EDUCATION AND EMPLOYMENT POLICY:

A FOCUS ON THE HUNGARIAN CASE AND EUROPEAN UNION

Multilevel Governance Exam – Final Paper

Levente Szuhányi
Giovanni Bonaldi
Barnabás Cseh
Martina Sciarretta
1. Introduction

Nowadays society has been demonstrating to show more and more skills and principles
promoted by national and international policies: among these, the ones related to education
and employment turned out to be strictly correlated. Indeed, by guaranteeing the efficiency of
the former, it is more likely that such a structured education system can lead to the growth of
social inclusion and integration, encouraging “active citizenship and strengthen equity”,
aligning to the workforce skills needed in the modern labour market
(https://ec.europa.eu/education/policies/european-policy-cooperation/education-jobs-and-
growth_en). Also, viceversa, it is shown that employment rates increase with higher educated
people, while the cause behind unemployed workers lies under a low level of training. To
safeguard employability, policies that encourage education and general learning are regulated
on adjustments in the economy and society (Obadić and Porić, 2008).

This research paper aims at analysing both education and employment policies, with a special
focus on the Hungarian case for the first program and on the European Union for the second
one. What emerges from this study is the product of the efforts governments took over time
and of the challenges that they keep facing in our worldwide social system.

2. Education policy: unique trend in the Hungarian education policy after 2010

After the 1989/90, Hungary moved towards a democratic system: one of the main elements
was a new system of self-government with a high degree of autonomy, starting a process of
decentralization of power in favour of the municipal subsystem. However, the government
has continuously delegated the public tasks, such as the provision of primary and secondary
education, without supplying the resources needed to perform the tasks. This process led to a
deficit: between 2007 and 2010 the debt stock of local governments increased from HUF 491
billion to HUF 1247 billion (Hegedűs, 2018). Because of these “malfunctions”, against the
international trend, the centralization of public education has then occurred to be in place after
2010, despite the problems of excessive centralization already demonstrated (Kornai, 1959).
The explicit policy objectives in introducing this reform were the curbing of public education
expenditures (adopted quickly to ensure macroeconomic stability), the increase of the
efficiency of schools and decrease of the inequalities among jurisdictions, and, finally, the
better distribution of school resources. The maintenance of primary and secondary schools
(not kindergartens) fell into state hands. Educational institutions passed from local authorities’
control to the Klebelsberg Institution Governance Center (Klebelsberg Intézményfenntartó
Központ, abbreviated as KLIK) and budgetary allocation to local governments were cut
substantially. A more strictly regulated universal salary system for teachers was introduced.
Starting in 2014, the rights and powers of headmasters or principals diminished drastically,
and, from the beginning of 2017, the nationalization of municipal schools progressed further.
Finally, per-student expenditures were reformed.

The below panel shows how the reform influenced the per-student spending compared with
the “national average”. Since 2012, data shows that the centralization helped in diminishing
the inequality of per-student spending but affecting the second richest 20 % of local
authorities. (Semjén, 2018). In the section below, based on an interview, we present a third
way beside the centralization-decentralization dispute, the catholic educational institution.

Note: The sample consists of schools that cover only

grades 1-8, in operation between 2012 and 2016, were
under KLIK management starting from 2013, and had
reliable financial data available for the whole period
(number of schools: 530). Quintiles of local authorities
are defined with respect to their average per capita
personal income tax base in 2012. Local authorities are

weighted according to the number of students.

3. A dual school system: advantage or disadvantage?

What kind of vertical division of tasks in the field of education policy does (or does not) serve
the specific interests of a country? The issue of centralization and decentralization is especially
important in this respect. In many cases, if the performance of the tasks had remained as small
level as possible (local authorities or schools) in accordance with the principles of subsidiarity
and/or self-government, that would have served the interests of actors much more effectively,
both in fiscal and economic terms. The Hungarian education policy has a similarly
controversial issue, a third-way solution. Nowadays, the phenomenon shows a stable,
entrenched practice. In Hungary, besides the state-private division, there is a state-church1
division, which has seemed more emphasized in previous years. It is interesting to examine
how the process was taking place in Hungary and what are the differences between the
institutional system of the state and the church. Better management, more effective leadership,
more resources, better-performing students, segregation?

