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MONOGRAPHSCANDIDATE COUNTRIESVOCATIONAL EDUCATION ANDTRAINING AND EMPLOYMENTSERVICES IN HUNGARY

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VOCATIONAL EDUCATION ANDTRAINING AND EMPLOYMENTSERVICES IN HUNGARY

Prepared by:Tamás Köpeczi Bocz, National Institute for Vocational EducationIstván Sum, Ministry of EducationMária Ladó and Joszef Bagó, Ministry of Economic AffairsLewis Kerr, Madeleine Gunny and Jean-Raymond Masson, European Training Foundation

A great deal of additional information on theEuropean Union is available on the Internet.It can be accessed through the Europa server(http://europa.eu.int).

Cataloguing data can be found at the end ofthis publication.

Luxembourg: Office for Official Publications ofthe European Communities, 2004.

ISBN 92-9157-294-2

Reproduction is authorised, provided thesource is acknowledged.

Printed in Italy

TABLE OF CONTENTS

EXECUTIVE SUMMARY 5

1. INTRODUCTION 17

2. VOCATIONAL EDUCATION AND TRAINING AND LIFELONG LEARNING

IN THE CONTEXT OF THE NATIONAL EMPLOYMENT POLICY 21

2.1 Overview of the initial vocational education and training system 21

2.2 Responsiveness of the initial vocational education and training systemto the needs of the labour market and the individual 45

2.3 Contribution of the education and training system to promoting socialand labour market inclusion 50

2.4 Contribution of the education and training system to promotingentrepreneurship 51

2.5 Contribution of the education and training system to promoting equalopportunities between males and females 51

2.6 Conclusions 51

3. CAPACITY OF PUBLIC AND PRIVATE EMPLOYMENT SERVICES TO SUPPORT

THE AIMS OF THE NATIONAL EMPLOYMENT POLICIES 55

3.1 Organisational structure 55

3.2 Resource allocation to the public employment services 59

3.3 Coverage of public employment services 63

3.4 Range and quality of services 64

3.5 Role of private employment services 66

3.6 Reforms of public employment services 68

3.7 Support for implementing the European Employment Strategy 69

3

ANNEXES 71

ANNEXES TO CHAPTER 2 71

1. Change in the titles of the funding sources and the relevant acts of law 71

2. Law on Adult Education 72

3. Subsidies provided on the basis of decentralised applicationsfrom VET funds (in thousands HUF) 84

4. Payment of vocational education and training contribution in 1998-2000 85

5. Vocational education and training contribution (in billion HUF) 86

6. Costs booked by businesses for the training of their own employees againstthe vocational education and training contribution, by region (in 2000) 86

7. Higher vocational qualifications in the NVQR (AIFSZ system) 86

8. Number of institutions participating in AIFSZ training between 1998 and 2001 87

9. Institutional settings 87

ANNEXES TO CHAPTER 3 91

10. Brief history of the PES 91

11. Extracts from the Act IV of 1991 on the promotion of employment andproviding care for the unemployed – related to the functions andresponsibilities of the PES 92

12. The major features of the Labour Market Fund 94

13. Staffing and tasks of the County Labour Centres 95

APPENDICES 97

1. Extracts from the Joint Assessment Paper on Employment (JAP),relating to the PES 97

2. Extracts from the project fiche on Modernising the Hungarian PES,relating to the strategic objectives of the PES 98

LIST OF ACRONYMS 99

4

VOCATIONAL EDUCATION AND TRAINING AND EMPLOYMENT SERVICESIN HUNGARY

EXECUTIVE SUMMARY

1. THE CONTEXT

1.1 ECONOMIC DEVELOPMENT

Source: Central Statistical Office, Hungary

� The Hungarian economy is a

functioning market economy.Between 1995 and 2000 GDP andeconomic output (productivity)increased faster in Hungary than theaverage growth rates of the memberstates of the European Union, but froma much lower base (�50.3 billion or�115.1 billion purchasing powerstandard (PPS) in 2000)1. The relativelylow growth rates in GDP recorded in1995 and 1996 reflect the impact of theausterity measures introduced in early

1995. Labour productivity showednegative growth in 1997 and 1998 andlow growth in 1999, but in other yearsduring this period growth was strong.

� In 2000 GDP per capita in Hungary(11,500 PPS) was 52% of the EUaverage2, but this figure disguisessubstantial regional disparities. In theSouth Great Plain and the North GreatPlain GDP per capita was less than onethird of the EU average in 19993.

� Three quarters of Hungary’s exports goto EU markets4.

5

1992 1993 1994 1995 1996 1997 1998 1999 2000

GDP index(1989=100) 82.4 81.9 84.3 85.5 86.6 90.6 95.1 99.3 104.6

Industrialoutput (%) -9.7 4.0 9.6 4.6 3.4 11.1 12.5 10.7 18.0

The country monograph on vocationaleducation and training and employmentservices provides a baseline for theassessment of progress in implementingthe priorities identified in the JointAssessment Paper on Employment Policy

(JAP) agreed between the government ofHungary and the European Commission.Current EU policies based on the Lisbonconclusions, such as the lifelong learninginitiative, and the European EmploymentPolicy set the framework for the analysis.

1 Eurostat

2 ibid.

3 Central Statistical Office, Hungary

4 ibid.

1995 1996 1997 1998 1999 2000

Unemployment rate (%)5 10.2 9.9 8.7 7.8 6.9 6.6

1.2 KEY EMPLOYMENT AND LABOUR

MARKET DEVELOPMENTS

� The unemployment rate has

decreased substantially since the

mid 1990s and has been below the

EU average for nearly all that period.The decrease in the unemployment ratesince 1995 is greater than in any of theother Central and Eastern Europeanacceding and candidate countries andin many EU member states during thesame period. However, there remainregions (South Great Plain, North GreatPlain and Northern Hungary) in whichunemployment remains high, with blackspots as high as 25%. These regionssuffer from a lack of foreign directinvestment, poor transportinfrastructures and the out-migration ofskilled workers to the more prosperouswestern regions.

� Unemployment data continue todemonstrate the vulnerability tounemployment of the poorly qualified. In1998 unemployment rates amongst thepopulation aged 25–64 varied between1.4% for those with tertiaryqualifications, 5.8% for those with uppersecondary education and 11.1% forthose with less than upper secondaryeducation6.

� Activity rates remain low (59.9% overall;67.6% male and 52.5 female)7,particularly amongst the femalepopulation and the 55–59 age cohort.These figures are below the EUaverage (69.0%) and below the rates forany of the other Central and EasternEuropean acceding and candidatecountries. The 55–59 cohort are oftenlow-skilled and unable to adapt to thechanging demands of the labourmarket.

Only 11% of the 15–19 age cohort areeconomically active, but this may beexplained by the extension ofcompulsory education to the age of 18and consequent high participation ratesin education.

1.3 DEMOGRAPHIC DEVELOPMENT

� The Hungarian population is ageing.

In 1999 around 12% of the totalpopulation of 10.1 million was in the agegroup 5–148 – the same percentage asin the Czech Republic and close to theOECD average of 13%, but somewhatless than in Poland (15%) and theSlovak Republic (15%). The youthpopulation (15–19 year-olds) was 7% ofthe total (as in the Czech Republic andon average in OECD countries), a littleless than in Poland (8%) and the SlovakRepublic (9%). Both age groups are

projected to contract in the period upto 2010, when the 5–14 age group willbe only 79% of its current size, whilstthe 15–19 age group will havecontracted by about 8% (i.e. will be 92%of its current size)9. The size of the

young adult age group (20–29 years)

is also projected to contract over thenext decade, and by a greater degree(22%)10 than the same age group in theSlovak Republic (6%); the same agegroup in Poland is projected to grow by4%. The OECD average is a 7%contraction and the Czech Republic a21% contraction11.

2. FOUNDATIONS FORLIFELONG LEARNING

� While the Adult Education Act (2001)provides the legal framework for the


6

5 Eurostat

6 OECD Employment Outlook, 2001

7 Eurostat

8 Central Statistical Office

9 ibid.

10 ibid.

11 Education at a Glance, OECD, 2001

provision of lifelong learningopportunities, the concept of lifelong

learning is not well-embedded,

particularly at county and

municipality levels. There is littleunderstanding, at this level, of theimplications of a lifelong learningperspective on training opportunities.

A holistic approach to promoting

lifelong learning is being adopted insofaras initial and continuing vocationaleducation are linked through a commonqualification instrument, the NationalVocational Qualification Register (NVQR).However, the links between the two sectorsremain weak in implementation due to alack of cooperation between the lineministries and, at county and municipalitylevels, their respective agencies andcouncils.

There have been three significant

initiatives in Hungary that have the

potential to promote lifelong learning.

� The nine Labour Market Developmentand Training Centres have the potentialto become regional centres ofexcellence in the provision of lifelonglearning opportunities. In someinstances this potential has alreadybeen realised.

� The Development and Training Fund,financed by a specific contribution fromenterprises, is a sub-fund of the LabourMarket Fund and is used to finance thetraining of employed people.

� The NVQR provides a unifiedqualification system.

2.1 PARTICIPATION IN EDUCATION

AND EDUCATIONAL ATTAINMENT

Educational attainment levels are

relatively high. Two-thirds of thepopulation aged 25–64 in 1999 hadattained at least upper secondaryeducation, with 40% of the age groupgaining the maturita and 26% not. TheHungarian rates for upper secondary

education are above the EU average of60% and above Poland at 54% but belowthe Czech Republic at 87% (Portugal 21%,Spain 35%, Italy 42%, Greece 50%, Ireland51%)12. In the 25–34 cohort 80% have atleast upper secondary education (ISCED 3).Some 13.5% of the 25–64 cohort hadattained a tertiary level qualification, whichis close to the OECD average of 14%13, butsomewhat below the EU average of 21%.These figures contrast with rather lowresults in the International Adult LiteracySurvey, which indicated that only one thirdof the adult population had prose literacyscores at level 3 or above (OECD countrymean 53%, Poland 24%, Czech Republic58%)14. However, the more recent PISAstudy reports that 52% of 15 year-olds hadreading skills at level 3 or above (OECDcountry mean 61%, Poland 53%, CzechRepublic 58%). This suggests that thelower skilled are amongst the older agegroups.

� Since 1990 there has been a substantialshift away from the vocational schoolprogrammes towards secondarygeneral and secondary vocationalprogrammes (leading to the maturita),which now cater for more thanthree-quarters of all secondarystudents. This represents a major

shift towards educational

programmes leading to higher

qualifications.

� Participation in and provision of

vocational education and training

(VET) is high in Hungary, although

lower than in Poland. In 1999/2000475,000 students and trainees weretrained in 1,521 institutions, of which1,229 provided some vocational trainingprogrammes (81%)15.

� The dropout rate from VET has beenreduced from 15.3% (1995) to 3.1%(1999) in secondary general andvocational schools. However, invocational schools the figure remainshigh, although it is decreasing. In1996/97 it was 23%, in 1999/2000 it isestimated to have dropped to

7


13 ibid.

14 ibid.

15 Hungarian National Observatory

14.1%16. With the introduction of morerelevant curricula this figure is expectedto drop still further. The government’starget is to reduce the dropout rate by50% by 2006 and to zero by 2010.

� Enrolment in higher education morethan doubled between 1990 and 1997.The net entry rate in tertiary type A was58% (1999). In the four years between1995 and 1999 enrolment increased by64%. Over the same period there wasan 84% increase in Poland and a 37%increase in the Czech Republic. In 1999the average number of years a youngperson in Hungary could expect tospend in tertiary education throughoutone’s lifetime was 1.8 years, comparedwith 1.4 years in the Czech Republic,2.3 years in Poland and 2.5 years, onaverage, in OECD countries17. A genderimbalance in favour of women hasincreased over the past five years.

Participation rates in continuing

vocational training (CVT) are low.

According to OECD figures (based on theInternational Adult Literacy Survey (IALS)),the participation rate of the 25–64 cohort,at 18%, is higher than those in Poland(14%) and Portugal (13%), but well belowthose of many other OECD countries18.However, the participation of adults informal education as a part of CVT (266,000in 2000) is increasing significantly.

� The Eurostat CVT2 Survey reports that37% of enterprises in Hungary providedtraining for employees, a figure thatdoes not compare well with otheracceding and candidate countries. OnlyBulgaria and Romania reported lowerlevels of provision. Participation rates inCVT courses provided by companies

are low (26% of employees) comparedto rates in other acceding and candidatecountries (Czech Republic 49%,Slovenia 46%)19. The same survey, inwhich nine acceding and candidatecountries participated, reported anaverage of 38 hours in CVT courses perparticipant in Hungarian enterprises in1999. This is a relatively high levelcompared to other acceding andcandidate countries with only Romania(42) and Lithuania (41) reporting morehours per participant.

� Only 10% of registered unemployed

people follow training programmes

funded through the PES20

. The PESestimates that it provides services forbetween 60% and 70% of unemployedpeople, but such services include bothpassive and active measures. Greaterflexibility in the provision of training forunemployed people and a moresensitive benefit system are required ifthere is to be a greater take-up of theactive measures administered throughthe PES.

2.2 FINANCIAL RESOURCES

� In 1998 5% of GDP was dedicated to

education. This is slightly below the

OECD average (5.5%), but compares

well with other acceding and

candidate countries. Of this 5%, 0.8%was allocated to pre-primary education(ISCED 0), 1.9% to primary education(ISCED 1 and 2), 1.1% to secondary,0.1% to post-secondary and 1% totertiary21. The Hungarian NationalObservatory estimates that VETaccounted for approximately 0.8% ofGDP in 1995, 0.9% in 1996 and 1.0% in2000.

8


Percentage distribution of expenditure on active and passive measures

1992 1996 1997 1998 1999 2000

Active 21 33 41 39 41 45

Passive 79 67 59 61 59 55



18 ibid.

19 CVTS2

20 Employment Office, Hungary

21 OECD/WEI

� Expenditure per student at uppersecondary level was �2,600 PPS in1998. The cost per student in highereducation was �5,500 PPS. Bothfigures are considerably below theOECD average, (�6,500 and �9,900respectively).

� Education is funded directly from thestate budget and vocational training is

funded both through the budget and

through the Development and

Training sub-fund of the Labour

Market Fund created through a trainingtax of 1.5% of wages levied onemployers. The sub-fund is used, inpart, to reimburse the costs of practicalin-company training for VET schoolstudents and to subsidise VET schoolsthrough the procurement of new trainingequipment. This contribution fromenterprises represents approximatelyone-third of the budget for vocationaltraining.

� Hungarian companies invested 1.2%

of labour costs in training in 1998(CVTS2); some of this investment canbe reimbursed through theDevelopment and Training sub-fund(see above). A maximum of 33% of thelevy paid into the fund can be used forthe training of the company’s ownemployees. In-company training for staffis offered by far fewer enterprises in

the less developed regions.

� Public expenditure on Employment

Policy amounted to 0.87% of GDP in

200022, compared to 3.69% in Belgium

and 3.12% in Germany (these countries

having comparable unemploymentrates).

� Active and passive employmentmeasures are financed through theEmployment sub-fund of the LabourMarket Fund. The Employment fund isfinanced by a levy of 3% of labour costson employers and 1.5% on employees.

� The government is placing greateremphasis on active measures ratherthan passive measures, particularly asunemployment is increasingly structural.

3. INITIAL VOCATIONALEDUCATION AND TRAINING(IVET)

Since the early 1990s Hungary hasderegulated its education system, givingsignificant autonomy to schools andmunicipalities and organising an in-depthdecentralisation at county level as far assecondary and VET schools areconcerned. Local and private initiativeshave been encouraged in terms of thecreation of new curricula and pathways,often with the support of different donors,among them the European Commission(through the Phare programme) and theWorld Bank, which have tried to developcurricula in accordance with the needs ofthe labour market. As a result, a realchange has taken place, with manyreforms benefiting from these initiatives.Nevertheless, the transparency of theoutcomes of the different initiatives is nowan issue.

9

1992 1996 1997 1998 1999 2000

Unemployment rate in % 10.7 9.9 8.7 7.8 6.9 6.6

Total Expenditure on active and passive employment measures

million EUR 810.9 405.0 433.3 421.7 435.5 433.8

% of GDP 2.81 1.13 1.07 1.01 0.96 0.87

Expenditure on active measures

million EUR 174.3 133.4 179.2 163.1 180.7 196.1

% of GDP 0.61 0.37 0.44 0.39 0.4 0.39

Expenditure on training

% of GDP 0.15 0.08 0.08 0.07 0.07 0.07

22 Employment Office

10


The provision of initial VET is nowdecentralised to the 19 counties and theBudapest administration. The legalframework makes provision for the fullinvolvement of the social partners, but inreality there is little involvement ofemployers’ and employees’ associations atcounty and local levels, and there is a lackof cooperation between the VET schoolsand local employment services.

3.1 POLICY AND LEGAL FRAMEWORK

Since the early 1990s Hungary hasdeveloped a comprehensive legal structurefor an education system designed torespond to the needs of a market economy.Each of the four major laws makes provisionfor the full participation of the socialpartners. The Vocational Education andTraining Act, 1993, regulates the provisionof initial and continuing VET in schools andpublic and private training centres; thePublic Education Act, 1993, establishes thestructure of the public education system; theHigher Education Act, 1993, establishes thestructure and governance of highereducation institutions, ensuring theirautonomy and academic freedom; and theAdult Education Act, 2001, regulates theprovision and financing of adult trainingservices in the public and private sectorswith the aim of promoting lifelong learning.

The county-level vocational education andtraining committees were replaced in 2001by regional development and planningcommittees. This reflects governmentpolicy to establish structures for regionalplanning, but as the financing of educationis channelled through the counties andmunicipalities, the authority of the regionalplanning committees is limited.

3.2 RESOURCES

Teachers

� Student/teacher ratios (10:3 in generalsecondary schools and 13:3 invocational secondary schools23) are lowcompared to other OECD countries(OECD country mean 14:6). Given thedemographic decline reported above,

the number of teachers and trainersemployed in the system would beexpected to drop.

� Teachers have high qualifications,usually at the tertiary level, as requiredby their status as civil servants, but

they are an ageing cohort, some of

whom have difficulty in adapting to

new teaching situations.

� Given the current poor salary structuresfor teachers, it is difficult to attract andretain new teachers and trainers into thesystem. The government is seeking toaddress this issue by planning toincrease teachers’ salaries from thecurrent 100% to 125% of the nationalaverage by 2006.

� Pre-service training is dislocated

from the school system. It is offered at17 universities and colleges where thestudents graduate in their specificsubject. However, the traininginstitutions are not involved in thedevelopment of new curricula and thereis no tradition of classroom-basedresearch, bringing the training institutionand the school together.

� The upgrading of teaching staff and, inparticular, of the managerial staff inschools is crucial to the success inextending new curricula throughout thecountry. The implementation of newcurricula requires a new managementapproach to the provision of training, acapacity which is lacking at regional andcounty levels.

Equipment

� A dedicated education server,

Sulinet, offers email, Internet and

database services to more than 2,000

schools throughout the country24

.

There are an average of 30 computersper school, and OECD figures show that41% of lower secondary schools inHungary have access or intend to haveaccess to email/the Internet forinstructional purposes. This is the samefigure as for Belgium, but Hungary isconsiderably below other OECDcountries for which data are available.In 2000, 1,300 VET schools hadInternet access.


24 Ministry of Education

� Many school workshops are stillequipped with obsolete trainingequipment inherited from the socialistperiod. However, one of thegovernment’s priorities is to re-equipschools through a number ofprogrammes under the umbrella of ‘theSchool for the 21st Century’.

3.3 STRUCTURE AND ORGANISATION

� Reforms deriving from the Vocational

Training Act (1993) have been

on-going since 1998. The act seeks tointegrate initial and continuing VET andto provide a framework for the provisionof VET in a market economy. The actestablished the NVQR, which ismaintained by the National Institute forVocational Education (NIVE). The NIVEis currently collaborating with theNational Vocational Education Councilin developing competency-basedqualifications for new occupationalprofiles identified with the involvementof employers’ associations andentrepreneurs at national level.

� Compulsory education has been

extended to age 18 and is free inpublic schools. School-life expectancy(16.0 years)25 is the same as in Poland,greater than in the Czech Republic(15.1 years) but less than the OECDaverage (16.7).

� In 1998/99 114,000 pupils completedprimary education and 108,800 (96%)continued their studies in secondaryinstitutions26, following one of threepathways:� secondary general schools (32%),

leading to the maturita examinationgiving access to higher education;

� secondary vocational schools (39%),leading to the maturita examination,giving access to vocational collegesand higher education;

� vocational schools (25%), leading toentry to the labour market27.

The preponderance of students followingeducation paths leading to entrance toinstitutions of higher education supports

the government’s policy of increasing thepercentage of students passing thematurita examination to between 80% and85% of the school population by 2006.

� The on-going reforms initiated in

1998, which began the development ofnew curricula and introducedpre-vocational training in the secondaryvocational schools, allow for greater

transparency and horizontal

permeability in the structure of

vocational training. Pre-vocationaltraining (up to the age of 18 insecondary vocational schools) preparesstudents with a wider, more adaptablerange of vocational skills which can beapplied to specific vocations inpost-secondary training in vocationalcolleges or institutions of highereducation.

� The reformed NVQR, which seeks toreduce the number of single-occupationqualifications and increase the number ofmore generally applicable qualifications,will be more transparent and will introducemodular curricula which should

contribute to the promotion of lifelong

learning. The new curricula are graduallybeing adopted by schools throughout thecountry with an associated trainer trainingprogramme, but in the less developedregions there is a lack of capacity toimplement the reformed curricula.

� A new maturita examination, consistentwith the competency-based curricula,will be introduced in 2005.

� Hungary operates a modified dual

system for secondary vocational

school and vocational school

students mediated through the

chambers of commerce. Students donot become the employees of theenterprises offering practical training,but work under a training contract. Thequality of the practical training provisionvaries from region to region and fromsector to sector. In the service sector75% of practical training was providedby enterprises, while in the industrialsector the figure is only 55%28.

11

25 These figures pre-date the extension of the compulsory education to the age of 18.


27 ibid.

28 ibid.

3.4 DELIVERY

� While there is evidence of the activeinvolvement of social partners in thedevelopment of policy and curricula atnational level, this is less apparent atcounty and municipality levels.

� In addition to monitoring the trainingcontracts (see above), the chambers ofcommerce provide trainer training formaster craftsmen and certification forthe training provided.

3.5 RESPONSIVENESS OF IVET TO THE

NEEDS OF THE LABOUR MARKET AND

THE INDIVIDUAL

� Guidance and counselling is providedin the primary schools and in thesecondary vocational and vocationalschools. Local labour offices alsoprovide guidance and counsellingservices, but both suffer from a lack ofadequate labour market intelligence anda tendency for student and parentalpreferences to over-ride market needs.

� Vocational specialisation is nowdeferred until the age of 18 forgraduates of secondary vocationalschools and the age of 16 in vocationalschools. Prior to specialisation studentsfollow general and pre-vocationaltraining with the objective of providingthem with a range of vocational skillswhich can be applied in a wider range ofjobs.

� The integration of Roma into

mainstream education (starting atpre-school age) remains a problem.Only 1.5%29 of the school-age Romacommunity complete secondaryeducation and a disproportionatenumber are consigned to schools forchildren with learning difficulties.However, the government recognisesthis issue and there are a number ofinitiatives at local and national levelwhich are designed to facilitate theintegration of Roma children into themainstream.

� The Public Education Act (1993)provides for equal opportunities in

education and there is no legal genderdiscrimination in education. However,activity rates show a low level of activityamongst females between the ages of20 and 24 (50%) and older women(21%)30.

� All training at ISCED 5 level is required toinclude a module on entrepreneurship

by the NVQR. At ISCED 3 level,enterprises offering practical trainingplaces are required to develop acomponent in entrepreneurship with thetrainee’s school.

� The developments in IVET during the1990s, which were characterised byextension and diversification ofeducation and training provision and anevolving private training market, have at

least partially contributed to making

the system responsive, to both thelabour market and individual needs.

4. CONTINUING VOCATIONALTRAINING (CVT)

While participation in CVT is increasing(266,000 in 2000)31, Hungary stillcompares poorly with other future memberstates.


� The recently adopted Adult EducationAct regulates the provision of training inthe public and private sectors. Theobjective of the act is to establish aframework in which lifelong learning,within the context of employmentstrategies, can develop. Newcompetency-based profiles are beingdeveloped by bipartite committees(employers’ associations andgovernment representatives) within thestructure of the National VocationalQualification Register on the same basisas the profiles being developed for IVET,and trainers’ skills are being upgraded todeliver the new materials. Furthercapacity building will be necessary toensure the effectiveness of socialpartnerships.

12


29 EU Barometer on Human and Trade Union Rights in the Education Sector, 2001

30 Central Statistical Office


� Through strengthening socialpartnerships at county and regionallevel, the government is seeking furtherto integrate labour market surveys andeducation and training, and to extendaccess to training for disadvantagedgroups.


� Training for unemployed people isfunded through the Employment Fund.Labour offices at county level launchtenders for the provision of training.Both public and private traininginstitutions, including VET schools, maysubmit bids for the tender. The mainproviders of training for the unemployedare the Regional Labour Developmentand Training Centres, which are underthe authority of the Ministry ofEducation, but the private sector alsomakes a contribution. There is little

control of the quality of the provision

of training, as the funding channels,the county and local labour offices, donot have supervisory authority over thetraining providers, which are registeredby the Ministry of Education. The

criterion for evaluation is attendance,

not output.

� In 1999 83% of courses32

provided for

employed people were offered byprivate training providers recognised bythe Ministry of Education as fulfilling therequirements of the NVQR.

� Businesses that are obliged to paycontributions to vocational educationand training may spend 0.5% of theirwage costs (33.3% of the contribution)on the training of their own employees.The total amount of such funds in thenational economy was someHUF 10 billion (�40 million) in 199933.These funds will be supplemented bythe tax benefit specified in the AdultTraining Act to be provided for theindividual (earning income andparticipating in training) to be introducedfrom 1 January 2003 at a rate still to bedetermined.

� The Public Employment Service isattempting to provide a service for the

economically inactive by working withNGOs and local Roma councils.Participation rates amongstdisadvantaged groups remain, however,very low.

4.3 RESPONSIVENESS OF CVT TO THE

NEEDS OF THE LABOUR MARKET AND

THE INDIVIDUAL

� Responsiveness of CVT to individualneeds depends on the capacity oftraining providers to analyse thoseneeds and to be aware of the needs ofthe labour market. The regional LabourDevelopment and Training Centres,generally, provide a well-focusedservice, but, in the case of courses forunemployed people there is lessconcern for the quality of training thanthere is in the attendance records oftrainees, as training providers are paidon a per capita basis.

� The lack of adequate marketintelligence at the county andmunicipality levels also lessens theimpact of CVT.

� There is a lack of policy addressing

the needs of vulnerable groups.Measures to promote access to CVTremain fragmented and often depend onthe personal initiative of labour officedirectors or NGOs. Phare-fundedprogrammes are currently beingimplemented by the Ministry of Socialand Family Affairs to facilitate theintegration or reintegration to the labourmarket of the Roma community andwomen returning from child rearing.Retraining courses organised by labouroffices continue to be the main tool forcounteracting social exclusion. Thesecourses are available only for peoplewho are registered as unemployed. Asattendance on such courses precludesworking in the grey economy, theyremain unattractive to unemployedpeople trying to exist on very lowamounts of benefits.

� Guidance and counselling for peoplewho are registered unemployed isprovided by the county and local labouroffices. Their remit is also to deal with

13


33 ibid.

employed people, but their marketshare is small as those who areemployed tend to prefer the services ofthe private employment agencies.

� Participation of women in retraining ishigh, despite inequalities in levels of payin the labour market.

