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

Factsheet for case 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 Temporary, 18 May 2020 – 31 March 2021
Type Legislations or other statutory regulations
Category Promoting the economic, labour market and social recovery
– Active labour market policies, incl. subsidised job creation
Author Nóra Krokovay (KOPINT-Tárki) and Eurofound
Case created 13 July 2020 (updated 20 July 2021)

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 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.

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

  • 18 May 2020: NFSZ (2020) Munkahelyteremto berkoltseg tamogatas (Support for wage costs for job creation – announcement
  • 18 May 2020: Govt launches wage support programme (index.hu)
  • 14 July 2020: New criteria for job creation wage support (www.portfolio.hu)
  • 15 October 2020: New state subsidy for wages available (www.portfolio.hu)
  • 15 October 2020: Details of 5-month wage support
  • 15 October 2020: Wage subsidy only droplets (nepszava.hu)
  • 17 November 2020: Wage support programme launched (www.kormanyhivatal.hu)
  • 31 May 2021: Workforce support programme for companies (nfsz.munka.hu)

Citation

Eurofound (2020), Wage support for job creation/workforce support programme for companies (2021), case HU-2020-21/986 (measures in Hungary), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.