Hungarian labour market processes were dominated by the economic transition for most of the 1990s. The chapter first describes the labour market institutions and policies established in response to emerging unemployment in the early 1990s and then moves on to examine tendencies towards the homogenization of insured and means-tested unemployment benefits. The two schemes are found to have become similar in terms of benefit rates, mostly due to reductions in the amount of unemployment insurance, but not in terms of entitlement conditions and administration. Further integration has often featured in policy debates, but not in the actual design and implementation of employment policy. Rather than responding to structural changes or distortions in the labour market, policymaking has been largely dictated by the politically determined cycle of overspending and fiscal squeeze, and more specific short-term political aims, such as appeasing public discontent by regulating the ‘idle poor’.