The new 2011 Act (Act CXC of 2011) names the legal entities that can maintain public schools
and these include ecclesiastical legal entities as well. Between 2001 and 2009, the number of
church and private schools in Hungary increased slowly (by 23% and 25%). After 2010,
however, changes in the numbers of church and private schools has split. The number of
church schools began to grow rapidly, and the number of private schools began to decline.
Between 2010 and 2014, the number of foundation schools decreased by 20% and that of
church schools increased by 68%. In 2014, there were a total of 268 foundation and private
schools and 436 church schools in Hungary (Z., Hermann – J., Varga, 2016). In this chapter,
we present - highlighting the most important points - the ecclesiastical regulation and
institutional system. It is shown that the system consists in several specific church institutions
with quite ordinary but important tasks. To present this, a semi-structured interview with the
secular leader and headmaster of the church school, Ferenc Tóth, was conducted. Thus, this
part of the paper will rely on the interview, the legal regulations, and the documents of each
institution.

First, it must be clarified that the specific territorial administration of the church has developed
over the centuries, and slightly differs from the state’s one. At present, twelve dioceses with
Latin rites (https://katolikus.hu/egyhazmegyek) can be distinguished: those are much larger
than the “civil” counties, and are headed by the chief pastor, i.e. the county bishop. Although
the minister remains responsible for the professional management, on the next level2 the
Klebelsberg Center falls out of the system and a church institution takes its place. The
Diocesan Catholic School Authority3 (herein after: DCSA), which is an autonomous
organization, exercises supervisory and control over the schools of the diocese, namely in
pedagogical, educational, upbringing and management matters. The accountability rules are
strict. In this respect, it may have a similar operation as the maintainer of the state system, but
these institutions are basically equivalent to education district centres.

1 Inthis paper, „church” just means the catholic educational institutions.

2 Inthis paper, the administrative levels do not necessarily follow each other according to official documents, but in order of
importance in a sense of management issues.
3 http://www.eger.egyhazmegye.hu/oktatas/ekif/egyhazmegyei-katolikus-iskolai-fohatosag
On the other hand, church schools are accountable to the Office of Education
(https://www.oktatas.hu/), in certain areas of budget, statistics, education and pedagogy, in
which public institutions are also accountable. Here, however, the advantages of a two-tier
system appear. In the state dimension the minister asks for some direct account, or even
indirect, through the Office of Education, in some cases through the maintainer. In this case,
can the institution send the documents requested by one body to the other for verification
(formal, legal clauses)? Can the institution forget about deadlines? However, in the case of
church schools, it is not uncommon for some documents to be received twice: first, from the
Office and secondly from the DCSA, which provide legal and professional help to the schools.

The Catholic Pedagogical Institute4 is found on the next level (hereinafter: Institute). The
Institute offers services covering a large geographical and professional area, from
kindergartens to secondary school trainings, vocational counselling, pedagogical evaluation,
and school administration. In addition, the school is accountable to it for various statistics that
may relate to professional development, measurements, competition results etc.

This is followed by the level of the school, which, however, does not differ from the state
regulation in many respects5, as the career model organized and conducted by state
institutions, besides the supervision of education, and qualification, in the same structure. We
believe that the efficiency of the church school system is, interestingly, not based on the
internal structure, but on the fact that the state itself has created a dual system, in which the
church thus obtains certain advantages and surpluses. Thanks to the dual institutional system,
the church schools are accountable to their own maintainers (DCSA), where regulation is
much more flexible, furthermore the institution helps the schools in bureaucratic procedures.
It is known that church schools manage from more sources than public ones: the reason is the
dual funding system. In addition to public funding, which is the same as that provided to public
schools, the church also provides them with resources from its own budget. This advantage
can be well-seen in developments and investments. Thus, it can be stated that church schools
have become the model institutions of public education in Hungary, because the church is
quite interested in providing education to emerging generations under good conditions,
according to its principles, thoughts and worldview.

