Some key factors of catching up of the Hungarian economy

The analysis deals with the issue of labour force as a key factor in the problems of the Hungarian economy, more precisely with the labour shortage and its components. Labour shortages are only a superficial manifestation of the Hungarian economic problems, which are closely related to almost all neuralgic issues of the economy. The study examines these issues. 

  • The productivity lag of the Hungarian economy can mainly be explained by the low productivity of domestically owned SMEs. In addition to lower technological level, the decisive factor is that lower wage levels make it more difficult for them to access a highly skilled workforce and themselves spend less on training the workforce, too. 
  • Tax rates on wages are high in international comparison, despite tax cuts in recent years. Further reductions in taxes on wages are a key issue for improving productivity, as they also contribute to reducing emigration of skilled labour force. 
  • According to the European level data of the European Innovation Scoreboard (EIS) and the CIS (Community Innovation Survey), the innovation activity of Hungarian companies is rather low, here too SMEs are at a significant disadvantage. This is closely related to the lack of an innovative workforce. 
  • Providing a highly skilled and flexible workforce is the responsibility of the education system. Both the results of the PISA surveys and the high school drop-out rate, as well as the frequent reorganization of the vocational training system, show the low efficiency of the education system 
  • Quality of public institutional environment is crucial for corporate innovation. Hungary is not doing well in the so-called governance indicators. Over the past two decades, Hungary has experienced a marked deterioration in almost all government efficiency indicators. 
VOSZ (Vállalkozók és Munkáltatók Országos Szövetsége)
January 2020
Project leader:
Éva Palócz
Zoltán Matheika, Péter Vakhal, Tamás Gebei