Pécs Functional Urban Area (FUA), consisting of 133 small settlements and a core city with 140,000 inhabitants, is located in South-Western Hungary, approximately 200 kilometres from Budapest. Pécs is a post-industrial city, where the industry has lost its relevance and was replaced by commercial and public services, but as manufacturing is weak and the city lacks big companies there is a strong tendency of outmigration both regarding the low qualified and the highly qualified labour force. Pécs is also a university town with 20,000 native and foreign students. The disparity in social well-being and economic performance between the core city and the settlements around Pécs is striking.


In Hungary private ownership is the main housing form (91% owner occupied in 2019). The housing crisis (steadily increasing housing and rent prices) has reached the country making housing affordability less achievable. Government supports in housing focuse on the families with children to obtain housing ownership and renovate flats, while the possibility of social housing is exceptionally limited (below 4% of the stock). The housing situation of Pécs fits well to the national trends. Compared to other bigger cities Pécs municipality has a more substantial housing stock (5.5%) although a significant amount of it is inhabitable, located in marginalised areas and there are long waiting lists for the empty flats. Pécs is also exceptional in that regard that the large amount of university students compared to the number of inhabitants (14%) puts pressure on the private rental market making private renting unaffordable for those who do not have access to social flats.


The financial crisis hit especially young people between the age of 15-29, which was followed by a quick recovery by the year of 2016, and the same can be seen at the Covid crisis where the recovery was even faster. As regards employment rate (74.2% in 2021) and unemployment rate (3.9% in 2021) the statistically captured employment situation is not severe (even after the Covid crisis) but youth unemployment is substantially higher (14% in 2021). On the other hand there are extremities behind the averages: there are large regional and urban/rural disparities, and socio-demographic disparities (e.g. unemployment of Roma population is four times higher than that of non-Roma population.) Even though, Pécs is a university town, the local labour market does not provide sufficient possibilities, thus young people tend to out-migrate. Still, the unemployment level in Pécs is moderate (20 registered unemployed/1000 inhabitants in 2019), while it is 5.5 times higher in the neighbouring villages.

The passive employment measures are marginal in the country (unemployment benefit is provided for 3 months), while active employment programmes are significant, financed mainly from EU sources (like the Youth Guarantee Funds). However active interventions seem to have a short time impact and not able to reach the most marginalised layers of the society.


The Hungarian educational system is characterised by high level of segregation and the reproduction of the advantages and disadvantages resulting from the family background. (The Hungarian educational system is one of the worst in the EU to compensate the cultural disadvantages of students.) Building social distances starts in the primary schools and further strengthens in the secondary education (e.g. by choosing either secondary grammar school or vocational education). In addition the educational system is highly centralised: in the last decade the local municipalities have lost all their competencies in the field of education.

Still Pécs as a location is an educational hub, providing a wide range of educational services from primary school to university. Vulnerable young people have relatively wide choices, and there are state and NGO run programmes that aim to assist students who are left behind (e.g. János Arany Talent programme, or after school activities to compensate learning difficulties). Still, these specific programmes can cover very limited number of students (some hundreds).

Social protection

Compared to the EU average, Hungary in general has relatively good social inequality indicators (e.g. Gini index, at-risk-of-poverty rate), but it is in a worse situation in terms of deprivation indicators (severe material deprivation, housing deprivation). Issues related to poverty are not properly mitigated by the measures of the welfare system, which has two major attributes: 1) it favours families with children and 2) supports the middle-class through tax based compensations and shows preference to work income against social transfers. The major items in the national social allowance system did not change nominally in the last 10 years, consequently they provide marginal help.

Compared to other Hungarian cities locally set allowances are significantly lower in Pécs, and are not properly indexed. The local social services concentrate rather on the elderly and families with children. Youth is targeted mainly through other policy fields, thus it is a rather neglected group in social protection. Both on country and Pécs city level social disadvantage seems to be inherited from generation to generation.

Discussion and main conclusions

  • The financial crisis has directly influenced the financial markets in Hungary in parallel with the decline of the GDP and other economic indicators. Strong economic recovery has been experienced since the 2010s thanks to the inflow of EU funds and favourable economic conditions Europe wide. The Covid pandemic had an impact on the economic performance in 2020, but the recovery was fast and most of the indicators reached the level of 2019 in mid-2021. The pandemic seems to have the greatest impact on education, where two years is partially lost.
  • Pécs FUA has limited economic potential compared to other parts of Hungary, thus both the skilled and the unskilled labour force is migrating either to other regions (the capital or Western Hungary) or abroad.
  • There are huge territorial inequalities inside the functional urban area of Pécs: in spite of its relative economic weakness Pécs is a culturally strong city with a variety of working spaces mainly in the service sector, while the rural hinterland of Pécs is among the most remote areas of the country – mainly further away from Pécs.
  • The city struggles with spatial segregation, having marginalised areas with low quality private and social housing and inhabitants with low social status, many of whom are Roma.
  • There is a strong centralisation process with regard to welfare services in the last decade in Hungary which affected education the most. As a result local municipalities (including Pécs) do not have any competencies in education any more; practically have no influence on employment services; have some limited impact on social protection though locally set social allowances and social services (e.g. child care centres); while have strong role for providing social housing for which they do not have the financial means. In general, local authorities, mainly in economically weaker areas, have very limited impact on the level of welfare services, however they can benefit from state welfare interventions (e.g. active employment interventions, extra state funds for the improvement of vocational education, specific state programmes for compensating educational disparities).
  • Even though statistically the young generation cannot be proven as a more vulnerable group compared to the active age cohort (except for their labour market position), there are signs that prove the opposite, especially in Pécs: the number of young people is growing among the clients of social services. Youth is indirectly supported via different policy fields; coherent youth strategy is missing.

Official deliverables

D2.2 Urban report - Pecs Pécs case study report Pecs WP3 policy brief (English) Pecs WP3 policy brief (Hungarian)

Pécs Urban Story Our storymaps draw together insights on inequalities and policies affecting urban youth, across education, employment and housing, from the WP2 urban reports and data analyses.