the increase and also the number of entrants into the labour market has been growing.(14) In Hungary the number of entrants is expected to decline in the second half of this decade, especially because the number of teenagers will decline (see Table 10) while in Poland the increase will continue. In the year 2000 the population between 15 and 24 years in Hungary is projected to be some 104,000 lower than in 1994,(15) while in Poland it will increase by some 443,000 (or 7.3 per cent) between 1995 and 2000, adding to the tension on the labour market (see Table 11).


Table 10
Youth population and young economically active population
(1994, 2000, 2010) in Hungary

    Economically active Population
    15-19 years 20-24 years 15-19 years 20-24 years
  Male 106.8 287.7 452.4 372.4
1994 Female 76.0 174.4 430.3 354.3
  Total 182.8 462.1 882.7 726.7
  Male 61.0 324.2 334.0 435.4
2000 Female 44.1 198.4 320.0 416.4
  Total 105.1 522.6 654.0 851.8
  Male 57.2 232.3 312.9 312.0
2010 Female 41.2 142.7 298.9 299.6
  Total 98.4 375.0 611.8 611.6
Source: Hablicsek et al., 1995.


Table 11
Youth in total population - state and prognosis, Poland

Years Total population Youth 15-24 years
    Thousands % in total Dynamic to 1978
Total
1985 37357.3 5208.1 13.9 81.8
1990 38585.3 5388.5 14.0 84.7
1995 39620.6 6106.9 15.4 96.0
2000 40650.6 6550.0 16.1 103.0
Men
1985 18210.4 2666.0 14.6 81.8
1990 18802.3 2750.1 14.6 84.3
1995 19298.2 3116.7 16.2 95.6
2000 19788.7 3346.6 16.9 102.6
Women
1985 19146.9 2542.1 13.3 81.9
1990 19783.0 2638.4 13.3 85.0
1995 20322.4 2990.2 14.7 96.4
2000 20861.9 3203.4 15.4 103.3
Source: Prognosis of population of 2000, the Main Statistical Office, 1994.


The changes in the absolute and relative size of the youth population have been accompanied by declining economic activity of youth as shown in Tables 12 and 13. In Hungary, in 1995 43.1 per cent of the age group between 15-24 years old was considered economically active, compared to 47.2 per cent in 1993, quite a change in such a short period of time. In the same period economic activity of teenagers declined from 21.8 per cent to 17.7 per cent, and the decline was especially strong for teenage women, 6.2 percentage points compared to 2.3 percentage points for male teenagers. For the age group 20-24 economic activity fell from 77.4 per cent to 73.7 per cent and although the decline was slightly stronger for males their activity rate remained higher than that of female young adults.

In Poland the percentage of economically active youth has been following similar trends but with lower rates than in Hungary. Between 1992 and 1995 the share of economically active dropped from 43.0 per cent to 38.2 per cent with the male rate declining by 5.4 per cent and the female rate by 4.1 per cent. The difference between male and female activity rates is much larger in Poland than in Hungary, 7.7 percentage points compared to 3.8 percentage points respectively in 1995. The declining share of economically active youth can be traced back to several factors which will be examined in more detail later in this section. The main factors in this respect are demographic developments, an increasing participation in education, the discouraging effect of the depressed over-all labour market situation and the particular difficulties for young people to find a job.

Table 12
Economic activity of youth population by sex (per cent)
Hungary, 1993-95

  1993 1995
15-19
  Male
  Female
  Total
22.3
21.4
21.8
20.0
15.12
17.7
20-24
  Male
  Female
  Total
79.3
75.5
77.4		 75.0
72.3
73.7
15-24
  Male
  Female
  Total		 48.2
46.2
47.2		 44.9
41.1
43.1
Source: LFS.


Table 13
Economic activity of youth - by sex and age (per cent)
Poland

Specification 1992 1995
Total
15-17 years
18-24 years		 43.0
12.4
59.0		 38.2
3.8
51.5
Men
15-17 years
18-24 years		 47.5
13.9
65.9		 42.1
4.6
57.2
Women
15-17 years
18-24 years		 38.5
10.8
52.4		 34.4
2.9
45.9
Source: Yearbook of Statistics.


