Economic Slump Sends Hungarians Abroad

Budapest, Keleti Train Station. (CC By SA photobeppus)

Last summer, having pondered his professional opportunities for some months, Istvan Kozari upped sticks, leaving his native Budapest for a new life in London. Mr Kozari, then just 35, had worked as a sales and marketing manager with a leading digital publisher in Hungary, and tried his hand working with Hungarian start-ups. But to further his career, the move was essential.

“I wanted to work in an international environment, preferably in a multi-cultural team. In my field, advertising and digital advertising, there are huge limitations in Hungary,” he told the Central European Financial Observer.

While Mr Kozari had considered positions in Prague, Warsaw and Dublin, he says the UK capital, as the “European hub” for advertising, is a “hugely attractive” location. With his work experience and MBA from the UK’s Open University, he landed firmly on both feet.

“I am based in London, working as the global digital media lead in the central marketing team for a major international player. I oversee the global digital communication strategy on 21 markets, including online advertising, social media, search and mobile activities,” he says.

Apart from the professional challenge, it’s also financially rewarding: while the costs of living are higher, salaries are “much greater” than he could expect back home.

Of course, stories of entrepreneurial natives heading west from from former communist Europe are nothing new: vast numbers, most particularly of Poles and Romanians, have sought a better life in the richer half of the continent since 1990.

But Hungarians were different. Whether due to better economic prospects, poorer language skills or just plain social disposition, in the first two decades since the fall of communism Magyars were reluctant to relocate even in their own homeland, let alone emigrate.

“When I studied social science in the 1990s, it was commonplace to say that Hungarians will never go abroad, because they don’t seek that. At the time, they would not even move from Miskolc [eastern Hungary] to Gyor [in the west], even if new jobs were being created in Gyor,” says Viktor Szigetvari, co-chairman of the Together Party, a centrist opposition group.

This has changed over the past few years. Mr Kozari is just one individual in an exodus of expatriate Magyars now estimated  to number between 300,000 – 600,000 who have moved to western Europe. The UK, Germany and Austria are the preferred locations.

While nobody knows the precise figures, the loss of so many from a population of 10m (of whom about 4.5m are of working age) is “hugely worrying” for Hungary’s future, says Mr Szigetvari, particularly since anecdotal evidence indicates that the exodus includes a disproportionately high ratio of skilled workers and university graduates.

“Of my high school classmates, about half are now working abroad,” he says.

In a study concluded in early 2012, Agnes Hars, a senior researcher at Kopint-Tarki, a Budapest-based research institute, says Hungarians became more open to relocating during the first decade of the new millennium, helped by the country’s accession to the European Union in 2004, and again in 2006 when the Socialist government introduced austerity measures.

But the trend gained new impetus after 2011, which she ascribes to tougher restrictions on unemployment benefits, plus “economic and social deterioration”. Another Tarki study of the same year revealed that the percentage of adults seeking to work abroad had jumped from 13% in 2010 to 19%. For adults aged 30 and under, the number was 48%.

Unsurprisingly, the Fidesz government of prime minister Viktor Orban, which had introduced swathes of controversial and populist measures after its resounding election victory in 2010, was reluctant to acknowledge the issue. But in early 2013, Gyorgy Matolcsy, then minister of economy, reaffirmed the government’s goal of creating 1 million jobs in Hungary by 2020 “in order to attract back the half million Magyars working abroad.”

Since then, however, the government has played down the problem, arguing it is more the result of

Germany and other EU states lifting restrictions on immigration from the eastern EU states. In January this year, Mr Orban said it was “absurd” to speak of Hungarian economic migrants within the European Union.

Naturally, some expatriates return. Indeed, some 100,000 with jobs abroad have never left – being resident in Hungary but commuting daily to neighbouring states – principally Austria.

The number of such cross-border workers has jumped from around 20,000 to 100,0000 in the past five years, yet, conveniently for the government, these workers continue to count in the official domestic employment statistics, says Mr Szigetvari.

But this still leaves anything from 300,000 to 500,000 out of the country. While the government boasts of a record 4.2m employed, this figure is boosted not only by international commuters, but by some 180,000 engaged in state-sponsored public work schemes, which provide little real contribution to the economy, says Andras Vertes, of GKI, a Budapest economic think tank.

The outflow is unlikely to slow. While GDP growth in 2014 is expected to hit a respectable looking 3.2%, much of this is down to construction projects launched prior to the elections and funded by “a huge inflow of EU funding of between €6-7bn in the past year, which is now in decline”, says Mr Vertes. GKI forecasts GDP growth of around 2% this year, and only 1.7% in 2016.

Certainly the Hungarian public is not optimistic: despite a continuous feed of good economic news and company expansion stories in the pro-government media, a survey of those aged 19-29 released in January by K&H Bank revealed that 61% of those with work expected unemployment to rise.

With such a mood at home, and business confidence undermined by continuing unpredictable government policies, Mr Szigetvari says he sees no reason for those who have left to return to Hungary.

“Given the fact that no sustainable growth can be experienced in Hungary, I believe many [of those working abroad], especially the working, middle-class families, are lost forever,”  he says.

For Central European Financial Observer Kester Eddy in Budapest.

 

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