5. PUBLIC AND PRIVATEEMPLOYMENT SERVICES


The Public Employment Service is

responsive to its perceived primary

clients, those who are unemployed, but

currently lacks the physical and human

resources to provide an individualised

service. Nor does it receive the full supportof employers in reporting job vacancies.The Public Employment Service wasestablished by the Employment Act (1991)and its work plan is determined by theannual employment policy guidelines. Thelast set of employment policy guidelineswas published in 2000, and was, for thefirst time, prepared according to the fourpillars of the European EmploymentStrategy. Thus a first National EmploymentAction Plan has been developed as part ofHungary’s preparation for taking part in theimplementation of the EuropeanEmployment Strategy in the future.However, as of 1 July 2001 the

government resolution on the National

Employment Action Plan was rendered

ineffective (because it was withdrawn),

without being replaced by a similar

comprehensive and general policy

framework for 2001. As a consequencethe Public Employment Services have hadno clear guidance on their activities.Preparations are, however, underway todevelop a National Employment ActionPlan for 2002.


� The PES comes under the authority ofthe Ministry of Economic Affairs andcomprises the National EmploymentOffice, the Budapest Labour Centre and19 county-based centres with 176 local

labour offices. The PES administerspart of the Labour Market Fund, whichis divided into seven sub-funds. Ofthese, the Employment sub-fundfinances active employment measuresand the Operational sub-fund financesthe PES itself. The administration of theEmployment fund is largelydecentralised: 90% of the fund isdisbursed by County Labour Centres.

5.3 RESOURCES

� Staff numbers, which in the early 1990sreached 4,500, have been reduced to3,180. There will be a further 2%reduction in 2002. Of the total number,11% are in senior managementpositions, 2.5% are engaged in labourmarket planning, 33% deal directly withclients, 26% perform brokerage, 12.6%administer active measures, 7.9% areengaged in guidance and counselling,3% deal with financial matters and 3%form the inspectorate. For each memberof staff working directly with clientsthere are approximately 286 registeredunemployed people, which is a very lowratio compared to EU standards, whichgenerally range from 1:50 to 1:10034.

� Both county and local labour offices arehoused in well-maintained andwell-furnished buildings. There are3,600 computers within the system. Anaverage employment centre has 180computers. However, many are old andneed replacing.

� It is estimated that the PES addressesbetween 60 and 70% of unemployedpeople, or, approximately 156 clientsper employee working directly withclients. Nationally, between 20 and 30%of job vacancies are registered with thePES, although this disguises wideregional disparities. Only about 10% ofvacancies are registered in Budapest,while in the regions, where there arefewer employers, the figure is closer to100%.

� There are no national data on themarket share of the private employmentservices (PRES), but surveys indicatethat the number of agencies involvedvaries between regions and is

14


34 Employment Office

concentrated in Budapest. The PRESoperating in Budapest mediated inlabour exchange in 12,600 cases in2000. Approximately 6,000 of theirclients were unemployed. Clients are forthe most part graduates with high skillsand employability. Low-skilledunemployed people do not use thePRES.

6. CONCLUSIONS

Hungary is probably one of the mostadvanced future member states in terms ofmodernisation of the VET system, and ithas made some progress in thepreparation for lifelong learning.

Substantial reforms have been introducedsince the beginning of the 1990s, andimplemented step by step. Many initiativeshave already been taken which allow forthe upgrading and widening of skillsprovided in secondary education, and therehave been substantial developments intertiary education. Measures to decreasethe dropout rate have been partiallysuccessful. The establishment of aNational Vocational Qualification Registerin 1993 allowed for better links betweeninitial and continuing training. Specificfocus has been placed on a realinvolvement of social partners in VETreforms and management. A special levyhas been put in place with a view todeveloping CVT at company level but alsoto involving companies in initial training. Amodern dual system has started todevelop. A comprehensive law concerningCVT has recently been adopted, whichshould promote development of provisionand a striving for quality.

However, the legislation governingeducation in general, and initial andcontinuing education in particular, isover-regulatory and may provide someconstraints on the development of lifelong

learning opportunities. For example,training providers seeking governmentsubsidies for courses offered to the publiccan only offer courses leading toqualifications in the NVQR, thus excludingnon-formal and informal learning frompublic recognition.

According to the Joint Assessment Paper(JAP) the government intends to promotejob creation through:

� improving market intelligence andintroducing individualised guidance andcounselling and training forself-employment and to facilitate theintegration and reintegration of disabledpeople and other disadvantagedgroups;

� the continuous updating andtransparency of qualifications indeveloping the National Register ofQualifications to improve the skills baseof students graduating frompost-secondary and tertiary traininginstitutions and promote the concept oflifelong learning;

� improving links between the skill needsof the labour market and continuingvocational training policy and the needthat such a policy be strengthenedthrough the development of the systemof social dialogue and partnershipbetween vocational education andtraining schools and employers.

The achievement of these objectivesshould come from the continuation ofefforts mentioned above, but accountshould also be taken of the followingconcerns.

� The collection and dissemination oflabour market data remains weak atboth the national and local levels.

� The operational budget of the PES

does not reflect the workload. Thedecrease in expenditure on theadministration of the PES reflects the

15

1992 1993 1994 1995 1996 1997 1998 1999 2000

Administrative budget asa % of GDP35 0.15 0.15 0.15 0.13 0.11 0.13 0.12 0.11 0.11

35 Employment Office35 Employment Office

16


decline in the number of unemployedpeople, but fails to take intoconsideration the extra workload of thePES in terms of providing anindividualised service for long-termunemployed people.

� Work has begun on the reform andupdating of the NVQR, and newmodular curricula are being adopted byVET schools throughout the country.On-going trainer training programmesneed to be reinforced and capacitybuilding for school principals increased.The restructuring of the management ofVET schools into 200 managementunits will facilitate this.

� The involvement of social partners indeveloping CVT policy iswell-established at national level, butneeds to be further developed at thecounty and municipality levels.

� Innovations in curricula, the creation ofnew pathways and, more generally, thedevelopment of public and privateprovision in initial and continuing VEThave benefited from the significant levelof autonomy given to schools and fromthe decentralisation at county level.

� Funding is still an issue, as the rapiddevelopment of participation in uppersecondary and tertiary education hastaken place without additional

resources, which is now creatingdifficulties for the recruitment ofteachers and the renewal of technicalequipment in vocational schools ingeneral.

� Referring to the Lisbon conclusions,some of the targets have already beenincorporated in the NationalEmployment Action Plan (to increaseinvestment in human resourcedevelopment, to raise the numbers ofstudents continuing their studies atupper secondary and tertiary level, toimprove access to the Internet, todevelop new basic skills). However, themajority of the lifelong learning buildingblocks still need to be developed furtherand implemented. These includecoordination between the Ministry ofEducation, the Ministry of EconomicAffairs and the Ministry of Social andFamily Affairs and involvement of socialpartners; better coordination andpartnership between national, regional,county and local levels in order toaddress inequalities between regionsand to promote better governance of thewhole system; more investment ineducation and training; and improvedaccess to learning, in particular forvulnerable and marginalised groups.

1. INTRODUCTION

Following the turbulent years between1992 and 1996, during which theHungarian economy went through a majorrestructuring process, with the loss of1.1 million jobs (a fall of 21.4% in theemployment rate), and an austerityprogramme introduced in 1995, a period ofsubstantial growth began in 1997 and hasbeen maintained since then. The increasein GDP rose from 1.3% in 1996 to 4.6% in1997 and similar growth rates have beenachieved in succeeding years (5.3% in2000). In 2000 the economy was 4% largerthan in 1989, having dropped to 19% belowthe 1989 figure in 1993.

Over the same period (1992–2000),unemployment rose to a high of 10.2% in1995, since when it has been decreasingyear by year to 6.4% in 2000, considerablybelow the average in the EU-15 in that year(8.1%). With this decrease, thecharacteristics of unemployment havechanged from demand-deficientunemployment in the mid 1990s tostructural long-term unemployment at theturn of the century. In response to thischange in the structure of unemployment,

the public employment services aredeveloping targeted active measures andindividualised responses to the needs oflong-term unemployed people.

Activity rates of 59.9% are well below theEU-15 average (69.0%) and lower than therates in any of the other future memberstates in Central and Eastern Europe.Female participation in the labour force isparticularly low (52.5%) and indicates thatwomen are particularly vulnerable to socialexclusion and economic inactivity. TheMinistry of Social and Family Affairs, whichhas specific responsibility for thereintegration of women in the labourmarket, is promoting a number ofprogrammes which address this issue, butsocial mores militate against their meetingtheir objectives.

Notwithstanding these structuralweaknesses, with the privatisation andrestructuring processes now substantiallycompleted the economy can be describedas an functioning market economy in whichentrepreneurs and enterprises can operatein a stable and predictable environment.

17

1

Foreign direct investment (FDI) has playeda substantial role in the growth of GDP.Since 1995 foreign-owned enterpriseshave outperformed indigenous enterprisesin terms of exports, productivity andprofitability, and account for almost 80% ofthe domestic industrial output.

There remain substantial territorialdifferences between the various regions ofHungary in terms of economic productivity.In terms of GDP per capita the mostadvanced regions are more than twice asproductive as the least advanced regions.Territorial inequalities were determined bymarket-based processes in the 1990s,resulting in a growth of the differencesbetween regional development levels.

These imbalances in the labour markethave resulted in significant out-migrationamongst highly skilled workers from thethree most depressed regions (NorthHungary, North Great Plain and SouthGreat Plain) to Budapest and, to a lesserextent, the western regions. As a resultthere is a growing skills shortage in theeast and south east and persistently highunemployment rates (approximately 20%,although as high as 50% in some isolatedareas), amongst low-skilled workers due tolack of investment.

The government is seeking to addressthese issues through the adoption andimplementation of the Széchenyi Plan overthe period 2000–06. The plan provides forpublic sector investment in motorwaydevelopment to connect theless-developed regions to the Europeannetwork, home construction, tourism,research and development, informationtechnology and employment. Thebudgetary resources earmarked for thiseconomic development programme areapproximately 2% of GDP in 2001. Thedevelopment of local infrastructures andtheir integration into the nationalinfrastructure should result in a decrease inregional disparities and the inclusion of theeastern regions in the economic up-turnbeing experienced in the rest of thecountry.

As in other acceding and candidatecountries, the birth rate in Hungary isnegative (natural increase per 1,000inhabitants is –3.8) and the population isageing. Most significantly, the size of theyoung adult age group (20–29 years) isprojected to contract over the next decadeby 22%. This will impact substantially onthe labour market, and underlines the needto invest in the retraining and upgrading ofthe current workforce and the long-termunemployed.

18


Region

GDP per capita

(thousand HUF),

1998

Number of

businesses in

foreign ownership

per 1,000

businesses

Foreign capital

investment per

capita (thousand

HUF)

Central Hungary 1,474 47 596

Central Transdanubia 978 21 160

West Transdanubia 1,102 37 240

South Transdanubia 770 23 52

North Hungary 678 11 139

North Great Plain 675 12 76

South Great Plain 761 22 90

Country 997 31 256

Key characteristics of regions

Source: CSO, 1999

However, there is evidence that Hungary isunder-performing in this area. Eurostatstatistics show that the provision of trainingfor employed people in the workforce isrelatively low compared to other accedingand candidate countries and most of themember states. The provision of trainingfor unemployed people is also low. In 20000.07% of GDP was devoted to thispurpose, making provision forapproximately 10% of those who areregistered unemployed.

The government’s priorities for theimplementation of labour market measuresare to continue the shift from passive toactive measures and to target vulnerablegroups in particular, including women,ethnic minorities, long-term unemployedpeople and unemployed young people. Asmentioned above, the public employmentservices intend to introduce individualisedservices for long-term unemployed people.However, as resources are already thinlyspread (the ratio of registered unemployedpeople to labour office officials workingdirectly with clients is 286), furtherinvestment in the administration ofemployment services will be necessary inorder to achieve this objective.

The development and implementation oflabour market policies has been hinderedby the lack of a national employment actionplan for the year 2001. At local level, thecollection and dissemination of labourmarket intelligence is not carried outconsistently throughout the country and,consequently, vocational schools do notrespond adequately to local market needs.Guidance and counselling services tend tobe driven by consumer demand rather thanthe needs of the labour market.

Reforms in the organisation and provisionof initial and continuing vocationaleducation and training, which have been

instigated on an evolutionary basis since1993, have resulted in a well-structuredand unitary framework provided by theNational Vocational Qualification Register.The NVQR, which is updated (with theparticipation of the social partners) on acontinuous basis, increasingly reflects theneeds of the labour market; the modularcurricula that have been developed toprepare students for the qualifications, arebased on the World Bank model and arecompetency-based. In rolling out the newcurricula and teaching methodology to allVET schools, attention has been given tothe upgrading of teachers and trainers, butthere remains a lack of capacity toimplement the reformed curricula at locallevel.

The adoption of the Adult Education Act in2001 provides a legal framework for thepromotion of lifelong learning opportunities,but, with rare exceptions, the concept oflifelong learning is only well-established atnational policy-making level. There is littleevidence of a holistic approach to lifelonglearning at regional or county levels.

In summary, while considerable progresshas been made in the development of aVET system that has the potential torespond positively to the needs of afunctioning market economy, skillmismatches remain, particularly in the lessdeveloped regions of the country and inareas in which the capacity to respondadequately to the labour market is lacking.This may arise because of inadequateinvolvement of the social partners at theregional and county levels, poor labourmarket intelligence, or poor facilities.

The following chapters provide a detaileddiscussion of the responsiveness of theVET and public employment systems to theneeds of the labour market.

19

1. INTRODUCTION

2. VOCATIONAL EDUCATION

AND TRAINING AND

LIFELONG LEARNING IN THE

CONTEXT OF THE NATIONAL

EMPLOYMENT POLICY

2.1 OVERVIEW OF THE INITIALVOCATIONAL EDUCATIONAND TRAINING SYSTEM

The education and training systemdescribed in this report is that whichexisted prior to the general election inHungary in April 2002, which resulted in achange of government. Early indicationssuggest that the new government willre-establish a Ministry of Labour which willhave overall responsibility for employmentpolicy and vocational education andtraining. This will require amendments tothe basic laws governing the educationsystem, but there are no indications thatthe new government is planning tointroduce substantial changes in policydirection.

National employment policy and thestrategic issues of VET and lifelonglearning are coordinated by the Ministry ofEducation, the Ministry of Economic Affairs

and the Ministry of Social Affairs throughthe National Labour Council at nationallevel and by the County Labour Councils

at county level. In the case of Budapestthis is performed within the framework ofthe capital labour council.

Education policy is consistent with theobjectives of the National EmploymentAction Plan (NEAP). The NEAP hasamongst its objectives an increase in theskills base, and hence the employability ofgraduates of the education system, and adecrease in the gap between theoperational skills of the existing labourforce, particularly amongst disadvantagedgroups, and the skills needed by the labourmarket. The education system hasresponded by increasing the percentage ofstudents who complete compulsoryeducation with the maturita examination(the general certificate of education) and bybroadening the skills base of thoseentering the labour market or continuing

21

2

their education in the tertiary sector. Theestablishment of the National VocationalQualification Register in 1993 (and itson-going updating in the light of thechanging needs of the labour market)provides for a unitary and transparentqualifications system for initial andcontinuing VET, and has led to thedevelopment of curricula that better meetthe needs of the labour market.

2.1.1 LEGAL FRAMEWORKAND INSTITUTIONAL SETTING

THE LEGAL FRAMEWORK

The Hungarian education and trainingsystem is mainly regulated by the followingbasic laws.

� The Act on Employment Assistance

and Unemployment Benefits

(No IV, 1991)

This act has been modified severaltimes, most recently in December 1998.It defines the conditions under whichtraining courses for the unemployedmay be supported, and the forms andamounts of support that can be granted(see Chapter 3 for details).

� The Vocational Education and

Training Act (No LXXVI, 1993)

This regulates the provision of initial andcontinuing VET in schools and publicand private training centres.

� The Public Education Act

(No LXXIX, 1993)

This establishes the structure of thepublic education system and the rightsand obligations of pupils, parents andthose employed in the system.

� The Higher Education Act

(No LXXX, 1993)

This establishes the structure andgovernance of higher educationinstitutions, ensuring their autonomyand academic freedom.

� The Act on the National Vocational

Training Council (No LXXXIV, 1995)

This modifies the Vocational Educationand Training Act, specifying the tasks ofthe National Vocational TrainingCouncil.

� The Adult Training Act (No CI, 2001)

This regulates the provision and

financing of adult training services in thepublic and private sectors, with the aimof promoting lifelong learning.

� The Act on the ‘VET contribution’

(No LI, 2001)

This updates and modifies previous acts(No LXXXVI/1998, No LXXVII/1996, NoXXIII/1988 ) concerning the VocationalTraining Contribution and Developmentof Vocational Training through a levy oncompanies to contribute to the costs ofinitial and continuing VET.

The three laws adopted in 1993 replacedthe legislation that was in effect before thetransition to a market economy. They allowfor extensive liberalisation of the systemand the introduction of private andconfessional sectors at both secondary andtertiary levels. In addition, a series ofspecific acts or decrees must bementioned, among them:

� the LXXVII Act of 1993 on the rights ofnational and ethnic minorities;

� the XVI Act of 1994 concerning theoperations of the chambers ofcommerce;

� the introduction of the ISCED levels inHungary (Decree in 1996);

� the CXXIV Act of 1997 on the financialconditions of the religious and publicservice activities of churches;

� the XXVI Act of 1998 on the rights ofpeople with disabilities and theirguarantee of equal opportunities;

� the establishment of the conditions forcommencing and conducting vocationaltraining, setting out the specific facilitiesand staff resources that traininginstitutions have to provide to bepermitted to commence and conductvocational training (Decree 45 in 1999);

� the definition of the framework ofvocational examination fees andexaminers’ fees set out in Decree 2000(VI.4).

Overall, Hungary has progressively set upa complex and comprehensive set of lawsconcerning education and training thatmakes provision for a decentralised systemwith involvement of the social partners inpolicy formation at national level and in theimplementation of policy objectives at locallevel.

22


1) The Vocational Education and

Training Act regulates the provision of:� initial VET in the education system;� continuing VET in public and private

training centres, but not in highereducation institutions;

� professional upgrading courses;� training in entrepreneurial skills;� training for disadvantaged groups,

including those with reduced workcapabilities.

The act seeks to integrate initial andcontinuing VET and to provide aframework for the provision of VET in amarket economy. It devolves theadministration of VET, the allocation ofresources and the assessment of labourmarket information to the county level.Since 2001 some of these functionshave been undertaken by RegionalDevelopment Agencies.

One of the most important decreesderiving from the act is No 7/1993,which establishes the National

Vocational Qualification Register.The NVQR comprises all vocationalqualifications recognised by the stateand for which training programmes maybe publicly funded36. The qualificationsrecognised in the register have been,and continue to be, developed incollaboration with social partners atnational level and reflect the needs ofthe labour market.

Government Resolution No 2211/1997(VII.24.) facilitated the responsivenessof the vocational education and trainingsystem to the needs of a marketeconomy through the introduction ofnew pre-vocational orientationprogrammes within a range ofoccupational groupings (i.e. the modeldeveloped in the World Bank project),and the introduction of competence-

and project-based syllabuses whichare based on the description ofqualifications in the NVQR. Theresolution also provided for substantialinfrastructure development support.

2) The Public Education Act establishes:

� the management structure andoperational framework of the publiceducation system within the contextof a functioning market economy andknowledge-based society;

� the right to freedom of teaching andlearning;

� the rights and obligations of pupils,students, parents and thoseemployed within the system;

� the right of national and ethnicminorities to be educated in theirmother tongue;

� the principle of equal opportunities ineducation.

The objective of the law is to provide aframework for the provision of free andcompulsory education for all Hungariancitizens between the ages of 6 and 16.In 2001 compulsory education was

extended to the age of 18 for all

students who entered primary school

from 1998 onwards.

The 1999 amendment to this act had amajor impact: it established the four (orthree) years of education in thesecondary vocational schools andvocational schools system; and it set upthe requirement for teachers invocational training schools to have auniversity or college qualification.

Decree No 28/2000, deriving from theact, impacts on VET and lifelonglearning insofar as it governs theelaboration, introduction and applicationof the framework curricula, i.e. the

competency-based curricula that

replaced the subject-oriented

curricula previously in use.

3) The Higher Education Act regulatesthe structure and operation of highereducation institutions, ensuring theirautonomy and defining the role playedby the state in higher education. The actprovides for the freedom of teaching,freedom of study and the freedom tocultivate the arts and sciences.

Decree No 85/1997, deriving from theHigher Education Act, regulates the

23

2. VOCATIONAL EDUCATION AND TRAINING AND LIFELONG LEARNING IN THECONTEXT OF THE NATIONAL EMPLOYMENT POLICY

36 See 2.1.3 below

recognition and registration ofpost-secondary vocational training

conducted in universities (and incolleges and secondary vocationalschools), and specifies the conditionsand pre-requisites for offering suchtraining. The decree also makesprovision for the graduation examinationsfor post-secondary training and for theawarding of certificates.

4) The Act on the National Vocational

Training Council specifies the tasks ofthis new council, which replaced theformer National Training Council, andwas formed to support the tasksinvolved in decisions relating to theVocational Training Fund.

5) The Adult Training Act regulates:� the registration and supervision of

adult training centres in the publicand private sectors that offercourses leading to both NVQRqualifications and non-NVQRqualifications;

� the remit of the Regional LabourDevelopment and Training Centres37;

� the accreditation of individualcourses;

� the funding of NVQR courses on aper capita basis;

� the provision of subsidies for trainingprogrammes promoting employmentand for the training of an employer’sown employees;

� the purchase of equipment andtraining facilities;

� the personal income tax benefit to begranted to those intending toparticipate in training (this provisionwill come into effect on 1 January2003 – the rate of the benefit has yetto be determined);

� the registration of statistics relatingto adult training.

The act places responsibility for

overseeing the provision of adult

education with the Ministry of

Education. The act seeks to facilitateaccess to lifelong learning opportunitiesin the context of the labour market andto increase the employability of theworkforce. It is too early to assess

whether the provisions of the act willsucceed in achieving these objectives,but evidence suggests that considerablecapacity building will be necessary atregional level for successfulimplementation of the act.

INSTITUTIONAL SETTING AT THE

NATIONAL LEVEL

The following ministries are involved in theadministration and funding of the educationsystem at national level.

� The Ministry of the Interior allocatesfunds for public education from the statebudget.

� The Ministry of Education isresponsible for policy relating to primaryeducation, general education, IVET andhigher education. This covers, forexample, strategic developments, targetsetting, curricula policy, dialogue withsocial partners, evaluation andmonitoring. It also oversees theprovision of CVT. The Public EducationAct devolves the administration of thebudget allocation for primary andgeneral secondary education tomunicipality level, and for IVET andadult education to the counties, whilepersonnel management and staffing isdevolved to school principals, andschools are given latitude of up to 30%to introduce material into the curriculumto reflect local needs.

� The Ministry of Economic Affairs isresponsible for employment policy ingeneral. Through the National LabourCouncil, a tripartite body withrepresentation from the Ministry ofEducation, the Ministry of Social andFamily Affairs and social partners (seeparagraph below), the Ministry ofEconomic Affairs administers theEmployment Fund, a sub-fund of theLabour Market Fund which financesCVT for those who are registeredunemployed. At the local level, the fundis channelled through the county labouroffices, which have responsibility forcontracting training providers to delivertraining for registered unemployedclients.

24


37 See the section on CVT below

� The Ministry of Social and Family

Affairs is responsible for the promotionof IVET and CVT for women and peoplewith disabilities, and for thedisbursement at national level of theRehabilitation sub-fund of the LabourMarket Fund, which finances initiativestargeted at these groups. At local levelthe fund is administered through thecounty labour offices.

� The Ministry of Agriculture isresponsible for IVET and CVT in thefield of agriculture.

� The Ministry of Health is responsiblefor CVT in the field of medicine andnursing sciences.

� The Ministry of Defence is responsiblefor IVET and CVT in the field of defence.

In developing education policy andadministering the education system, therelevant ministries are assisted and/oradvised by a number of technical

institutions and consultative bodies thatoperate at national level. All consultativebodies are based on the tripartite principle,and technical institutions have steering oradvisory committees that also include stateand social partners’ representatives;therefore, in theory, social partners areable to influence policy development andimplementation.

a) The National Institution of Vocational

Education (NIVE or NSZI), establishedin 1990 by the Ministry of Education andthe Ministry of Labour, has the remit tocarry out research and development inVET and to provide support for VETinstitutions. Although it may be involvedin the development of VET policy atnational level through its researchfunction, it is primarily focused towardsVET schools, providing services inupgrading trainers and assisting in theimplementation of the new curricula. Italso maintains the National

Vocational Qualification Register

(NVQR). It is staffed by 101 civilservants and between 70 and 80contract employees. Smaller institutionsare operated by the Ministry ofAgriculture and Rural Development(Agricultural Training Institute) andthe Ministry of Health (Medical

Extension Training Institute).

b) The National Vocational Training

Council (NVTC, or OSZT) wasestablished in 1995 by a specific act. Ittook over tasks previously undertakenby the National Training Council, whichwas set up in 1991. But instead ofhaving a decision-making role, itbecame a consultative body,undertaking preparatory work fordecisions taken at ministry level. Itincludes representatives of the majorstakeholders in VET, namely� employers,� employees,� chambers of commerce,� organisations in charge of the

maintenance of schools (primarilymunicipalities),

� ministries in charge of vocationalqualifications.

It has two primary functions, the firstadvisory and the seconddevelopmental. The Council advises

the line ministries involved in VET in

the development of VET policy. It alsoscrutinises draft legislation, monitorsvocational qualifications defined in theNational Vocational QualificationRegister and develops proposalsconcerning the introduction of newvocational qualifications.

In developing the vocations

contained in the new National

Vocational Qualification Register

issued in 2001, the NVTC draws on

the support of qualification

sub-committees in 21 vocational

groups. These sub-committees aremade up of experts of the relevantstakeholders (enterprises andemployers’ associations) and allowthem to influence the contents ofvocational qualifications. Thesub-committees are chaired byrepresentatives of the ministries incharge of the various qualifications, forexample, the Ministry of Agriculturechairs the sub-committee concernedwith occupational profiles in the field ofagriculture. The secretarial tasks of thecommittees, including assistance andmethodology support for theperformance of the tasks of thecommittees, are performed by the NIVE.

25


At the end of the process, newqualifications set up by the Council aresubmitted to the NIVE for approval.

The Council also oversees thedevelopment of vocationalrequirements, syllabuses, and teachingmethodologies, and carries outevaluations of the effectiveness ofvocational counselling and theapplication of syllabuses, and thetechnical/professional requirements oftraining centres.

The Vocational Education and TrainingAct requires the Council to monitor the

entry into the labour market of career

starters who have acquired

vocational qualifications. Based onthis information, the Council shouldformulate proposals to enableinstitutions providing vocationaleducation and training to improve theirresponse to market needs. However,this task has largely been ignored bythe Council.

c) The Development and Training

Council (FKT)

Prior to 2001 the NVTC was responsiblefor the disbursement of theDevelopment and Training sub-fund ofthe Labour Market Fund for the partialfinancing of IVET and CVT. However, in2001 the Act on the ‘VET

Contribution’ (see above) created the

Development and Training Council

as an independent body which took

over responsibility for the

disbursement of the fund.

In the framework of the preparations fordecision-making, the Development andTraining Council makes proposalsconcerning the separation of the centraland the decentralised fund, thedistribution of the decentralised portionamong regions, and the use of thecentral portion of the funding limit to beprovided for vocational education,training and higher education; it alsoevaluates bids relating to centralsubsidies and makes proposalsconcerning subsidies attaching therelevant reasons.

The council operates as a nationwidebody in charge of the preparation of

decisions, and commenting on and

making proposals in respect of the

VET contribution and the VET fund.

