Productivity growth has been low since the global financial crisis, in sharp contrast with the rapid growth prior to the crisis. The productivity slowdown reflects the intensive use of public work schemes and the inclusion of low-productivity workers. Nonetheless, structural weaknesses are important and include low productivity and innovative activity in the business sector, reduced competitive pressures, and weak labour market dynamics. Broad structural reforms are needed to secure more competitive firms and an adequately skilled labour force, through more pro-competitive regulation and more effective labour market and education policies. In particular, a comprehensive SME strategy could increase economic dynamism and inclusiveness.
- A more dynamic business sector requires cutting red tape and better use of regulatory impact assessments to improve transparency, stability and formulation of regulatory policies.
- Enhance competitive pressures by removing sector exemptions from the competition law and only allow anti-competition mergers on clear and explicit public interest grounds.
- The effectiveness of training programmes in public work programmes should be enhanced to facilities the employment of participants on the primary labour market.
- Improved vocational training and lifelong learning would, together with better links between the education system and the labour market, bolster the inclusion of weak labour market groups and promote productivity.
- Existing skills could better used by promoting a better work-family balance, including measures to increase the supply of child care and better incentives for paternity leave.
Source: OECD May 2017 Economic Outlook database
OECD (2016), “Bolstering business sector investment” and “Enhancing skills to boost growth”, in OECD (2016) OECD Economic Surveys HungaryMay 2016, OECD Publishing, Paris.
Halpern, L., M. Koren and A. Szeidl (2015),"Imported Inputs and Productivity.", American Economic Review, 105(12): 3660-3703.
Productivity - enhancing institutions
There is no single institution dedicated to productivity in Hungary. The Ministry for National Economy, among others institutions, provide analysis on productivity issues.