Results of the IEER Business Climate Survey – April 2014

In 2012, there was a greater economic downturn than expected in Hungary (-1.8%) as the gap between the actual level of production and its level before the crisis got deeper again. The biggest drop occurred in the last quarter of 2012 (-2.5% compared to the same period last year, according to seasonally and calendar-adjusted, balanced data). However, according to the currently available data of GDP in the last year reports that the recession is not deepening further and the Hungarian economy is leaving its lowest point. According to the new results of the IEER Business Climate Index a further positive changes can be expected. The IEER Business Climate Index rose to +30 points in April 2014 from +23 points in October 2013.

The aim of the following paper is to unfold some factors that affect the young skilled workers’ chances of getting a job, doing further studies and using the learned profession at work or school. The survey examined the start of the labour market career of young skilled workers who have finished trade school or vocational school in the previous year. The survey focused on the question whether the skilled entrants could or wanted to enter the labour market in a 9-months long period after finishing trade school or vocational school. The results are based on a joint database of yearly databases between 2009 and 2012 that contains data of 10,104 young skilled workers. The results show that higher educated parents’ children have better chances on the labour market and unemployed fathers’ children encounter a higher risk of getting unemployed. The chance of getting a job or using the learned profession in a job or further studies is increased by choosing the profession matching the personal interests, by fulfilling a traineeship at a company, good scholastic records, knowledge of foreign languages and getting a high-school graduation. Further studying results in tangible wage premiums in the short run and in a labour market position stabilized by the skills of getting new knowledge in the long run. As a conclusion we believe that acquiring good general knowledge and studying skills is very important for young skilled workers: the continuously renewing requirements of the labour market and the frequent change of jobs and professions make lifelong learning necessary, thus improving flexibility and skills of knowledge renewal became an important task of the vocational training system.

The IEER have been preparing forecasts of registered job-seekers for several months. In the last three months we have noticed that the forecasts have begun to show larger estimation errors than normal and as expected. For a quick analysis, we set as a goal to demonstrate this phenomenon and investigate its possible causes. Our goal was to explore the causes and, where possible, to find how we can improve forecasting accuracy.

Rather sectorial benefits

The HCCI Institute for Economic and Enterprise Research conducted a survey in 2013 to size up how the Hungarian enterprises conceive the proposed free-trade agreement between the USA and the European Union. A significant part of the respondents think that the emergence of the agreement will less affect their own companies, however it will have more positive effects on the economic sector they operate in.

The research program "Vocational schools" by IEER conducted since 2008 includes two main parts. The aim of the company survey is to map the demand of specific segments in the business sector for vocational school graduates within one year and beyond a three-year time span.
The survey on graduates examines the beginning of the working life of those young people who obtained their qualifications in vocational schools or trade schools 19 months before. The research has a focus point on whether these young people were able or willing to enter the labour market during the 19 months after their graduation.

According to the latest study of IEER, making the right choice of skills that meets the personal interests of the student improves the career prospects of qualified vocational school graduates. In addition, good academic results, the knowledge of foreign languages and matriculation also helps skilled young people to succeed in the labour market. In the case of becoming unemployed the effect of family background is important, whilst this risk can be reduced by ambitions for further education, foreign language skills, acquiring good academic results, finishing secondary school with a final exam, and making the right career choice. Further education after learning a profession is beneficial - in the short term it means higher wages, while for the long-term it translates into more stable employment. The acquisition of functional literacy, foreign languages, and study skills is therefore very important for the future success of skilled workers in the labour market.

The results of the latest SME Outlook survey reveal more favourable expectations compared to the previous quarter: the SME Outlook Business Climate Index increased from 2 points to 9 points, surpassing the level of January 2013 (7 points). The value of the SME Outlook Uncertainty Index compared to the previous quarter is similar, it increased from 31 to 33 points. These values are notably lower than we found earlier in the course of the SME Outlook Business Climate Survey. This result implies that there is a decrease in the diversity of opinions on views toward the current and expected business situation of enterprises, however the perceptions of the trends are still not clear or uniform within the SMEs.

The IEER estimates that in January 2014 the number of registered job seekers is expected to increase by about 52 thousand people. This increase is greater than what would be the seasonal effect.

Since 2010 the HCCI Institute for Economic and Enterprise Research (IEER) has been conducting a business climate survey on a quarterly basis, the seventeenth taking place in January of this year. In this survey 400 company managers reported on the current and expected business climate. The results of the January 2014 survey indicate that compared to the previous quarter business confidence improved among Hungarian companies.

The IEER estimates that in December 2013 the number of registered job seekers is expected to increase by some 1.6 thousand people. Based on seasonally adjusted data, we estimate a 6.8 thousand person increase in the number of registered jobseekers as compared to the level in November.