History of the Creation of Hungary’s Unified Public Employment Program and Its Main Characteristics

A previous system of community service in the public interest was replaced in 2011 in Hungary with a “public employment” system, in which the government temporarily employs disadvantaged, unemployed people who are healthy and able to work and who are within the age limits for working, but who, for whatever reason, have not had a stable workplace and have therefore relied on government subsidies, such as welfare without employment. Under the new program, these citizens have been gainfully employed by the government for a set period of time. The goal of public employment is to give a path for those workers who have been unemployed for a long time, and are disadvantaged in some way, to re-enter (or enter) the private job market. Workers are employed under favorable, “sheltered” conditions, however ones that begin to approach the conditions they can expect in the private market. All this helps the employed workers to improve their employability, as well as to maintain and improve their work skills. Today, the public employment system is not targeted primarily at those with severe disabilities. However, the regulations which establish this program do name members of this group as a target for the program, if they are currently undergoing rehabilitation.

Published by SCHOLINK INC. had no interest in working. All of this led to a fall in the German demand for labor. It was at this time that German chancellor Gerhard Schröder called on Volkswagen's director of HR, Peter Hartz, to lead a commission for introducing work labor reforms to curb the high rate of unemployment.
The Hartz Committee's recommendations were voted into law ina series of reforms called the Hartz reforms in four stages, starting in January of 2003 (Hartz I) and extending through January of 2005 (Hartz IV). The first three stages of the reforms, Hartz I-III, were concerned primarily with introducing new types of work possibilities. Hartz II introduced wage subsidies in order to help foster the creation of new workplaces. Hartz III greatly reformed the German Federal Labor Agency. Finally, Hartz IV, enacted in 2005, significantly reduced the unemployment benefits for the long-term unemployed. These reforms included the following (Centre for Public Impact, 2016):  "Staff Services agencies" were created, which work similarly to jobs placement agencies, to place the unemployed with employers;  For freelancers, introduced the "Ich-AG" (literally Me, Inc) support format, in order to encourage more people to work as freelancers;  A system of "Mini Jobs" (Note 1) aiming to reduce the prevalence of black market labor, and reintroduce more people to working;  Reducing benefits by up to 30% in cases where a person receiving benefits refuses acceptable work they are offered;  combining long-term unemployment benefits with social benefits.
As a result of these steps, within the first three years unemployment fell from 11% to 7.5%. It then rose modestly during the financial crisis of 2007-2008, then after 2012 again trended downward, reaching 5.5%. In all the series of Hartz reforms resulted in nearly a 3% drop in the German unemployment rate.
Although for the most part the reforms were unpopular, they created 2.5 million new jobs in the German economy and helped Germans find work during the recession. The reforms were in line with the EU's Lisbon Strategy of 2000, as well as the long-term EU goals for improving employment indicators. European courts required only a few modifications to these reforms, mostly to protect the rights of older workers.
The Hartz reforms were one of the keys to the later growth of the German economy. The German government very carefully and continuously monitored the results of these reforms. The efficiency of the program was also evaluated on a continuous basis in order to optimize the existing programs. As a result, the reforms were the first large welfare program in German history which was comprehensively studied throughout its duration. The evaluation process began with two competing studies which established the theoretical framework for the evaluation, on the basis of which the government solicited studies for continuous monitoring of the activities (Fertig & Kluve, 2004). This resulted in work by over 100 researchers at more than 20 economic and sociological research institutions who studied the effects of the programs. The results of these studies showed that the government unemployment reforms were successful, with the exception of certain services. The reform of training programs improved their effectiveness, however aspects of the program geared toward creating new workplaces continued to fall short of expectations.
Political steps, suggest reforms to wage subsidies and the introduction of "start" support created significant positive effects. The new strategy, which placed increase emphasis on subsidizing wages and on support at the beginning of careers, with a smaller emphasis on training and creating new workplaces, seems to have resulted in a program mix which has moved the German labor economy in the right direction (Jacobi & Kluve, 2006).
A quantitative analysis by Tom Krebs and Martin Scheffel, researchers at the IMF, showed that the Hartz IV reform significantly reduced the long-term (non-cyclical) unemployment rate. In their estimation, the reform decreased unemployment by 1.4%, from the long-term 9% unemployment rate (2000-2004 period) to a new, long-term rate of 7.6%. As expected, the main factor decreasing unemployment was the introduction of a system to support those seeking work, which resulted in higher earnings for both short-term and long-term unemployed, with a greater effect on those who were unemployed long-term. In short, the Hartz IV reform attained its chief goal, namely the reduction of non-cyclical unemployment, by encouraging people to find new workplaces (Krebs & Scheffel, 2013).
The Hartz reform packages remain in effect to this day, though the later government under Merkel introduced certain modifications and introduced additional elements (for example, the amount of unemployment benefits was equalized throughout the country). However, the reforms were basically maintained (Méltányosság Politikaelemző Központ, 2009).

