Most deficiencies of the Hungarian labor market emerge from a combination of the transition crisis and special features of the economy or transition process. The most crucial labor market problem is low employment. Negative impacts are high taxation and social security contributions; reduced investment, job creation, and economic growth; and people driven from the labor market who seek jobs in the black economy. While the unemployment rate has steadily decreased, employment has not increased significantly. Neither the structure of labor market policy nor its delivery system are effective in handling the problem of long-term unemployment. The most backward regions--the northeast, southwest and eastern border--are characterized by a disadvantageous industrial structure; low-quality infrastructure; lower average educational background; large Romany population; and less success in attracting investment. The tendency for students to enter vocational secondary schools rather than apprenticeship schools gives them a better chance to find jobs or continue education, but the curriculum cannot follow changes in the occupational structure of labor demand fast enough. A striking development is the increasing wage gap between the private and public sectors. (Appendixes include: additional tables and characteristics of the education system. Contain 37 references.) (YLB)