Labour market Hungary: How to deal with increasing workforce shortage?

Author / Editor: Zsolt Meszaros / Franziska Breunig

The problem of workforce shortage is perceived with an increasing concern by the management of Hungarian companies. This is regarded as the main obstacle of growth in every sector today.

(Source: Eckerle, Boly)

The number of the employed was 4.44 million in September in Hungary. Experts are expecting an unemployment rate of about 4 per cent this year, which could decrease to 3,8 per cent by 2018. At the same time, a workforce shortage has developed in the recent few months in almost all branches of industry. This is indicated also by the fact that the requirements set out for the applicants are decreasing: in 65.5 per cent of the positions advertised, an intermediate or basic level of education is satisfactory. At more than three quarters of the positions, experience is not demanded at all or employees content themselves with 1-3 years of time spent in a similar role.

Increasing workforce shortage

At the same time, the index indicating the expectations of Hungarian SMEs shows that the intention of SMEs to expand their workforce has increased. Furthermore, they have become more optimistic regarding the overall tax burden, they are planning by slightly increasing sales revenue but lower profits for the next year. The proportion of those thinking about expanding their workforce by more than 4 persons has doubled. In general, more than a third of the companies are planning to hire new employees. Another survey has come to the same conclusion. Two thirds of the Hungarian companies regard this situation as a significant problem and a mere 16 per cent sees that workforce shortage is not a problem in its industry.

Is raising wages not enough?

Although domestic wages are increasing, according to companies, the hike in the minimum wage is not enough to deal with workforce shortage. According to experts, in the following time period, the development of the education system will get even more emphasis, at the same time people in backward strata are involved in education in a growing proportion. This is indispensable, once the Hungarian economy wants to catch up to the employment levels of the developed European economies. A new colleague is expensive – let’s search for young talent!

Especially in the present situation, all managers know, good workforce is worth gold. However, hiring involves significant costs – say domestic companies. The present situation is shaded even more by the fact that it takes an average two months for more than two thirds of the companies to find the new colleague.

Fluctuation can be reduced if one is willing to invest energies in educating colleagues themselves. Although it is challenging to work with beginners and apprentices, but the company can work with perceivably more motivated workers already in the short run and this increases the loyalty of the workforce and decreases the risk of attrition.

Pensioners return

In addition to educating another way out could be (for example in retailing) the employment of pensioners. Experts are relying on about 2 million pensioners in relieving workforce shortage. Many of these would be happy to work if companies were able to offer an appropriate position. Experienced workforce, on the other hand, could be handy for companies.

Are we not talking about this?

In July last year, modification of law brought a breakthrough in employing foreign workers in Hungary. An efficient solution for the domestic companies’ workforce problem, regarding both quality and quantity, could come from the Ukraine, as we are talking about a neighbouring country of 42 million, where unemployment as well as unutilised workforce is significant. According to experience, mostly Ukrainian employees between 20 and 40 apply for work in Hungary many of those are schooled and come together with their spouses. They are often interested in residence permits, so they want not only to work, but also to start a new life with us in greater safety and better living standards.

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