The expected effects of EU subsidy policy on labour market development in the 2007-2013 period

Huzdik, Katalin

Keywords: positive economics, segmented labour market, normative economics, European Employment Strategy, New Hungarian Development Plan

The Hungarian labour market faces significant challenges in the upcoming period. The rate of employment needs to be raised from the current 59% to 70%, without any significant increase in the rate of unemployment, through the utilisation of EU resources. This will have a considerable impact on agrobusiness in such a way that – in keeping with international trends – the ability of agriculture to provide employment will fall. In light of this, and taking into account the economic laws of the labour market, sectoral development must serve both employment growth and effective production in the 2007-2013 period.

The necessity and importance of labour market flexibility came to the forefront of employment policy in the second half of the 1990s in particular, following the democratic transformation, as a result of globalisation and growing unemployment in Western Europe. Greater labour market flexibility has became important, because international competition is growing increasingly hard (Hungary’s accession also creates growing competitiveness), and the companies that can expect better results and improved competitiveness on global markets are those that can adapt flexibly to changing market expectations. Important elements in adapting to the market are the labour market’s terms and conditions and the active and passive skills of the employed; in other words, the extent to which employed labour can be adapted fast and flexibly to changing market requirements. This, however, requires knowledge of the forces that move the labour market and how these work, as well as how labour market theories developed, which can have a significant role in the implementation of necessary measures and the highlighting of the correct goals.