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Tuesday, July 29, 2008

Hungarian Employment and Unemployment Both Drop In Q2 2008

Employment and unemployment both fell in Hungary in the second quarter of 2008. The solution to this othwise brain-baffling enigma is, of course, that Hungary now has an ageing and declining population, this falling unemployment is completely compatible with very low economic growth and large numbers of people leaving the labour force at the upper end in order to retire.

Hungary's unemployment rate declined in the second quarter from the first to a seasonally adjusted 7.6 percent, which compared with the 8 percent registered in the January-March period, according to the national statistics office (KSH) in Budapest earlier today.

The number of Hungarians employed at 3.87 million was up over the 3.84 million in the first quarter but down when compared with the 3.94 million registered in the second quarter of 2007. The last time the number of employed in Hungary was this low during the second quarter was in 2002. The number of employed was down by over 70,000 since end-June 2007, while there were some 20,000 more unemployed and 50,000 more inactive people in April-June than in the same period of 2007.

Thus we find that more than 50,000 people have “disappeared" from the Hungarian labour force in the space of a year.

So the central bank now has a problem, since as people leave the labour market to retire the labour market also tightens, reducing the room for monouevre in reducing interest rates due to the continuing pressure on wages, even as economic growth approaches stagnation point.

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