There has been a distinct change in the industrial structure of youth employment during the transition period. The main trends in Hungary are very much in line with the developments in the economy in general, the share of agriculture in youth employment has been declining sharply while services have increased their share (see Table 14). For the age group of 114-19 years, which saw its total number of employed decline by 57.9 per cent, the share of agriculture in total employment declined from 12.4 per cent to 6.6 per cent between 1990 and 1996 (compared to 8.2 per cent for total employment) and in absolute terms it was cut to less than a quarter of the 1990 level. Employment in manufacturing was more than halved in these 6 years, however, its share in total employment of this age group increased slightly from 32.7 per cent to 34.5 per cent, much higher than in total employment (23.3 per cent in 1996). Several services achieved large increases in their share of employment for this age group in the period under analysis, for example, trade and repair increased from 14.4 per cent in 1990 to 20.6 per cent in 1996 (compared to a share of 14.1 per cent in total employment) and hotels and restaurants from 3.7 per cent to 7.6 per cent (3.4 per cent for total employment). For the age group 20-29 trends have been comparable, although with a few important exceptions including the much more moderate decrease of total employment (9.4 per cent), the slight decrease of manufacturing in total employment (from 26.2 per cent to 24.3 per cent) and the fact that almost all service industries grew both in relative and absolute terms with financial services almost tripling its participation from 1.0 per cent to 2.7 per cent.

Table 14
Number of young persons in employment
by industries in 1990-1996
Hungary

  1990 1994 1996
  14-19 20-29 14-19 20-29 14-19 20-29
Agriculture, hunting, fishing, forestry 32,600 131,552 10,407 48,730 7,133 53,706
Mining and quarrying 3,120 19,842 1,473 8,078 458 6,323
Manufacturing 84,040 255,294 48,817 197,215 37,387 215,050
Electric, gas, steam and water supply 4,520 22,860 2,287 16,931 776 18,035
Construction 21,631 72,049 13,371 55,014 7,841 52,643
Wholesale and retail trade, repair motor vehicles 36,716 110,399 31,876 122,721 22,306 146,074
Hotels and restaurants 9,616 27,328 13,036 35,435 8,250 38,495
Transport, warehousing, telecom 20,956 97,476 7,874 73,488 5,272 83,734
Financial services 2,545 10,006 2,027 16,478 1,398 24,275
Real estate, renting and other business activities 4,969 29,286 5,641 30,252 1,605 37,120
Public administration, social security 5,994 52,700 3,201 62,095 2,871 60,345
Education 6,904 55,576 6,142 52,666 2,310 48,291
Health and social services 14,725 50,295 11,267 42,220 6,170 53,616
Other public and personal services 9,015 40,815 7,647 42,420 4,638 47,638
Total 257,351 975,478 165,066 803,743 108,415 885,345
Source: Census 1990, Pilot survey 1994, Microcensus 1996.


Another important difference is that employment for the lower age category keeps declining in the six year period, while for the 20-29 age group employment recovers and actually increases by 81,600 between 1994-1996, although total employment was still shrinking. (16) These differences are probably mainly due to demographic developments and the faster increasing participation of the lower age group in education. The position on the labour market of this age group has been improving and indeed their employment grew in virtually all industries in this two-year period with the exception for mining, construction, education and public administration. The fastest growth for this age group has invariable been in services, particularly financial services (47.3 per cent in these two years), health and social services (27.0 per cent), real estate, renting and business activities (22.7 per cent), and trade and repair (19.0 per cent). At the same time for the age group 14-19 employment kept declining in all sectors in this period.

Table 15 gives the age structure of employment in Poland at the end of 1996. Youth employment shows quite a different industrial structure than in Hungary, comparable to the differences between the general employment situation in the two countries, most notably the relatively large size of agriculture. The structure of Polish youth employment differs in some aspects from the general Polish employment structure though.

