The study looks at reasons behind the low employment level in Hungary that have to do with educational attainment. The starting point is an international comparison of the educational attainment structure of the population. The comparison is impeded by uncertainties about how to classify certain levels in the Hungarian school system. There are strong substantive reasons for saying that a qualification from a skilled worker or vocational school should be placed in a category lower than the upper secondary level. If that classification is applied, the educational attainment of Hungary's population in 2001 fell significantly short of the average for the EU countries, despite the large scale expansion of education in the 1990s. The still high proportion of ill educated can be attributed mainly to a break in the mid-1980s in a long term trend: the proportion of each cohort attaining a very low level of schooling had been falling steadily since the beginning of the 1970s. The expansion of schooling stopped short at the poor strata. Most of the shortfall in employment derives from the problems with employing labour with low educational attainment: there are too many of them compared with the EU average and they are less employable. Finally, the study draws on earlier evidence and some new arguments to dispel concerns that the excessive education is being provided in Hungary in secondary schools offering a school-leaving certificate and in higher education.