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← Overview Database of Innovative Social Policies in Europe

Increasing Employment and Promoting Flexibility

Country of implementation
Hungary
General short description of the innovation
Micro-, small- and medium-sized enterprises and NGOs with less than 250 employees are exempt from the employers? contributions if they have been hiring registered unemployed people for 3 months.The reduction is for one year during which the new workers should be retained and their employment should be maintained for an additional year. /
Target group
Total Population
Policy Field
  • general fiscal
Type of Policy
  • public
Duration of the policy
2006
Scope of innovation
  • Scope: temporary (2 years)
  • Number of intended beneficiaries: 300 thousands registered unemployed, 900 thousand SMEs
  • Spatial coverage: national
General description of (intended) objectives and strategies
From January 2006 micro-, small- and medium-sized enterprises and NGOs with less than 250 employees are exempt from the employers? contributions if they have been hiring registered unemployed people for 3 months.The reduction is for one year during which the new workers should be retained and their employment should be maintained for an additional year. The discount covers the ?xed-sum health insurance contribution, the social security contribution payable by the employer and the employers? contribution for unemployment insurance. The basis for the reduction shall be up to 130% of the minimum wage for full-time employees and correspondingly less for part-time workers. / The Government envisages that this measure would help 300 thousand registered unemployed persons to ?nd employment and give the opportunity to 900 thousand SMEs to grow by hiring new workers. / / / http://econ.core.hu/file/download/HLM2005/TheHungarianLabourMarket_2006_onefile.pdf, p223 /
Nature of the innovation-short-term perspective
Promote the employment of unemployed through the reduction of social contribution and help SMEs to grow by hiring them
Nature of the innovation-long-term perspective
Activation and job creation
Type of ideal-typical strategy for the innovation
  • others (activation)
Type of innovation
  • new policy, practice or measure
New outputs
  • subsidies/tax-credits (Exemption from social contribution)
Clarification of intended mechanisms, outputs and outcomes (optional)
Exemption from social contribution (around 36% of labour costs) for hiring registered unemployed people.
Intended target group
Registered unemployed for 3 months, Micro-, small- and medium-sized enterprises and NGOs with less than 250 employees
Working age population
  • employment situation (unemployed)
Employers-private institutional actors
Micro-, small- and medium-sized enterprises and NGOs with less than 250 employees
Actors involved in policy-making/implementation and/or evaluation
  • beneficiaries/users (registered unemployed for 3 months)
  • employers (organised or individual) (Micro-, small- and medium-sized enterprises and NGOs with less than 250 employees)
Intended output
  • subsidies/tax-credits (Exemption from social contribution)
Did the innovation have any outcome related to job quantity?
SMEs hiring new workersunemployed find employmentdecrease
Clarification of outcomes in terms of impacting resilience and labour market inclusion
The government aim was to increase employment and promote flexibility through lowering labour costs of employing registered unemployed people (exemption of social contribution for employers). That would give the opportunity to SMEs to grow by hiring new workers.
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