Table 15
Employment by age and sections according to the NACE
November 1996
(LFS) (per cent), Poland

Specification Total Age
  15-24 25-29 30-34 35-44 45-54 55-59 60 <
Total 100 100 100 100 100 100 100 100
From total:
Permanent work
Casually work
94.9
5.1
86.0
14.0
95.0
5.0
96.4
3.6
97.0
3.0
96.2
3.8
93.6
6.4
90.0
10.0
From total:
Agriculture, hunting and forestry
Manufacturing
Construction
Trade and repair
Transport, storage and communication
Education
Health care and social work
21.2
20.9
6.4
12.8
6.1
6.5
6.9
18.5
25.6
8.1
20.9
3.4
2.2
4.0
13.4
24.4
6.0
14.2
6.3
7.0
7.0
16.4
20.8
6.0
13.4
5.9
8.3
8.6
16.7
21.5
6.9
13.1
7.0
6.6
7.8
20.1
21.0
6.7
10.4
7.1
8.1
7.0
35.6
15.2
5.2
9.8
6.0
7.3
5.8
70.0
5.8
1.9
4.5
2.0
3.6
3.0
Source: Economic Activity of Population in Poland (Labour Force Survey), The Main Statistical Book.


Youth employment in agriculture is almost 3 per cent lower than the average (18.5 per cent and 21.2 per cent respectively) while employment in manufacturing is much higher (25.6 per cent for youth compared to 20.9 per cent in total employment) and the difference in the share working in trade and repair is even bigger, 20.9 per cent of employed youth work in this industry compared to 12.8 per cent of total employed. Moreover, in some of the other service sectors youth employment is relatively low, e.g. only 2.2 per cent of young people work in education compared to 6.5 per cent of total employed and in health care and social work the respective figures are 4.0 per cent and 6.9 per cent. An important reason for this may be the low wage levels in agriculture, education and social work, making these sectors unattractive for young people.

Summarising, the industrial structure of youth employment has to a large extent followed the developments in overall employment in both countries, however, some striking differences can be observed. They include the lesser importance of agriculture in the employment of young people and a higher than average participation in manufacturing. Young people are also strongly over-represented in certain service sectors, especially trade and repair.

2.2 Youth unemployment

The transition period has seen a rapid deterioration of the labour market position of young people reflected in high unemployment, particularly concerning teenagers. The strong decline of employment has made entering the very tight labour market extremely difficult for young people, worsening their situation in comparison with most of the rest of the labour force. Demographic developments have further aggravated this situation as the number of young entrants in the labour market increased in the first half of the 1990s.

In Hungary, unemployment of the age group 15-24 rose quickly in the first years of this decade to reach 119,800 or 16 per cent in 1992 and climbed further to its highest level in 1993, 141,300 or 19.2 per cent (see Table 16). For both years this is some 1.7 times the overall unemployment rate. After 1993 youth unemployment started to decline both in absolute and relative terms to reach 101,900 or 14.1 per cent in the forth quarter of 1996. Its developments clearly follow the same pattern as general unemployment figures, the unemployment rate for young people remained around 1.7 times the overall rate and the share of young people in total unemployment has been fluctuating around 27 per cent during 1992-1996 (see Table 17), although both figures decreased slightly at the end of 1996.

Table 16
Teenager and young adult unemployment,
based on the LFS,
Hungary

Year Teenager
(15-19 years of age)		 Young adult
(20-24 years of age)		 Total
(15-24 years of age)
  Number
Thousand		 Rate (%) Number
Thousand		 Rate (%) Number
Thousand		 Rate (%)

