Administrative Burdens of Employment in Hungary

HETFA Working Paper No. 7.

Fruzsina Bognár and Ágnes Szabó-Morvay (2011): Administrative Burdens of Employment in Hungary

ISBN 978-963-89112-4-7, ISSN 2062-378X

In this study we analyze the perception of administrative burdens of employment in Hungary. In comparison with the members of the European Union, the supply side of the Hungarian labor market is lagging behind. This means that the ratio of the inactive is relatively high. Moreover, there is also a relatively large gap in the demand of labor. It is of high importance to analyze the effect of administrative burden on economic achievement and employment, for two reasons. First, the extent of administrative burden in Hungary is enormous in absolute value compared to the EU average (4% of the GDP). Second, the rates of country-level employment and administrative burden show a strong correlation. According to our results, the more a company outsources its accounting, the bigger difficulties the administrative burdens of employment pose. The subjective assessment of burden differs significantly from the objective costs estimated on the basis of interviews with accountants. However the opinion of CEOs and accountants interviewed was unanimous that keeping up with the ever-changing legal environment means the largest burden for employers. Examining the various types of atypical employment we came to the conclusion that employers deem the related administrative burdens slightly higher compared to regular, full-time, indefinite employment.

Available in Hungarian including an English abstract