The Development and Training Councilhas 29 members, who are invited toparticipate by the Minister of Educationfrom among representatives of theministries in charge of vocationalqualifications and the organisationalgovernance of the labour market, thenational employer and employeefederations represented in the NationalLabour Council, local governments incharge of the maintenance of schoolsparticipating in the work of the NationalVocational Training Council, and theHigher Education and Scientific Council.

d) The National Adult Training Council

The National Adult Training Council wasestablished in 2001 by an article in theAdult Education Act, and will beginoperating on 1 July 2002. It will assistthe Minister of Education in thepreparation and development of

strategies promoting adult training,the elaboration of the laws governingadult training and the rules on theaccreditation of institutions and

programmes as well as theirtechnical/professional requirements.The National Adult Training Councilshould also monitor the employment

record of persons who have

participated in adult training, payingspecial attention to those indisadvantaged positions, and will makeproposals concerning the improvementof the system where necessary.

The 13 members of the National AdultTraining Council come from threerepresentative groups:� two representatives are from the

Ministry of Education, and there isone representative from each of thefollowing ministries: economicaffairs, social and family policy andfinance;

� four experts in the area of adulttraining;

26


� one representative of each of thefollowing stakeholders: employers’and employees’ associations,chambers of commerce andinstitutions offering adult training.

e) The National Adult Training Institute

was established by the Adult EducationAct in 2001 as a sub-division of theNIVE:� to develop adult training

methodologies;� to prepare the technical/professional

documentation for adult training andmonitor the on-going development ofsuch documentation;

� to coordinate research and thetechnical and professional servicesrelating to adult training;

� to strengthen the links between adulttraining and higher education as wellas to liaise with internationalinstitutions, particularly those of theEuropean Union;

� to act as secretariat of the AdultTraining Accreditation Body.

f) The Adult Training Accreditation

Body was established by the AdultTraining Act in 2001 as the bodyresponsible for the accreditation of adulttraining centres. It is an independentbody of up to 20 members, representingthe Ministries of Education, EconomicAffairs and Social and Family Affairs,churches, local governments, trainingproviders and experts in the area ofadult training. The organisation works inclose cooperation with, and takesaccount of the opinions and commentsexpressed by, the Hungarian

Accreditation Committee, the bodyresponsible for the accreditation ofhigher education programmes.

g) The National Labour Council

The National Labour Council is chairedby the Ministry of Economic Affairs andincludes representatives of the Ministryof Social and Family Affairs, the Ministryof Education, and employers’ andemployees’ associations. The Councilcoordinates the interests of employers,employees and training providers in theprovision of initial and continuing VET in

the context of the labour market atnational level, and advises on thedisbursement of the Labour Market

Fund. The fund comprises seven

sub-funds, two of which relate to

IVET and CVT. The Development and

Training sub-fund partially funds IVETand provides some funding forupgrading the skills of employed peoplein the workforce. The Employment

sub-fund finances the training of thosewho are registered unemployed throughthe Public Employment Services. Forfurther details, see section 2.1.3 below.

In summary, there are a number ofinstitutions and bodies which contributeto the relevant ministries in thegovernance, development andimplementation of VET activities, withspecific responsibilities in each of themain fields. Nevertheless, there is afeeling that these institutions havedeveloped with insufficient

coordination between them and in

particular between initial and

continuing VET; it also seems thatafter the initial period of liberalisationand decentralisation, during which arange of responsibilities were given tomany actors, including thedecision-making process for theadministration of the VET contribution,there is now a new process that

seeks to re-establish state control in

VET developments. There are also some

doubts concerning the ability of social

partners to play their role effectively in

all the consultative bodies in which

they are called to take part.

DISTRIBUTION OF RESPONSIBILITIES

AT REGIONAL LEVEL AND BETWEEN

NATIONAL AND REGIONAL BODIES

The administrative organisation of Hungaryis decentralised and based on centralgovernment units and local authoritieswhose leaders are elected for four years atboth county level (19 plus Budapest), andthe level of towns and villages.

The municipalities are responsible for theprovision of primary and general education,for the administration of the state budgetallocation to schools and for the allocation

27


of local taxes to schools. The counties areresponsible for the provision andadministration of the funding for IVET andCVT. Higher education institutions areautonomous, self-governing bodies.

At regional and local level, there areself-governmental and publicadministration units at NUTS III(Nomenclature des unités territorialesstatistiques) and NUTS V levels. Followingthe Regional Development Act of 1996,seven NUTS II regions were established.These are planning and statistical regionsled by Regional Development Councils andsupported by the Regional DevelopmentAgencies. Amendments to the act in 1999were intended to strengthen the RegionalDevelopment Councils, define theircompulsory tasks, create a consistentoperating environment and adequateworking structures and define theregulatory framework. These amendmentsdo not necessarily require thetransformation of the planning andstatistical regions into self-government- orpublic-administration-type regions,although Resolution No 1052/1999envisages the creation of such regions.Members of the Regional DevelopmentCouncils include the presidents of theCounty Development Councils, ministerialrepresentatives (from the Ministries ofInterior, Agriculture and RegionalDevelopment, Finance, Economic Affairs,Education, Health, Social and FamilyAffairs, Environment, Transport,Communication and Water Management,Sport and Youth), representatives of smallregions and of cities, and the president ofthe Regional Tourism Board.

The regional structures are designed tofacilitate the setting of priorities, promoteconsensus building in decision-making,and coordinate tasks of the line ministries,county development councils,municipalities and the social partners.

The Regional Development Councils,whose members are elected by anelectoral college made up of directlyelected county officers, are expected toplay an increasingly important role in the

implementation of regional policies oncethe regional concept has becomeembedded in people’s consciousness.While regional development plans havebeen drawn up for each region, with humanresource chapters covering the themes ofemployment and vocational education andtraining, evidence from field visits indicatesthat the traditional power bases at countyand municipality level remain the focus ofattention; with this degree ofdecentralisation there is, inevitably,fragmentation within the system. Thisconstraint is exacerbated by the lack ofmanagement capacity identified in theEurydice report on the Hungarianeducation system38. The report states:

‘The educational system is a system ofinstitutions linked closely to the state andpublic administration. The transformation ofsettlements into independent localgovernments has played a major part in thefragmentation of the educational system.The standards of the operation of the localauthorities have a major impact on thequality of public education since theydetermine the conditions of the operation ofnursery schools (óvoda), schools and hallsof residence and the quality of educationalservices available to citizens. As aconsequence, the quality of publiceducational administration at the local levelis a matter of primary strategic importancein Hungarian educational policy. As a resultof this unique situation, the regional levelplays no significant role in regulation, butits participation is supposed to bestrengthened by the budgetary policysupporting associations of localgovernments, designed to stimulate theconcentrated utilisation of resources.

Due to the large number and often smallsize of local governments, the provision ofprofessional expertise required for thefulfilment of the local administrative tasks inpublic education is a difficult matter. Withthe majority of local governments thenotary, the person fulfilling legal andadministrative responsibilities is often theonly civil servant with a higher educationaldegree. Not all city councils and urbanlocal governments have independent

28


38 The Education System in Hungary 2000, Eurybase 2001

departments to deal with educationalmatters. A large number of decisionsconcerning education are made directly bythe local bodies of elected deputies.’

A number of steps were taken in 2001 inthe area of vocational education andtraining in respect of raising county-levelplanning and programming to a regionallevel (but see comments above on theeffectiveness of regional planning.) The

former county-level vocational education

and training committees have been

replaced by regional development and

planning committees with responsibilityfor identifying initial and continuing VETneeds. These committees participate in theannouncement of tenders for training andrelated tasks and in the evaluation of bidssubmitted under the Development andTraining sub-fund of the Labour MarketFund. The Committees include:

� representatives of the regionalorganisations of the same nationalemployer and employee organisationswho are represented on the NationalLabour Council (see above),

� local governments in charge of themaintenance of vocational schools,

� county chambers of commerce,� the boards of trustees of public

foundations established for thedevelopment and improvement of publiceducation,

� the labour centres,� higher education institutions,� representatives of the National

Educational Examination and ValidationCentre.

The members of the committees areappointed by the Minister of Educationafter consultation with the organisationsparticipating in the work of the committee.The committees have 27 members. Thecomprehensive inclusion of trade unions inthe committees has led to someresentment among employer associationsas they feel their influence is diminished inso large a body.

INVOLVEMENT OF THE SOCIAL

PARTNERS

The principle of tripartism is enshrined in allthe laws relating to the education system.

As noted above, a series of institutionswere established in which an active rolehas been assigned to social partners. Inparticular, social partners haverepresentatives at national level on theNational Vocational Training Council,where they carry out tasks related tostrategic development, and on theDevelopment and Training Council, wherethey carry out tasks relating to theutilisation of funds; at regional level theyparticipate in the work of the RegionalDevelopment and Training Committees.Furthermore, they participate in the work ofbodies facilitating the supervision anddirection of institutions.

More recently, after changes that occurredin 2001, social partners have also beeninvited to take part in the sectoral work ofthe 21 vocation group committees underthe NVTC, and in the definition ofvocational examination requirements.There is therefore a question of howeffective a role they will be able to play inall these bodies. Beyond playing asatisfactory role at national level, evidencefrom field visits suggests that the tripartiteprinciple exists more in theory than insubstance at regional and county levels ofadministration.

2.1.2 POLICY FRAMEWORK

The links between the policy frameworkand the employment policy objectives arespecified by Government ResolutionNo 1040/2000 defining the NationalEmployment Action Plan developed by theMinistry of Economic Affairs incollaboration with the Ministry of Education,the Ministry of Social and Family Affairsand social partners. The planning periodruns to 2006.

The key priorities of the government in thefield of VET and lifelong learning are asfollows.

1. Updating the NVQR

� The number of vocational

qualifications that are suitable only

for narrowly specified occupations

will be reduced (there are currentlymore than 900 qualifications under theNVQR) and the number of training

29


programmes leading to more generalskills which prepare graduates for avariety of jobs will be increased. Thiswill impact on both IVET and CVT,providing:� improved access for disadvantaged

young people to trainingopportunities, thereby promotingequal opportunities;

� training for young people belongingto the Roma minority in tradesrequired by the labour market;

� more appropriate retraining of thosewithin the labour force.

2. Institutional development

� The number of secondary VET

schools will be rationalised and

reduced. There are currently 1,500VET schools, which will be regroupedinto 200 management units.

� The tasks of Labour Development andTraining Centres will be redefined andaccount will be taken of their potentialcontribution to the provision of lifelonglearning opportunities.

3. Reducing the number of dropouts

from the school system

� The current dropout rate39 should bereduced by 50% by 2006 and to zero by2010.

� Special attention will be paid to pupilswho are not capable of completing theirstudies in primary education by the ageof 16 (this is normally completed by theage of 14).

4. Promoting the concept of lifelong

learning by� developing a training system that

promotes:� modular syllabuses,� mutual recognition of qualifications

at EU level,� vertical and horizontal movement;

� developing a public service lifelongcareer model.

5. Developing a uniform measurement

and evaluation system

� Between 2002 and 2006 a new andcomprehensive measuring andexamination system will be developed40.

� An evaluation system will be developedthat:� is capable of measuring the added

value of training, includinginstitutions providing training fordisadvantaged students;

� facilitates local decision making byorganisations in charge of themaintenance of training institutions.

� It is planned to increase the

proportion of those acquiring the

maturita to 80–85% by 2006.

� From 2005 a higher-level maturitaexamination will replace the entranceexaminations organised by highereducation institutions and will allow forautomatic admission to highereducation.

6. Teachers’ wages

� The average earnings of teachers willbe increased from the current 100% to125% of the national average earningsby 2006.

7. Creating the school of the 21st

century

� New, up-to-date school centres capableof providing competitive knowledge willbe developed in regions facing capacityshortages.

� Neglected school buildings will berenovated.

� In allocating government school buildingsubsidies, priority should be given tolocal governments that have organisedeffective tripartite advisory bodies.

30


39 Of the 81,000 entrants to secondary grammar and secondary vocational schools in 1998, 4,400 (5%) failed tocomplete the secondary programme (Source: Ministry of Education).

40 The results and experiences of projects on the recognition of knowledge and skills gained through non-formallearning conducted by the Hungarian Federation of Trade Unions, in cooperation with ISERES, the researchinstitute of French trade unions, or in the framework of the Leonardo da Vinci programme, could be utilised inHungary. These projects conducted by trade unions have identified significant steps to be made in therecognition of practical knowledge in vocational/professional training. The outdated view of higher educationprofessionals concerning this subject and the attitude they take to protect their positions should be altered. (Itis worthy of note that two-thirds of trade union activists would be willing to continue their studies in highereducation provided that their practical knowledge and experience were recognised.)

8. Talent-fostering and catch-up

programmes, with particular focus

on disadvantaged young people

� Priority education districts should becreated for disadvantaged youngpeople, characterised by the following:� smaller numbers of students per

class,� employment of ‘developing’

teachers,� individual development programmes.

Local governments may be entitled toenhanced financial support, for instance onthe basis of a high percentage ofunemployed parents with fewqualifications.

The proposed reforms are coherent, andconsistent with the JAP and the NEAP;they should make a significant contributionto the implementation of government policyon education and employment throughoutthe country. The social partners have beeninvolved in the reform process through theirparticipation in the various bodiesdiscussed above.

However, successful implementation of thereforms will require substantial upgradingof school facilities, including the provisionof access for disabled students and there-equipping of workshops (see Creatingthe school of the 21st century, above). It willalso require further training for teachersand, crucially, school managers, many ofwhom currently lack the managementcapacity to implement the frameworkcurricula and the NVQR profiles.Awareness campaigns will also be requiredto promote the concept of lifelong learning,which is currently poorly understood in theregions.

2.1.3 RESOURCES

FINANCIAL RESOURCES

The sources of public and privateexpenditure on education and training areas follows:

(a) The state budget, which financesgeneral and vocational education andtraining

National statistics for 2000 suggest that

public and private expenditure on

education was 5.4% of GDP. Assumingthat the figure was reported on the samebasis as OECD figures, this is an increaseon the figure for 1998 (5.0% of GDP),which was slightly below the OECDaverage (5.5%), but a little better than theCzech Republic (4.7%). The increasereverses a downward trend (5.5% of GDPin 1995, 5.2% of GDP in 1997) and reflectsthe extra expenditure required toimplement government policy in education.(In the EU-15, average public expenditureon education was 5.0% of GDP in 1998,while the figure for Hungary was 4.6%.)This also demonstrates an important

private contribution to education

(0.4–0.5% of GDP, about 6–8% of thepublic contribution), especially for initialVET, which partially compensates for thediminishing funding of the early 1990s,when the level of financing increased by120–140 % between 1991 and 1995, whileconsumer prices grew by 240%41.

The Hungarian National Observatoryestimates that expenditure on VETaccounted for approximately 0.8% of GDPin 1995, 0.9% of GDP in 1996 and 1.0% ofGDP in 2000. Meanwhile 0.06 % of GDPwas allocated to adult education in 2000.

The cost per student at secondary level was�2,600 PPS (1998) and the cost per studentin higher education was �5,500 PPS. Bothfigures are considerably below the OECDaverages (6,500 and 9,900 respectively).

The Ministry of the Interior determines thecontribution of the state budget to theprovision of initial VET in the schoolsystem. The administration of the greaterpart of the budget allocation (�336 millionin 2000) is devolved to local government atmunicipality level and is allocated toschools on a per capita basis. A smallportion of the central budget is reserved forspecific interventions in training determinedat the national level.

(b) Local taxation

Municipalities may ‘top-up’ the contributionfrom the state budget for general educationthrough local income tax.

31


41 Towards lifelong learning in Hungary, OECD proceedings, 1999

(c) The contribution of enterprises to

VET and lifelong learning through the

Vocational Training Contribution

Enterprises make a contribution to thefunding of initial VET in the school systemand to the provision of CVT for employeesthrough a tax of 1.5% of wage costs. Thetax levied on enterprises finances theDevelopment and Training Sub-fund ofthe Labour Market Fund (see above); thetax is referred to as the ‘Vocational

Training Contribution’.

Up to one-third of the tax (0.2% until1999, 0.5% in 2002) can be spent by

companies on CVT for their own

employees, but only on trainingprogrammes included in the NationalVocational Qualification Register. Thiscondition is fulfilled through prioragreement given by the County TrainingCommittee.

Up to 75% of the tax can be contributed

directly to vocational schools for theorganisation of practical training forstudents, or to cover the costs of training inmoney or in kind, or by directly providingfinancing.

Since 2001, direct support can also begiven to higher education institutions. Theremainder is paid into the Vocational

Training Fund, which has a decentralisedand a centralised component.

The decentralised component isdevolved to the level of municipalities on astudent per capita basis and may be usedat the discretion of municipalities within aframework of eligible measures drawn upby the Minister of Education on the adviceof the NVTC.

The centralised component of theVocational Training Fund is used in anumber of ways, on the authority of theMinister of Education following advice fromthe NVTC.

� It is used to pay for practical trainingplaces offered to initial VET students byenterprises and to support the chamberof commerce in its overview of thetraining. Funds are distributed on the

basis of applications by enterprisesproviding practical training for VETschool students, verified by a directcontract with a vocational school ormediated through the chamber ofcommerce (for further details see2.2.1 – Delivery).

� It is used for the procurement ofexpensive equipment requested by avocational or secondary vocationalschool.

� It is used to contribute to the Leonardoda Vinci programme and other nationaland international VET programmes.Funding is allocated to suchprogrammes during the relevantprogramming cycle.

� It is used to support the work of theNIVE.

The Vocational Training Contribution

has increased considerably since thebeginning of the 1990s, growing fromHUF 9.4 billion in 1991 to 15 billion in 1995,30.6 billion in 1998, 36 billion in 1999,43.3 billion in 2000 and 47.6 billion in 2001.As part of this, the Vocational TrainingFund increased from around 20% up to1996, to a share of around 30% since1997. The direct subsidies to schools

showed the largest increase, fromaround 25% in 1991 to 40% in 1997 andmore than 50% since 1998. The

contribution to ‘corporate training’

decreased drastically and consistently,from more than 50% in 1991 to 39.3% in1995, 29% in 1997, 18.6% in 1998, 16.1%in 1999 and 13.6% in 2000, while thethreshold for this contribution to CVT hadincreased from 0.2 to 0.5% in 1999.

In 2000 the Vocational TrainingContribution amounted to an estimatedHUF 43.3 billion (�173 million). Thecontribution from the Development andTraining Fund to initial VET was estimatedto be approximately �150 million, or 0.3%of GDP, i.e. nearly one-third of the totalestimated expenditure on initial VET.Therefore, only �23 million was

available for CVT for employees – 13.6%

instead of the theoretical one-third.

One reason for this could be the recentintroduction of the reference to the NVQRas a condition for accepting the funding of

32


training courses. Another factor is thetradition of Hungarian companies beinginvolved in initial education and training (itshould be noted that when the VocationalTraining Fund was introduced before 1990,the purpose was to support schools, andnot CVT). Finally, we must acknowledgethat the great majority of Hungariancompanies are small or very small (only2% of the companies employ more than300 people), and they therefore do not usethis facility, as the money available couldnot cover their real training needs (seeSum, I. and Toth, A., ‘Financing vocationaltraining outside the school’, HungarianMinistry of Education, 1999). The amountsactually spent on their own employees bybusinesses from the Development andTraining Fund in 2000 are presented inAnnex 4 in a breakdown by regions.

(d) The additional contribution of

enterprises to the provision of

training for employees

According to Eurostat42, Hungariancompanies invested 1.2% of labour costs inCVT courses for their own employees,which includes a portion (around 14%) ofthe contribution to the Development andTraining Fund. This is low compared to theCzech Republic (1.9%) and Estonia(1.8%), but similar to Slovenia (1.3%),Latvia (1.1%) and Bulgaria (1.0%).

The volume of training offered to

employees is relatively modest

compared to other future member states

(the participation rate of employees is 26%in Hungary, 49% in the Czech Republic,and 46% in Slovenia), although expressed

as a cost per employee (�305 PPS, ofwhich �84 PPS is the contribution to theFund), it is relatively expensive.

Other sources have estimated that the costof in-company training varies between0.5% and 6% (of wage costs), dependingon sectors. According to a survey carriedout by the National Observatory, thelargest proportions were spent in thebanking/insurance sector and electronicsand engineering sectors (6%), while thesmallest proportion (0.5%) was spent ontraining in agriculture.

(e) Course fees paid by individuals

While there are no data on the investmentof individuals in CVT, participation isincreasing. The cost of training will becometax-deductable from January 2003,providing a further incentive for increasedparticipation.

(f) The Employment sub-fund of theLabour Market Fund

This is financed by a levy on employers of3% of labour costs and on employees atthe rate of 1.5% of gross salary.

Financial resources in the Employmentsub-fund of the Labour Market Fund areavailable for the retraining of unemployedpeople; these funds are transferred totraining providers, which may include VETschools, through County Labour Centres.In 2000 HUF 13.2 billion (�52.8 million), or0.07% of GDP, was allocated for thispurpose. This compares well with otherfuture member states (0.02% of GDP in the

33


Maximum

% of fundBillion HUF Million EUR % of total

Direct support to VET schools 75 24 97 56

Decentralised component ofVocational Training Fund 5 20 11

Centralised component ofVocational Training Fund 8 33 19

Training provided by companiesfor their own employees 33 6 24 14

Total 43 174 100

42 CVTS2 1999

Czech Republic, 0.01% of GDP in Poland),but is considerably less than expenditure inmember states (0.29% of GDP in Spain,0.31% of GDP in Sweden).

HUMAN RESOURCES

� General situation concerning

teachers

Although the current poor situation ofteachers is being addressed by thegovernment, the profession remains one

of low status and low remuneration.

Teachers’ salaries are equivalent to thenational average. In comparative terms,according to OECD surveys (Education ata Glance, 2001), a Hungarian teacher inupper secondary vocational education with15 years’ experience earns �11,600 PPSper year, which is the same as in theCzech Republic, but less than in Turkey(�12,700 PPS) and is considerably belowthe OECD average (�31,000 PPS). Thesesalaries are equivalent to over 90% of GDPper capita, which is higher than in theCzech Republic (82%) but lower than theOECD average (138%).

The percentage of female teachers is alsorelatively high, females accounting for68.3% of the teachers in generalsecondary education (just behind Slovakia,71.5%, with the OECD average being51.1%) and 54.2% of the teachers invocational secondary education (Slovakia,64.8%, the UK, 56%, OECD average,45.8%). In addition, according to otherOECD data quoted by the NationalObservatory (National Observatory report,2000), the teaching population is veryyoung, as the proportion of teachers belowthe age of 30 years was 127.7% of the 14countries studied in 1996, and theproportion of teachers over the age of 50years was 24.7% of the average. This canbe explained by the fact that a teaching

career is not attractive enough to be

more than a temporary engagement. Butthe situation was different in vocationalschools, where between 40% and 50% ofteachers were over 50, and well below

10% were under 30, as these schools wereunable to recruit new graduate teachers.

It is also interesting to note that despite thereductions in the total numbers of bothteachers and students (NationalObservatory report, 2001), according toOECD, the percentage of Hungary’s total

active population who were teachers at

all levels of education (including teachersresearchers) was the second highest of

all OECD countries, with a ratio of 4.9,behind Iceland at 6, with 3.5 the average.The figures were even more significant fornon-teaching staff working in education,with a percentage of 1.4 (1.6 in Iceland and0.6 the OECD average).

At the same time, Hungarian teachers hadsome of the lowest levels of teaching hoursper year with 555 hours, compared to 692as an average.

However, as noted above, thegovernment’s policy is to increase

teachers’ salaries to 125% of the national

average salary by 2006. As a career inteaching and training becomes moreattractive, the quality of new entrants to theprofession and the retention of experiencedteachers may be expected to improve.

Teachers employed in state schools arepublic employees (in both state and highereducation). Non-teaching staff do not havethe status of public employees, but theirworking conditions, due to centralregulations and agreements between thegovernment and the employers, do notdiffer significantly from those in stateemployment. The conditions of servicedepend partly on the specific agreements(guided by central provisions) madebetween the teachers and their employers,i.e. the school heads.

In 1999/2000 there were 32,317 teachers

in secondary grammar and secondary

vocational schools at ISCED 3 level.

Student/teacher ratios (10.3:1 in general

secondary schools, 13.3:1 in vocational

secondary schools and 7.3:1 in tertiary

education)43

are high compared to those

34


43 Eurydice: summary sheets on education systems in Europe

in other OECD countries (the OECD

country mean is 14.6:1 at secondary

level). This may be explained by the

demographic decline that Hungary isexperiencing; as this decline accelerates,the number of teachers and trainersemployed in the system would be expectedto fall. However, the current high ratio, aswell as other factors mentioned above,suggests that some cost inefficiencies existat present.

� Entry qualifications

The teacher qualification requirements forprimary and secondary education aredefined by a government decree of 1997.The required qualification is determinedaccording to the specific branch ofeducation.

In vocational training, university graduatesare qualified to teach the theory ofvocational subjects in secondary vocationalor vocational schools, while collegegraduates are restricted to deliveringpractical training in secondary vocationalschools. They may, however, teach thetheory component in vocational schools.

Teachers are appointed by the principal ofthe school following an open competition ofappropriately qualified candidates.

The terms of employment are regulated bythe Act on Public Education, according toschool types and levels of education.

PHYSICAL RESOURCES

Assessments of the real property andmovable property portfolios of schools aredifficult to review owing to thediversification of the ownership structureand the forms of subsidies. Schools areowned by the municipalities, communesand county authorities. The maintenanceand operation of the buildings are usuallythe responsibility of local governments,while substantial amounts are providedfrom central and decentralised funds (inparticular, the Vocational TrainingContribution, either through its directfunding to schools from companies, orthrough the centralised or decentralisedportion of the Vocational Training Fund,

plays a very important role in thedevelopment of workshops, at school or incompanies; see above for a discussion ofthe possible use of the Vocational TrainingContribution), in terms of both groups ofvocations and types of school. Such fundsare used to provide subsidies to institutionsin the form of equipment and trainingfacilities and various developmentspromoting education.

The 158 secondary vocational schools thatparticipated in the World Bank and PhareVET reform programmes have benefitedfrom the provision of new trainingequipment and facilities. As part of aprogressive dissemination strategy, 135new schools were included in the processin 1998, and others will follow later, with aview to having all schools involved by 2004.Similarly, the nine Labour Development andTraining Centres, also developed with thesupport of the World Bank, are extremelywell-equipped and housed in purpose-builtpremises that have access and facilities forphysically disabled students.

In summary, the situation in Higher

Education is now very uneven, withmany schools, in particular vocationalschools and apprenticeship schools,operating in buildings that requirerenovation and re-equipping in order toimprove the delivery of courses and tobecome accessible to the general public aslifelong learning centres. Although aprogramme of upgrading school workshopshas begun, school-based workshops aregenerally of poor quality, with obsoleteequipment inherited from the socialistperiod. Under a current programme,HUF 16–17 million (�65.5–69.5 thousand)is available for purchasing trainingequipment for any school. Under theSecondary Vocational Orientationprogramme, 113 schools have receivedtraining equipment required for generaleducation (HUF 7 million/�28.7 thousandper school), in the 1999 academic year.This primarily involved the supply of IT andmultimedia equipment.

One positive development is the raising ofstrategic development to regional level andthe provision of funds for this initiative. In thesecond half of 2001, regional development

35


and training councils were established,replacing the county vocational educationand training councils. The regionaldevelopment and training councils areauthorised to distribute the decentralisedpart of the development and training fund.

2.1.4 REGIONAL DISPARITIES

Regional disparities are significant in termsof the responsiveness of vocationalschools to local labour market needs.Evidence from field visits suggests that inthe less developed regions there is anattitude of despondency in the face ofapparently insurmountable problems. Thisattitude is exacerbated by the poor physicalcondition of many schools and the difficultyin attracting teachers to work in difficultenvironments. However, the government’spolicy of rationalisation of the VET schools’management structure will make it easierto identify and address regional disparities.