1992
Female
Male
Total		 21.6
28.7
50.3		 23.7
28.2
26.1		 22.6
46.9
69.5		 8.4
16.2
12.4		 -
-
119.8		 -
-
16.0

1993
Female
Male
Total		 24.7
33.8
58.5		 28.1
35.0
31.7		 26.5
56.3
82.8		 10.1
19.5
15.0		 -
-
141.3		 -
-
19.2

1994
Female
Male
Total		 19.7
28.5
48.2		 24.6
30.9
28.0		 25.4
51.5
76.9		 10.0
18.1
14.3		 -
-
125.1		 -
-
17.6

1995
Female
Male
Total		 16.8
28.8
45.6		 25.9
32.3
29.6		 22.0
46.7
68.7		 8.6
16.8
12.9		 -
-
114.3		 -
-
16.7

1996*
Female
Male
Total		 16.9
25.3
42.2		 22.9
27.9
25.7		 19.6
40.1
59.7		 7.2
13.9
10.6		 36.5
65.4
101.9		 10.6
17.2
14.1
* 4th quarter of the year.

Source: Labour Force Survey


There are large differences between teenagers and young adults. Teenage unemployment has been constantly at a double rate or more of young adult unemployment (with the exception of 1994), and 2.5 to 3 times higher than the total unemployment rate. Apart from this also teenage unemployment more or less followed the fluctuations in total unemployment and reached its peak in 1993. The unemployment rate for young adults has been only a few percentage points higher than average unemployment and contrary to teenage unemployment it has been declining continuously since 1993.

Table 17
Share of young people among all the unemployed
(per cent) in Hungary

  Teenager
(15-19)		 Young adult
(20-24)		 Total

1992
Total
Male
Female		 11.3
10.8
12.1		 15.6
17.6
12.7		 26.9
28.4
24.8

1993
Total
Male
Female		 11.3
10.7
12.2		 16.0
17.8
13.1		 27.3
28.5
25.3

1994
Total
Male
Female		 10.7
10.4
11.2		 17.0
18.7
14.4		 27.7
29.1
25.6

1995
Total
Male
Female		 10.9
11.0
10.8		 16.5
17.9
14.2		 27.4
28.9
25.0
1996
Total 10.5 14.9 25.4
Source: Labour Force Survey, 1992-1996.


Again Table 17 shows that the share of both age groups in total unemployment have been quite stable, around 11 per cent for teenagers and between 15-17 per cent for young adults. This clearly shows their dependence on the general labour market developments, particularly general unemployment fluctuations, be it at a substantial higher level, especially when teenagers are concerned. Similar as in total unemployment the unemployment rate for young women has persistently been lower than the male rate, for teenage women it has been between 4.5 and 7 percentage points lower in 1992-1996 and for young adult women it has been only slightly more than half the rate of their male colleagues. In fact, young women have had unemployment rates below the general unemployment level throughout the transition period.

Table 18 shows the distribution of Hungarian youth unemployment by duration of job search for the age groups 15-19 and 20-29 in 1994 and 1996. Compared to overall long-term unemployment in 1996 (50.6 per cent), the rate for young people is clearly lower in both years. In 1994 it was 15.7 per cent for teenagers and 33.6 per cent for young people between 20-29 while in 1996 the respective figures were 23.3 per cent and 32.4 per cent. The increase in teenage long-term unemployment is quite strong though and also the increase of the percentage of teenage unemployed looking for a job between 6-12 months is worrying especially because total teenage unemployment has been declining in this same period. This suggests that there is an increasing group of teenagers that has started their career as unemployed, excluded from employment from the moment of entry into the labour market without being able to reverse this situation. However, part of it can probably be explained by teenagers that have unsuccessfully tried to enter the university and register as unemployed while waiting to try again in the following year.

Table 18
Distribution of youth unemployment by duration of job search
1994-1996
Hungary (per cent)

Age cohorts Duration of job search
Less than
1 month		 1-5
months		 6-12
months		 13-18
months		 19-24
months		 More than
two years
1994
14-19 62.6* 21.7 7.8 2.2 5.7
20-29 40.6* 25.8 11.3 8.2 14.1

1996

15-19 7.7 30.9 38.1 7.6 6.9
20-29 7.7 30.9 29.0 9.6 6.6
* Refers to less than 6 months.