4
In the state system, their equivalents are Pedagogical Education Centers, as deconcentrated organs of the Office of
Education. (https://www.oktatas.hu/pub_bin/dload/hivatal/szervezeti_abra_20201021.pdf)
5
Except the religious issues and management, obviously.
 State system Church system Competences/advantage compared
to the other system
Minister Minister Ensuring comprehensive professional
supervision throughout the sector/-
Office of Education (OE) Office of Education (OE) OE: Supervision over budget,
Pedagogical Education Centers Catholic Pedagogical Institute (CPI) statistics, education and pedagogy
areas/ -
CPI: Various statistics that may relate
to professional development,
measurements, competition results
etc. / It has its own management
system and double aid.
Klebelsberg Center DCSA Control over the schools of the
diocese, namely in pedagogical,
educational, upbringing and
management matters / It has its own
management system and double aid.

1. Table: Advantages of the church system institutions compared to the other system (Own editing)

These were the management and task-performance issues, but what is the situation in student
performance and inequalities? The picture is much more nuanced there.
First, it is noteworthy that, although the proportion of church primary school students has
increased the most in the poorest regions and smaller settlements, the distance between the
proportion of church students within all students and the various disadvantaged groups has
changed slightly, between 2010-2014. That is, church schools appear to favour students in a
relatively better position even in poorer regions and smaller settlements (Z., Hermann – J.,
Varga, 2016).
In a Hungarian study, the performance of public, church, and private schools was compared
based on the data of the National Competence Measurement. The results showed a different
pattern by school type. In the case of primary schools, private schools did not differ
significantly from public schools in terms of either mathematics or reading comprehension
test scores, nor did church schools, however, students in church schools scored slightly better
on reading comprehension. In terms of reading comprehension, therefore, we can say that
church elementary schools perform better. The 6th and 8th grades of secondary schools
(“small grammar schools”) showed a radically different picture. In non-public schools,
students’ test scores in 8th grade were significantly lower than those in public schools. The
mean change in test scores between grades 6th and 8th was similar (Z., Hermann – J., Varga,
2016).
It is worth noting that the value-added model used by the researchers indicates a significantly
smaller lag in performance than the disadvantage observed at the level of test results. This
indicates that, on average, significantly better students are admitted to state-run “small
grammar schools” than to church and private schools (Z., Hermann – J., Varga, 2016).
Perhaps surprisingly, but, summarizing the results of the study, it emerges that in terms of the
level of test scores, church and private high schools and vocational high schools lag behind
public schools on average, both in mathematics and comprehension. This is largely due to the
different composition of students, but in the case of mathematics, on average, the added value
of non-public schools also lags behind that of public schools, while no such difference is found
in reading comprehension. In church primary schools, the level of reading comprehension
results and the added value indicator also indicate only a weak positive effect. Except for
primary schools, it can be said that the effectiveness of church schools is lower. Based on the
test results, therefore, it seems that church and private schools do not outperform public
schools in this field on average, except for church primary schools. (Z., Hermann – J., Varga,
2016).

