Slowing recovery, new challenges: where is the Hungarian labor market headed?

By: Trademagazin Date: 2025. 03. 21. 10:56

The Hungarian Central Statistical Office (KSH) has published favorable labor market data for May: the unemployment rate fell to 4.4 percent, and the number of employed people increased. According to Márta Balog-Béki, the leading capital market analyst at the MBH Bank Analysis Center, this is an encouraging trend, but there are also several warning signs – especially in light of the restart of the economy and the effects of seasonality – writes Mfor.

Tight market, slowing easing

According to the expert, the tightness of the labor market remains decisive, and the signs of easing experienced in recent months are becoming increasingly faint. Although the decrease in inactivity on an annual basis remains marked, the increase in the number of unemployed people is continuing at a slower pace than before – this indicates that the easing is slowing down, or may even stop.

Seasonality also plays a role

Seasonal effects may also be behind the increase in employment – warns Márta Balog-Béki. The usual decline in the winter months is usually followed by a recovery in the spring, especially in agriculture and tourism. This could further reduce the unemployment rate in the coming months, even below 4 percent – according to the MBH Bank analyst, this could happen by the end of this year.

Recovery: opportunity and risk

The economic recovery in the second half of the year may also have an impact on the labor market – but this may also have its downsides. The expert draws attention to the fact that faster economic growth can also generate inflationary pressure, especially if real wages also grow dynamically. Therefore, in his opinion, it is crucial for companies not to think exclusively about hiring new workers, but to implement capital-intensive investments that improve efficiency.

“In recent years, many companies did not invest in technology or automation because cheap labor was available. This situation is now changing, and investment decisions must also be based on new foundations,” highlights Márta Balog-Béki.