National Employment Fund

Rationale

This is the chapter's largest single line and, on the classical-liberal frame, its clearest Keep. Passive jobseeker benefit is a contributory insurance payout: workers pay the social-contribution levy while employed, and the benefit is the claim that levy purchases against the involuntary, insurable event of job loss. It is not a discretionary allocation by political officeholders; it is the return leg of a contribution the worker already made. Abolishing it would not return the levy to workers — the levy funds the rest of the chapter — it would simply confiscate the insurance while keeping the premium. Keep is not endorsement of the current design. Hungary's álláskeresési járadék (jobseeker's allowance) is paid for a maximum of 90 days — the shortest duration in the European Union, where the common floor is around five months and fifteen member states allow at least a year[^5]. The classical-liberal objection to unemployment benefit is the moral-hazard one: an over-long, over-generous benefit subsidises extended search and weakens the incentive to take an available job. That objection does not apply to a 90-day benefit; if anything Hungary has already cut closer to the bone than the moral-hazard argument requires. The line is kept because it is genuine insurance against an involuntary event, financed by the people who draw on it. Operating-efficiency and duration review is legitimate; phase-out is not.

Rationale

This is the largest active-spending line in the chapter and the one where the gap between the seen and the unseen is widest. The seen is direct: roughly 67,000 people were in public employment in early 2026[^1], paid a public-works wage, doing locally-organised work in Hungary's poorest settlements. The unseen is the worker whose payroll levy funds the line, and — more sharply — the public-works participant whose years inside the programme make open-market employment *less* likely, not more. The mechanism is now well documented. Public works is a state-run parallel labour market. It does not respond to a price signal for labour; a settlement's mayor and the county government office decide how many places to open and what work they do. Without a wage set by what an employer would actually pay for the output, there is no signal that the activity creates value at its cost — and the programme's own evaluations show it frequently does not. Analysis published in the Hungarian labour-market literature found that long, high-hour public-works participation measurably *reduces* the probability of moving to the open labour market and *raises* the probability of cycling back into public works[^2]. The transition rate is the central number: of those in public works in 2012, only about 15% were working outside the programme a year later; by 2018, in a far stronger labour market, this had risen to roughly 25%[^3]. A programme that returns three in four participants to dependency, or to itself, is not a bridge into employment. It is a holding pattern that the levy-payer funds. Hungary's spending on this is an international outlier. Around 2016 Hungary directed roughly 0.7% of GDP to public works; the OECD average for comparable active-labour-market public-employment spending was about 0.05% — and among the very few countries at a comparable level, those that spend this share do so in far poorer economies on rural agricultural programmes rather than urban-adjacent public-works[^3]. The question this raises is not whether Hungary's poorest settlements need a labour-market policy. It is whether 156,000.0 millió Ft of payroll levy, administratively allocated, with a documented one-in-four exit rate, is that policy. An honest reform does not strand the people currently in the programme. The protected party is real: roughly 67,000 participants, many in settlements where the open labour market is thin and the public-works place is the household's only formal income. Abrupt removal would push them onto passive benefits or into the informal economy with no transition. The phase-out therefore runs five years, with the envelope redirected as it declines into two channels that the evidence supports better than parallel-market employment: direct wage subsidies tied to placement in actual private-sector jobs (the "Közfoglalkoztatásból a versenyszférába" placement benefit, currently 45,600 Ft monthly, is the existing instrument and the design template[^4]), and a needs-based income transfer for those in settlements where no open labour market realistically exists within the horizon. The first channel pays for results an employer has validated with a real job offer; the second is honest about the fact that it is income support, not employment, rather than disguising a transfer as work. Neither requires the state to run a parallel labour market it cannot price.

