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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure HU-2020-21/986 Updated – measures in Hungary

Wage support for job creation/workforce support programme for companies (2021)

Munkahelyteremtő bértámogatás / Vállalkozások munkaerő támogatása (2021)

Country Hungary , applies nationwide
Time period Open ended, started on 18 May 2020
Context COVID-19
Type Legislations or other statutory regulations
Category Promoting the economic, labour market and social recovery
– Active labour market policies (enhancing employability, training, subsidised job creation, etc.)
Author Nóra Krokovay (KOPINT-Tárki) and Eurofound
Measure added 13 July 2020 (updated 15 June 2022)

Background information

The aim of the measure is to create jobs for registered job-seekers, reducing the level of unemployment (which has risen during the COVID-19 pandemic). Businesses may apply to the local branch of the National Employment Office (which acts as a state authority) for a full grant of 100% of wages for six months for employing a registered job-seeker, which is then reviewed. The candidate for the job can be stated in the application form or it can be selected (recruited) by the Employment Office. If the application is approved, the Office signs a contract with the employer which includes details and conditions about the grant. This is a de minimis subsidy, so the rules of decree 1407/2013/EU apply. (Meaning that certain sectors such as export-linked sectors, farming and fisheries are excluded).

Content of measure

Businesses that apply for this subsidy will receive 100% of the wages and social contributions of the employee for six months, but they must promise to keep them on for another three months at least after the grant period at their own expense. The subsidy cannot exceed HUF 200,000 (€595) per month including social taxes. The employer must choose between two options when applying for the support:

  • Headcount increase: the new hire will result in an increase or be level to the existing headcount at the firm (counting part-time workers as one) on the day the application is submitted
  • Net headcount increase: the new hire must be an addition to (or stay level with) the headcount average in the six months prior to submitting the application , meaning that any workers laid off due to the COVID-19 pandemic can be re-hired with the help of this subsidy.

The amount earmarked for this subsidy is HUF 80 billion (€238 million).

Updates

The following updates to this measure have been made after it came into effect.

01 February 2022

The programme was extended until funding runs out. The targeted groups are: * youth aged 25 and below * unemployed for one month or more Applications are open from 1 February 2022 and support is given for up to 90 days. The amount of the subsidy is the equivalent of 50% of the new hire’s wages with social contributions, but no more than 150% of the minimum wage (currently gross HUF 200,000 or €555 a month), in the case of full-time employees.

01 December 2021

The work experience support programme was extended to target disadvantaged groups:

  • first-time job-seekers aged 25-30 who did not meet the criteria for the previous round of support for youth with qualifications
  • registered job-seekers who had been on parental leave in the previous 12 months
  • job-seekers aged 50 and over
  • job-seekers transitioning from the public to the private sector (having left a public employee position within 30 days)

Applications are open from 1 December 2021 and support is given for up to 90 days. The amount of the subsidy is the equivalent of 100% of the new hire’s wages with social contributions, but no more than 150% of the minimum wage (currently gross HUF 200,000 or €555 a month), in the case of full-time employees.

15 September 2021

The measure has been extended to include a new measure, ‘Work experience support’. The amount of the new subsidy is the equivalent of 100% of the new hire’s wages with social contributions, but no more than the minimum wage in effect (currently gross HUF 167,400 or €465 a month), in the case of full-time employees and a proportionate amount for part-time workers. The target group this time is people with a low-education level. The subsidy can be claimed for 90 days with the obligation of providing training for at least 40 hours a month to the applicant. After the 90-month period support can be claimed in the ‘workforce support’ scheme, so these can be combined.

01 June 2021

An extended measure, ‘workforce support programme for companies’, was introduced with the target groups:

  • the young (under-25) unemployed
  • job-seekers registered for more than 1 month with the National Employment Services

The support comes in the form of a grant for six months maximum. Applications must be filed to the local government office ( járási hivatal ). The amount of the grant is 50% of the gross salary with taxes payable by the employer, but no more than HUF 100,000 per month (€278) for full-time employment, and a proportionate amount in case of part-time employment, which is also eligible. The new employee is hired through the recommendation of the National Employment Service (NFSZ).The government announced this measure as the extension of the sectoral wage support programme, but it is not limited to any sector. It is estimated that it would help over 10,000 job-seekers find employment. It can be combined with the COVID-19 related tax relief measure Relief of tax on labour for certain target sectors affected by COVID-19 .

15 October 2020

From 15 October 2020, the programme was extended with a budget of HUF 12 billion (€33.3 million). The extension is for five months, until 31 March 2021. The two target groups are now:

  • the young (under-25) unemployed
  • people with an education level of less than completed secondary school.

The amount of the subsidy is the equivalent of 50% of the new hire’s wages with social contributions, but no more than HUF 100,000 (€278) a month, in the case of full-time employees and a proportionate amount for part-time workers.

16 July 2020

As of 16 July 2020, the scheme will only accept applications from the following target groups:

  • applicants aged 15 to 25
  • the long-term unemployed, that is, persons who have been job seekers for six months or more.

The applications received before 16 July will still be decided based on the previous criteria. The Ministry for Innovation and Technology said that until July more than 34,000 registered job-seekers were approved for the job creation subsidy and 80% of these applicants were people who lost their jobs due to COVID-19.

Use of measure

The Ministry for Innovation and Technology announced it can help 70,000 people with the measure (calculated by expecting that most companies will apply for the maximum amount of subsidy). In May 2020, when the measure was announced, the number of those registered job-seekers in Hungary, who were in receipt of unemployment benefit or social assistance (income substitution) stood at around 160,000. In the extension of the programme launched on 15 October, some 25,000 people are expected to benefit from the measure, according to the Ministry’s estimates.

By July 2021, 19,000 job-seekers including more than 10,000 young people were supported in the workforce support scheme, a state secretary at the Ministry said. Employers applied for subsidies worth HUF 10 billion (€27.8 million) in the scheme.

The Scheme ‘Job creation wage subsidy’ was introduced on 18 May 2020 and was available until 31 August 2020. It contributed to the employment of 38,800 jobseekers, using HUF 45 billion (€125 million). Then the ‘Labour support for companies’ phase was introduced on 15 October 2020. Until mid-January 2021, the programme contributed to the employment of 31,000 jobseekers, using HUF 17 billion (€47.22 million) in funding.

The Ministry for Industry and Technology, a new ministry set up under the government formed in May 2022, said that May 2022 had been a very good month for employment with a record number of people working. More than 52,000 job-seekers were helped by the workforce support scheme by May 2022, and HUF 34 billion (€87 million) was spent in the scheme.

Target groups

Workers Businesses Citizens
Employees in standard employment
Unemployed
Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Public employment service
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement No involvement
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: N/A

Involvement

No involvement.

Views and reactions

There were no consultations with social partners in the autumn extension of the measure. Trade unions’ representatives said they had not even been informed about it, while employers’ organisation MGYOSZ said they were informed the day before the programme was launched. The head of the MASZSZ trade union confederation said the programme could even have the opposite effect: it could lead to layoffs rather than preventing them. It is possible that employers will let go of existing permanent staff only to replace them with new hires in the subsidised programme for five months. MGYOSZ welcomed the programme as a first step, but said they were rather expecting a renewal of the already expired short-time work scheme, which, however, is stalled.

Sources

Citation

Eurofound (2020), Wage support for job creation/workforce support programme for companies (2021), measure HU-2020-21/986 (measures in Hungary), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/HU-2020-21_986.html

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