According to data from the NationalObservatory, in 1999/2000 475,000students were trained in 1,521 differentinstitutions at secondary level, 1,229 ofwhich provided some vocational trainingcourses. So the average number ofstudents per school at secondaryeducation level was about 312, which israther low and reflects the substantial

number of very small-size schools

widely dispersed throughout the country.This is partly due to demographic factorsand the decline in the number of studentsat school (517,816 in 1997/98 at uppersecondary level, compared to 475,000 twoyears later).

Moreover, this phenomenon was morepronounced in grammar schools andsecondary vocational schools: in 1997/98,989 grammar schools received 160,800students (average 163 students), 1,537secondary vocational schools received241,000 students (average 157), while 359apprenticeship schools received 136,300students (average 379 students) and 189

vocational schools and special vocationalschools received 57,300 students (average303 students). Of course the on-going shiftof students from apprenticeship andvocational schools towards grammar andsecondary vocational schools will lead to abetter balance among these types ofschools.

At this point it must be acknowledged thatsome schools combine grammar schoolsand secondary vocational schools, orsometimes secondary vocational schoolsand vocational schools, under the sameumbrella. Nevertheless, despite theabsence of detailed statistics, there isevidence that the average size ofsecondary schools remains very lowcompared to EU countries, and that thereis a need for substantial optimisation.

2.1.5 STRUCTURE ANDORGANISATION OFVOCATIONAL EDUCATIONAND TRAINING AND LIFELONGLEARNING

INITIAL VOCATIONAL EDUCATION AND

TRAINING

Traditionally there were four main streamsin the secondary school system: grammarschools, leading to the maturita and highereducation; secondary vocational schools,leading to the maturita and tertiary-levelvocational training; vocational schools(including special vocational schools fordisadvantaged or disabled students)leading to a vocational certificate and entryinto the labour market; and apprenticeshipschools, leading to a craft certificate andentry into the labour market.

Reforms introduced into the vocationaleducation and training system in 1993,1998 and 2001 have resulted in a less rigidsystem which allows, in principle, forgreater permeability between pathwaysand greater relevance and transparency ofqualifications.

36


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The objectives of these reforms are asfollows:

� the promotion of the overalltransparency of the school system;

� increased mobility within the system;� the recognition of previous vocational

knowledge;� comparability of competencies at the

national level;� an increase in individual career choices;� an increase in the technical skills and

knowledge of those leaving the schoolsystem.

In 1993 the NVQR profiles were

introduced and schools were given a

period of five years to adopt the

curricula leading to them. Since 1998 allschools have been teaching to the NVQRcurricula. The development of newoccupational profiles is on-going inresponse to emerging market needs. Morerecently, in 2001 a reform of theoccupational profiles within the NVQR andof the curricula leading to NVQRqualifications was introduced. The newmodular curricula are competency-based.

In 1998 apprenticeship schools thatprepared trainees for specific and narrowvocational fields and increasingly failed torespond to the needs of the labour marketwere transformed into four-year

vocational schools in which entrance andspecialisation in a particular vocational

field is deferred until the age of 16. Theyare now considered as part of thevocational schools system.

In parallel, government policy was to

introduce a new apprenticeship system,based on the German system, with stronginvolvement of chambers of commerce andindustry. Developed on a voluntary basis,this ‘dual system’ is developing slowly(during the three years 1997, 1998, 1999,4,795 study contracts had been issuedthrough chambers, affecting 864companies). As noted above, theDevelopment and Training Fund can beused to finance such training, as well as allkind of practical training set up incompanies for the benefit of other

vocational schools. But in practice thisprovision is limited and consequently mostpractical training is still provided in schoolworkshops. (For further discussion on theprovision of practical training see2.2.1 – Delivery.)

In secondary vocational schools theobjective of providing a more generalisededucation has been taken further. Since1998 students have followed a four-yearpre-vocational training programme invocational secondary schools and onlybegin occupation-specific training inpost-secondary education, i.e. from the ageof 18.

In 2001 compulsory education was

extended to the age of 18 for all those

entering primary school from 1998

onwards.

The current maturita examination is ageneral certificate of education. It isnecessary, but not sufficient, for entranceto an institute of higher education as theseinstitutions have their own entranceexaminations. A new maturita examinationwill be introduced at two levels (middle andhigher) in 2005. From that date, schoolgraduates with the higher maturita will gainautomatic access to higher educationwithout having to take a university entranceexam.

There are two main thresholds in the

basic education system. The first isgraduation from primary education at theage of 1444 with the possibility of enteringone of three streams: grammar school,secondary vocational school or vocationalschool. The choice is made by parents andstudents, with advice being available fromthe guidance and counselling service in theprimary school. For students entering oneof the two types of vocational streams(vocational school or secondary vocationalschool) the first years are devoted tochoosing a vocation from 420 occupationalprofiles. This ‘orientation’ period lasts twoyears in the secondary vocational schoolsand one year in vocational schools, as thesecond year is devoted to pre-vocationaltraining. During the orientation period

38


44 Students opting for education in the private sector can enter the private eight- or six-year grammar schools atthe age of 10 or 12 respectively.

students follow courses in vocationalguidance, career orientation and vocationgroup preparation. Following thecompletion of the first two years it ispossible for a student to move to anotherpathway or to continue studying in anothervocation group. There is, therefore, apotential for permeability within the system,but, in practice, there is little evidence ofmovement between educational pathways.

The second threshold appears at 16, whendecision is made regarding which specificvocational field will be followed. Insecondary vocational schools students inthe 16–18 age group follow pre-vocationalcourses (see below), while in vocationalschools students in the same age groupfollow one- or two-year vocational coursesleading to an ISCED 2 or 3 qualification.They can also enter the former‘apprenticeship’ pathways.

In the third and fourth grades of thesecondary vocational school (16–18 agegroup), vocation group-based training thatprepares students for the maturitaexamination is provided.

Students graduating from vocational

schools with an ISCED 2 or 3 qualificationenter the labour market.

Students graduating from secondary

vocational schools with the maturitaexamination have three options. They mayapply for entry to a university programme(ISCED 5a) or to a college programme(ISCED 5b). Students failing to gain entryto either programme may enter anaccredited post-secondary programmeprior to re-applying for university or collegeprogrammes. In fact, most students enterthe labour market on completion of theaccredited post-secondary programme.

Students graduating from secondaryvocational schools without taking the

maturita may enter a one- or two-yearsecondary vocational programme. On

completion of this programme they eitherenter the labour market or seek entry tocollege or university programmes afterpassing the maturita.

Students graduating from the

eight-class, six-class or four-class

grammar school programmes45 with the

maturita examination may apply for entryinto university or college programmes.Students failing to gain entry to universityor college programmes may enter theaccredited post-secondary pathwaydescribed above.

A catch-up programme is available forthose who have not completed primaryschool by the age of 16. On graduationfrom this programme students can re-enterthe mainstream or enter the labour market.

Schooling by type of school

From among those concluding primaryeducation in 1998/99 (113,800 pupils),97% (108,800) continued their studies insecondary institutions; 33% (36,000)continued their studies in secondarygrammar schools; 39% (44,500) continuedin secondary vocational schools; and 25%(28,000) continued in vocational schools(including special vocational schools fordisabled or disadvantaged students). Thesestudents and trainees were trained in 1,521institutions in 1999/2000, 1,229 of whichprovided some vocational trainingprogrammes (81%).

Private schools and church-funded schoolshave a very limited market share,particularly in terms of the vocationalbranches of the system. In the 1999academic year, 6% of vocational schoolstudents were educated in non-state-sectorschools while the figure for those followingsecondary vocational programmes was7%. However, 15% of students followingsecondary grammar programmes in thatyear were educated in the non-statesector46.

39


45 Schools within the public education system operate on the basis of eight years’ primary education and fouryears’ secondary. The eight-class and six-class grammar schools are private or church-funded schools andcater for a small percentage of the school-age population in grammar schools (11% in 1995/96). However,they offer some students the possibility to enter secondary education with the certainty that they will continuein grammar schools, and escape any orientation towards vocational education.

46 Ministry of Education

Figure 2 presents the number of thosecontinuing studies in secondary educationinstitutions in 1997–99. In the grammarschools and vocational secondary schoolsthe number of participants has increasedsubstantially over the past 10 years (from57% of one cohort in 1990 to 77% in 2000).This is in contrast to a decrease in thenumber of participants in vocationalschools, including apprenticeship schoolsbefore 1998 (from 43% in 1990 to 23% in2000).

The number of students holding vocationalqualifications from among those leaving theschool system has increased substantiallyover the past 10 years (from 61.2% in theearly 1990s to 78.6% in 2000).

The dropout rate in secondary vocationalschools has decreased substantially, from9% in 1996/97 to 1% in 1999/2000(preliminary figures). A contributory factormay have been the introduction of the newcompetency-based curricula. The decreasewas also evident in the case of students invocational schools, although the rate inthese schools remains high. In 1996/97 itwas 23%. In 1999/2000 it is estimated tohave dropped to 14%, according topreliminary data. Meanwhile, the dropoutrate in grammar schools has decreasedonly very slowly: it was still close to 8% in1999/2000. To further reduce dropoutrates, especially in vocational schools (andparticularly the former apprenticeshipschools), special programmes have been

40


201997 1998 1999

Grammar school Secondary vocational Vocational school

22

24

26

28

30

32

34

36

38

40

%

Figure 2. Continuing education in secondary education institutions

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1997/98 1998/99 1999/2000

%

dropouts ingrammar schoolsin 4 years

dropouts in VETschools in 3 years

dropouts in VETsecondary schoolsin 4 years

DROPOUTS

Figure 3. Dropout rates during training

launched with increased subsidies in thenormal vocational training section and alsofor those who have not completed theeighth grade of primary school.

Guidance and counselling, involving bothparents and pupils, is provided bydesignated teachers in primary schoolsand secondary vocational and vocationalschools. In primary schools advice is givenon which pathway a pupil should follow insecondary education, and in secondaryschools guidance is given on whichvocational pathway a pupil should follow.Evidence from field visits suggests thatparental wishes are given greaterconsideration than labour market needs,and hence there is an over-subscription onfavoured courses, such as hairdressing,relative to market demands.

Post-secondary education and training

With the support of Phare and also bilateralcooperation with some EU member states,Hungary made great efforts in the 1990s todevelop a diversified post-secondaryeducation and training system in bothschool and university systems. As a result,according to OECD data (Education at aGlance, 2001), Hungary ranks second of

the OECD countries (after Canada) for

the percentage of students having an

ISCED 4 diploma.

Post-secondary programmes of two years’duration leading to an ISCED 4qualification are offered to students whohave performed the maturita exam, thesebeing provided by Higher EducationalAccredited Vocational Schools (AIFSZ)established under the 45/1997 act. Whilepost-secondary vocational education andtraining courses may be implemented inhigher education institutions, the majorityare offered by secondary vocationalschools. Annex 8 shows that in 200198 secondary vocational schools offeredpost-secondary courses, while31 universities were involved in theprogramme, in cooperation with colleges oruniversities, facilitating closer cooperationbetween the two institutions. Annex 7presents the number of the AIFSZqualifications by vocational area. Annex 8shows the rapid increase during recentyears in the number of institutions that

have launched post-secondary trainingprogrammes, from 24 in 1998 to 129 in 2001.

Nevertheless, the quality and relevance ofthe provision varies considerably betweeninstitutions and professional fields. Themajority of participants enter the labourmarket on completion of training. However,the number of post-secondary coursesoffered is growing rapidly (see Annex 7).

HIGHER EDUCATION

This is a sector to which Hungary gave

high priority in the 1990s by developingand improving the provision in theuniversities and other relevant institutionsand by facilitating access for studentshaving completed secondary education.

Higher education courses are offered atthree- or four-year colleges or atuniversities. Three-year collegeprogrammes lead to ISCED 5bqualifications and the four-yearprogrammes and university programmeslead to ISCED 5a qualifications.

In 1998 the 30 independent universitiesand 59 colleges were reorganised into 12integrated universities. A course creditsystem was introduced that greatlyincreased both student choice and theresponsiveness of institutions of highereducation to the needs of the labourmarket.

At the same time the previouslylecture-based teaching methodology wasreplaced by more student-centredprogrammes that encourage students totake responsibility for their own learning.

Enrolment in higher education more

than doubled between 1990 and 1997.The net entry rate in tertiary type A was58% (1999). In the four years between1995 and 1999 enrolment increased by64%. Over the same period there was an84% increase in Poland and a 37% increasein the Czech Republic. In 1999 the averagenumber of years a young person inHungary could expect to spend in tertiaryeducation throughout his/her lifetime was1.8, compared to 1.4 years in the CzechRepublic, 2.3 years in Poland and 2.5years, on average, in OECD countries.

41


A key point noted from the OECDproceedings ‘Towards Lifelong Learning inHungary (1999)’ was that ‘the improvedaccess to higher education had to beaccompanied by reforms of both structureand contents. The lack of pathwaysbetween the different parts of the systemwas a source of serious concern, as wellas the continuing presence of institutionalrigidities that clearly serve as barriers tolifelong learning’.

CONTINUING VOCATIONAL TRAINING

CVT is provided by four categories oftraining provider for customers, as set outin the table below.

CVT in the formal system

There is the opportunity to re-enter theeducation system at any time of lifethrough the evening adult education

system, which offers grammar schoolprogrammes (ISCED 3), for which primaryschool graduation is a pre-requisite, highereducation programmes, for which thematurita examination is a pre-requisite,VET programmes leading to an ISCED 5qualification (again, the maturita is apre-requisite), and programmes leading toan ISCED 2 or 3 qualification. Training isprovided free of charge, but the trainingfacilities and methodologies are the sameas the ones in initial education, with littleconsideration of the specificity of adultlearning.

In this category we can consider part-timecourses and distance education coursesorganised by universities. Attendance onpart-time courses is rather stable andamounts to about 6,000 students a year;participation in distance education coursesdeveloped rapidly from about 20,000 in1992/93 to 51,000 in 1996/97.

CVT in the non-formal system

The non-formal sector , which in Hungaryis usually termed ‘vocational training

outside the school system’, has over thepast 10 years been the most dynamic areain education (Sum, I. and Toth, A.,‘Vocational training – Source of financing’,Ministry of Education, 1999). Nevertheless,OECD analysis (Education at a Glance,2001, report data from IALS survey 1998)showed that 17% of Hungary’s25–64-year-old population were involved incontinuing training outside the formalsystem, which was higher than theproportions in Poland (13%) and Portugal(12%), but lower than the proportion in theCzech Republic (25%) and the OECDaverage (31%). Other sources were morepessimistic; the OECD proceedings onlifelong learning in Hungary (1999)evaluated participation in adult education atabout 5–10% of the labour force(compared to between 27 and 46% in otherdeveloped countries).

According to data provided in theframework of the National Programme forData Collection (OSAP), with which eachtraining provider has to be registered, in1999 this system involved about 300,000people in vocational training activities, towhich we have to add about 100,000people who benefited from labour marketmeasures. This training was deliveredthrough four main types of providers:

� schools and colleges,� private providers,� non-profit institutions,� county or regional labour market

training centres.

42


Training Provider Individual Initiative Employer InitiativeEmployment

Service Initiative

Schools, collegesand universities

X X X

Private trainingcentres and othercompanies

X X X

Non-profitorganisations

X X X

Mainly because of the large-scale

liberalisation that had taken place in the

institutions providing training, 1,461

institutions were registered at the end

of 1998, and the number of private and

non-profit providers was still growing

fast. In 1999, 83% of the courses providedwere offered through the NationalVocational Qualification Register.

If we consider activities outside the labourmarket measures, a total of 13,075 trainingcourses were organised in 1999,representing 266,162 students: 19.6% ofthem (52,157 individuals) participated intechnical vocational training, 18.2% ineconomic or financial fields, and 16% in thetrade or catering fields. A substantialnumber (132,731 individuals, or 47% ofthose following CVT programmes) tookpart in ISCED 3 training leading to thematurita examination. A total of 121,141individuals, 45.5%, took part inISCED-5-accredited training, typically inorder to gain new vocational skills. A totalof 5,964 individuals, 2.2%, took part inISCED 2 training, and only 3,300, 1.2%attended ISCED 5 training (highereducation).

However, it should be noted that the AdultEducation Act (2002) introduces aconstraint, as it requires all trainingproviders to be accredited and all courses

provided to be recognised by the NVQR

if they are to receive publicly-funded

subsidies through the Development and

Training Fund.

In parallel, it has to be noted that the rateof participation of adults with low levels ofqualification has declined dramaticallysince the beginning of the 1990s (‘TowardsLifelong Learning in Hungary’, OECDproceedings, 1999), which could be seenas a signal that the CVT system does notproperly address the most vulnerablepeople in the labour market.

1) Schools and colleges

In 1998 schools and colleges still cateredfor around 22% of the total number ofparticipants. Their share of the market isdeclining somewhat. Schools do notconsider training outside the school system

as a basic activity; nevertheless, it providesa fixed income, albeit quite small in somecases (Sum, I. and Toth, A., Fundingvocational training outside the school,Ministry of Education, 1999). Trainingmethodologies still tend to be trainer-centred and classes tend to be largebecause the schools receive only limitedfinancial support. Consequently there is astrong tendency to move fromschool-based training to training providedby private training providers, particularly inurban areas, where supply is greater.

2) Private training providers

In 1998 private training providers cateredfor around 55% of the total number ofparticipants; they therefore represent themajority of training providers. This rate ofprovision is 2–2.5 times higher in terms ofboth classes and attendance compared tothe provision of adult training in the schoolsystem. These providers work undermarket forces and conduct their businessindependently. There are currently morethan 2,000 such organisations, of which800 actively and regularly provide adulttraining courses. In accordance withDecree No 45/1999 issued by the Ministerof Education, private training providershave to be registered at the county or cityemployment office as a pre-requisite forconducting vocational education andtraining. Registered providers must submitreports to the Ministry of Education on thecourses they wish to offer. These must beconsistent with their core business.

3) Non-profit institutions

A variety of non-profit institutions areinvolved in adult education in Hungary.Based on the tradition of ‘people’sacademies’, and with the support ofinternational donors, a range of ‘culturalcentres’ have been set up bymunicipalities, working under thecoordination of the Hungarian Institute ofEducation. Associations, local clubs andfoundations also play a role in organisingeducation for adults in different ways. Tobe noted in particular are two mainfoundations: the National EmploymentFoundation and the Open VocationalTraining Public Foundation, who play an

43


ever-increasing role in financing vocationaltraining outside the school system(‘Vocational Training – Source offinancing’, Ministry of Education, 1999).

4) Labour market training

In line with the government’s policy ofreducing regional disparities and tacklingunemployment, in addition to existingcounty training centres and other privatetraining providers, in 1991 nine Labour

Development and Training Centres wereestablished under the Ministry of Educationand with the support of the World Bank.These had the following remit:

� the organisation and provision ofvocational education and training forunemployed and disadvantaged clients;

� the provision of training forentrepreneurs and business advisoryservices;

� participation in the extension training oftrainers;

� the provision of practical training in theschool system based on agreementsconcluded with vocational schools;

� operating as methodology andexamination centres;

� the provision of labour market andpedagogical services.

Tripartite bodies, led by the Ministry ofEducation, act as supervisory councils forthe Labour Development and TrainingCentres, monitoring their performance andensuring that the training provided meetsthe needs of the local labour market. Thesupervisory councils also monitor thefinancial management of the centres.

The Labour Development and Training

Centres, and private institutions, providetraining for unemployed clients followingthe publication of tenders by the countyand local labour offices (see Chapter 3).With a capacity of 3,500 people annuallyfor each centre (about 30,000 in total), theLabour Development and Training Centreshave a 17% share of this market(evaluated at 88,000 benefiting from thelabour fund in 2000, indicating a regularincrease from 72,000 in 1996 and around80,000 in 1998). The labour offices monitor

attendance, but not the quality of trainingprovided. Neither the training providers northe labour offices track the employmentrecord of graduates from trainingprogrammes for those who areunemployed, other than in a negative way,i.e. by recording graduates of one coursefor unemployed people returning for asecond course. Previous learningexperiences are not taken into account andthe training providers can offer littleflexibility in their provision of training to suitthe needs of unemployed clients. This pointis dealt with in greater detail in Chapter 3.

The Labour Development and TrainingCentres generally make a positive impact,but the quality of services offered variesaccording to the management capacityavailable and the commitment to theconcept of service to the local community.Those that show this commitment havealready established outreach programmesto schools within their region (such asteacher upgrading courses) that couldcontribute to the upgrading of the provisionof initial VET and address the problem ofregional disparities. They also providetargeted services47 to unemployed clientsand other disadvantaged groups, includingdisabled people. With this sense of service,they could play an important role inimplementing the government’s policies forlifelong learning in the regions. Thosecentres in which the commitment to serviceis less evident will need further capacitybuilding before they reach their truepotential.

CVT initiated by companies: results of

the last Eurostat survey

As part of this chapter, it is important toconsider the training activities initiated

by companies for their own employees.This issue was already touched upon in thesection on VET financing (2.1.3). It wasdemonstrated that Hungarian companiesdevote a substantial amount of resourcesto training, in particular through themechanisms introduced in the VocationalTraining Contribution, but their participationin training their own employees is ratherlimited compared to that of companies inother future member states.

44


47 These might include such assistance as developing CVs and interview practice.

According to a survey conducted by

Eurostat in 1999, Hungary identifies

only 37% of its companies as training

companies (compared with 69% in theCzech Republic, 63% in Estonia and 39%in Poland) . This proportion reaches 79% ofcompanies with more than 250 employees,but is only 32% for companies havingbetween 10 and 49 employees. The ratio isalso higher in the financial sector (79%),but lower in manufacturing industries(34%). Training is organised throughcourses for 24%, but also through othermethods such as on-the-job training (30%).In the majority of cases courses areexternal; the average duration is 38 hoursper year, which is higher than in the CzechRepublic (25 hours) and Poland (28 hours).

Overall, continuing vocational trainingcourses account for 1.2% of the totallabour costs in Hungary (compared with1.9% in the Czech Republic , 1.8% inEstonia and 0.8% in Poland), and the costper employee for such courses is thehighest of all the future member states at�305 PPS, which comprises a contributionof �84 PPS relating to the contribution tothe Vocational Training Fund.

Hungary, together with Romania, is alsothe country in which the highest number of‘non-training companies’ give the answer‘initial training is enough’ when asked whythey do not organise any training. This hasto be put in the context of the large (andincreasing) amount of money given bycompanies to initial VET through thedifferent facilities offered by the VocationalTraining Contribution.

Trainers in CVT

A total of 97% of trainers in adult educationare part-time employees who work on acontractual basis. More than half have auniversity degree and 37% have a collegedegree, while 11% have a secondary

school education only. One-third of themare women. Nationally, 50% of the full-timeand 30% of the part-time trainers arequalified teachers.

As the majority of trainers are employed ona part-time basis, employers feel nocommitment to upgrading their skills. As aconsequence, the private training sectordoes not make a significant contribution tothe development of training methodologiesand practices, unlike its counterparts inmember states.

2.2 RESPONSIVENESS OFTHE INITIAL VOCATIONALEDUCATION AND TRAININGSYSTEM TO THE NEEDS OFTHE LABOUR MARKET ANDTHE INDIVIDUAL

Basic indicators:

Unemployment rate of graduates

Number of registeredunemployed schoolleavers:

31,247 (9.05% of thetotal number ofpeople registeredunemployed)

Number of registeredunemployed:

344,965 (as ofAugust 2001)

Source: Ministry of Economic Affairs

Much has been done in Hungary to makethe VET system more responsive to theneeds of the labour market: the process ofdecentralising curricula design; theintroduction of the National VocationalQualification Register in 1993, with furtheradaptations; the successive reforms of theVocational Training Fund aimed atdeveloping businesses’ contribution toinitial VET and also to CVT. The definitionof responsibilities within many triparitecouncils shows that the social partners aregiven an important role in the differentcomponents of the system. Nevertheless,there are still difficulties in several fields.

45


2.2.1 APPROPRIATENESS OFTHE EDUCATION ANDTRAINING SYSTEM

PLANNING AND PROGRAMMING

There remains a mismatch between the

output from the vocational training

system and the needs of the labour

market. This arises from a number offactors: poor labour market intelligence atcounty and municipality level; a guidanceand counselling system that is driven bystudent demand rather than labour marketneeds; and trainers and training materialsthat do not respond to changing marketneeds. At the county and local levels thecollection and processing of labour marketintelligence is sporadic and consequentlyinadequate for effective planning andprogramming.

At national level the curricula reforms andrelated in-service trainer training currentlybeing developed by the NVTC are informedof the relevant occupational profilesthrough the involvement of employers’associations and enterprises.Consequently the new profiles contained inthe NVQR should better reflect the needsof the labour market as perceived at thenational level, but until labour marketintelligence is improved at local level it willremain difficult to implement the revisedprofiles effectively.

THE NVQR AND THE FRAMEWORK

CURRICULUM

The key pillar is the National VocationalQualification Register established byDecree No 7/1993, issued by the Ministerof Education. The first version of theregister was compiled in 1993 through atripartite interest-reconciliation process inprofessional committees comprised ofemployers, employees and governmentrepresentatives. Maintenance of theregister is performed by the QualificationSubcommittees of the NVTC (see above).

The NVQR organises state-recognisedvocational qualifications, specifying theirkey characteristics. Vocations areclassified along the Uniform ClassificationSystem of Occupations (FEOR) published

by the Central Statistics Office. The NVQRincludes information on:

� the level of vocational qualification (inline with the ISCED system since 1996);

� the organisation of training;� the duration of training;� the relative proportions of theoretical

and practical training;� the required pre-qualification.

An updated version of the register is issuedevery year. In 2000 it comprised 932vocational qualifications (compared with955 in the first list in 1993, 973 in 1997,and 951 in 1999). But according to the keypolicy priorities established by thegovernment, a decision has now beenmade to reduce this number drastically(see 2.1.2) in order to provide broaderqualifications.

Based on the NVQR, the line ministries incharge of vocational training issued thetechnical/professional examinationrequirements for vocational qualifications.This was followed by the elaboration of thestandard curriculum for each vocationalqualification in the schooling system. Since1998, training may be introduced within theschooling system (at upper secondary andat post-secondary level) only for thepurpose of acquiring qualifications listed inthe NVQR.

Meanwhile, many reforms had beenundertaken in the field of curricula design.First of all, decentralised curricula were

introduced at the beginning of the 1990s

to replace the central curricula that were

prevalent in the 1980s. A reform basedupon wide international support coming inparticular from the World Bank and thePhare programme was then developedwith the aim of answering the needs of amodern market economy and a democraticsociety. It can therefore be said thatcurriculum design became a two-polesystem combining a central outline orframework curriculum and a locallydeveloped full curriculum.

Closely linked to the NVQR, the‘framework curriculum’ (or ‘national corecurriculum’ or ‘outline curriculum’,according to the different literature) has

46


been recently introduced (the decision wasmade in 1995 and implementation began in1998) with the aim of preserving the

autonomy of educational institutions,and also of providing the level of regulationnecessary to ensure transferability and

to implement fully the NVQR

requirements.

Therefore, training programmes offered inthe school system (in secondary grammarand secondary vocational schools andvocational schools) are determined by theNVQR and the framework curricula, theformer of these having been modified insummer 2001, resulting in substantialstructural changes, specifying 21 groups ofvocations along with the assignment of allvocational qualifications to such groups.

In the vocational streams, the teaching ofgeneral subjects and vocational orientationis provided in the first and second years,while in the third and fourth years basicvocational training is provided in thevocational schools and pre-vocationaltraining in the secondary vocational schools.

