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  • People, Portraits, Perspectives: Improving Employability for Inclusive Growth in Hungary

    Output 2

    Technical report on labor market analytics for improved jobseeker profiling

    Social Protection and Jobs Global Practice

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    Disclaimer

    This report is a product of the International Bank for Reconstruction and Development / the World Bank.

    The findings, interpretation, and conclusions expressed in this paper do not necessarily reflect the views

    of the Executive Directors of the World Bank or the governments they represent. The World Bank does

    not guarantee the accuracy of the data included in this work.

    This report does not necessarily represent the position of the European Union or the Hungarian

    Government.

    Copyright Statement

    The material in this publication is copyrighted. Copying and/or transmitting portions of this work without

    permission may be a violation of applicable laws.

    For permission to photocopy or reprint any part of this work, please send a request with the complete

    information to either: (i) Ministry of Finance (2-4 József nádor tér, 1051, Budapest, Hungary); or (ii) the

    World Bank Group Romania (Vasile Lascăr Street, No 31, Et 6, Sector 2, Bucharest, Romania).

  • i

    Notes and acknowledgments

    This report has been delivered under the provisions of the Reimbursable Advisory Services (RAS) Agreement on Improving Employability for Inclusive Growth in Hungary, which is carried out in partnership with the Hungarian Ministry of Finance. It was prepared under the guidance and supervision of Cem Mete (Practice Manager, Social Protection and Jobs, Europe and Central Asia) and Tatiana Proskuryakova (Country Manager, Hungary and Romania). The report was drafted by a team consisting of Sándor Karácsony (Senior Economist, co-TTL), Natalia Millán (Economist, co-TTL), Alina-Nona Petric (Social Protection Specialist), Dorothee Buhler (Expert), Céline Ferré (Expert), and Nóra Teller (Expert). The team was supported by András Tamás Torkos and Andrei Zambor in Bucharest, and Amara Khiev in Washington, DC. The team is grateful for peer review comments received from Aylin Isik-Dismelik, György Molnár, and Manuel Salazar.

    The team would like to express its gratitude for the excellent cooperation, guidance, and timely feedback provided by the representatives of the Ministry of Finance.

    The team would also like to acknowledge the contributions from the report titled, “An Evaluation of the Profiling System of the National Employment Service in Hungary,” by the HÉTFA Research Institute, and the report titled, “Impact Evaluation of Active Labor Market Programs: Effectiveness, Results, Opportunities for Improvement,” developed by Strategopolis Kft. The team thanks the authors of these reports for being available for consultations as well as for the inputs provided.

    The report has benefited from several rounds of consultations with the Ministry of Finance, the Ministry of Human Capacities, the Ministry of Interior, the Hungarian Central Statistical Office, and the HÉTFA Research Institute. Local-level Hungarian stakeholders—mayors, public employment service officials from district and county government offices, managers of social inclusion projects, civil society representatives—in a number of Hungarian locations have also been consulted as part of the process of developing this report. The team is grateful for the inputs received from all counterparts. (A detailed list of consultations and further mission activities are presented as part of the Progress Reports delivered under the work program.)

    This document has been produced using the 2016 EU-SILC data files of the Hungarian Central Statistical Office. The calculations and the conclusions within the document are the intellectual product of the World Bank.

  • ii

    Contents

    Notes and acknowledgments ........................................................................................................................ i

    Acronyms and abbreviations ....................................................................................................................... iv

    List of figures ................................................................................................................................................ vi

    List of tables ................................................................................................................................................ vii

    List of boxes ................................................................................................................................................ vii

    Executive summary ....................................................................................................................................... 1

    Introduction .................................................................................................................................................. 6

    1 Recent trends and structural issues in the Hungarian labor market .................................................. 10

    2 Analytical framework and methodology ............................................................................................ 21

    3 Latent groups among the out-of-work and marginally employed in Hungary in 2016 ...................... 24

    3.1 Characteristics of the out-of-work and marginally employed .................................................... 24

    3.2 Latent groups among the out-of-work and marginally employed.............................................. 32

    4 Tailoring activation and employment support policies to the needs of the identified latent groups 39

    5 Technical inputs for revising the current profiling mechanism .......................................................... 48

    5.1 First profiling systems: data-assisted models ............................................................................. 48

    5.2 New profiling model proposed by HÉTFA ................................................................................... 50

    5.3 Potential limitations of the proposed profiling model ............................................................... 51

    5.3.1 The current model continues to have possible data limitations ........................................ 51

    5.3.2 Institutional resistance to a new model ............................................................................. 53

    5.3.3 Lack of connection between categories, individual action plans, and services offered ..... 54

    5.3.4 The need to update existing registries ................................................................................ 55

    5.4 Number of categories of jobseekers ........................................................................................... 55

    6 Findings and recommendations .......................................................................................................... 57

    6.1 Recommendations on client intake ............................................................................................ 57

  • iii

    6.2 Recommendations on client classification.................................................................................. 58

    6.3 Recommendations on service identification .............................................................................. 59

    6.4 Recommendations on service delivery ....................................................................................... 60

    References .................................................................................................................................................. 63

    Appendix A. Definitions of employment barrier indicators using EU-SILC data ......................................... 65

    Appendix B. Employment barriers and socioeconomic characteristics of out-of-work and marginally employed individuals according to latent classes, 2013 EU-SILC ............................................................... 67

    Appendix C. Employment barriers and socioeconomic characteristics of target population according to labor market status ..................................................................................................................................... 69

    Appendix D. Employment barriers and socioeconomic characteristics of public workers, target and working-age populations ............................................................................................................................ 74

    Appendix E. Employment barriers and socioeconomic characteristics of out-of-work and marginally employed individuals according to latent classes, 2016 EU-SILC ............................................................... 78

    Appendix F. Brief overview of ALMPs, public works, and social and employment cooperatives in Hungary .................................................................................................................................................................... 84

    Appendix