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Hungary – Shortage occupations and their regulation

A study was recently conducted on the shortage occupation phenomenon in Hungary. It relied on interviews, document analysis, and a survey involving 2 500 students training for any of the officially designated shortage jobs.

The study revealed that about half of the students who train for a shortage occupation of low prestige wanted to learn something different. Their poor grades, however, prevented them from being admitted to the programme of their original choice. Not surprisingly, their low motivation and lack of commitment result in a higher-than-average dropout rate. Those who do complete the training programme are more likely to switch to another job. Eight months after completing their training, one third of qualified skilled workers work in a job they trained for. However, less than one third of those who trained for a shortage occupation end up being employed in such a job.

Since 2008, regional development and training committees have created annual lists of shortage occupations. The lists are drawn up on the basis of estimates provided by employers on their employment needs in the next four years. The methodology of the survey has been subject to criticism by a variety of experts and stakeholders since companies have a strong interest in indicating higher labour shortage estimates than their actual demands.

Labour shortage is a matter of perspective. The employer who is unable to hire workers at a given wage may perceive it as labour shortage. The perception of shortage may be fuelled further by the high rate of fluctuation that is characteristic of these jobs, on account of low wages and hard working conditions. A survey by the EBRD and the World Bank revealed that, in comparison with other countries in the region, it takes in fact less time for Hungarian employers to hire skilled workers.

A large number of people – several times more than the demand reported by employers – who have trained for a shortage job can be found among the registered unemployed. Those trained in a shortage occupation often find it impossible to secure an actual job, or possible only at rather unfavourable conditions.

In 2010, a scholarship programme was launched for vocational school students training for a shortage occupation. The monthly stipend amount is quite significant, attracting students from poor families. VET schools are also motivated to run training programmes in shortage occupations; they receive higher support from the state per capita, and are entitled to more cost deductions than in ordinary training programmes. Unlike the majority of VET programmes, there is no limit on the number of students schools can admit to shortage job trainings.

So why are the shortage occupation listings and their respective regulations maintained? The reasons are twofold. First, the simplistic model of running a ‘planned economy’ that was characteristic of the state socialist era is going through a renaissance now. The principle is simple: what is in short supply should be produced in bigger quantities. Actual occupation needs of the economy, however, are not that easy to forecast. Instead, they are contingent on a multiplicity of factors, such as the dynamics of supply and demand, growth trends, geographic and career mobility, alternatives of division of labour, the theoretical grounding and quality of VET, the learning ability of the labour force, transferability of skills and knowledge, technological investments, and so forth.

Second, regulation of shortage occupations has been influenced by heavy lobbying. The training of bricklayers, for instance, is quite a profitable business so keeping it on the shortage lists is obviously in the interest of training providers. Further, increase in VET output of less popular occupations may keep wages permanently low.

News Details

19/10/2012
ReferNet Hungary