4. Employment policy: definition and actors

The following analysis is aiming at examining the concept of a national employment policy,
as a vision and a practical, comprehensive plan for achieving a country’s employment goals.
Countries need them because employment challenges are getting more and more complex, but
the employment policy also has to regulate the market. Indeed, in summarizing the main
functions of employment policy, it can be stated that this policy is trying to find solutions to
the following problems (https://regi.tankonyvtar.hu/hu/tartalom/tamop412A/2010-
0019_foglalkoztataspolitika/ch05s02.html):
 demographic trends that put enormous pressure on labour markets;
 economic growth does not automatically translate into more decent jobs and more
benefits for poor citizens;
 wage inequality is rising across the world, with workers benefitting less from
economic development;
 secure, full-time employment with benefits is no longer the norm in the developed
world: it is not always in the interest of companies to provide social security for
workers, because there is plenty of workforce;
 there are more women in the labour force, but their quality of employment, including
wages, working conditions and prestige, still lags behind men. Pay gap between men
and women salaries is a current problem in nearly every country: in a fair system, all
 genders should get the same wage for the same job, but currently men are getting paid
more (https://www.moneyunder30.com/the-gender-pay-gap-in-the-21st-century);
 high youth unemployment is a serious problem as well: as mentioned, the labour
market is very instinct in most of the countries.
Due to scarcity of scope, every aspect cannot be covered. Though, sure is that one major point
of the employment policy is to make a labour plan. A good policy maker should know who is
working right now, which kind of jobs are instinct and which fields need more workforce.
From these data, he or she can tell what kinds of specialization should be supported at schools
and universities, what kind of aid should be given to the farmers or the miners and what kind
of retraining programs should be started. For instance, if there are too many fire fighters, more
firefighter training centres would not be built, while, when noticing the lack of computer
scientists, new training programs can be implemented.
From social consideration and for increasing future efficiency, every employment policy has
to find solution for the people who lost their job or became unemployed somehow. Every
country is dealing a bit differently with its unemployed people, but most of the time some kind
of unemployment benefit is assured.
Among the actors who play a critical role in a national employment policy, the followings
have a major function:
 The state: the government makes the policies and it also one of the biggest employers.
To run every public task well, it needs a huge manpower. Not only bureaucrats and
policemen/firefighters or military men are considered, but also several areas where the
state is a big employer: they provide postmen, teachers, doctors, other healthcare
workers, as well as the frequent presence of state-owned companies;
 The companies: they provide work for the people. But providing work is not their goal,
which is making money in the best way they can. In order to do so, they need
workforce. Most of the time, there are rules and guidelines for companies about work
conditions and social expectations. In the developing countries, it is a pretty serious
problem, since companies take advantage on employees and do not provide suitable
conditions;
 The workforce: they need the state for good regulations and companies for good jobs.
A good employment policy maker always keeps the interests of employees in mind,
since they are the backbone of the country’s economy. Though, in this case, it must be
taken into account that the term “employee” is not the most accurate, since it does not
include unemployed people who must be considered in the vision of workforce.
5. The Hungarian example of employment policy
During the communist time, the state’s goal was full employment. Cost effectiveness,
efficiency or basic economics were not really considered: a lot of people had a job, but also
did not have else to do for the rest of the day. The whole employment policy was not built on
efficient and critical criteria. The
government wanted to build an industrial
country, but the expert work was performed
by incompetent persons and Hungary
refused to trade with the Western countries.
Later after the years of Communism, the
market economy replaced conventional
practices too quickly: people did not know
what to do in this transition and were not
aware of new mechanisms, therefore a lot of them lost their job during the rearrangement. The
reason is that many state-owned companies gone bankrupt: some people got very rich in a
very short time, but too many others lost all of their income. The above graph depicts how the
unemployment rate boomed right after 1990 for such consequences.
After the big election victory of Fidesz, the Prime Minister Viktor Orbán specified his
employment policy in the full employment goal. Indeed, the government launched a public
work program: the aim was to suspend the
poor’ unemployment benefits and provide
them work by the local councils instead.
The government’s idea was to help these
people find back the world of work: they
wanted to provide a first step to get back to
the real labour market. Also, the Hungarian
government always highlights the
importance of workman trainings. As illustrated by the KSH Portfolio above, the number of
unemployed workers has been decreasing ever since
(https://www.portfolio.hu/gazdasag/20180130/kevesebb-a-kozmunkas-es-mar-nem-
dolgozik-annyi-magyar-kulfoldon-275045).
6. Employment policy: a focus on European Union

In order to analyse the effort that European Union takes in the employment policy nowadays, it is
critical to first appeal to the multiple past reasons of disequilibrium and constant remodelling of its
structure. Several causes are behind this instability:

 The dynamic nature of the employment issue, due to its policy-making radical shifts, had a
great impact over time. The full employment in Western Europe of 1950s and 1960s “gave
way to a period of rising unemployment and declining employment rates in the crisis
following the twin oil shocks of
the 1970s” (Rhodes, 2005). Since
then, following economic
improvements were unsuccessful in response to post-industrial challenges. Later in the ‘90s,
many countries had no choice but to confront a crisis of “Welfare without work” and forced
policy decisions.
 The variety of European labour market structure and industrial relationship have threatened
employment goals due to their embeddedness in numerous social, political and economic
systems, or “varieties of capitalism” (Hall and Soskice, 2001), which hindered social
protection and employment promotion.
 The ideological differences related to employment organization, mainly divided by the
conflict between socialists/social democrats and market liberals (Rhodes, 1992) on how the
social systems should be regulated.