The framework curricula contain theknowledge and skills to which everystudent must be given access. Up to 30%of the curricula may be supplementedaccording to local needs. In theory, thechoice of teaching methodology isdiscussed by the teachers, parents andother stakeholders of each educationalinstitution. In practice, decisions of thisnature are made by the school principalsand teachers. The choice of textbooks isthe responsibility of teachers’ workinggroups. Choices are made from a list ofeligible textbooks approved by the Ministryof Education.

TEACHER TRAINING AND UPGRADING

Teachers are qualified as required by thedecree of 1997, but as a consequence ofthe ageing of the profession (as far as VETteachers are concerned) and the lack ofcontact with enterprises, teaching

methodology remains essentially trainer-centred. However, this situation is beingaddressed: the World Bank vocationaleducation reform programme included ateacher-retraining component that hasbeen adopted by the NIVE and included inthe reform of the NVQR and thedevelopment of new competency-basedcurricula. Teachers and trainers are beingprogressively retrained to work with thenew curricula, and teaching facilities arebeing upgraded to facilitate participatory,project-based training.

Pre-service training is offered at 17universities and colleges, either as afull-time course parallel with technicalstudies or combined with a distance-learning course lasting two semesters.Training may also be provided by adistance-learning course offered over foursemesters.

While institutions providing teacher traininghave not been directly involved in thereform of curricula, pre-service training isprogressively incorporating the objectivesof educational policy in trainingmethodology, addressing issues such asquality assurance, development ofcompetencies and learning processes,organisational activities, active learningand project work. However, the autonomyof pre-service training institutions and thelack of contact with schools and the worldof work continue to provide a constraint onthe adequate preparation of teachers andtrainers for the school system.

As noted above, the provision of in-servicetraining goes some way to redress theinadequacies of pre-service training. TheNIVE oversees an on-going retrainingprogramme in accredited traininginstitutions, and teachers under the age of50 are required to complete 120 creditsevery seven years. Schools must nowspend 3% of their budget on in-servicetraining. Teachers themselves areexpected to pay 20% of the costs.

47


DELIVERY

Basic Indicators:

Number ofenterprises providingCVT in 2000

2,139Access to computers:an average of 30computers per schoolSource: NIVE – fullsurvey being preparedby Ministry ofEducation

Number of vocationalschools with Internetaccess

1,300Source: SULINET –full survey beingprepared by Ministryof Education

Enterprises are not involved sufficiently inthe provision of vocational training inschools, nor in the provision of practicaltraining in companies. In some cases,chambers of commerce and/or localenterprises are represented on schoolboards, but in practice they contribute littleto the provision or development of VETprogrammes within these schools.

Practical training provided for VET

school students by companies

As a consequence of the economictransformation and privatisation (includingthe closing of many state enterprises),practical training has changed radicallysince the beginning of the 1990s. Between

1990 and 1998 the number of training

workshops in companies fell by around

50%. This necessitated the establishmentof new training workshops in schools;

during the same period, their numberincreased by around 100%. Thisestablishment of practical workshops was

supported by the Vocational Training

Contribution and its different modalities(see the above description of the differentmechanisms).

In the period 1997–99 75% of practicaltraining was provided by enterprises in theservice sector. In the industrial sector, inwhich the largest number of individualsparticipated, only 55% of students weretrained by businesses. The proportions areeven worse in agriculture: two-thirds of thestudents and trainees studying in this fieldacquired their practical skills in schoolworkshops. The situation in the 1999/2000academic year is shown in the table below.

In the framework of the ‘new’

apprenticeship system (see 2.1.5), forthe as yet limited number of schools whichhave implemented it, the chamber of

commerce takes an active role in

improving the quality of the training

provision in its role as mediator betweenthe schools and enterprises offeringtraining; it accomplished this throughchecking legal regulations, but also throughproducing promotional materials toenhance the training environment, and a‘Training ABC’, which is distributed totraining providers. The chamber activelymonitors the quality of training and trainers,and offers upgrading courses for craftmasters. It also provides certification fortraining provided by enterprises.


48

Postal and DeliveryServices in School Workshops

in Workshopsoutside School

in Workplaceoutside School

in Small andPrivate Enterprises

Commerce andCatering

Service Sectorand Misc.

Agriculture

Building Industry

Industry

0% 20% 40% 60% 80% 100%

44.4

48.0

68.4

15.0

40.8

82.1

16.6

11.3

12.6

4.9

12.6

6.8

15.1

6.8

1.7

6.6

32.2

25.6

12.3

78.4

40.0

17.9

Figure 4. Breakdown of the number of vocational school students by place of

training and sector of the economy for 1999/2000

Some 80% of the enterprises offeringtraining are micro-enterprises with fewerthan 10 employees. However, thisaccounts for only 20% of the studentsreceiving practical training in companies;the remaining 80% undertake in largercompanies. The length and organisation ofpractical training attachments vary,depending on the vocational profile.

Enterprises offering training places can bereimbursed from the Vocational TrainingFund for the purchase of trainingequipment. Workshops therefore tend to bewell-equipped, while school-basedworkshops are relatively poorly equipped,although this situation is improving.

The impact of the chambers of commerceon the effectiveness of practical trainingprovided by enterprises varies betweenand within regions. In most instances theysee their responsibility in terms of thetraining providers rather than as activeintermediaries between the trainingproviders and the schools.

ACCESS TO COMPUTERS AND THE

INTERNET

There are an average of 30 computers perschool; OECD figures show that 41% oflower secondary school students inHungary use email and the Internet forinstructional purposes. This is the same asin Belgium, though considerably below thefigures for OECD countries that havedeveloped information societies. In 2000,1,300 VET schools had Internet access. Adedicated education server, Sulinet, offersemail, Internet and database services tomore than 2,000 schools throughout thecountry.

2.2.2 RESPONSIVENESS

The reform of the curricula registered in theNVQR, the associated programmes oftrainer training and the upgrading oftraining equipment should contribute to animprovement in the responsiveness ofIVET and CVT to labour market needs.However, as noted above, labour marketinformation at local level is inadequate andthere is insufficient liaison between thesupply and demand sides of the trainingprocess. This will clearly lessen the impactof the new curricula.

The local labour offices (see Chapter 3) areplanning to introduce a personalisedservice for long-term unemployed people,but the lack of liaison between the labouroffices and the local education authoritiesmeans that individualised trainingprogrammes have not been developed,despite the introduction of the newmodularised programmes developed underthe NVQR.

Amongst the future member states,Hungary performs badly in terms of bothprovision of CVT in companies andparticipation rates. Flexible contractsallowing workers to take up trainingopportunities have not yet beenestablished. While the government iscommitted to promoting lifelong learningopportunities, the concept is not wellembedded at local level, and trainingproviders are not responding to an as yetill-defined need.

In general it can be said that many buildingblocks that could contribute to thedevelopment of a real and responsivelifelong learning system are already inplace. The issue is probably the lack of areal, integrated strategy based on clearpriorities, established in close partnershipwith all main stakeholders and the basis ofa good level of coordination between alladministrative levels.

49


2.3 CONTRIBUTION OF THEEDUCATION AND TRAININGSYSTEM TO PROMOTINGSOCIAL AND LABOURMARKET INCLUSION

Basic indicators:

Activation rateNumber of registeredunemployed in 2000:

344,965

Registeredunemployed personsas a proportion of theeconomically activepopulation:Source: NationalLabour Centre

8,7%

Rate of return to employment afterparticipation in a measure

Number of peopletaking part in trainingin 2000:

88,173

Rate of return toemployment afterparticipation in trainingin the first half of 2000:Source: NationalLabour Centre

50,1%

Access and inclusion of Roma people

It is estimated that the number of Romapeople living in economicallydisadvantaged areas is around 500,000(150,000 according to official sources, but800,000 according to other sources).However, only 1.5% of the school-ageRoma community complete secondaryschool (EU Barometer on Human andTrade Union Rights in the EducationSector, 2001), and the ratio of children

accepted in secondary schools is

declining (National Observatory report1999), while the number of Roma

dropouts from vocational schools is

increasing. Increasing school attendanceand appropriate measures to tackle socialexclusion and dropout rates are thereforepriorities, requiring specific funding for theprovision of training.

While government policy is to increase theparticipation rates of Roma children insecondary education, the issue is not beingaddressed adequately at national level.The number of Roma pupils in schools for

children with learning difficulties isdisproportionately high, and few have theopportunity to enter continuing education atthe secondary level.

At the county and municipality levels therehave been significant interventions bynational and international NGOs involved ineducation. One such is the Ghandi HighSchool opened in Pecs in 1994. It is aprivate secondary school that receivessome state funding and integrates Romastudents with the general population, butfocuses on Roma culture and traditions.Six other schools modelled on the GhandiHigh School have subsequently beenopened.

Other programmes initiated by NGOs haveaddressed teacher-training issues andpromoted the inclusion of Roma children inmainstream education. However, localadministrations continue to administerdiscriminatory policies that exclude Romachildren.

Training disabled and disadvantaged

students

People with disabilities are taught inintegrated and segregated institutions,depending on the degree of their disability.However, the majority are taught insegregated institutions. In the past three tofour years the NVQR has made a separatedesignation for institutions and trainingcourses offered to this group. Suchcourses receive special resources andteaching aids such as multimedia tools(including CDs and videos).

The curriculum introduced fordisadvantaged groups makes it possible toidentify the problems of members of thesegroups at an early stage and leadindividuals through a supportiveprogramme, with a resultant decrease inschool failures. Integration and cooperationbetween institutions to allow for horizontalmobility is, however, still a challenge. Insupport of this, the student hostelprogramme has run for the past threeyears; it aims to support disadvantagedstudents with state funds to enable them tostudy in other communities.

50


2.4 CONTRIBUTION OF THEEDUCATION AND TRAININGSYSTEM TO PROMOTINGENTREPRENEURSHIP

Design of entrepreneurial skills

While entrepreneurial skills are given equalimportance in the IVET and CVETsystems, they are treated differently atdifferent levels of training.

At ISCED 5 level

All fifth-level vocational training accreditedby the National Vocational QualificationRegister must have a separate modulecovering entrepreneurial knowledge. Oneproject of the National Institute ofVocational Education is worthy of note: aswell as the general curriculum, anentrepreneurial skills module manual wasalso developed. These modules are nowused by several different technical groupswithin the institution. Subjects coveringentrepreneurial skills go beyond justentrepreneurial knowledge, especially infields such as economics, trade andcatering, where more than just a theoreticalknowledge of the topic is required: thestudent takes part in practical experience inthe field of management.

At ISCED 3 level

Entrepreneurial skills are also taught inthird-level vocational training, though thereare large differences between the variousgroups. In this case the curriculum isdeveloped through coordination betweenthe school and the companies in which thestudents will gain their practicalexperience. This may take place in theshop or work area of the company, whichhelps to support the students’ studiesfinancially.

2.5 CONTRIBUTION OF THEEDUCATION AND TRAININGSYSTEM TO PROMOTINGEQUAL OPPORTUNITIESBETWEEN MALES ANDFEMALES

Combating gender stereotypes and

inequalities

The gender question is not perceived as anissue at either national or local levels inHungary. The law on Public Educationmakes provision for equal opportunities ineducation, and participation rates indicatethat there is no discrimination againsteither gender in primary or secondaryeducation. Participation in higher educationshows a slight and growing preponderanceof female students.

Participation rates for women in CVT arehigh and assistance is given to womenwishing to re-enter the labour market. TheMinistry of Social and Family Affairs isimplementing a Phare-funded projectdesigned to promote the reintegration ofwomen into the workforce.

However, school-based guidance andcounselling services do not perceive aneed to reduce occupational stereotypingand, consequently, no effort is made toincrease the participation of girls in trainingfor occupations traditionally performed bymales, and vice versa.

2.6 CONCLUSIONS

Hungary is probably one of the mostadvanced of the future member states interms of modernisation of the VET system,and has made some progress in thepreparation for lifelong learning.

Substantial reforms have been introducedsince the beginning of the 1990s, and areon-going.

51


� Many initiatives have already been putin place that allow for the upgrading andwidening of skills provided in secondaryeducation, and there have beensubstantial developments in tertiaryeducation that have contributed to thesector’s responsiveness to labourmarket needs.

� The dropout rate in secondary grammarand secondary vocational schools hasdecreased dramatically over the past10 years, but remains a problem invocational schools, especially for Romastudents.

� The establishment of the NationalVocational Qualification Register in1993 has facilitated better links betweeninitial and continuing training.

� Legal provision has been made for theinvolvement of social partners in VETreforms and management.

� A special levy has been put in placewith a view to developing CVT atcompany level but also in order toinvolve companies in initial training. Amodern dual system has started todevelop. A comprehensive law on CVT,which should enable provision to bedeveloped and quality to be acheived,has recently been adopted.

However, the legislation governingeducation in general, and initial andcontinuing education in particular, isover-regulatory and may provide someconstraints on the development of lifelonglearning opportunities. For example,training providers seeking governmentsubsidies for courses offered to the publiccan only offer courses leading toqualifications in the NVQR, thus largelyexcluding non-formal and informal learningfrom public recognition.

State funding for VET and lifelong learninghas decreased over the past 10 years; thisdecrease has only been partially offset bythe development of the Vocational TrainingContribution, which is particularly active forthe initial training system.

The introduction of the law covering adulteducation and its amendments will have asignificant impact on vocational educationoutside the school system, thoughchallenges remain if the provisions of the

act are to be fully implemented.Furthermore, there is a risk that the systemestablished will be over-regulated.

One important question is to what extentthe institutions and accredited programmeswill support the quality and transparency ofeducation. Another issue is how thefavourable tendency that started in the fieldof company training courses will spread tothe small and medium-sized companies.

The success of the new system isinfluenced to a great extent by theefficiency of the National Adult TrainingInstitute. Employment policy and adulteducational strategy and programmingshould be strengthened both nationally andlocally. One very considerable challenge isthe current lack of coordination betweenthe training sectors at county level.

In the past 10 years the emphasis hasbeen shifted to continuous training withinthe context of lifelong learning. Furthercapacity building and awarenesscampaigns will be necessary to ensure thefirm establishment of the concept of lifelonglearning in the regions. In particular,greater attention will need to be placed onless skilled adults and the Roma populationas a whole.

Greater collaboration is needed betweenschools and enterprises in providingtheoretical and practical trainingrespectively. This should facilitate theefficient integration of the school systemand the economy.

According to the Joint Assessment Paper(JAP), the government intends to promotejob creation through:

� improving market intelligence andintroducing individualised guidance,counselling and training forself-employment and to facilitate theintegration and reintegration of disabledpeople and other disadvantagedgroups;

� the continuous updating andtransparency of qualifications indeveloping the National Register ofQualifications to improve the skills baseof students graduating from

52


53


post-secondary and tertiary traininginstitutions and promote the concept oflifelong learning;

� improving links between the skill needsof the labour market and continuingvocational training policy, and therecognition that such policy must bestrengthened through the developmentof the system of social dialogue andpartnership between vocationaleducation training schools andemployers.

The achievement of these objectivesshould come from the continuation ofefforts mentioned above, although accountshould be taken of the following concerns.

� The collection and dissemination oflabour market data remains weak atboth the national and local levels.

� Work has begun on the reform andupdating of the NVQR, and newmodular curricula are being adopted byVET schools throughout the country.On-going trainer-training programmesneed to be reinforced and capacitybuilding for school principals increased.The restructuring of the management ofVET schools into 200 managementunits will facilitate this.

� The involvement of social partners indeveloping CVT policy is well-established at national level, but needsto be developed further at the countyand municipality levels.

� Innovations in curricula, the creation ofnew pathways and, more generally, the

development of public and privateprovision in initial and continuing VEThave benefited from the significant levelof autonomy given to schools, and fromthe decentralisation at county level.

� Funding is still an issue, as the rapiddevelopment of participation in uppersecondary and tertiary education hastaken place without additionalresources; this is now creatingdifficulties for the recruitment ofteachers and the renewal of technicalequipment in VET schools in general.

� Referring to the Lisbon conclusions,some of the targets have already beenincorporated in the National EmploymentAction Plan (to increase investment inHRD, to raise the numbers of studentscontinuing their studies at uppersecondary and tertiary level, to improveaccess to the Internet, to develop newbasic skills). However, the majority ofthe lifelong learning building blocks stillneed to be developed further andimplemented. These includecoordination between the Ministry ofEducation, the Ministry of EconomicAffairs and the Ministry of Social andFamily Affairs and involvement of socialpartners; better coordination andpartnership between national, regional,county and local levels in order toaddress inequalities between regionsand to promote better governance of thewhole system; more investment ineducation and training; and improvedaccess to learning, in particular forvulnerable and marginalised groups.

3. CAPACITY OF PUBLIC AND

PRIVATE EMPLOYMENT

SERVICES TO SUPPORT THE

AIMS OF THE NATIONAL

EMPLOYMENT POLICIES

3.1 ORGANISATIONALSTRUCTURE

The Public Employment Services (PES)established in 1991 by the EmploymentAct48 are composed of the followingorganisations in Hungary:

� Employment Office (EO)� County (capital) Labour Centres

(CLCs)49

� Labour Development and TrainingCentres (LDTC).

The analysis in this chapter concentrateson the two employment-related institutionsof the PES, the Employment Office and theCounty (capital) Labour Centres, as LDTCsare discussed in Chapter 2 in the context oftraining and lifelong learning.

During its decade-long history the PES hasfunctioned under different line ministriesand in different institutional structures interms of the roles and powers at variouslevels. (For a brief historical account seeAnnex 10) Currently, the situation is asfollows.

� The Ministry of Economic Affairs

(MoEA) is responsible for employmentpolicy (with effect from January 2001)and the PES.

� The MoEA established theEmployment Office (EO; in Hungarian,Foglalkoztatási Hivatal) on 1 July 2001as a national centre of PES and thelegal successor to OMKMK (OrszágosMunkaügyi Kutató és MódszertaniKözpont – National Labour Researchand Methodology Centre).

55

3

48 Act IV of 1991 on the promotion of employment and providing care for the unemployed (or in brief, theEmployment Act), Article 47

49 There are 19 county labour centres plus the Budapest (Capital) Labour Centre.

� The PES now comprises the (National)

Employment Office, the Budapest

Labour Centre and 19 County Labour

Centres, as well as 176 local labour

offices (LLOs).

The relationship between the MoEA, theEmployment Office and the County LabourCentres is best described as triangularrather than a line hierarchy. The MoEAdirectly supervises both the EO and theCLCs, while the EO provides technicalsupport to the CLCs. Management powers(employer’s rights over county centredirectors; the budget and finances; thepower of supervision over counties) arepredominantly with the MoEA. Inadministrative terms, the EO is not superiorbut adjacent to CLCs. The EO is given thetask of professional assistance andguidance (as detailed below), thoughwithout a management function. The MoEAis the key decision maker50.

The responsibilities and functions of the

PES are defined by the Act IV of 1991 onthe promotion of employment and providingcare for the unemployed (the EmploymentAct, hereinafter Flt., the Hungarianabbreviation). (For the full text of therelevant provisions, see Annex 11.)

The PES is a national state organisation,established:

� to provide labour market measures inorder to tackle, solve and eliminateemployment-related crisis situations;

� to prevent and reduce unemployment,as well as to mitigate its detrimentalimplications.

The legislation aims primarily to coordinatedemand and supply on the labour market.

Thus, the PES implements labour marketpolicy rather than contributing to thedevelopment of employment policy.

Chapter VII of the Flt. sets out the specificduties of the various organs of PES: theEmployment Office (article 48), CountyLabour Centres (Articles 49 and 50) andlocal labour offices (Article 50/A).

The Employment Office’s most importantfunction is to provide professional assistanceand guidance to the County (capital) LabourCentres. Its tasks are closely related to thedaily operation of the PES as well as theirprofessional development.

County Labour Centres and their local

labour offices perform three basic types ofactivity:

� the provision of services51 (such aslabour exchange and selection,counselling on job-seeking, vocationalguidance and occupationalrehabilitation)52, primarily for registeredunemployed clients;

� the provision of support in the form ofactive measures53;

� performing statutory activities (such asdetermining benefits and allowances,maintaining various registers, issuingoccasional employee cards, andalternative military service).

LLOs operate as ‘one-stop shop’ servicecentres handling all active and passivemeasures.

CLCs and their LLOs have, however, alsotaken part in activities that go beyond theirroles and responsibilities as explicitlyspecified in the Flt.; examples are given inthe following list.

56


50 It is interesting to note that since the establishment of PES in 1991, none of the supervisory ministries haveactually let it develop into a ‘mature’, somewhat separate institution that has a clear functional autonomy andfull responsibility accordingly, within the set framework. Neither has the actual central institution (now theEmployment Office) become a genuine headquarters for the PES, to which the county labour centres couldhave been subordinated.

51 The term ‘services’ is interpreted in the Hungarian legislation in a rather narrow way in relation to the activitiesof PES. Active measures are not included in the services of PES.

52 Services provided by PES are detailed and their provision is regulated by the Decree of the Minister ofEconomic Affairs No 30/2000. (IX. 15.) GM on labour market services and the subsidies that may be providedin connection with them.

53 Active measures managed by PES and their provision is regulated by the Decree of the Minister of LabourNo 6/1996. (VII.16.) MüM on measures promoting employment and the subsidies that may be provided formanaging employment crisis situations financed from the Labour Market Fund.

� They have assumed an important role inthe development, implementation andfinancing of project, including thoseaimed at social and human resourcedevelopment, improving employmentand regional development.

� They have taken part in attractingforeign direct investment throughproviding information, and subsequentlyby finding, selecting and trainingworkers (for example, through specifictraining courses tailored to the needs offoreign enterprises).

Nevertheless, the PES has alwaysassumed more of a contributory role thanbeing a driving force of regionaldevelopment. So far the cooperationbetween the PES and the various regionalactors (Regional Development Councils,Regional Development Agencies) has beensporadic. In some regions a closecooperation has developed, while in others,CLCs have not been involved at all. In thefuture, however, CLCs could play a keyrole in regional human resourcedevelopment, as it is foreseen in theNational Development Plan. The concreterole of the PES in implementing economic

development tasks (such as enhancingtourism, promoting SMEs and boostinghousing) is to be clarified in more detail inthe on-going programming process.

Social partners in Hungary have adecisive role in the field of employment andlabour market policies and theirimplementation. Their involvement stemsfrom the administration of the LabourMarket Fund (LMF), which is the financialinstrument for all employment and labourmarket-related activities (details are givenin Annex 12). It is financed through thecontribution of employers and employees(currently 3 and 1.5% levied on wages,respectively). Social partners can thusreasonably claim to have a significant sayin how the fund is spent.

The management of the LMF is based ontwo strongly linked tracks:

� state administration, including centraland county structures;

� tripartite structures at national anddecentralised levels (see illustrationbelow).

57

3. CAPACITY OF PUBLIC AND PRIVATE EMPLOYMENT SERVICES TO SUPPORTTHE AIMS OF THE NATIONAL EMPLOYMENT POLICIES

(in certain areas with the cooperation ofthe Ministry of Social and

Family Affairs, and the Ministryof Education)

Employment Office(based on the delegation from the MoEA)

Ministry of Economic Affairs

State administration

County Labour Centres(20 Centres including

176 local offices)

- Active measures department- LMF department

Steering Committee (LMFSC)

members:- respective ministries

- national social partners

Labour Market Fund

Tripartite structures

County Labour Councils

members:- local government and local authorities

- respective social partners

Organisational structure of LMF

Responsibility for the disbursement of theLMF is formally granted to the MoEA, butaccording to the law54, the ministerexercises this right jointly through theLabour Market Fund Steering

Committee (LMFSC), a tripartite bodycomprising 18 members nominated by therespective organs and appointed by theMoEA for a period of four years. In thetripartite body all ministries concerned arerepresented, namely the Ministry ofEconomic Affairs, the Ministry of Education(two seats each), the Ministry of Social andFamily Affairs, and the Ministry of Finance.National employer organisations and tradeunions have six seats each, and thus thethree sides have an equal number of votesand hence, equal powers.

The LMFSC has extensive powers in theadministration of the LMF55, including:

� approving the three-year strategicprogramme of the LMF;

� deciding on the allocation among thesub-funds of the LMF56 (see Annex 12);

� deciding on the cofinancing of thenational programmes for economic andregional development;

� proposing the LMF’s annual budget;� evaluating the expenditure at least

every quarter.

The LMFSC is also active in policyformulation. It is the specialised body whichdiscusses employment policy and therelated draft legislation on, for example,unemployment provisions, employmentpromotion measures and the operationalrules of LMF. The Steering Committeeregularly evaluates the government policyachievements as well as the utilisation ofthe LMF.

The LMFSC, however, is not the onlytripartite body that has a stake in theemployment policy field. The National

Labour Council, the central tripartite body,scrutinises all draft laws relating to

employment. The LMFSC submits itsannual report to the National LabourCouncil.

At the decentralised level, the County

Labour Centres and the County Labour

Councils bear the same joint responsibilityover the decentralised sub-funds as thenational bodies. The extent ofdecentralisation varies. In the case of theEmployment sub-fund it is almost 90% ofthe total, reflecting the view that localactors can best respond to local needs andthus can utilise the allocated sources mostefficiently.

The County (capital) Labour Councils aretripartite bodies composed ofrepresentatives of employers, employeesand local governments. The three sides ofthe Councils have equal powers. Themission of the County Labour Councils is toreconcile the interests regardingemployment issues, labour market trainingand the support provided for therehabilitation of people with a reducedworking capacity.

The County Labour Councils havefar-reaching powers57, including thefollowing:

� deciding on the allocation of theEmployment sub-fund of the LabourMarket Fund to the counties, and on theshare of active employment measures;

� monitoring the appropriation ofdecentralised parts of the LabourMarket Fund in the county;

� giving an opinion on the tendersannounced for financing from theRehabilitation sub-fund of the LabourMarket Fund allocated to the county;

� initiating and assessing the short- andlong-term employment programmes inthe county, and monitoring theimplementation of such programmes;

� evaluating the operation of the county’sorgans of the PES;

58


54 Act IV of 1991 on Promotion of employment and provisions for the unemployed; which has been amendedseveral times since 1991. The relevant provision is article 39/A.

55 See Act IV of 1991, Article 39/A.

56 Of the seven sub-funds of the LMF the most important are the Employment fund, which finances activeemployment measures, and the Development and Training Fund, which partially finances initial vocationaltraining and fully finances CVT.

57 See Act IV of 1991, Article 13.

� exercising its right for preliminaryconsultation on the appointment of thedirector of the County Labour Centre.

The organisational structure of the LMF fitswell into the current structure of stateadministration and with the principle oftripartism. While this principle iswell-established in law, there must be somedoubt as to its effectiveness, particularly atthe regional and county levels.

3.2 RESOURCE ALLOCATIONTO THE PUBLICEMPLOYMENT SERVICES

The PES is financed exclusively from theNational Labour Market Fund58. The tablebelow shows the expenditure on passiveand active measures, including theadministrative costs of PES, for 1992–2000.

Since 1992 the budget allocated to PEShas decreased in line with the decline inthe number of unemployed people. From1995, however, neither the financialresources nor the staff level (see later)have kept pace with the growing number oftasks of increasing complexity assigned toPES.

The budget for PES for selected years issummarised in Table 2 and Table 3.

