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Efficiency of municipal public works programmes

Unemployment rose very rapidly after the regime change in 1989, and was followed by a steady rise of long-term unemployment during the mid-1990s. In response, the Road to Work Programme (ÚMP) was launched in 2009 to provide income and an employment opportunity to long term unemployed low educated workers. The main thrust of the programme was a substantial increase of the budget available for public works programmes managed by local governments.

Our research examined the targeting and take-up of ÚMP as well as its effects on long term unemployment. Estimates based on administrative data showed that ÚMP has indeed reached the long-term unemployed with the worst chances of re-employment, although those living in remote areas were less involved in the programme. The take-up of ÚMP increased considerably by the end of 2009: nearly all villages and towns and more than a quarter of the potentially eligible long-term unemployed took part in some public works project. However, supplementary services that would facilitate the re-entry to the open labour market remained weak.

According to our quantitative analysis, ÚMP did not reduce long-term unemployment. This also applies to programmes prior to ÚMP, which implies that public works does not have a positive impact even on a longer time span, through the effect of improving the ability to work. Based on the above, we recommend a strengthening of the involvement of social workers and job centres, and a reallocation of funds towards employment services that enhance the ability to work.

Project details
ClientNational Employment Foundation
Project leader Ágota Scharle
Duration31/12/2010 - 30/08/2011
Efficiency of public works programmes (in Hungarian)
Efficiency of public works programmes (summary)