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The Hungarian employment rate has increased by nearly 19% since accession to the European Union

On 1 May 2004, ten new member states, including Hungary, joined the European integration. Free movement of labour is one of the fundamental principles of the European Union, so EU accession can have a major impact on the labour markets of the member states. Since the mid-2000s, the employment rate of the EU has risen by 9.2 percentage points, while that of the euro area is slightly behind, with an increase of 7.6 percentage points. The biggest change has taken place among the member states that joined after 2004. However, labour market differences between members have not levelled out. In addition, the crises of recent decades have affected countries differently. Hungary’s labour market has recorded the third highest rate of employment growth (18.6 percentage points), after Malta (24.8 percentage points) and Poland (21.2 percentage points). The data also highlight the key role of targeted national economic policies. The surge in employment in Hungary started in the 2010s. At the time of EU accession in 2004, employment stood at 56.6%, then remained at similar levels for almost a decade until 2013, before rising to 75% in the following period.

The economic cycles, including the recessions and periods of boom of the last two decades, have affected each member state differently, as their economic policies, and therefore their resilience to crises, have varied. For example, while in the mid-2000s Southern European countries still had unemployment and employment figures around or above the EU average, the crises of the past decade and a half, especially the euro area crisis, have had a persistent negative impact on this group of countries. (Previously at Oeconomus, we have written about the link between stress from macroeconomic events and employees’ health, and about the impacts on lifestyle.) Labour market data also show greater variation between Western European countries. However, in a European comparison, the Nordic and Western European member states, such as the Netherlands, Sweden and Denmark, have generally more favourable data for this indicator.

The figure can be referenced here: https://public.flourish.studio/visualisation/18318005/

Several of the countries that joined in 2004 had low employment rates in 2005, according to Eurostat. Over the past two decades, the Eastern and Central European countries have made significant progress and several of them, including Hungary, are now among the EU member states with higher employment rates.

There are greater differences in development pathways, with, for example, 3 million Romanians and 1.5 million Poles living and working in other EU member states. Poland and Romania had employment rates below the EU average in the early 2020s. Hungary had one of the lowest employment rates 20 years ago but is now among the EU leaders. In addition, emigrants tend to return after a few years working abroad.

The figure can be referenced here: https://public.flourish.studio/visualisation/18318440/

Overall, labour market trends have been positive, with unemployment falling by 4.1 percentage points between the first quarter of 2005 and the last quarter of 2023 in the EU and by a slightly smaller 3 percentage points in the euro area. In addition, the employment rate of the 27 EU member states rose by 9.2 percentage points, while the euro area’s employment rate increased by a slightly smaller extent, 7.6 percentage points. The progress made by the member states that joined the EU after 2004 played an important role in this improvement. Hungary’s labour market has recorded the third highest rate of employment growth (18.6 percentage points), after Malta (24.8 percentage points) and Poland (21.2 percentage points). The data also highlight the key role of targeted national economic policies. In Hungary’s case, they started in the 2010s. At the time of EU accession in 2004, employment stood at 56.6% and remained at similar levels until 2013. After that, there was a steady and strong increase, leading to 75% employment by the last quarter of 2023.

The figure can be referenced here: https://public.flourish.studio/visualisation/18318688/

Senior kutató | Published writings

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