59


1992 1993 1994 1995 1996 1997 1998 1999 2000

Total expenditure

Billion HUF 82.8 99 79.9 74 77.4 91.4 101.6 110.1 112.8

Million ECU/EUR 810.9 920.9 640.7 455.1 405 433.3 421.7 435.5 433.8

% GDP 2.81 2.79 1.83 1.33 1.13 1.07 1.01 0.96 0.86

Unemployment rate 10 9 8.9 6.9 6.6

Passive measures

Billion HUF 65 75.6 53.1 50.4 51.8 53.6 62.4 64.5 61.7

Million ECU/EUR 636.6 703.2 425.8 309.9 271 254.1 259 255.1 237.2

% GDP 2.21 2.13 1.22 0.92 0.76 0.63 0.62 0.56 0.47

Of which:

Unemploymentcompensation 2.15 2.02 1.07 0.72 0.60 0.46 0.45 0.47 0.44

Early retirement 0.05 0.11 0.15 0.19 0.16 0.17 0.16 0.09 0.04

Active measures

Billion HUF 17.8 23.4 26.8 23.7 25.5 37.8 39.3 45.7 51.0

Million ECU/EUR 174.3 217.6 214.9 145.7 133.4 179.2 163.1 180.7 196.1

% GDP 0.61 0.66 0.61 0.43 0.37 0.44 0.39 0.40 0.39

Of which:

PES andadministration

0.15 0.15 0.15 0.13 0.11 0.13 0.12 0.11 0.11

Training 0.15 0.23 0.19 0.13 0.08 0.08 0.07 0.07 0.07

Subsidisedemployment 0.31 0.28 0.27 0.17 0.18 0.23 0.20 0.22 0.22

Source: JAP

Table 1. Expenditure on active and passive employment measures, 1992–2000

(billion HUF, million ECU/EUR and % GDP)

58 The LMF is financed through a levy of 3% of employment costs on employers and 1.5% on employees. Afurther levy of 1.5% of wages is raised from employers.

The significant increase of the budget for2001 does not reflect a consciousdevelopment policy but a statutory salaryincrease, for the following two reasons:

� a redesignation of employees of thePES as civil servants rather than publicservants;

� an increase in the salaries of civilservants.

Financing takes place in the frameworkand according to the rules of the statebudget (Public Finances Act, PublicProcurement, Treasury, etc.) regardless ofthe fact that the source is the LabourMarket Fund, which is based on thecontribution of employees and employers.The financing principles of the budgetsector (including the restriction of publicexpenditure and the centralisation ofpayment processes) also apply here, andthe peculiar features, tasks and role ofthe organisation do not ensure anexemption. The planning of the budget,compliance with rules applicable to public

finances and the requirements forkeeping financial records represent asignificant burden and requireconsiderable administrative staff.

The PES, including the Employment Office,20 CLCs and 17659 LLOs, employs almost4,000 staff altogether.

The core staff in most CLCs were hired in1995 at the period of highestunemployment, in response to theconsequent needs and priorities.Continuous training has had only a limitedeffect in reducing the discrepancy betweenthe routine acquired over the years and thenew tasks and expectations arising fromthe fundamentally changed labour market.Being part of the state administration, PEShas repeatedly been subject to compulsoryworkforce reduction. For example, its staffnumbers had to be reduced by 10% in1995 and by 4% in 1999; a further 2%decrease should be implemented in 2002.In 2001 staff recruitment was frozen, withthe exception of a few months.

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1991 1994 1997 1998 1999

Operational expenditure 6,000 7,904 9,510 10,620

Accumulation 370 388 400

Reserve for operationalexpenditure 136 150 170

Institutional development(building, IT investment) 400 2,307 1,300 1,201

Total 1,790 6,400 10,717 11,348 12,391

Table 2. Budget of PES, 1991–1999, selected years (billion HUF)

Source: Lázár György – Dr. Sziklai Éva – Dr. Varga Ildikó: Áttérés a passzív munkaerõpiaci eszközökrõl az aktívmunkaerõpiaci politikára. In: Frey Mária (szerk.): EU-konform foglalkoztatáspolitika, Budapest, 2001

2000

planned

2000

actual

2001

planned

2001 first

quarter, actual

Operational expenditure 11,044 11,115 11,791 5,933

Centralised reserve 200 200 206 83

Institutional development(building, IT investment) 850 850 1,200 142

Total 12,094 12,165 13,197 6,158

Table 3. Budget of PES, 2000–2001 (billion HUF)

Source: Gazdasági Minisztérium: Beszámoló a Munkaerõpiaci Alap 2000. évi költségvetésének teljesítésérõl;Gazdasági Minisztérium: Beszámoló a Munkaerõpiaci Alap 2001. évi költségvetésének I. félévi teljesítésérõl

59 The JAP refers to 174 local labour offices, while the Phare project on PES contains the figure quoted here.

The broad distribution of the current PESstaff by activities is as follows:

� 350 persons are in leading positions atvarious levels (such as directors, deputydirectors and heads of units);

� 80 persons are engaged in labourmarket planning;

� 1,050 persons deal directly with clients(on tasks including registrations, firstinterviews and individual action plans);

� 850 persons perform brokerage;� 400 persons administer the active

labour market measures;� 250 persons are highly qualified labour

counsellors (including psychologists andleaders of job clubs);

� 100 persons deal with financial mattersand unemployment provisions;

� 100 persons carry out inspections.

Staff numbers alone are less meaningfulthan the actual workload measured both inqualitative and quantitative terms. This kindof assessment, however, is only availablefor 1997–9860.

In 1997, the PES employed 4,375 personsaltogether: 100 persons at the NationalLabour and Methodological Centre, 1,522persons in the CLCs and 2,753 persons atthe LLOs61. For 1998, a staff increase of 60persons was approved (three persons ineach county) to start dealing withoccupational rehabilitation. The averagenumber of staff for LLOs was around 10persons. The smallest LLOs had 4–6persons. According to the survey, an LLOneeded to employ at least 10–12 personsin order to perform all statutory tasks andto provide the basic services to allconcerned.

The composition of the staff in CLCs andLLOs can be found in Annex 13.

Since 1997–98 the regional disparities inthe range of tasks and staff ratios haveincreased, according to interviews with keyleaders in PES. The major contributingfactors have been as follows.

� Staff reductions due to budgetrestrictions have usually been carriedout in a uniform manner irrespective ofthe existing buffers or bottle-necks ofthe CLCs and LLOs.

� Labour market tensions have tended toincrease in regions where LLOs werealready overburdened.

� LLOs wishing to expand their serviceshave been forced to work within theiravailable financial and humanresources, as no additional money oremployees have been provided. Thishas resulted in a situation in whichLLOs in the most disadvantagedregions have less chance of offeringmore than the basic services, as theirstaff are already fully occupied withunemployment registration andproviding unemployment benefit.

� Similarly, the administrative limits ofhuman resources set for LLOs have hadto be observed when the managementof active measures was allocated toLLOs from CLCs. Thus, the number ofstaff dealing with active measures atLLOs had to be increased two- orthree-fold, which could only be achievedat the expense of those responsible forstatutory administration and brokerage.

Over the years the number of unemployedpeople has decreased significantly, whichhas led to the proposal that the staff of thePES should be reduced proportionallyrather than increased. This approach doesnot take into consideration the followingpoints.

� Those who are still unemployed,primarily long-term unemployed people,require more complex and long-termassistance from LLOs.

� The decrease in the number ofregistered unemployed people does notresult in a reduction of turnover. Thenumbers of persons leaving andre-entering registration, and thoseleaving and later enrolling again intoactive measures have barelydecreased.

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60 See Munkaügyi Minisztérium: Tájékoztató a munkaerõpiaci szervezet létszámhelyzetérõl, különös tekintettelaz új feladatok teljesítésébõl adódó többlet követelményekre. 1998. június. (Overview on the staff of the PES,with a special focus on the new requirements due to the additional activities assigned to PES, Ministry ofLabour, 1998)

61 Yearly average figures. In the given period the National Labour Inspectorate was also formally part of thePES. Its staff are not included in the figures quoted.

� The actual activities of PES go farbeyond dealing with unemployed clients(e.g. contacting employers and trying toexplore vacancies in the labour market).

The PES also has a number of unexpectedtasks to perform from time to time. Forexample, the service organised publicworks and other assistance to mitigatedamage caused by floods and soil water in2000. The PES was also involved in theimplementation of the so-called Status Act,adopted by the Parliament in 2001(including issuing identity cards for theso-called status Hungarians; providingwork permits; registering them astemporary employed; and labourexchanges taking the status Hungariansinto consideration). No additionalheadcount or supplementary budget isavailable for these or other similarunplanned activities.

The interviews with various leaders andkey employees of CLCs and LLOs showsome common concerns regarding thecurrent state of affairs, including thefollowing.

� The time available for dealing with anindividual client has become muchshorter (due to the repeated staffreductions and the growing number oftasks assigned to PES), which tends toresult in a sort of automatism in dealingwith people. This certainly underminesthe quality of work of the PES62.

� While a certain specialisation couldpreviously be maintained, employees ofthe LLOs, and to a certain extent thoseof the CLCs, are now supposed to begeneralists. However, staff have no timeto become experts in all fields; theyhave difficulties in following the frequentchanges in all relevant legislation andare not provided with adequate internaltraining.

One of the possible sources ofrationalisation is to improve the IT supportof the activities carried out by the PES. Thecurrent situation is as follows.

� There are a total of around 3,600computers within the PES, which issufficient in number, but not in quality.The vast majority of the staff usecomputers on a daily basis. A CLC andits LLOs have, on average, 180computers.

� In the past, however, computers havenot been purchased according to ascheduled plan in order to ensure timelyreplacements. Thus, the number ofobsolete computers is high. Thesolution would be a significant, focusedinvestment (of a value of around HUF1–2 billion), followed by the introductionof a strict order for further investment.

� County databases are not directly linkedto a national system. National data areproduced as an aggregate of the countydatabases, on the basis of the commonsoftware programmes. Currently, nonationwide database exists concerningvacancies and job-seekers, althoughon-going investment aims to connectcounty information sources across thePES system.

� Information gathered by the locallyproduced programmes is not utilisedbeyond the county, however useful orinteresting it is. ‘Best IT practices’ areseldom shared at county level, and arenot well-known within the headquartersof PES.

� Computer programmes, especiallythose produced centrally, keep up withchanges in legislation, but only withconsiderable delay. This is one of thereasons that CLCs and LLOs developprogrammes themselves, or work,temporarily or in the longer term,without any IT support.

Wider use of computer programmes andtheir better quality would not alone solvethe tensions arising due to theoverburdening of the PES staff. IT can,however, reduce the time spent onadministration, primarily in the case ofshort-term unemployed clients, and thusmore attention and patience can be givento the more complex cases.

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62 The survey on the 1997/98 situation already concluded that ‘the staff is not enough to perform the giventasks; should further tasks be assigned to the PES, those could not be fulfilled without jeopardising the qualityseriously’.

3.3 COVERAGE OF PUBLICEMPLOYMENT SERVICES

No investigation has been carried out sofar regarding the market share of the PES.According to the estimates of its leaders,around 60–70% of those who areunemployed turn to the PES for registrationand/or services, while only 20–30% ofactual vacancies are notified to PES. Thelatter national average covers considerableregional disparities. The ratio of notificationis even lower in the capital (estimated at10%), while it is close to 100% in theregions, where a relatively small number ofemployers are operating. The regionaldifferences in market share can be tracedback not only to the diversities of the labourmarkets (and of the level of unemploymentin particular), but also to factors such asthe distinct hiring policies and opportunitiesof employers; the efforts of LLOs and theirefficiency in building close cooperation withthe employers in the given regions; and theprofessional expertise of LLOs inbrokerage.

It is widely believed that the market shareof the PES has been decreasing overrecent years for two reasons.

� The number of unemployed people, thetraditional main clients of the PES, hasbeen decreasing. Moreover, followingthe recent legislative changes,unemployed clients are subject to PESregistration for a relatively short periodonly, before moving outside the remit ofthe PES63.

� The PES still provides assistanceprimarily, if not exclusively, to registeredunemployed clients, while othercategories of potential clients, forexample inactive people (such asdependants, retired persons still at anactive age, students and those who areat home raising a child), people in

employment seeking a new job, andemployers looking for new employees,are virtually out of its reach, though tovarying degrees.

The future market share of the PESdepends on how it will be able to attractnew clients; key contextual factors areoutlined briefly below.

Economically, the inactive persons haverecently become potential clients of PES.Now, for instance, school leavers andcareer beginners, and those who receivechild-raising support, are entitled to enrolon subsidised (re)training courses even ifthey are not registered as unemployed.Students are entitled to access careerguidance and information on furthereducation. The PES, however, does notseem to be sufficiently prepared for thesenew tasks.

These targeted measures can certainlybring certain groups of the inactivepopulation closer to the PES, though theyare unlikely to lead to any major increase inthe employment rate, as these groups donot constitute the long-term unemployed. Inorder to reach other segments of inactivepeople, civil associations (NGOs) will needto be involved, as they could contact thesepeople much more successfully than publicauthorities. Such ‘bridging’ is essential inthe case of the Roma population. The PESmust work much more closely with theRoma minority self-governments or the civilassociations working in Roma communitiesin order to integrate inactive Roma peopleinto the labour market.

Employed peole who are looking foranother job seldom turn to the PES. Theyare not encouraged to do so, as the PEShas more than enough clients from amongunemployed people, and the few vacanciesnotified to PES are in any case ‘reserved’

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63 From February 2000 the maximum time for receipt of unemployment benefit is 270 days. This length of timeis proportionate to the number of days worked in the four preceding years (five days worked provide eligibilityfor one day of unemployment benefit). The amount of unemployment benefit is 65% of the average earningsin the four preceding years. If the unemployment benefit period has expired, the person is no longer obligedto cooperate with the LLO, while the LLO continues providing assistance if the person so requires. After theexpiry of the unemployment benefit, unemployed clients can ask for a regular social allowance (which is 70%of the minimum old-age pension). For this purpose, he/she has to be registered at the local government, andhas to cooperate with that public authority. Local governments organise public works, public utility work andother types of work in the public interest, in which unemployed people are obliged to take part. In case of arefusal, the person is excluded from the regular social assistance.

for those who are unemployed. NeitherCLCs nor LLOs have yet developed anappropriate, service-oriented approach.There is also a prejudice on thejob-seekers’ part. Most of them see thePES as a state authority that only dealswith those who queue up for benefit but donot really want to work, and that offers noinformation about reasonably well-paidjobs, due to the lack of notification byemployers.

Thus, the PES provides support toemployed people in crisis situations only.For example, it supports training of thosewhose employment is threatened byclosure or redundancy. The PES is alsoactive in handling mass redundanciesthrough providing various services.

Similarly, employers tend to turn to thePES when they are undergoing temporarydifficulties, or are forced to restructure, andthey ask for assistance in retraining theiremployees or retaining employees (wagesupplement scheme). In regions wherethere is a shortage of labour, CLCs andLLOs are often asked to assist in recruitingand selecting employees and subsequentlyin training the selected persons for givenjobs. The PES also provides assistancewhen employers intend to create jobs witha view to rehabilitation.

In general, however, employers do notinvolve the PES in their recruitmentprocesses. Despite their legal obligation,they do not even notify the PES ofvacancies for ‘quality jobs’64, assuming thatCLCs and LLOs are not in a position toprovide them with appropriate ‘qualityworkers’. This attitude reinforces theexperience of job-seekers who feel thatvacancies registered at PES are for badlypaid, low prestige jobs. In regions whereeconomic development has alreadystarted, a more constructive relationshipbetween the PES and employers isbeginning to emerge.

3.4 RANGE AND QUALITY OFSERVICES

As previously described, the main clients ofthe PES are those who are unemployed;thus their services are aimed primarily atassisting them and, to a much lesserextent, at assisting job-seekers (ingeneral), inactive people and employers.Labour inspection is currently provided bya separate state authority (National LabourInspectorate).

The PES provides practically all thepassive and active labour marketmeasures that are common in the memberstates. Around 20 different instruments(classified in the Hungarian terminology asmeasures and services65) are available foruse either separately or combined ifrequired66.

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64 The failure to notify a vacancy is not sanctioned by the relevant decree No 30/2000. (IX.15.) GM.

65 The Decree of the Minister of Economic Affairs No 30/2000. (IX.15.) GM includes the following services:provision of labour market and employment information; counselling on job-seeking, career selection, positionseeking, rehabilitation and local (regional) employment; job brokerage; reporting and registration of labourdemand. The Decree of the Minister of labour No 6/1996. (VII.16.) MüM covers the subsidies provided foractive labour market measures. They include subsidies for example for training, employment,self-employment, and income institution allowances.

66 The most comprehensive way of combining various instruments is the so-called labour market programme,which is a package of various active measures and services provided for a target group, in the framework of adistinct scheme. A labour market programme might run for up to three years. See below for furtherdiscussion.

Table 4. Persons involved in active and passive measures, selected years

1994 1999

Persons involved in active measures 108, 512 115, 646

Persons involved in passive measures 476, 959 339, 822

Total 585, 471 455, 468

Share of persons involved in activemeasures (%) 18.5 25.4

Source: Lázár György – Dr. Sziklai Éva – Dr. Varga Ildikó: Áttérés a passzív munkaerõpiaci eszközökrõl az aktívmunkaerõpiaci politikára. In: Frey Mária (szerk.): EU-konform foglalkoztatáspolitika, Budapest, 2001.

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1994 1999 2000

1. Public employment services and administration 0.15 0.11 0.11

2. Labour market training 0.19 0.07 0.07

a) Training for unemployed adults and those at risk 0.19 0.07 0.07

b) Training for employed adults 0.00 0.00 0.00

3. Youth measures .. .. ..

a) Measures for unemployed and disadvantagedyoung people .. .. ..

b) Support for apprenticeship and related forms ofgeneral youth training .. .. ..

4. Subsidised employment 0.27 0.22 0.22

a) Subsidies to regular employment in the privatesector 0.12 0.09 0.07

b) Support for unemployed persons startingenterprises 0.02 0.00 0.00

c) Direct job creation (public or non-profit) 0.14 0.13 0.15

5. Measures for disabled people .. .. ..

a) Vocational rehabilitation .. .. ..

b) Work for disabled people .. .. ..

6. Unemployment compensation 1.07 0.47 0.44

7. Early retirement for labour market reasons 0.15 0.09 0.04

Total 1.83 0.97 0.86

Active measures (1–5) 0.61 0.40 0.39

‘Mobilising labour market supply’ (2a, 3a, 4a–b, 5a) 0.33 0.16 0.13

‘Non-targeted training’ (4c, 5b) 0.00 0.00 0.00

‘Work as a social objective’ (4c, 5b) 0.14 0.13 0.15

Source: Employment Office

Table 5. Major active measures financed from the Labour Market Fund, selected

years, percentage values of GDP

Over the years there has been a shift frompassive to active measures, regarding both

the persons involved (see Table 4) and theshare of expenditure (see Table 1).

The bulk of the resources for activemeasures have been spent on threemeasures, albeit with a changing share:public work programmes, training and wagesubsidy (see Table 5).

For some years the efficiency of activemeasures has been limited by the fact that

mitigating unemployment was based ondetailed eligibility criteria rather than on thecomplex problems to be tackled. Theso-called labour market programmes nowfocus solely on the special needs of thevarious groups: long-term unemployedadults, young unemployed people,job-seekers with disabilities and from the

Roma population; these programmesprovide for a flexible mix of activemeasures. Programmes have also beenlaunched to promote equal opportunitiesbetween men and women, to preserve thejobs of those threatened with long-termunemployment, and to assist theadaptation of the workforce to industrialand technological change67.

Computer-assisted self-service facilitiesare seldom established at CLCs and LLOs.In 1997, for example, this kind ofassistance was available in only fourcounties (Komárom, Jász, Szabolcs andHajdú). Less sophisticated techniques areused (such as leaflets, advertisements andvideos) to inform unemployed people. Themajor reasoning is that the bulk of theclients would not be able to get informationthemselves from a computer-assistedservice, and they need individual treatmentand counselling anyway.

Case management has not yet beenintroduced across the PES. Some LLOs,however, have already made efforts in thisdirection.

Regarding monitoring systems, there is aregular process for monitoring theeffectiveness and impact of the activemeasures68. This is the basis for thequarterly report submitted by the PES tothe relevant CLCs and the annual reportsubmitted to the ministry. The monitoringprocess gives a good picture of the resultsachieved. Nevertheless, it could have beencomplemented more frequently withfollow-up investigations covering all clientswho participated in a given scheme. Thegeneral services (information, brokerage,counselling) provided by the PES are notsubject to comprehensive monitoring.Statistical data are collected, but are notused for performance assessment. Neitherare the clients’ opinions researched to

provide feedback. Ex-post evaluation byindependent experts and comprehensiveimpact analysis are exceptional.

3.5 ROLE OF PRIVATEEMPLOYMENT SERVICES

The first legislation relating to privateemployment services (PRES) was issuedin 1997 and regulated labour exchange(Government Decree No 274/1997. (XII. 22.)).This was replaced by Government DecreeNo 118/2001. (VI. 30.) on the registration ofand the conditions for pursuing temporarylabour leasing and private brokerageactivities by private entities, which hasbeen in force since 1 July 2001.

The legislative intention of the governmentwas twofold:

� to allow private enterprises to pursuelabour exchange, and also, from 2001,temporary labour leasing, and thus toput an end to the public monopoly inthese fields;

� to provide legal protection for clientsagainst private enterprises operating inan unfair manner; this was especiallyurgent for certain types of labourexchange abroad (nannies, au pairs).

The decree does not set restrictionsconcerning the corporate form: therefore,legal persons, business entities withoutlegal personality and individualentrepreneurs may all be PRES. Thisdiversity is reflected in practice.

There is no information on the marketshare of PRES in terms of the proportion ofvacancies.

Even the total number of PRES across thecountry is currently subject to estimates(somewhere between 350 and 500), as the

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67 Examples of labour market programmes: ‘highly educated, 50-plus unemployed people’; ‘unemployedyoungsters who have not completed education’; ‘transit social and employment programme for homelesspeople’; ‘social public works programmes for unemployed people living in small settlements’; ‘training andemployment programmes for gypsies’; ‘preventing long-term unemployment for women’; ‘searching for afamily solution – in the case of disadvantaged families’.

68 The monitoring procedure is as follows. Three months after the end of the main programmes the CLCs makeenquiries with the programme participants as to their employment status. The information gained from theseenquiries and from the programme administration files enables the CLC to assess the programmes accordingto such success criteria as the re-employment ratio of the participants and the average cost ofre-employment.

relevant decree only came into force in mid2001. Based on interviews with PESleaders, the number of PRES seems tovary considerably between regions.Sporadic information on 2000 (when onlylabour exchange enterprises were allowedto function according to the then regulation)indicates that most of the PRES wereregistered in Budapest. In Baranya county,for example, there were 18 private labourexchange enterprises in operation and theysuccessfully managed 666 labourexchange cases; in Csongrád county therewere 12 enterprises in operation and theywere successful in 526 cases. The PRESoperating in Budapest performed labourexchange in 12,600 cases, of which around6,000 were unemployed in 2000.

Services offered by PRES are prescribedby the relevant legislation. DecreeNo 118/2001. (VI. 30.), now in force, allowsfor the establishment of two types ofPRES: temporary agencies that carry outlabour leasing, and labour exchangeagencies. In terms of labour exchange, thelegislation determines various directions(exchange of Hungarian employees withinHungary or abroad; free labour exchangeor brokerage against a charge). Thedecree does not prevent the enterprisefrom linking its labour exchange to otheractivities (such as counselling, training andeducation).

Initially, ‘head-hunter’ and counselling firmsappeared on the labour market; these wereused by clients with a university educationand good language skills in order to getmiddle- or top-management positions.Nowadays, private agencies providingservices to the entire range of employees,from those educated to elementary level tothose with the highest academicqualifications, have been established.Service providers that satisfy special needshave also been established to address onlyspecific groups of clients (e.g. disabledpeople).

Private labour exchange and leasingagencies typically perform additionalactivities complementary to their primebusiness. Employers and job-seekerswould not ensure the sustainability ofPRES, with the exception of a fewwell-established, successful enterprises.

Regarding clients, the relationship betweenthe PES and PRES is of a complementarynature. Job-seekers with higher levels ofeducation who are looking for ‘quality jobs’,as well as those with special difficultiesprimarily contact PRES. Those who areunemployed seldom use PRES.Competition is present only in respect ofone group of clients, i.e. those seeking jobsabroad. These clients turn to PRESbecause they usually receive offers quickerthan they would through the PES.

While the PES and PRES practicallycomplement each other in terms of theirclients, still there are various forms ofcooperation between them. The PESperforms the following activities in relationto PRES.

� CLCs provide initial licences foroperation of PRES.

� CLCs monitor whether the conditionsrequired for operation of PRES69 arefulfilled and, if not, suspend or withdrawthe licence.

� PES, in general, is supposed tocooperate with PRES (according toArticle 17 of the Government DecreeNo 118/2001 (VI. 30.)), although thepossible forms and areas of cooperationare not determined in detail, and thepractice has so far been limited.

Some CLCs have already signedcooperation agreements with PRES in theappropriate county, on the basis of mutualadvantages. These kinds of formal linksare especially important for non-profit civilassociations that seek professionalassistance in this way.

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69 The conditions are as follows: appropriate education or vocational qualification of the staff; suitable physicalconditions; the inclusion of labour leasing and exchange in the scope of the enterprise’s activities and its deedof foundation; security deposit in certain defined cases (brokerage outside Hungary; labour exchange againsta charge). If all the conditions are met, the private enterprise is given a licence for operation in the form of anadministrative state resolution. Licensing was performed by the Ministry of Labour until March 1998, when itwas delegated to CLCs.

The PES does not monitor the PRES interms of the quality of services provided. Inthe case of small private agencies, qualityof work is mainly motivated and ensured bythe primary interest of staying in business.Labour exchange, counselling andhead-hunting companies with foreignparticipation usually use their ownmonitoring systems, which varysignificantly.

3.6 REFORMS OF PUBLICEMPLOYMENT SERVICES

The PES has undergone substantialorganisational restructuring (as alreadymentioned in Chapter 3.1 and summarisedin Annex 10), but none of thesedevelopments were intended to bring aboutmajor changes in the PES objectives andtheir implementation, nor have they doneso. The PES has continued serving itsmission as it was defined in 1991: tohandle and solve employment-related crisissituations; to prevent and reduceunemployment; and to mitigate itsdetrimental implications (Article 5 of theFlt.).

The fact that PES has for some time beenin need of reform, and not only in itsorganisational structure, is not in question.The rationale of the reform derives, first ofall, from the change in the paradigm in theHungarian employment policy: prioritieshave been clearly shifting from themanagement, mitigation and prevention ofunemployment towards the increase ofemployment. This change in paradigm isfurther strengthened by Hungary’saccession to the European Union, and thefact that the Union has set the target of fullemployment and creating quality jobs in theframework of the European EmploymentStrategy.

Obviously the PES must adapt, in terms ofobjectives, priorities and working methods,to the emerging ‘new employment policy’.This is fully recognised by the Hungariangovernment, a fact reflected in the JAP.(The relevant parts of the JAP aresummarised in Appendix 1.)

Taking into account the priorities of theJAP, certain modernisation efforts have

already started. The most significant is theproject aimed at ‘Modernising theHungarian PES’, submitted in theframework of COP2001 for Phare support.

Its overall objective is to improve theefficiency and effectiveness of PES:

� by providing better services to allclients;

� by supporting the operation of thelabour market;

� by helping regional developmentprojects with detailed labour marketinformation, in compliance with the EUEmployment Strategy Guidelines.

The purpose of the project can besummarised, on the basis of the standardsummary project fiche, as follows.

� A computerised nationwide informationsystem covering all vacancies andjob-seekers registered in Local LabourOffices and meeting the requirements ofindividual case management, efficienthandling of vacancies and EURES, andalso of collecting statistical data andmonitoring PES performance.

� A service model to ensure the provisionof professional individual services,self-service facilities and specialservices for employers.

� The modernisation and expansion ofPES services and activities taking intoaccount the needs of job-seekers andemployers.

� The modernisation and expansion of theorganisation and management of PES.