Note: There is a 1 year difference in the lower age limits of the youngest age groups in the two years.

Source: Pilot survey 1994, Micro-census 1996.


In Poland youth unemployment also quickly emerged after the start of transition but it went far beyond the Hungarian levels. In 1992, the unemployment rate of young adults was 26.1 per cent and that of teenagers even 36.4 per cent (Table 19). Together they accounted for 28.2 per cent of all unemployed. In 1994 the number of unemployed young people was only slightly higher than two years earlier. As a result, the rate for young adults increased mildly to 27.6 per cent (still double the general unemployment rate of 13.9 per cent), however, for teenagers it jumped further to 45.3 per cent (3.3 times the general rate) and the share of young people in total unemployment rose to 30.2 per cent. After 1994 youth unemployment decreased substantially in absolute numbers, however, the share in total unemployment remained 30.2 per cent.

For teenage men the absolute number of unemployed has continuously been higher than that for teenage women, however, for the latter the unemployment rate has been much higher. For young adults the female rate has also been higher and in 1994 and 1996 they also had higher absolute numbers of unemployed. Urban youth unemployment has consistently been higher than rural youth unemployment although at least in absolute terms the difference is getting smaller quickly.

In this context it is interesting to see what has happened to the employment rate of the young population (Table 20). Between 1992 and 1995 the share of the young population actually in employment fell by 4.5 percentage points, from 31.8 per cent to 27.3 per cent. The fall was especially strong for the age group 15-17 (from 11.3 per cent to 3.3 per cent) mainly because of an increased participation in education. In urban areas, where youth unemployment is much higher, the employment rate is substantially lower than in rural areas, although it started a slight recovery as of 1994 while the rural employment rate for young people continued to decline. The differences between the rural and urban youth employment rate is again getting smaller and smaller.

Table 19
Unemployment by categories and age
(Labour Force Survey)
November, Poland

Specification Total Age
15-19 20-24 25-29 30-34 35-44 45-54 55 <
Unemployment ('000)
Total 1992 2394 235 440 358 355 631 261 112
1994 2375 239 479 321 342 630 275 88
1996 1961 162 430 252 254 530 262 71
Men 1992 1172 124 224 182 146 299 125 73
1994 1135 122 237 148 150 298 132 50
1996 911 94 199 120 102 229 124 45
Women 1992 1221 112 215 176 209 333 136 40
1994 1240 118 243 173 193 333 143 37
1996 1050 69 231 132 152 302 138 26
Urban 1992 1686 137 282 236 246 480 203 102
1994 1542 132 279 203 209 449 197 73
1996 1254 88 241 152 148 368 193 62
Rural 1992 708 99 158 122 109 151 58 10
1994 834 106 201 118 133 181 78 15
1996 707 74 188 100 106 162 68 9
Rate of unemployment (%)
Total 1992 13.7 36.4 26.1 16.9 13.1 11.3 9.1 5.9
1994 13.9 45.3 27.6 16.3 14.7 11.2 8.6 5.0
Men 1992 12.4 32.7 24.9 14.8 9.8 10.3 8.4 6.8
1994 12.3 39.9 25.7 13.1 11.8 10.2 8.1 5.0
Women 1992 15.2 41.9 27.4 19.7 17.3 12.5 9.8 4.8
1994 15.7 53.2 29.8 20.5 18.4 12.3 9.2 5.0
Urban 1992 15.8 44.2 28.8 18.7 14.3 12.6 11.0 13.8
1994 14.8 54.5 29.6 17.7 14.7 11.9 9.2 9.9
Rural 1992 10.3 29.4 22.3 14.2 11.0 8.5 5.7 0.9
1994 12.4 37.1 25.3 14.3 14.7 9.8 7.5 1.5
Note: Data about rate of unemployment in each group in 1996 not published yet.

Source: Economic Activity of Population in Poland (Labour Force Survey), The Main Statistical Office.


Table 20
Employment rate of youth - by age and location
Poland, 1992-1995

Specification