HUNGARY: Mounting recession in Hungary eating away at jobs in the country's extensive black and grey economy

Record ID: 809192

  • Title: HUNGARY: Mounting recession in Hungary eating away at jobs in the country's extensive black and grey economy
  • Date: 20th July 2009
  • Summary: BUDAPEST, HUNGARY (FILE) (REUTERS) CONSTRUCTION SITE BY DANUBE NEAR ERZSEBET BRIDGE CONSTRUCTION WORKER GIVING INSTRUCTIONS DIGGER AT WORK ON CONSTRUCTION SITE APARTMENT BUILDING UNDER CONSTRUCTION VARIOUS OF WORKERS CUTTING METAL
  • Embargoed: 4th August 2009 13:00
  • Keywords:
  • Location: Hungary
  • Country: Hungary
  • Topics: Economic News,Employment
  • Reuters ID: LVA6PM6ZK4J8XTO083YV2BOCQ86G
  • Story Text: A mounting recession, which has pushed registered unemployment in Hungary close to 10 percent, is also fast eating away at jobs in the country's extensive black and grey economy.
    Thirty one year old Sandor Macsek, an ethnic Hungarian from neighbouring Romania, sustains himself from day jobs taken at Moszkva Square, a key traffic hub in Budapest which has also operated as one of the city's main illegal labour markets since the fall of communism 20 years ago.
    Macsek now knows what it means to literally wrestle with competition for a job.
    A bricklayer, road paver and cook, he has always managed to find work since he first came to Budapest in 1991, but the economic crisis which drove Hungary to the brink of financial meltdown in October, has also hit the illegal jobs market.
    "There are fights, people get into brawls over who gets to work," said Macsek.
    "It wasn't always like this. In the old days everyone could go, there were jobs for everyone, but now there aren't," he added.
    The number of registered unemployed in the March-May period, the latest for which data is available, rose by over 21 percent from a year earlier to 409, 700 while the number of employed dropped slightly to 3.78 million in a country of 10 million.
    Most jobs were lost in industry and construction and with the economy expected to shed 6.7 percent this year and remain in recession next year, workers at this busy square in Budapest are growing increasingly desperate.
    "We have been here since last month, but did not work one single day. I have never seen anything like this. Last year was better, we could find some work, but now we find nothing at all," said Bela Varga, a worker from Romania.
    "We came together with our family, but we actually don't know what future will bring for us, but I guess the end will not be happy. People don't come to us -- the companies are dead, so there is no possibility for work," he added.
    The government estimates the size of the grey economy at 17-18 percent but that proportion is higher in labour-intensive sectors, mainly construction, where unregistered workers are routinely exposed in raids by authorities as the government tries to clamp down on illegal employment.
    According to a joint World Bank and government report on black employment published last year, the number of illegal workers in Hungary totalled 630,000-670,000 between 2001 and 2005, or 16-17 percent of the total workforce.
    Another government commissioned report on the grey economy said that in 2007 alone, Hungary's labour market authority unveiled 72, 743 cases of illegal employment.
    Prospects for job seekers in the black economy turned bleak after the global crisis, which prompted Hungary to ask for an International Monetary Fund-led bailout last October.
    "There will be a huge disaster because people still come here to work, but they can not and they are afraid," said 25-year old Jozsef Kanalas, who can be a bricklayer, painter or gardener, depending on the job he gets.
    He said pay has also come down significantly.
    "The daily wage we get has dropped a lot. While last year you could get 7,000 to 10,000, (25 - 36 euro approx) now you can not get a job for even 2,000 forints (7 euro approx)," he added.
    The National Bank of Hungary has said that it expects lay-offs of around 180, 000 this year and next, or around five percent of the total number of employed workforce, which may push the registered jobless rate above 11 percent.
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