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Amendment of the Employment Act ("workfare reform package?)

Country of implementation
Hungary
General short description of the innovation
Reduction of the entitlement period of the Unemployment Insurance Benefit and the abolition of the means-tested Unemployment Assistance. Local governments were put in charge of administering the Regular Social Assistance (RSA). A new responsibility of the local governments was to organise public work schemes for at least thirty days for applicants of the Regular Social Assistance.
Target group
Older Workers
Policy Field
  • employment
Type of Policy
  • public
Duration of the policy
2000
Scope of innovation
  • Scope: structural
  • Budgets: 2000: 18.3 million EUR, 2001: 41.6 million EUR, 2002: 57.9 million EUR
  • Number of intended beneficiaries: n.a.
  • Spatial coverage: national
General description of (intended) objectives and strategies
?Subsequent modifications of the unemployment benefit system in 2000?2001 made it much less accessible and generous than it was in the past. In the ?workfare reform package? the conditions for eligibility have been tightened and the maximum duration of the benefit was reduced from 12 to 9 months and the replacement rate was significantly lowered. The restrictions included the switch from the insurance based unemployment assistance (IUA) to a means-tested regular social assistance for the unemployed. Local governments were put in charge of administering the Regular Social Assistance (RSA) which is given to people who have exhausted the entitlements to IUA. A new responsibility of the local / governments was to organise public work schemes for at least thirty days for applicants of the Regular Social Assistance. Results indicate little positive effects of the changes in terms of success in directing the long term unemployed and hard hit disadvantaged groups into the non-supported jobs of the labour market. The workfare reform has reduced the number of benefit claimants significantly but failed to raise non-subsidised private-sector employment. In 2003 several measures were taken to counterbalance the negative effects of the former restrictions on the most disadvantaged groups of the population.? / (http://econ.core.hu/file/download/HLM2004/TheHungarianLabourMarket_2004_onefile.pdf, pp.32-33) /
Nature of the innovation-short-term perspective
The conditions for eligibility for the unemployment benefit have been tightened and the maximum duration of the benefit was reduced from 12 to 9 months and the replacement rate was significantly lowered.
Nature of the innovation-long-term perspective
The restrictions included the switch from the insurance based unemployment assistance (IUA) to a means-tested regular social assistance for the unemployed.
Type of ideal-typical strategy for the innovation
  • liberalisation
Type of innovation
  • retrenchment or expansion of an existing/earlier policy
New outputs
  • benefit duration (12 to 9 months)
  • benefit eligibility (tightened)
  • services (public work schemes)
Intended target group
Long-term unemployed
Working age population
  • employment situation (Long-term unemployed)
Actors involved in policy-making/implementation and/or evaluation
  • beneficiaries/users (Long-term unemployed)
  • municipal government (implementation of public work schemes)
Intended output
  • benefit duration (12 to 9 months)
  • benefit eligibility (tightened)
  • services (public work schemes)
Did the innovation have any outcome related to job quantity?
slightly increased
Intended and unintended outcomes
proportion of benefit recipients decreased: 55-58% >> 36%, proportion of participants in public work schemes increased: 8-16% >> 22-28% (estimation)
Clarification of outcomes in terms of impacting resilience and labour market inclusion
The workfare reform has reduced the number of benefit claimants significantly but failed to raise non-subsidised private-sector employment.
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