� Improvements in the level ofprofessional qualification of PES staff,enabling them to design, implement,monitor and evaluate ESF-type labourmarket and human resourcedevelopment projects and regionaldevelopment projects.

The project fiche anticipates the followingoutcomes.

� The project will help to develop a newservice model, which will beimplemented as a pilot scheme in threelocal offices in each of the sevenregions of Hungary (or one in eachcounty). With this approach, theHungarian PES will be much more

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effective in its dual role of offeringvacancies to job-seekers and differentservices to employers on the one handand as a registering system taking careof the different groups of unemployedpeople on the other. The projectconcentrates on the local level and onlyon a relatively small number of offices.The new service model will later beintroduced nationwide, financed fromthe Labour Market Fund.

� A computerised information system willbe installed in 20 Local Labour Officesand the Employment Office covering allvacancies and job-seekers registered inall the existing 176 Local LabourOffices. The data system will meet therequirements of individual casemanagement, efficient handling ofvacancies and the requirements ofEURES, and also of collecting statisticaldata and monitoring PES performance.

� New office environments will be createdin 100 Local Labour Offices selected onthe bases of client turnover.

The Phare project summarised aboveaddresses areas of weakness and puts theplanned activities into the wider context ofemployment promotion, regionaldevelopment and European integration (asregards the connection to EURES). As awider framework, it also reflects anenvisaged profound organisationalrestructuring of PES: in the long run the 20County (Budapest) Labour Centres will beorganised into seven Regional LabourOffices. As public administration isbecoming more modern, the role of locallabour market management will graduallybe transferred from the level of counties toNUTS 2 regions, defined from theplanning/statistical point of view.

The introduction of Regional LabourOffices, either to replace completely or tocomplement the County Labour Offices, isnot a new idea. It was proposed as part ofthe latest modification of the EmploymentAct in the summer of 2001, but was heavilyopposed by social partners, who tend tooperate at county rather than regionallevel. The government has postponedmaking the final decision. The wording ofthe Phare project, as well as that of theJAP, suggests that (i) the establishment of

regional institutions is no longer inquestion, only their role might still be thesubject of debate; (ii) the final decision islikely to be made rather soon (as the JAPwill be implemented by the date ofaccession, and the Phare project expires atthe end of 2003).

The project preparation has alsocontributed to the still on-going strategyformulation for the PES. The strategicobjectives as defined (as an attachment tothe project fiche) in mid 2001 aresummarised and commented on inAppendix 2.

3.7 SUPPORT FORIMPLEMENTING THEEUROPEAN EMPLOYMENTSTRATEGY

In the current situation it is quite difficult tojudge the extent to which PES will be ableto participate in the implementation of theEuropean Employment Strategy (EES). Inthis context the fundamental question ishow quickly the change of paradigm inHungarian employment policy will reachthe PES, and when the strategic objectivesof the PES – already aligned to EES – willbe formulated and accepted. Otherquestions include: how fast and howefficiently the organisation, managementsystem and working methods of the PESwill be able to adapt to the strategicobjectives; how consistently the newstrategic objectives will be implemented;and what financial and human resourceswill be available for all these endeavours.

At the same time, taking into considerationthe activities of the PES, we may concludethat one decade of experience and practiceprovides a sufficient basis for implementingthe EES. A wide variety of active measureshas been in place for many years, whichcan be combined and concentrated aroundthe various priorities. However, asystematic analysis of the efficiency of theactive measures, especially that of thelabour market programme, could be auseful source of further development.Another factor that must be be taken intoaccount is that the PES has to direct itsactivities towards new clients, including

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those who are inactive, job-seekers whoare still employed, employers andforeigners. Their needs can only be metusing new methods that need to bedeveloped in the near future.

Regarding the European Social Fund, it isnot yet clear what role PES will play. Thepreparatory activities, in the framework ofPhare projects and the (Preliminary)National Development Plan, have beencarried out by central governmentauthorities. Nevertheless, PES has muchto offer. It has developed and run several

projects financed from Phare and otherEuropean financial sources; it has uniqueexperience of delivering active labourmarket measures eligible for ESF fundingin the future; it possesses all the labourmarket information required for regionalplanning; and it has been working withsocial partners for many years and hasalso been part of wider local partnerships.The possible involvement of PES in ESFpreparation and in subsequent relatedactivities would be worth addressing in thenear future.

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ANNEXES

ANNEXES TO CHAPTER 2

ANNEX 1. CHANGE IN THE TITLES OF THE FUNDING SOURCESAND THE RELEVANT ACTS OF LAW

Name Reference

Skilled Worker Training Contribution – SkilledWorker Training Fund

Joint Decree No 2/1972. (I. 8.) MüM-PM issuedby the Ministry of Labour and the Ministry ofFinance

Vocational Training Contribution – VocationalTraining Fund

No XXIII Act of 1988 on the Vocational TrainingContribution and the Vocational Training Fund

Vocational Training Contribution – LabourMarket Fund Vocational Qualification FundSection

No IV Act of 1991 amended by No CXXIV Act of1995

Vocational Training Contribution –Labour Market Fund Development and TrainingFund Section

No LI Act of 2001 on the Vocational TrainingContribution and the provision of financialsupport to the development of the trainingsystem

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ANNEX 2. LAW ON ADULT EDUCATION

NO CI ACT OF 2001 ON ADULT TRAINING70

In order to enable the exercising of the constitutional right to learning throughout the wholelife of citizens, to enhance the possibilities of accessing adult education and training for allmembers of the society and to enable citizens to meet the challenges imposed byeconomic, cultural and technological development and to successfully participate in thelabour market and continue to be successful through their lives, and to ensure theimprovement of the quality of life through adult education and training, the Parliament isadopting the following Act.

PART I – GENERAL PROVISIONS

ARTICLE 1

Under the framework of this act the state grants the right to participate in adult training foreverybody.

ARTICLE 2

(1) This act regulates adult training activities and service providing and administrativeactivities relating to adult training, along with the institution system and the subsidysystem supporting the operation of adult training.

(2) Issues pertaining to adult training not regulated herein shall be governed by theprovisions – as appropriate – of No LXXVI Act of 1993 on vocational education(hereinafter: Sztv.), those of No LXXIX Act of 1993 on public education (hereinafter:Ktv.) and of No LXXX Act of 1993 on higher education.

ARTICLE 3

(1) With the exceptions specified in paragraph (4) the scope of this act shall cover thefollowing:a) adults participating in adult training or adults using services relating to adult training,b) in relation with their activities specified in paragraph (2)� public education institutions,� vocational education institutions,� higher education institutions,� public service corporations (non-profit organisations), associations, public bodies,

foundations, public foundations andother legal entities and business organisations without legal personality, soleproprietors, and the associations of such established to perform adult trainingactivities.

(2) For the purposes hereof adult training activities shall be construed as follows:a) training provided outside the schooling system on a regular basis, the objective of

which may be general, language or vocational training, andb) services relating to adult training.

(3) Further to the activities specified in paragraph (2), for the purposes of the application ofparts IV, V and VI hereof, the concept of adult training shall include training – fallingunder the scope of the Ftv. – provided at higher education institutions for adultstudents, not receiving state subsidies under the Ftv.

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70 The Act was adopted by Parliament on 18 December 2001

(4) The scope of this act does not cover legal entities established under Article 13 of No IVAct of 1990 on the freedom of conscience and religion and on churches, except wherea) such an entity falls under the scope of the Sztv., the Ktv. or the Ftv and is pursuing

adult training activities,b) such entity has been established in order to perform exclusively adult training

activities.

PART II – THE GOVERNANCE AND INSTITUTION SYSTEM OF ADULT TRAINING

The governance of adult training

ARTICLE 4

(1) In its scope of duties pertaining to adult training the Government shall specify thedetailed rules on the following, in decrees:a) the accreditation of institutions performing adult training and of adult training

programmes,b) the use of normative subsidies provided for adult training, the obligations pertaining

to state subsidies of institutions performing subsidised training activities subsidisedas specified in Part IV hereof.

(2) The tasks of the sectoral governance of adult training shall be performed by theMinister of Education. The Minister shall issue decrees regulating the following:a) the detailed rules of the entering of institutions performing adult training activities in

the register of such institutions;b) in addition to those specified in Article 16 (2), further rules governing the various

forms of adult training.

National Adult Training Council

ARTICLE 5

(1) The National Adult Training Council (Országos Felnõttképzési Tanács, hereinafter:OFkT) shall operate as a nationwide body in charge of providing assistance to theperformance of the tasks of the Minister of Education, of the preparation oftechnical/professional decisions to be made and of commenting and making proposals.

(2) The OFkT shall comment on the following:a) strategic issues pertaining to adult training;b) the principles of the adult training subsidy system;c) the drafts of legislation on adult training;d) the rules of the accreditation procedure and the technical/professional requirements

of accreditation.

(3) The OFkT shall appraise the wealth of experience relating to the opportunities in the jobmarket of former participants of adult training courses – particularly of those indisadvantaged positions – and shall make proposals concerning the necessaryimprovements.

ARTICLE 6

(1) The OFkT shall be comprised of 13 members, invited by the Minister of Education for aperiod of three years, as specified below:a) one person representing the ministry in charge of the governance of education, of

the planning of the central budget, of employment policy, of the governance of public(cultural) education and of the training of individuals of altered working capabilitieseach,

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ANNEXES

b) four persons from among recognised experts of the various areas of adult training,c) one individual representing interest-representing organisations of employees, one

representing those of employers, one of those representing the chambers ofcommerce and one representing the interest-representing organisations of adulttraining institutions.The names of the members shall be disclosed in the official journal of the Ministry ofEducation.

(2) One of the members of the OFkT shall be invited by the Minister of Education to act asthe chairman of the Council.

(3) The OFkT shall establish its own procedural rules.

(4) The Minister of Education shall provide for the availability of the requisites for theoperation of the OFkT.

National Adult Training Institute

ARTICLE 7

The Minister of Education shall establish a National Adult Training Institute (NemzetiFelnõttképzési Intézet, hereinafter NFI), which shall carry out the following:

a) technical/professional and methodology development of adult training activities,b) tasks of improvement of adult training,c) production and ongoing improvement of the technical/professional documents relating

to adult training,d) coordination – on a nationwide level – of research efforts and of the technical/

professional services provided in the field of adult training,e) strengthening of the links and relationships between and among adult training, public

education, higher education and public (cultural) education,f) development of international cooperation, including cooperation with the adult training

institutions of the Member States of the European Union,g) the tasks of the secretariat of the Adult Training Accreditation Body (Felnõttképzési

Akkreditáló Testület, hereinafter FAT).

Registration of institutions performing adult training activities

ARTICLE 8

(1) Subjects-at-law listed in Article 3 (1) b) shall be entitled to launch adult training activitiesor the provision of services relating to adult training if they are included in the register ofadult training institutions.

(2) For the purposes of this act institutions performing adult training activities shall includeinstitutions and persons contained in the register as specified in paragraph (1)(hereinafter institutions providing adult training).

(3) Higher education institutions performing adult training activities shall be subject to theprovisions comprised in paragraph (1) only if they perform training activities not fallingunder the scope of the Ftv.

(4) The register of institutions providing adult training services shall be kept by the NationalPublic Education Evaluation and Examination Centre (Országos Közoktatási Értékelésiés Vizsgaközpont, hereinafter OKÉV).

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(5) OKÉV shall enter an institution performing adult training services in its register if suchinstitution meets the requirements specified in a separate piece of legislation. OKÉVshall issue a certificate of such registration.

(6) An applicant may lodge an appeal against a decision on the refusal by OKÉV to registerthe applicant or against its deletion from the register, to the Ministry of Education. In theprocedures relating to the register the provisions of No IV Act of 1957 on the rules ofthe state administration proceedings (hereinafter Áe.) apply.

ARTICLE 9

(1) The register of institutions providing adult training services shall contain the followingdata:a) the name of the institutions providing adult training services,b) in the case of a public education institution the OM (Ministry of Education)

identification number,c) the number of the entry in the register,d) the date of recording in the register,e) the deadline set for the performance of the reporting obligation [Article 9(5)],f) the objective of the prospective adult training activities as specified in Article 3(2)

and the form of the service relating to the prospective adult training activities,g) in the case of language training: whether the training is aimed to enable the

acquiring of a certificate of language proficiency recognised by the state orrecognised on an international basis, the level(s) of such certificates and thelanguage(s) concerned,

h) the entitlement to the organisation of state-recognised language proficiencyexaminations, the accreditation number,

i) in the case of vocational training: whether the training is aimed to enable theacquiring of a certificate of vocational qualification recognised by the state orrecognised on an international basis and the vocations(s) concerned,

j) in the case of state-recognised vocational qualifications the entitlement to theorganisation of vocational examinations, the number of the piece of legislation onwhich such entitlement is based and the title (name) of the vocational qualification(s)concerned,

k) the title(s) of the accredited adult training programmes and their identificationnumber(s),

l) the date and reason for the deletion from the register and that of the suspension ofthe register.

(2) An institution providing adult training services shall always apply its registry number inthe documents used in the course of its training activities (attendance sheets, progresslogs, certificates etc.) as well as in the business documents pertaining to the trainingoperations and shall communicate such to its customers, include it in the brochures andprogramme booklets covering its activities and post it in a prominent place at itspremises available for its customers.

(3) An institution providing adult training services shall pay an administrative service fee forthe procedure of its recording in the register, the amount of which shall be specified bylaw.

(4) The register of institutions providing adult training services shall be accessible for thepublic, it shall be published by OKÉV once a year. The data of the register and theattached documents shall be available for anyone for inspection at the venue of theregister. Anyone may take notes from the register and may apply for copies of theregister –against payment of an administrative service fee.

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ANNEXES

(5) An institution providing adult training services shall produce reports on its operationsonce every two years after its registration as specified by law, and shall submit suchreport to the organisation keeping the register.

Supervision and controlling of institutions providing adult training services

ARTICLE 10

(1) The following shall be checked by OKÉV:a) whether a given institution providing adult training services is included in the

register,b) whether its operations are in line with the conditions specified by law and those

underlying the issuance of its certificate.

(2) An institution providing adult training services shall provide for the requisites andrequirements for such an audit, as specified by law.

(3) In the course of the performance of its official duties as an authority OKÉV shall retainexperts designated by the minister in charge of the vocational qualification(s)concerned.

(4) In other respects the controlling power of OKÉV shall be governed by the provisions ofthe Áe concerning the controlling activities performed by authorities.

Regional labour development and training centres

ARTICLE 11

(1) In order to ensure the performance of tasks relating to adult training the Minister ofEducation shall operate regional labour development and training centres (hereinaftertraining centres).

(2) A training centre shall be operating as a central budgetary organ.

(3) The tasks of the supervision of training centres shall be carried out by the Minister ofEducation along with the exercising of the rights of the entity in charge of themaintenance of such centres as specified in No XXXVIII Act of 1992 on the generalgovernment system. The costs of the basic level of operation of a training centre shallbe borne by the central budget.

(4) The fundamental tasks of a training centre shall include the following:a) performance of the training of social groups specified in the central training

programmes,b) participation in the implementation of training programmes facilitating employment,c) performance of the tasks imposed on such an institution by the act on vocational

training,d) participation in international programmes pertaining to adult training,e) provision – on an optional basis – of services relating to adult training.

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PART III – CONTENT REQUIREMENTS OF ADULT TRAINING

Accreditation of institutions providing adult training services

ARTICLE 12

(1) An institution providing adult training services recorded in the register as specified inArticle 8 may apply for its accreditation based on conditions specified in a separatepiece of legislation.

(2) In the course of the accreditation procedure FAT shall issue the certificate ofaccreditation.

(3) One pre-requisite for the accreditation procedure shall be that the institution providingadult training services has an annual training plan approved by the technical/professional advisory body as specified in Article 14 and that besides adult training itprovides services relating to adult training.

(4) The accreditation of an institution providing adult training services shall expire upon theend of the fourth year after its issuance.

(5) An institution providing adult training services shall submit its application foraccreditation to FAT.

(6) Under authorisation granted pursuant to another statute of law in the procedure that isto be regarded as the accreditation of an institution as specified herein, in the case ofan institution providing adult training services authorised to perform the activitiesspecified in such statute – within the framework specified in a separate statute of law –FAT shall issue the certificate of the accreditation of the institute along with full or partialexemption from the procedure specified in this Article.

(7) An institution providing adult training services shall pay the procedural fee for theaccreditation procedure, as specified in a separate statute of law.

Adult Training Accreditation Body

ARTICLE 13

(1) In order to carry out the tasks of the accreditation of institutions providing adult trainingservices and adult training programmes the Minister of Education shall establish theFAT.

(2) The FAT shall check the adult training activities of accredited institutions providing adulttraining services, and, in view of the findings of such checks, it shall decide on whetheror not to withdraw accreditation.

(3) The FAT shall operate as an independent professional body.

(4) The FAT shall be comprised of up to 20 members. The members of the FAT shall beinvited by the Minister of Education for a period of three years, from among personsdesignated by the minister in charge of education policy, employment policy and theintegration of those with altered working capabilities and people with disability torepresent the ministry, along with representatives of the churches, chambers ofcommerce, employers, employees, local governments and institutions providing adulttraining services as well as recognised experts of adult training.

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ANNEXES

(5) The names of the members of the FAT shall be disclosed in the official journal of theMinistry of Education.

(6) One of the members of the FAT shall be invited by the Minister of Education to act asits chairman.

(7) In the course of its operations the FAT shall take into account the resolutions andproposal made by the Hungarian Accreditation Committee (Magyar AkkreditációsBizottság, hereinafter MAB) and shall provide for the participation of the MAB in themeetings of the body with a consulting right.

(8) The Minister of Education shall exercise legal supervision of the operation of the FAT.

Professional advisory body

ARTICLE 14

(1) In order to provide for the continuous maintenance of the quality of its technical/professional work and that of training and in order to ensure the quality standardsmeeting the requirements of the users of its services an institution providing adulttraining services may set up professional advisory bodies.

(2) A professional advisory body shall be comprised of a minimum of five members,representing the instructors of the institution, professional advisory bodies in the area ofthe main field of training provided by the institution and employers. The number ofmembers of the body employed by the institution providing adult training servicesconcerned shall not be higher than a third of the total membership of the body.

(3) The duties of a professional advisory body shall include the following:a) commenting and formulating its position on the annual training plan bi-annual report

of the institution providing adult training services,b) participation in the development of the quality assurance system of the institution

providing adult training services,c) promotion of the development of professional publicity and public relations of the

institution providing adult training services.

(4) A professional advisory body shall establish its own procedural rules.

Annual training plan

ARTICLE 15

(1) The annual training plan shall include the planned training programmes, their targetgroups, the sources of funding and the mode of the provision of the personal andmaterial requisites for the training courses conducted by the given institution providingadult training services.

(2) Such annual training plan shall be made available for those interested in the trainingactivities of the institution providing adult training services.

(3) In the course of its operations the institution providing adult training services shallsubmit annual reports to the professional advisory body on the accomplishment of theannual training plan.

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The contents and the accreditation of the contents of a training programme

ARTICLE 16

(1) Adult training may be performed only on the basis of a training programme.

(2) A training programme shall contain the following elements:a) the competence to be acquired through the course,b) the requisites for the joining of and participation in the course,c) the planned training period,d) the techniques of training (individual preparation, group training, tele-teaching etc.),e) the units (modules) of the syllabus, their objectives, contents and scope,f) the maximum number of participants in a group,g) the description of the system of evaluation of the performance of participants,h) the conditions of the issuance of the certificate of the training and of the completion

of its various units (modules),i) the personal and material requisites for the implementation of the training

programme and the mode of the provision of such.

(3) A training programme may also be of a modular structure.

ARTICLE 17

(1) A training programme shall be adjusted to the preliminary qualifications and skills of theadults participating in the course.

(2) An adult intending to participate in training may request ex-ante assessment of the levelof his or her knowledge/skills which the institution providing adult training services shallassess and take into account.

ARTICLE 18

The training of adults may also be organised in the form of open training or

tele-teaching

ARTICLE 19

(1) An institution providing adult training services listed in the register specified in Article 8shall apply for the accreditation of their training programmes in accordance with therules laid out in a separate statute of law.

(2) Based on the accreditation procedure the FAT shall establish the deadline for thevalidity of the programme accreditation and shall issue the programme accreditationcertificate.

(3) Training programmes accredited under authorisations granted by other statutes of lawor authorised under other the scope of power of relevant authorities, in accordance withthe provisions laid out in a separate statute of law, shall be reported to the FAT. Basedon such a report the FAT shall issue the programme accreditation certificate.

(4) In the course of the accreditation of adult training institutions of churches and theirtraining programmes the contents of subjects pertaining to theology and those relatingexclusively to religious practices shall not be reviewed.

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ANNEXES

Adult training contract

ARTICLE 20

(1) An institution providing adult training services and an adult participating in such trainingshall conclude an adult training contract.

(2) The adult training contract shall contain the following details:a) the vocational qualification or competence to be acquired through the training,b) the mode of the testing and evaluation of the performance of the participant,c) the place, duration and schedule of training,d) the amount of the training fee – including the examination fee,e) the consequences of any breach of contract by the adult participant or the institution

providing adult training services,f) all other items specified by law.

(3) An adult training contract shall be concluded in writing which shall be preserved by theinstitution providing adult training services concerned, for a period of five years.

(4) A training contract specified in Article 52 (2) of No LXXVI Act of 1993 on vocationaltraining shall be accepted as an adult training contract.

PART IV – ADULT TRAINING SUBSIDIES

General rules on subsidies

ARTICLE 21

(1) Adult training provided for an adult individual of Hungarian citizenship shall be providedfinancial assistance by the state in accordance with the provisions laid out in Part IVhereof.

(2) The sources of subsidies for adult training, in the general government system:a) central budget,b) the part of the vocational training contribution to be allocated to adult training,c) the parts of the Labour Market Fund (Munkaerõpiaci Alap, hereinafter MPA) devoted

to employment, development and training,d) tax allowances specified in a separate statute of law.

Normative subsidy for adult training

ARTICLE 22

(1) The state shall provide normative adult training subsidy, of an amount specified in thebudget act each year, for the training of adults and of adults with disabilities,participating in training courses aimed at the acquiring at the given institution providingadult training services, of a first vocational qualification, recognised by the state,included in the National Vocational Qualifications Register (Országos Képzési Jegyzék,hereinafter OKJ).

(2) Based on the proposal made by the Minister of Education the Government shall beentitled to specify each year an additional group of adults for the training of whom thestate may provide normative adult training subsidy as specified in the budget act.

(3) Based on the proposal made by the Minister of Education the Government shall specifyeach year the total number of adults who may be granted normative adult trainingsubsidies as laid out in paragraphs (1) and (2).

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(4) Normative adult training subsidy may be provided exclusively for an institution providingadult training services accredited as specified in Article 12, which has concluded anagreement with the Ministry of Education on the subsidising of adult training, asspecified in a separate act of law.

ARTICLE 23

(1) Under a statutory provision the training of adults whose extension training is requiredfor the improvement of the standards of the performance of public duties may begranted subsidy from the budget.

(2) Such subsidy may be used only for the purposes of participation in programmesaccredited as specified in Article 19 of institutions providing adult training servicesaccredited as specified in Article 12.

Subsidising of training programmes facilitating employment

ARTICLE 24

(1) In the cases and under conditions specified in Article 14 of No IV Act of 1991 on thepromotion of employment and on the provision of services for the unemployed(hereinafter Flt.) the training of an adult may be subsidised from the MPA.

(2) Under this paragraph only the training of an adult receiving training in an institutionproviding adult training services accredited as specified in Article 12.

Subsidising of the training by businesses of their own employees

ARTICLE 25

The training of an adult employee may be subsidised by the employer in the way and tothe extent specified in No LI Act of 2001 on the vocational training contribution and thesubsidising of the development of the training system.

Subsidising of the improvement of the technical conditions of adult training

ARTICLE 26

In order to promote the development of the technical conditions of adult training theMinister of Education – having elicited the opinion of the OFkT – may put out an invitationof applications to be submitted by accredited institutions providing adult training servicesfor subsidies from the development and training parts of the Labour Market Fund

Personal income tax allowance

ARTICLE 27

Under the provisions on personal income taxation an adult – adult participant of a trainingcourse – shall be entitled to a personal income tax allowance on the basis of his or herparticipation in a training course.

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ANNEXES

Registration and supply of statistics

ARTICLE 28

(1) Institutions providing adult training services shall register and manage data specified inthe annex hereto. Apart from the exceptions specified by law such data may bedisclosed to third parties only with the consent of the person covered by such statisticaldata.

(2) An institution providing adult training services shall be obliged to provide data forpurposes of the compiling and processing of statistics under the provisions of No XLVIAct of 1993 on statistics.

PART V – INTERPRETING PROVISIONS

ARTICLE 29

For the purposes hereof:

(1) Institution accreditation: assessment and authentication from the aspect of quality of thetraining (syllabus development, education/training, evaluation) performed by an adulttraining institution and of service-providing activities relating to adult training along withthe standards of the management and decision-making processes of the institutionconcerned.

(2) Programme accreditation: assessment and authentication of the accomplishment of theobjectives of training (with particular attention to its requirement in the labour marketand the improvement of the quality of life), of feasibility and of the satisfaction ofpedagogy- and andragogy-related requirements.

(3) Adult training organised in the form of open training or tele-teaching is based on theapplication of specific info-technological and communication-based means of trainingand knowledge-transfer methods which enable training based on the interactiveconnection between the trainer and the adult participant of the training as well as on theautonomous learning activities of the participant. The duration of such training and theforms of the checking of the success of knowledge transfer and of the acquiring of theknowledge/skills shall be specified by the institution providing adult training services inthe adult training contract concluded with the adult participating in the trainingprogramme.

(4) General-purpose training: training aimed to enhance general education contributing tothe development of the personality of adults and to the development of equalopportunities in the society and of citizens’ competencies.

(5) Adult: a natural person participating in adult training, who has satisfied his or herschooling obligations as specified in a separate statute of law.

(6) Adult in disadvantaged position: an adult whose access to training opportunities is moredifficult than the average without state aids, on account of social, lifestyle-related or anyother circumstances.

(7) The forms of services provided in relation to adult training activities include, inparticular, the ex-ante assessment of the knowledge/skills level, vocational orientationor adjustment consultancy, the assessment of training requirements and the provisionof training advice and the provision of job seeking advice along with the training of jobseeking techniques.

82


(8) Adult with disabilities: an adult – under the provisions hereof - categorised as anindividual with disabilities as specified in Article 4 a) of No XXVI Act of 1998 on therights and the equality of opportunities of people with disabilities.

(9) Training outside the schooling system: training whose participants are not regularstudents of (in such legal relationship with) the training institution.

(10) Competence: the entirety of the knowledge, skills, capabilities and behaviour patternsof a person who has participated in adult training enabling the individual tosuccessfully accomplish a given task.

(11) Unemployed adult: a natural person as defined in Article 58 (5) d) of the Flt.,categorised as an adult under the provisions hereof.

(12) Training provided on a permanent basis shall qualify as training conducted on aregular basis along with training provided in repeated cycles within a given year, if theminimum duration of the training course is not shorter than 15 hours and 3 days.

PART VI – CLOSING PROVISIONS

ARTICLE 30

(1) This Act shall enter into force on 1 January 2002, with the exception of paragraph (2).

(2) Articles 22, 24, 27 and 28 (2) shall enter into force on 1 January 2003 whileArticle 23 (2) shall enter into force on 1 January 2004.

(3) Institutions providing adult training services shall be entitled to submit applications fortheir accreditation and their programmes’ accreditation after 1 July 2002.

(4) The entry of institutions providing vocational training outside the schooling system priorto the entry into force hereof as registered institutions shall qualify as equivalent withregistration as per Article 8 hereof for a period of two years from the entry of suchinstitutions in the register.

(5) Upon the entry into force hereof Article 53 of the Flt. shall be abrogated.