It was not until 1997 when EU Member States established a common set of goals for employment
policy, so that the European Employment Strategy (EES) was constituted. This characterizes a
fundamental separation from the past thanks to two main innovations:

- The engagement of EU in national supremacy areas, which have always been strictly protected
from intervention, in order to create new employment.
- The development of a new strategy and use of mechanisms that, at the same time, would target
the quality and quantity problems of job-formation, other than reducing countries
preoccupation of external interferences within their domestic policies.
What emerges is a political response to
the Economic and Monetary Union
(EMU), which precluded single countries
to adopt expansionist fiscal policies so to
encourage economic and employment
development. Thanks to EES, a modern
job-creation plan took place, by virtue of
non-binding, soft-law tools. Finally, it
was good at defeating the double cleavage between different above mentioned ideologies on policy-
making. Table 11.1 outlines the progress that the new method made possible.

Today, it is part of the Europe 2020 growth strategy and its implementation, supported by a special
committee (https://ec.europa.eu/social/main.jsp?catId=101&langId=en), involves the use of the
European Semester steps:

1. Employment guidelines, recognized by national authorities and then used by the Council.

2. The Joint Employment Report (JER), built upon:

- The evaluation of the job status in EU

- The evaluation of a scoreboard of principal social indexes

3. National Reform Programmes (NRPs) are proposed by national authorities and examined by
the Commission for agreement with Europe 2020.

4. Based on the above assessments, the Commission publicizes a series of reports, examining a
country’s policies and particular suggestions.

An insightful analysis of soft-law instruments leads to the strong effect of the so called “consensus”
process, which takes place in the Council: “although the European Parliament has evolved to have a
much more important impact on the decision-making process than at its creation” (Scully, 1997a,
1997b, 2001; Moser, 1996; Kreppel, 2002), most studies of EU policy define the Council as the most
important decision-making European institution. Formally, legislation starts with the proposal of the
EU Commission, then left to the Council of Ministers and European Parliament. In this case, the
decision of the procedure relies upon the constitutional basis of the initiative, decided by the
Commission in its proposal. Depending on this choice, the legislation in the Council is passed by
qualified majority voting (QMV) or unanimity. With the new informal process, in their pursuit for
agreement, Member States “meet the demand of another Member State in a different issue area which
creates demand for another legislative act in that issue” (Heisenberg, 2005). With QMW, if a state is
not requested in the majority, its demands are ignored. With consensus, a timely solution of those
problems is prevented. As also stated by Romano Prodi (2001), the choice was made to “embrace a
majority voting culture, in which decisions reflect the will of the largest number but apply equally to
each and every one”.

In addition to the EES, the EU also proposes policies for Employment and Social Affairs, due to the
increasing globalization and tech developments, which constantly affect the way people work
(https://europa.eu/european-union/topics/employment-social-affairs_en). In view of guaranteeing
equal opportunities and adequate working status, public and private fundings support the projects and
assure a minimum level of social security.

Finally, to implement the policy-making from both EU and Member States, the European
Employment Policy Observatory (EEPO) was instituted, so to spread information on the structure,
monitoring and assessment of policies. Thanks to valid research papers, the EEPO gathers a “network
of experts” from all over the European Union, each of them specialized in labour market and
employment areas (https://ec.europa.eu/social/main.jsp?catId=1086&langId=en).

7. Conclusions

The end of the above analysis leads to the evident result that modern education systems do rely on a
centralized system, which, specifically in Hungary, since 2010 did not meet some of the basic
requirements that are necessary for the making of a successful reform. Finally, the catholic
educational system shows interesting differences between regulation and system from national school
that also affects the results of student capabilities.

When examining the employment studies instead, what emerges the most is a practical and clear
structure of the policy from the various EU governments. This is not just a job creation program: it
considers the overall dimension of social and economic problems, impacting on different sectors of
the government. Thus, it gathers numerous measures and institutions that affect the demand and
supply and so the role of labour markets. A single national employment policy should always refer
to international standards and principles of social safety and workers’ fundamental rights. As stated
by the International Labour Organization in 2015, “many stakeholders have to be involved in making
it, and the result has to be something that they can all work toward”

(http://www.ilo.org/wcmsp5/groups/public/@ed_emp/@emp_policy/documents/publication/wcms_
334913.pdf).
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