Employment, pensions, earnings - are we doing better than 20 years ago?

Are we lagging behind the Visegrad countries or are we taking the lead? Is Romania really ahead of us? 1 May marks the 20th anniversary of our accession to the EU, which is an excellent opportunity to look at how Hungary's position has changed compared to other countries in the region with similar historical, social and economic backgrounds, according to a press release by GKI Gazdaságkutató Zrt.

Change in the relative position of our country compared to our regional competitors (2004-2023)

$\"GDP$

GDP/capita, consumption, earnings and pensions at purchasing power parity. Employment in the 15-64 age group

Formatted GDP/capita, Consumption, Earnings, Pensions from Eurostat (2024), Employment from OECD (2024)

Eurostat (2024), Employment from OECD (2024)

GDP/capita at domestic purchasing power parity (i.e. adjusted for price level) GDP/capita increased 2.2-fold between 2004 and 2023. However, despite this, our country's relative position has deteriorated, with the Poles and Romanians overtaking us by 2023. While in 2004 we were ranked 19th out of 27 EU countries, by 2023 we were only 22nd.

One of the main drivers of the significant (albeit below peer) GDP per capita growth has been a large improvement in labour market activity. While 56.8% of Hungarians aged 15-64 were employed when we joined the EU, by 2022 this figure had risen to 74.4%. In this respect, we have overtaken the Slovaks in the region and are now among the leaders in the EU.

Hungarian earnings at purchasing power parity have increased nearly two and a half times between 2004 and 2022. Slovakia is now behind us on this indicator, putting us in third place among our competitors. At the same time, we have moved up from 23rd to 22nd in the EU.

In the period under review, domestic pensions at purchasing power parity rose by 76%. Although the outlook for Hungarian pensioners is better than it was 20 years ago, our regional positioning is clear: in the past 20 years, Polish, Slovakian and Romanian pensions have lagged behind domestic ones.

The rise in earnings and pensions has also brought with it an improvement in consumption (in purchasing power parity terms), which rose by 86% between 2004 and 2022. However, while we were silver medallists among our competitors in 2004, by 2022 we were at the bottom of the league: Polish, Romanian and Slovakian consumption is now higher. While we were ranked 19th in the EU when we joined, by 2022 we will have slipped to 26th, second last, behind only Bulgaria in terms of consumption.

We are now the only country in the EU to have fallen to 26th, second last, in terms of consumption

Over all, we are doing better than 20 years ago in all five indicators taken alone. In terms of GDP per capita, earnings and consumption, we are also close to the EU average, and our employment figures are even above it. But domestic pensions have moved away from the EU average.

If we look at the rankings of countries, we see that we have worsened in GDP per capita, pensions and consumption, while we have improved in employment and earnings.

On 1 May 2004, ten new countries joined the European Union (EU), including Hungary. In a series of articles published by GKI Economic Research, experts examine how Hungary's position has changed over the 20 years of EU membership, with the help of a series of indicators. The previous parts of the series have looked at changes in Hungarian labour costs and pensions, as well as employment.