With a declining population and accelerated population ageing, a significant fall in the working-age population is expected on the labour market.

The working-age population may fall from 6.6 million in 2015 to 4.3 million by 2060. The ratio of the working-age people within the population may decrease from 68% in 2015 to 54%.

Looking ahead, demographic processes may become an increasingly relevant labour supply challenge especially in the 2020s and in the 2040s, according to the report.

The demographic changes on the supply side effect economic performance via the labour market, the capital accumulation and the productivity channels, while on the demand side their impact appears via the consumption, savings and budget channels.

Population ageing may have a negative impact on the fiscal balance over the long run, primarily through higher pension and health expenditures, the NBH said.

The quality of labour force can also pose difficulties as the ratio of college and university degree holders lags behind the EU average and the ratio observed in the more developed countries.

The lag is present despite the ratio of the higher education graduates growing from 14% to 23% since the millennium in the age group of 25-64 years because of the higher average education level of new employees entering the labour market.

There is also a significant lag in the number of participants in vocational training in secondary education compared to other EU countries.

The majority of the lower educated do not meet the requirements of the enterprises with vacancies based on their skills and there is also a geographical mismatch between vacancies and labour supply.

The overall tax burden of the labour force is still high in Hungary in an international comparison.

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