(6) The labour centres shall submit to the OKÉV the registries as specified in the DecreeNo 45/1999. (XII.13.) OM (issued by the Ministry of Education) on the conditions to bemet by the commencement and conducting of vocational training not later than31 January 2002.

Ferenc MádlPresident of the Republic

Dr János ÁderSpeaker of the House

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ANNEXES

ANNEX TO ACT CI OF 2001

Data to be managed under this act:

a) name, date and place of birth and citizenship of the adult, address of residence andstay and telephone number of the adult,

b) data relating to the training relationship, including, in particular,� data on schooling and vocational qualification,� data on admission to the course,� assessment and qualification of the studies of the adult, examination details,� data on disciplinary and compensation issues,� other data with the consent of the person concerned,

c) data required for the establishment of various benefits to be provided to the adult(personal income tax allowance, state grant, social subsidy, other aids) in proof of his orher income and social position.

Data listed in the Annex may be used for purposes of collection and processing of statisticsand may be handed over for such purposes in forms not enabling the identification of thepersons concerned. The name, date and place of birth of an adult participating in adulttraining financed by the state shall be submitted to the Ministry of Education forregistration.

ANNEX 3. SUBSIDIES PROVIDED ON THE BASIS OFDECENTRALISED APPLICATIONS FROM VET FUNDS (INTHOUSANDS HUF)

84


0

200

400

600

800

1998 1999 2000

1998 280.37 177.39 272.23 246.05 260.87 237.77 254.66

1999 299.16 422.7 452 458.28 448.89 411.46 427.94

2000 389.66 523.07 534.44 520.07 582.81 531.41 547.98

Central

Hungary

Central

Transdanubi

Western

Transdanubi

Southern

Transdanubi

Northern

Hungary

Northern

Great Plain

Southern

Great Plain

Central Hungary Central Transdanubia

1998 1999 2000 1998 1999 2000

Subsidy (thousands HUF) 804,000 854,700 1,108,300 197,500 469,700 579,127

Population (thousands) 2,867.56 2,856.95 2,844.22 1,113.37 1,111.19 1,107.16

Subsidy per capita 280.37 299.16 389.66 177.39 422.7 523.07

Western Transdanubia Southern Transdanubia

1998 1999 2000 1998 1999 2000

Subsidy (thousands HUF) 270,000 446,400 525,970 242,500 449,200 506,947

Population (thousands) 991.79 987.60 984.15 985.56 980.18 974.77

Subsidy per capita 272.23 452 534.44 246.05 458.28 520.07

Northern Hungary Northern Great Plain

1998 1999 2000 1998 1999 2000

Subsidy (thousands HUF) 335,000 572,900 739,673 365,000 629,500 808,780

Population (thousands) 1,284.13 1,276.26 1,269.13 1,535.06 1,529.89 1,521.95

Subsidy per capita 260.87 448.89 582.81 237.77 411.46 531.41

Southern Great Plain

1998 1999 2000

Subsidy (thousands HUF) 345,800 577,600 735,305

Population (thousands) 1,357.89 1,349.71 1,341.84

Subsidy per capita 254.66 427.94 547.98

ANNEX 4. PAYMENT OF VOCATIONAL EDUCATION ANDTRAINING CONTRIBUTION IN 1998-2000

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ANNEXES

billion HUF

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

45.0

1998 1999 2000

Vocational fund Practical training in thecompanies

Direct developmentsupport for schools

8.6

5.7

16.3

19.2

5.8

11.0

24.2

5.9

13.2

ANNEX 5. VOCATIONAL EDUCATION AND TRAININGCONTRIBUTION (IN BILLION HUF)

Description 1998 1999 2000 2001

Development and training fund part 8.6 11.0 13.2 14.3

Corporate training 5.7 5.8 5.9 6.5

Development aid for vocational schools 16.3 19.2 24.2 25.0

Development aid for higher education institutions - 1.8

Total amount payable in vocational educationand training contribution

30.6 36.0 43.3 47.6

Estimated and calculated data

ANNEX 6. COSTS BOOKED BY BUSINESSES FOR THE TRAININGOF THEIR OWN EMPLOYEES AGAINST THE VOCATIONALEDUCATION AND TRAINING CONTRIBUTION, BY REGION(IN 2000)

ANNEX 7. HIGHER VOCATIONAL QUALIFICATIONS IN THE NVQR(AIFSZ SYSTEM)

86


554,517499,067

423,750

0

50 000

100 000

150 000

200 000

250 000

CentralHungary

NorthernTransdanubia

NorthernGreat Plain

SouthernTransdanubia

SouthernGreat Plain

NorthernHungary

CentralTransdanubia

Total cost

Cost to be accounted

Accepted cost for training

ThousandsHUF

14

7

1

13

3

13

97

32

4

1412

9

39

0

10

20

30

40

50

Agriculture Technology Economy Human Total

2001

19982000

number

ANNEX 8. NUMBER OF INSTITUTIONS PARTICIPATING IN AIFSZTRAINING BETWEEN 1998 AND 2001

ANNEX 9. INSTITUTIONAL SETTINGS

I. SCHOOL

Chapter V of the Public Education Act defines the operation of institutions, identifying thevarious levels of direction and management (Articles 54-63), the structure of which withinschools is as follows.

The head of the institution

exercises the rights of the employer, and is in charge of:

� the proper operation of the institution, in compliance with the relevant legislation,� educational (pedagogical) activities,� the operation of the quality assurance system,� cooperation with the school board, employees’ interest-representing organisations and

student councils as well as parents’ organisations (societies).

Teaching staff

The teaching staff is the community of the teachers of an education/teaching institution.This is the key consulting and decision-making organ of an institution in matters ofeducation and teaching.

This body is entitled to:

� accept the pedagogy programme and its modification;� prepare the annual work plan of the education/teaching institution;� accept comprehensive analyses of, appraisals of and reports on the work of the

education/teaching institution;� establish that a student may enter the next grade;� comment, from a professional angle, on applications submitted for the position of the

head of the institution.

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ANNEXES

0

50

100

150

8 8

22

31

16

36

Higher educationalinstitution

Vocational secondaryschool

Both together

24

44

1998 1999 2000 2001

75

97 98

129

On the initiative of teachers, inter-institutional professional working associations mayalso be set up.

Parents’ organisations

In order to exercise their rights and to facilitate the discharge of their obligations, parents

may establish parents’ organisations (societies). The parents’ organisation (society) mayinitiate the establishment of a school board.

The school board

A school board may be set up to assist education and teaching activities at school, in orderto promote cooperation between

� teaching staff,� parents,� students,� the organisation in charge of the maintenance of the particular school, and� other organisations having an interest in the operation of the institution.

In a vocational school or a secondary vocational school the local chamber of commerce

is also represented in the school board.

The school board specifies the conditions and requirements of teaching, on the basis of abusiness undertaking linked primarily to adult training. A school board comments on thepedagogy programme of its school. A school board has a right to make proposalsconcerning both the direction/management of the education and training institute andthe person to be employed as head of the institution.

Students’ societies and student councils

The students of a school may set up various students’ societies and associations toorganise their joint activities.

To represent the students’ interests, students’ societies may organise student councils.The activities of a student council may cover all issues relating to students. A studentcouncil may express its opinion and make comments and proposals concerning theoperation of the education and training institution as well as any other issue pertaining tostudents, and concerning the utilisation of funds made available for purposes of youthpolicy.

II. ADULT TRAINING INSTITUTION

Pursuant to the Adult Training Act only registered institutions71 will be authorised to provideadult training services. Registered institutions shall be entitled to apply for accreditation,which is a pre-requisite for access to state funds.

One pre-requisite for the accreditation procedure is that the institution involved in adulttraining should have an annual training plan approved by its technical/professionaladvisory board.

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71 In the case of higher education institutions and schools involved in vocational education and training andpublic education, such registration is required only to a limited extent.

Technical/professional advisory board

An institution involved in adult training may set up a technical/professional advisory boardto promote its professional work and to provide for quality assurance.

The members of such a board include:

� teachers of the institution,� technical/professional bodies appropriate to the orientation of training,� employers’ representatives.

The tasks of the board include the following:

� commenting on the annual training plan and the bi-annual report,� participation in the designing of the quality assurance system of the institution,� promotion of the PR activities of the institution.

Annual training plan

Including:

� the planned training courses/qualifications,� the target groups of the training courses,� the sources of funding,� the method of supplying personal/material requisites.

III. COUNTY (BUDAPEST) LOCAL GOVERNMENT

Tasks

A county government and the Budapest municipal government are required to provide forthe following:

� secondary school and vocational school service provision,� secondary school and vocational school service provision for national and ethnic

minorities,� adult training,� further training and vocational advisory services and education consultancy,� provision of school and student hostel services for children and students with

disabilities, who cannot be educated/taught together with the rest of the children andstudents,

where the village, town (district) local government does not undertake to provide suchservices, or if the performance of this task is not yet provided for in a given county or incertain parts of Budapest.

Planning

The Budapest/county local government prepares a task performance, institution operationand development plan. The opinions and comments of the following shall be obtained tosupport the preparation of the plan:

� Budapest/county statistics office,� labour centre,� regional/local chamber of commerce,� Budapest/county parents’ and students’ organisations,

89

ANNEXES

� non-governmental, non-local governmental organisations in charge of the maintenanceof institutions,

� Budapest and county-level teachers’ union.

The plan relating to the satisfaction of demand for the secondary studies is covered by aseparate chapter in the county development plan. In respect of the education/teachingtasks the development plan must contain the following:

� the fundamental principles of cooperation between and among local governments,� the guarantees and requisites for the flexibility of the education institution system

(compatibility of its elements).

The local minority council72

concerned may comment on and participate in thepreparation of the development plan.

The following elements are included in a development plan:

� evaluation of the progress made in the organisation of the provision of publicadministration services,

� the tasks to be carried out,� the medium-term plans for the admission of students to schools covering the territory of

Budapest or the county.

The total capacity of the various types of school should be established in the schooladmission plan – in relation to the expected number of students – along with the tasks ofthe various schools in discharging their obligation to provide schooling and in the provisionof facilities for continued studies.

The development plan is prepared for a minimum of six years. The development planmust be reviewed at least once every four years. Furthermore, it must be reviewed whenrequested by the local government concerned, or by the local minority councils or thenational minority councils, or by at least 5% of all interested parties.

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72 Councils may also be established in Hungary on the basis of ethnicity (for instance, the Roma Council).

ANNEXES TO CHAPTER 3

ANNEX 10. BRIEF HISTORY OF THE PES

In the decade-long history of the PES, three periods can be distinguished in terms of theorganisational structure and the responsibilities at various levels.

(i) 1991–97

The Ministry of Labour directed the County Labour Centres (CLCs) through the NationalLabour Centre (Hungarian abbreviation: Országos Munkaügyi Központ, OMK), and theCLCs directed their Local Labour Offices (LLOs), which belonged to the sameorganisation. At the same time, however, the Ministry of Labour also had supervisorypowers in parallel with OMK. In administrative terms, OMK was not within the samestructure as the CLCs, and the CLCs were not clearly subordinated hierarchically to it.Hence, double direction developed to a certain extent.

(ii) 1997–July 2001

The Ministry of Labour ended OMK’s role in direction, and itself exercised this powerdirectly over the 20 CLCs. The PES did not have a national centre, even in formal terms.The ministry, which was the direct manager (initially the Ministry of Labour, later theMinistry of Social and Family Affairs), did not establish a separate organisational unit withinthe ministry to embody the management of the PES. In practice, management fell apartand a vacuum was generated. None of the ministries that were involved in stateadministration were able to address the problems, which escalated to ministry level, andthe CLCs did not received sufficient support for their work. Having lost its earlier role inmanagement, OMK also lost its footing.

The next organisational change was the merger of the Labour Research Institute, andthrough that the creation of the National Employment Research and Methodology Centre(Hungarian abbreviation OMKMK, Országos Munkaügyi Kutató és Módszertani Központ) inJanuary 2000. This step suggested a tendency in which the previous ‘middle managementfunction’ of the OMK would be replaced by a technical assistance role, providingbackground support for both the state administration (the actual ministry) and forimplementation (CLCs).

The employment policy itself was put in a somewhat uncertain position by the terminationof the Ministry of Labour in 1998. The organisational solution initially chosen, namely thedivision of employment policy between active areas (linked to the MoEA) and passiveareas (linked to the Ministry of Social and Family Affairs), did not prove to be successful. Inthis period, also as a result of the link with the Ministry of Social and Family Affairs, it wasprimarily the requirements of social policy – interpreted in a narrow way – that wererelayed to the PES.

(iii) from July 2001

A new organisational structure was created, which is discussed in Chapter 3.1.

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ANNEXES

ANNEX 11. EXTRACTS FROM THE ACT IV OF 1991 ON THEPROMOTION OF EMPLOYMENT AND PROVIDING CARE FORTHE UNEMPLOYED – RELATED TO THE FUNCTIONS ANDRESPONSIBILITIES OF THE PES

ARTICLE 3

(1) A nationwide state-sponsored organisation established to provide labour marketmeasures (hereinafter referred to as Public Employment Service) shall promote toachieve the objectives set forth in this Act.

(2) The PES shall perform its duties through its central and local entities.

(3) Employers, employees and, in respect of local entities, local governments shallparticipate in the management of PES.

(4) The PES shall carry out its duties as a human service in appreciation of thepsychological and societal aspects of unemployment.

ARTICLE 4

(1) All persons eligible for employment and all employers shall have the right to use theservices of the PES, as governed in Paragraphs a) and c) of Subsection (2) of section13/A of this Act, free of charge.

(2) The PES shall inform employees and employers regarding their rights and obligations,and shall provide assistance with their demands.

ARTICLE 5

(1) When possible, the elimination, handling and solving of employment-related crisissituations, and the prevention and reduction of unemployment, as well as the mitigationof its detrimental consequences shall be primarily accomplished by the means of labourmarket measures and job assistance activities described in Chapter III.

(2) Increasing employment opportunities, preventing unemployment and reducing thelength of unemployment shall be promoted also by means outside the scope ofemployment policy (e.g. by tax incentives, by the appropriation of special fundsallocated for regional development and the creation of new jobs, and by coordination ofthe education system and the employment policy).

ARTICLE 13/A

(1) The PES shall provide measures to assist in job search, finding employment andappropriate personnel and in maintaining existing jobs.

(2) Labour market measures shall include the following:a) providing information pertaining to the labour market and employment;b) job, occupational guidance, guidance on job-search, on rehabilitation and local

(regional) employment policies;c) labour exchange.

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ARTICLE 48

(1) The Employment Office is a central budgetary institution with legal entity and its ownfinancial responsibility, under the supervision of the MoEA. The occupationalrehabilitation activities of the Employment Office are directed by the MoEA but with thecontribution of the Ministry of Social and Family Affairs. Regarding its responsibilitiesrelated to employment policy, the Office shall:a) professionally direct the activities of the County (Budapest) Labour Centres (see

Article 49),b) perform the tasks delegated by the Ministry of Economic Affairs regarding the

operation of the Labour Market Fund,c) professionally direct the law enforcement activities of the County (Budapest) Labour

Centres (see Article 49),d) develop and operate the unified labour register,e) perform the human resources development tasks of PES, with the exception of

those of the Labour Development and Training Centres,f) perform the methodological tasks related to unemployment provisions, measures to

promote employment, and labour market services,g) develop and operate IT related to unemployment provisions, measures to promote

employment, and labour market services,h) perform the centralised property management of PES, with the exception of the

Labour Development and Training Centres,i) process statistical data, analyse and disseminate information on the basis of its own

registers,j) prepare labour market forecasts and statistics, analyse them, and based on these,

disseminate information to the wider public,k) professionally coordinate the inspection activities carried out by County (Budapest)

Labour Centres in their capacity as public authorities,l) coordinate labour market programmes that involve several counties,m) perform any other tasks delegated by the Minister of Economic Affairs.

(2) The tasks as specified in Paragraphs a)–g) and i) of sub-article (1) above, areperformed by the Employment Office with the professional contribution of the Ministry ofSocial and Family Affairs, in relation to the unemployed with reduced working capacityand occupational rehabilitation.

(3) The Employment Office is headed by the General Director, appointed and relieved bythe Minister of Economic Affairs, upon recommendation of the administrative statesecretary of the MoEA. The Minister of Economic Affairs exercises all other employer’srights over the General Director.

ARTICLE 49

(1) County (Budapest) Labour Centre (hereinafter referred to as ‘Labour Centre’) is acentral budgetary institution with legal entity and its own financial responsibility,independent of the county (Budapest) local governments.

(2) The Labour Centre is composed of:a) central organisational units,b) local labour offices.

(3) The directors of Labour Centres are appointed and discharged by the Minister ofEconomic Affairs, upon recommendation of the administrative state secretary of theMoEA. The Minister shall obtain the preliminary opinion of the competent LabourCouncil. Other employer’s rights over the directors shall be exercised by the deputystate secretary appointed by the Minister of Economic Affairs. The directors of LabourCentres are civil servants with the status of ministerial department heads.

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ANNEXES

ARTICLE 50

(1) By way of its central organisational units, the Labour Centre shall:a) perform the duties related to the operation of financial instruments of the Labour

Market Fund within the county,b) perform the duties related to permits for foreign nationals seeking employment in

Hungary and to civil service tasks,c) perform the secretarial duties of the Labour Council,d) supervise its local labour offices,e) collect and provide information on county (Budapest) labour market trends and

situations, and prepare forecasts on expected changes,f) orient school administrative bodies responsible for running the schools on

educational/training structure and on enrolment,g) establish and operate a rehabilitation working group for the promotion of the

occupational rehabilitation of people with a reduced working capacity,h) assist in solving the employment-policy-related problems caused by collective

redundancies,i) perform the inspection of the appropriation of measured financed from the Labour

Market Fund, furthermore the eligibility for unemployment benefits not falling underthe scope of Paragraph a) of Sub-article (1) of Article 51,

j) exercise the rights of imposing fines described in Article 56/A,k) direct the activities of County (Budapest) Labour Centres related to occupational

rehabilitation,l) perform the other tasks assigned to its authority by legislation.

ARTICLE 50/A

Local Labour Offices shall perform the tasks related to :

a) registration of unemployed persons,b) labour exchange, job and career guidance and other tasks,c) determining, suspending and reclaiming unemployment benefits and job assistance

measures,d) other tasks assigned to its competence by the director of the Labour Centre.

ANNEX 12. THE MAJOR FEATURES OF THE LABOUR MARKETFUND

The general purpose of the Labour Market Fund (LMF) is to improve the prospects ofthose who face the greatest difficulties in finding or retaining work. Like the EuropeanSocial Fund (ESF) for the European Union, the LMF for Hungary is the main tool throughwhich the employment policy aims are translated into actions. The general policy fields inwhich the LMF now finances activities provide a rather good match with the objectives ofthe ESF. The LMF could therefore be reasonable regarded as the main (though notexclusive) source of future cofinancing. The methods by which the LMF currently channelsits support are understandably different from, though not contradictory to, EU practice.

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The Labour Market Fund in its current form was created in 1996, through a limited mergerof five employment-related funds that were established in the early 1990s73. The LMF nowconsists of seven sub-funds, which all have their specific aims, and provide financialsupport accordingly, but both combination and reallocation of sources of funding arepossible. The sub-funds are as follows:

� the Solidarity sub-fund provides unemployment compensation,� the Income Subsidy sub-fund ensures partial financial assistance for unemployed

people who are no longer eligible for unemployment benefit,� the Employment sub-fund finances active labour market programmes,� the Rehabilitation sub-fund helps job creation for disabled persons,� the Wage Guarantee sub-fund has a similar function to the one envisaged by the

Council Directive on protecting employees in the event of the insolvency of theiremployer,

� the Development and Training sub-fund facilitates vocational training and theup-skilling of employees,

� the Operational sub-fund finances the Public Employment Service and theadministrative operation of the LMF.

When the LMF was created through the merger of the funding mechanisms alreadyavailable, the aim was to ensure enough flexibility to combine passive assistance withactive measures, and progressively to put a stronger emphasis on the latter. Hungary hasbeen successful in this shift (as discussed later), although still there is much to do.

ANNEX 13. STAFFING AND TASKS OF THE COUNTY LABOURCENTRES

Composition of the staff of the CLCs (persons)

Total in the

20 CLCs

Maximum number of

persons/county

Name of the county(ies)

Minimum number of

persons/county

Name of the county(ies)

Appointed leaders 22313

Budapest, Csongrád8

Veszprém

Technical staff 1,078104

Budapest35

Somogy

Administrativestaff

11919

Budapest1

Baranya

Physical staff 10212

Bács2

Baranya, Komárom, Vas

Total 1,522145

Budapest53

Vas

Source: Munkaügyi Minisztérium: Tájékoztató a munkaerõpiaci szervezet létszámhelyzetérõl, különös tekintettelaz új feladatok teljesítésébõl adódó többlet követelményekre. 1998. június.

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ANNEXES

73 Act CXXIV of 1995 on ‘Creating the Labour Market Fund’.

Composition of the staff of the 175 LLOs (persons)

Appointed leaders 175

Deputy leaders (also performing other activities) 108

Staff performing statutory activities (including registration of unemployed clients;checking the eligibility for UB; determining the amount of UB; excluding personsfrom UB provision when necessary; and issuing temporary employee cards)

728

Staff providing services (including brokerage, job clubs and occupationalinformation centres) 1,004

Staff administering active measures 364

Staff providing counselling 78

Labour market analysis, IT 65

Administrative staff 143

Physical staff 88

Total 2,753


The proportion of employees with high-level education varied significantly, with the lowestshare being 34% (in Fejér county) and the highest shares 61–63% (in Csongrád, Békés,Vas and Gyõr counties).

Considerable differences were found in terms of the tasks to be performed and the staff ofthe various LLOs. Some indicators are listed in the following table.

Basic tasks and staff indicators of LLOs by counties

Total or

average

Highest number or

ratio by county;

name of the

county(ies)

Lowest number or

ratio by county;

name of the

county(ies)

Number of LLOs 175 15Borsod

6Gyõr, Heves,Nógrád, Zala

Number of registered unemployed(persons)

474,462 55,653Borsod

9,323Vas

Number of registeredunemployed/LLO

2,712 4,314Szabolcs

1,332Vas

Number of unemployed with UB(persons)

139,408 15,724Budapest

3,675Vas

Staff performing statutory activities 728 89Borsod

15Gyõr

Number of unemployed with UB/staffperforming statutory activities

191 352Gyõr

138Borsod

Staff providing services 1,004 98Budapest

20Gyõr

Number of registeredunemployed/staff providing services

473 807Borsod

301Vas

Number of persons involved in activemeasures

231,506 28,243Borsod

6,150Vas

Staff managing active measures 364 48Borsod

0Vas

Number of persons involved in activemeasures/staff managing activemeasures

636 1,926Hajdú

397Nógrád


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APPENDICES

APPENDIX 1. EXTRACTS FROM THE JOINT ASSESSMENTPAPER ON EMPLOYMENT (JAP), RELATING TO THE PES

‘The Government recognises the important role of the public employment services infacilitating the effective functioning of the labour market and has defined the following keyareas to be further developed: strengthening the role of public employment services in thelabour market, which necessitates development of placement and counselling services forjob-seekers and employers and improving the employment service delivery system,especially as they relate to staff resources and IT facilities. The Government will alsoconsider needs in terms of reorganising the Public Employment Services at regional level.’

In this spirit, the Hungarian government has made several commitments, as follows.

� ‘The Government will further develop the Public Employment Services in order tostrengthen their role in matching the labour supply and demand and to ensure equalaccess to high-quality services throughout the country. It will also seek to strengthenthe interface between its unemployment benefit systems and its role in brokering amore effective response to labour market requirements.

� The Government will also strengthen co-operation with other actors in the labourmarket, especially the social partners, to ensure better implementation of employmentpolicy and a more efficient delivery of different measures and programmes. It intends toimprove co-operation between the labour centres and the multi-level (regional, countyand district) institutions of regional development, also in view of future European SocialFund activities.’

The major elements of the reform, as they are listed in the JAP, address a number ofshortcomings in the current operation of the PES. For example:

� ‘Contacts with employers will be promoted in order to increase the market share of thePES and the number of vacancies registered with the employment offices.

97

� To create a more efficient PES, the computer-assisted services of the local employmentoffice network will be completed. This means that, over the next three years, thecomputerised system will cover job-seekers and vacancies in the whole country andoffer sufficient possibilities for the use of self-service in all local offices.

� The workload of staff will be reduced by modernising employment offices and byincreasing, for example, the use of self-service.

� The professional qualifications of staff will be improved to ensure greater efficiency.’

APPENDIX 2. EXTRACTS FROM THE PROJECT FICHE ONMODERNISING THE HUNGARIAN PES, RELATING TO THESTRATEGIC OBJECTIVES OF THE PES

‘The number of registered unemployed people together with the characteristics of theunemployment situation determines the strategy of PES. The number of registeredunemployed people has continued to decrease for eight years, while the nature ofunemployment has also undergone a major change. Recession unemployment resultingfrom the economic shift has turned into structural unemployment, in which, as well as anincreasing labour demand and occasional labour shortages, considerable long-termunemployment prevails. At the same time tensions triggered by unemployment are alsonoticeable. Furthermore, the composition of unemployment has been changed, one of itsmost important factors being permanent long-term unemployment.’

Considering the above-mentioned developments, the strategic objectives of PES can besummarised as follows:

1) to increase the market share of PES in placement activities, to increase employability,and also to design services for employed people;

2) to offer unified and higher-level services for clients (including unemployed clients,employed clients and employers);

3) to improve the efficiency of labour market measures offered, and to extend the role ofPES in providing them (see section 3.2 in JAP);

4) to strengthen cooperation between the labour centres and the multi-level (regional,county and district) institutions of regional development (see section 3.5.3 in JAP);

5) to contribute to efforts to decrease regional differences in the labour market throughservices provided;

6) to promote equal opportunities in the labour market (women, ethnic minorities);7) to focus on disadvantaged groups in order to tackle and prevent long-term

unemployment.’

We wish to make two comments on the strategic objectives cited above.

� We feel that there is a contradiction between the arguments in the introduction and theobjectives derived from them. While the introduction follows the traditional‘unemployment-oriented’ approach that was typical of the past decade, the objectivesthemselves reflect a much more comprehensive approach (which is also indicated byrepeated references to the JAP).

� We must add that the above strategic objectives have not yet been officially andformally adopted. Furthermore, according to interviews carried out in CLCs, they arenot yet known even to those concerned.

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LIST OF ACRONYMS

AIFSZ Higher educational accredited vocational school

CLC County labour centre

CVT Continuing vocational training

EES European Employment Strategy

EO Employment Office

ESF European Social Fund

EU European Union

EURES European employment services

Eurostat Statistical Office of the European Communities

Flt. Employment Act

GDP Gross domestic product

HRD Human resource development

HUF Forint (Hungarian currency)

ISCED International standard classification of education

IT Information technology

IVET Initial vocational education and training

JAP Joint Assessment Paper on Employment Policy

LDTC Labour Development and Training Centre

LLO Local labour office

LMF Labour Market Fund

LMFSC Labour Market Fund Steering Committee

MoEA Ministry of Economic Affairs

NEAP National Employment Action Plan

NGO Non-governmental organisation

NIVE National Institution of Vocational Education

NUTS Nomenclature of territorial units for statistics

NVQR National Vocational Qualification Register

NVTC National Vocational Training Council

OECD Organisation for Economic Cooperation and Development

99

PES Public employment services

PISA Programme for International Student Assessment

PPS Purchasing power standard

PRES Private employment services

SME Small and medium-sized enterprise

VET Vocational education and training

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EUROPEAN TRAINING FOUNDATION


Luxembourg: Office for Official Publications of theEuropean Communities

2004 – 102 pp. – 21.0 x 29.7 cm

ISBN 92-9157-294-2

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