Social Models and Work-Based Programs (Workfare) in Great Britain
Since the 1990s, there have been contractual welfare-to-work programs, which aimed to give long-term help to the unemployed by helping them find work, and which were financed from the state's unemployment benefits budget. Among these the Work Programme was the main work program of the British government from June of 2011 to April of 2017. From its start in June of 2011, until December 1 st , 2015, 1,810,000 people registered for the work program in Great Britain; of whom 503,160 participants were successful in finding work. Data from industry suggests that during this period, 770,000 participants performed work for at least part of the time, including those who ultimately did not find employment, or who had not yet completed the program at the time of the study .
When the Department for Works and Pensions evaluated the program, it found that the Work Programme made significantly simplified the operation of welfare to work programs in Great Britain, created a stabe welfare-to-ware infrastructure, and was as effective as earlier programs in reducing the long-term unemployment rate. The commission also found that future welfare-to-work programs should attempt to be at least as successful as the Work Programme, however the cost per participant should be reduced. As far as its effectiveness, the commission found that too many of the participants remained unemployed upon the completion of the program. Nearly 70% of participants completed the program without finding stable employment. The Work Programme had particularly poor results among those facing more complicated, or several compounding, barriers to employment, and which Electronic copy available at: https://ssrn.com/abstract=3397804 would have required more severe intervention to overcome. In the future the government hopes to achieve much better results in finding work for the long-term unemployed. The commission decided that from 2018 the Work Programme and especially the Work Choice program designed for those with some kind of disability, would be replaced by a new Work and Health Programme (Work and Pensions Committee, 2015). In November of 2017, the Brtish government published a white paper, "Improving lives: The Future of Work, Health and Disability". This publication determines the government's reform plans for the following ten years, with the goal that by 2027, the number of employed people will increase by 1 million (Department for Work & Pensions, 2017). The main goal of the program is to support those who are looking for a workplace, to find and keep one. The program is entirely voluntary and is primarily geared toward those with long-term health problems and disabilities or those who belong to some disadvantaged group. The program also helps those people to find work, who have been unemployed for more than two years, however, for them participation is mandatory. The Work and Health Programme budget has been set at least 130 million pounds until 2019/20 (Parliament UK, 2018).

Social Models and Work-Based Programs (Workfare) in Other Parts of the World
Programs of public employment are not only in use in developed countries, but have also been used in many developing countries with success. In their book Subbarao and his coauthors have showed in detail the main characteristics and effects of these projects (Subbarao et al., 2013). An article presents the Argentinian Jefes de Jefas Hogar Desocupados programme in detail in (Novoszáth, 2009).

Creation of the Hungarian System of Public Employment
Public employment has a several hundred year old history in Hungary. The rulers and landowners of the country have often taken advantage of the possibilities of public works projects to build castles, palaces, temples, roads, bridges, ports, hospitals, schools and universities. Still, the first very large public works project came about during Maria Theresa's rule at the end of the 18th century. Waterways were particularly important for military transport, but mainly used to transport agricultural products (oat and wheat) to the Habsburg patrimonial lands. These waterworks were usually built through public labor by demanding from each province a number of workers who were then employed cleaning riverbeds and constructing canals. Since until 1844 no regulations placed restrictions on the public works of the various counties, this means that this was in fact unpaid labor. Only material expenditures and the wages of the overseers were paid from county treasuries. When there was a dispute among the counties regarding the completion of the work, then the local council, or the "royal arbiter" they sent, would decide. Thus a portion of the waterworks were completed by the county and since it was considered a matter of public interest and therefore all of these costs were borne by the tax-paying public. Nobles were notably exempt from taxation. In another portion of the works, the situation was a bit different. These were done by landowners in order to protect their own properties, and done by their own serfs (Dunka et al., 2003). Significant progress was made in regulating public works when the first law on this subject was signed in 1844 (law IX), which contained an itemized list of all the public labor which must be performed for free (such as transportation roads, bridges, support structures and their maintenance, the public labor necessary for county administration, as well as river regulation and the associated labor which the law mentioned (Corpus Juris Hungarici, 1844).
In 1848 [1932][1933][1934][1935][1936], created a special plan to overcome unemployment in point 44 of the National Labor Plan, declaring that dealing with the issue of providing work to the unemployed was a responsibility of the state during the economic crisis.
The government maintained its policy of not giving unemployment benefits. Instead, in order to provide employment to as many of the unemployed as possible, it launched public works programs, financing them in part from its own budget, and in part from foreign loans. The government accepted several of the Finance Minister's recommendations, including starting to invest in waterworks, road and bridge construction, building an airport in Csepel, developing the ports of Csepel and Tisza, flood relief and prevention works, development of fruit farming and fishing, and modernizing railways (Vonyó, 2015).
Following the second worldwar, for a few years under the direction of the Ministry of Agriculture, public employment continued which had been introduced in waterworks projects (Dunka et al., 2003).
After this period, with an end to some of the unemployment and the firm establishment of
Electronic copy available at: https://ssrn.com/abstract=3397804 After these forced labor camps were shut down in 1953, public employment focused exclusively on the socialist programs of industrialization, all the way until the end of the socialist system in Hungary with the regime change in 1989. Hungary's communist rulers introduced the soviet economic system in the country. January 1 st , 1950 marked the start of the first five-year plan, which sought to transform Hungary into the country of iron and steel, without considering the country's economy and geography.
The first five year plan truly was a plan for heavy industrialization, where most of the investment was in steelmaking, coal mining, and military production. The most prominent action of the 1950s was the building of so-called socialist cities. These cities were each meant to provide the labor for large investments into a specific industry. In the first decade after 1949 the majority of population growth was in the capital and in county seats or these soviet cities. The population of these new industrial cities nearly doubled during this time, which together accounted for nearly one fifth of the combined populations of "city-sized" communities-61 in total in 1949 (Laki, 2015).
In the 1970s and the start of the 1980s, there was a temporarily decline in the workforce in some important industries that were somehow less attractive than other sectors. However, this situation was reversed from the end of the 1980s. Those companies that were operating at a loss or which were producing goods that couldn't be sold were closed, or their production levels and therefore workforces were drastically reduced. Heavy industry suffered the largest unemployment rate. Between 1982 and 1990 nearly 300,000 people were displaced from work in heavy industry, which represented nearly 20% of that workforce (and from 1989-1990 a further 106,000 lost their work), as industry shrank for one thing due to the overly developed mining and metallurgy industries that had been chosen under the socialist system (these two industries shrank by 24. 2% and 21.1% respectively, from 1988-1990).
Following this the KGST (Comecon) soviet market's collapse led to a 40% decline in the machinery and chemical industries, and reduction in the workforce (80,000 people in machinery). The fall in production, inflation, unemployment, and resulted in a drastic reduction in domestic consumption, which led to a fall in production in both light industry and food industries, and further layoffs (Barta, Published by SCHOLINK INC.
within the framework of the program were able to carry out further local government tasks with aims for the betterment of the community as far as their capacity allowed.

