Efficiency and employment in Hungarian agriculture

Popp, József

Keywords: efficiency, competitiveness, productivity, employment

The improvement in efficiency is associated with the reduction in employment. Hungary be-longs to the lowest-ranking group of EU Member States in terms of per capita GDP and per capita individual consumption. The primary reason for that is its weak international competi-tiveness. Competitiveness is one of the requirements of effectiveness and efficiency requires trained employees; however, rural unemployed people are generally low-skilled and thus em-ploying them in competitive agriculture (or industry) is not an option. In Hungary the qualifi-cations of agricultural employees are significantly lower than the national average and the EU average. Agriculture cannot solve the unemployment problems of the rural population, how-ever, it may modestly contribute to the creation of new jobs. GDP or gross domestic product is equal to amortisation, wage and profit combined. One of the main reasons for the low per capita GDP is that labour costs in Hungary are only a fraction of those in Western Europe. The share of agriculture in total employment and gross value added production has declined steadily. It is also the reason why the contribution of agriculture to GDP is lower than the share of total active employees in agriculture. The higher the educational level, the lower the probability that employees will remain permanently employed in agriculture. The socio-ethical reputation of agricultural activities can only be improved if agricultural labour costs reach the national average. The efficiency-oriented strategy is based on international competi-tiveness. Improving the efficiency of labour can be achieved either by saving labour or tech-nological development as the amortisation is a part of the GDP. Increasing the efficiency and competitiveness can be achieved by improving labour productivity in line with profitability (profit is a part of GDP). A condition of a higher value-added production structure (livestock production and horticulture) is, in addition to capital, a skilled and well-paid labour force (wages are part of the GDP). The employment-oriented economic policy is doomed to failure without efficiency-oriented development. The output of agriculture can easily be increased by 50% with the help of capital, innovation and expertise (higher depreciation, higher wages and higher profits). In addition to the livestock production, plant production also has plenty of re-serves, taking into account average yields and yield variability of the crop. In the livestock production, along with the increase of livestock numbers yields per unit can be increased as well.

Full article