Rationale

This line is the domestic pre-financing and co-financing of EU-funded labour-market programmes. The matching revenue line — "Előfinanszírozott uniós programok kiadásainak visszatérülése" (reimbursement of pre-financed EU programme expenditure), 70,000.0 millió Ft — shows that the bulk of this is a cash-flow operation: the Hungarian state pays first and is reimbursed by Brussels, so the net domestic cost is the co-financing share, not the gross 83,000.0 millió Ft. The line cannot be unilaterally cut without forgoing the EU transfer it unlocks, and it is bound by multi-year operational-programme agreements that run beyond a single budget cycle. The analytical objection — that EU labour-market programme spending is itself an administratively-allocated transfer whose distribution channel is no more market-disciplined than the domestic ones — is real, but the reform path runs through the next operational-programme negotiation, not through a 2026 line cut. Nominal freeze: hold the allocation flat, let real-terms erosion narrow it, and do not expand the programme commitments that drive it.

Rationale

This line subsidises vocational training — courses, training providers, and training-linked employer support. The difficulty is structural: the Fund administrator cannot know which skills are scarce in which local labour market, because that information exists only in the wage offers of employers who would hire the skill.[^7] A central training budget allocates toward the courses providers are set up to deliver and the ones administrators can credential, not necessarily toward the skills an employer would pay a premium for. The programme's own labour-market evaluations found that participants who did move from public works to the open market did so because labour demand rose, not because the training equipped them with what the market wanted[^2] — direct evidence that the training content is not tracking the price signal. This does not mean vocational training has no value. It means the state's role should not be to run and fund the training programme centrally. The protected parties are training providers on multi-year agreements and the cohorts of trainees currently enrolled, whose courses must be allowed to finish. A four-year phase-out lets in-flight course commitments run their term while intake is wound down. The envelope is better redirected — where a subsidy is retained at all — to demand-side instruments: a training voucher the worker takes to a provider of their choice, or an employer-side credit for training the employer has identified as needed. Both keep the choice of skill with the party who faces the actual labour-market price, rather than with the administrator who does not. The classification reflects the mechanism — central allocation of a budget that cannot price its output — not the size of the line.

Rationale

This line covers discretionary employment subsidies — wage subsidies, employer grants, and assorted active-labour-market support outside the public-works and training lines. It is a discretionary allocation: the county government office decides which employers receive a subsidy to hire which workers. That is a classic public-choice exposure — the benefit concentrates on the employers and intermediaries who receive the grant and know how to apply for it, while the cost spreads across every payer of the payroll levy. The deadweight problem is well known for hiring subsidies: a share of subsidised hires would have happened anyway, so the levy partly pays employers for decisions they had already made. A three-year phase-out is appropriate because some current subsidy agreements are multi-year wage-subsidy contracts with employers who hired in reliance on the continued payment; abrupt cancellation would strand those hiring decisions. The placement-benefit instrument (payment to a worker who actually moves into a competitive-sector job, currently 45,600 Ft monthly[^4]) is the one component of this cluster worth retaining, because it pays for a validated outcome rather than an administrative judgement; it can be folded into the Start-munkaprogram placement channel. The remainder winds down over three years as existing subsidy contracts expire.

Rationale

The wage-guarantee scheme pays the unpaid wages of workers whose employer has become insolvent, with the Fund later recovering what it can from the liquidation estate — the chapter's revenue side shows 400.0 millió Ft of "Bérgarancia támogatás törlesztése" (wage-guarantee repayment), the recovered portion. This is a rights-protection function in the strict sense: it enforces the worker's contractual claim to wages already earned, when the counterparty cannot pay. The worker performed the labour; the wage is owed; the employer is insolvent. The scheme makes the worker's prior contractual right effective rather than transferring an unearned benefit. It is small, bounded, partially self-funding through recovery, and consistent with the frame's core function of contract enforcement. Keep.

Rationale

This is the administrative-operating line of the Fund itself — the cost of running the NFA. As the active-spending lines above are phased out, the administrative apparatus that allocates them should shrink in parallel; a programme office is the second-best substitute for a missing market price, and as the allocations it manages decline, so should it. But cutting the operating line ahead of the programmes it administers would simply break administration of spending that is still flowing during the phase-out years. A nominal freeze holds it flat while the substantive lines wind down; the operating line should then fall in the budget cycle that follows completion of the Start-munkaprogram and training phase-outs. Real-terms erosion at typical inflation narrows it by roughly a fifth over a decade in the interim.