Comparison of Number of Economically Inactive and Public Works Employees over Time
Subsequently In recent years, public works employment has activated a considerable portion of those who were previously absent from the labor market. It provided work offering higher income than social benefit to those who were unable to find employment on the open labor market. It developed or improved the workplace socialization of program participants. With the increase in the demand for workforce it became a realistic goal for as many participants as possible to leave public works employment and move in the direction of the primary labor market. This has been incentivized by opening the scissors between the minimum wage and the public works employment wage, and by subsidies available to employers.
Don't want to work All inactive former group had a considerably more favorable opinion of public works employment. Presumably, the explanation to this is that-since the majority of the participant of public works employment are those who as a result of their place of residence, education qualification or their lack of work experience, have a significantly lower than average chance to be successful on the open labor market-public works employment represents a real alternative in comparison with unemployed status which provides a rather low assistance income (or none at all). The opinion of those living in rural areas regarding the role of public works employment is more favorable than the opinion of those who live in municipalities with characteristically broader employment opportunities. Of those who have not been involved in public works employment, proportionally only half as many consider public works beneficial from the aspect of unemployment management, than those who have been involved before (KSH, 2016

Conclusion
The Hungarian system of public employment provides more than a hundred thousand citizens and their families with the means to survive, and at once helps the development and maintenance of various settlements, as well as keeping residential areas and the environment clean and beautiful. In addition to the direct effects, people's attitude toward work has improved, and so has their health, the number of kids absent from school has gone down, and public safety has improved. In their global quality, many parts of the country have surpassed the level in more developed countries of Western Europe, thanks in large part to the effects of public employment. The government continues to consider public employment to be a temporary measure, aiming to supply work and income rather than simple financial subsidies to those seeking work in the most disadvantaged parts of the country, in some of which this form of employment remains the sole legal form of employment available. Expanding public employment produces more workplaces, and helps develop rural areas and communities.
A large part of public employment aims to give temporary work opportunities to parts of the country in which the number of private employers is extremely small, and the job market has stagnated. In these areas, for a significant part of participants, public employment represents their first legal form of work.
By choosing public employment, these participants choose to join the job market rather than remain passive and inactive, and therefore their work skills and self-esteem improve. A fundamental goal of public employment projects is to create value and make it possible for communities to sustain themselves, as well as maintain the skills of their rural populations. The work training they receive gives employees a greater chance of joining the primary job market, and leaving the public employment sector. In exchange for the money paid by taxpayers, society rightly expects public works projects to be as effective as possible at returning more participants to the job market more quickly than presently happens. In addition, it is important to increase the amount of value created by public works projects, and to increase the amount of human resources development performed in the course of public employment, so that public employment participants can participate in training and development in which they gain skills and professional knowledge for which there is a market need, and thereby help fill labor shortages. Beyond all this, public employment must have a greater charitable effect, first of all when it comes to focusing on placing those who have long-term health problems, have disabilities, or are members of disadvantaged groups into workplaces. Today, Hungary has a greater need for human development public employment programs, and ones that improve health, than standard public works projects.