Hungary’s labour market continues to face mounting pressure from demographic decline and uncertain economic prospects, with analysts warning that a meaningful recovery in employment conditions may still be some way off.
According to economists, the latest labour market data suggest that while the sharp deterioration seen earlier this year has stabilized, companies remain cautious about expanding their workforce amid weak external demand, rising costs and geopolitical risks.
Péter Virovácz, an analyst at ING Bank, said Hungary’s unemployment rate remained broadly unchanged in April, in line with expectations, indicating that the labour market has stabilized following weaker-than-expected data in February.
He noted, however, that the number of economically inactive people increased significantly while the working-age population continued to shrink. Employment levels remain close to a four-and-a-half-year low, despite the working-age population declining by around 160,000 people. At the same time, the number of unemployed people has risen by approximately 65,000.
Although the labour market remains relatively tight by historical standards, Virovácz said there are clear signs of gradual easing. Job vacancies and employment are declining, while unemployment is rising, leaving businesses caught between higher labour costs, rising energy prices and broader geopolitical uncertainty.
‘Most companies are still waiting for stronger economic momentum before expanding headcount, and some continue to retain excess labour capacity despite weaker demand,’ he said.
ING Bank maintained its forecast for Hungary’s unemployment rate to fluctuate between 4.5 and 5.0 per cent this year, with the indicator likely settling around the middle of that range by the end of 2026.
Chief economist at Gránit Investments Gábor Regős described the labour market data as ‘persistently unfavourable’, pointing to the continuing decline in the number of employed people.
He said the most significant structural issue remains the shrinking working-age population, as the number of people retiring exceeds the number of younger workers entering the labour market. Slower economic growth in recent years has also reduced labour demand, while the increasing employment of workers from non-EU countries has altered labour market dynamics.
According to Regős, official employment data tracking the Hungarian population show fewer people working, while the number of employees registered by Hungarian companies has actually increased, suggesting that foreign workers are filling part of the labour gap.
He added that several opposing trends could shape employment in the coming months. New industrial investments and stronger economic growth could increase labour demand, while planned restrictions on hiring workers from third countries may tighten the labour market further. However, elevated energy prices linked to tensions in the Middle East continue to pose a significant risk to business competitiveness and hiring intentions.
Diána Horváth, senior analyst at the Economic Analysis Centre (GFÜ), said the decline in employment is largely concentrated in the primary labour market, where companies are relying on restructuring and natural staff turnover rather than active hiring.
She added that weaker-than-expected economic growth, sluggish foreign demand and geopolitical tensions are encouraging businesses to delay recruitment decisions. The average duration of job searches has also increased to 13.1 months, highlighting growing difficulties for jobseekers.
According to Horváth, labour market conditions could begin improving in the second half of the year if economic growth accelerates and business confidence recovers. For now, however, companies are expected to focus on utilizing spare capacity rather than increasing staff numbers.
Senior analyst at MBH Bank Márta Balog-Béki also warned that the number of economically active people has fallen back to levels last seen at the start of the year.
She said the decline in unemployment in April was overshadowed by a rise in inactivity, indicating that more people may have stopped looking for work altogether. Balog-Béki added that geopolitical instability, demographic trends and planned tightening of rules on foreign guest workers are all slowing the labour market’s stabilization.
She does not expect Hungary’s unemployment rate to return toward the 4 per cent level in the near term, forecasting a rate of 4.6 per cent for 2026.
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