This webinar is the first in a series on selected economic issues in the CEE region. The event discusses findings from the 2021 OECD Economic Survey of Hungary on productivity growth together with research from institutions in the region.
Isabell Koske I OECD Economics Department
Martin Borowiecki I OECD Economics Department
Balázs Reizer I Centre for Economic and Regional Studies, Hungary
Zuzana Zavarská I Vienna Institute for International Economic Studies, Austria
Matthias Rumpf I OECD Berlin Centre
Main findings from the discussion:
- Hungary and most other countries in the CEE region suffer from low productivity, the main factor preventing income alignment with advanced economies. As populations are aging and the workforce is shrinking, boosting productivity becomes even more important to sustain living standards.
- Hungary could bolster productivity growth through better labour allocation, improved skills formation, more competitive markets, and through a faster adaptation of new technologies.
- Unlike Germany or Austria, the VET systems in Hungary and most CEE countries lack apprenticeship positions in companies to combine studying with practical experience; with regards to ethnic minorities, the education system seems to amplify inequalities instead of reducing them.
- As labour market problems in Hungary are concentrated in poorer regions, small rental markets and insufficient transport infrastructures hinder labour mobility; however, domestic labour mobility may be underestimated due to inaccurate registration practices; balancing rent regulation between tenants and landlord, increased investment in local train networks and more funding for maintenance could improve labour mobility.
- There is a large and growing productivity gap between foreign-owned and domestic-owned enterprises in Hungary; ICT adoption is low compared to the OECD average, competition in public procurement is limited; stricter reviews on mergers, phasing out distortive taxes, more competitive public procurement and stricter enforcement of anti-corruption rules would improve more competitive markets.
- The business environment in Slovakia would benefit from more dynamism, more domestic entrants and higher spending on R&D; as in Hungary, demographic trends advance the need for a more inclusive and mobile labour market.