Labor shortage bites in certain sectors and regions of Hungary

Budapest, Hungary (Charles Sayer, CC BY-NC-ND)

According to data published by the Central Statistical Office (KSH), the proportion of positions remaining unfilled was the highest at enterprises in the IT and communications sector of the national economy, while the number of jobs waiting to be taken was highest in the processing industry, according to an analysis of the statistical overview published by the KSH.

In the first quarter 36,000 jobs were waiting to be filled at companies employing at least five people, while budgetary institutions had some 14,500 positions available. The former is a growth of close to 9,000, or approximately 33 per cent, compared to the corresponding period of last year – the analysis reveals.

While the proportion of unfilled positions was highest at firms in the IT and communications sector, at 3.5 per cent (2,900 jobs), the administrative and service support sector took second place in this regard, with a 2.4 per cent proportion of jobs waiting to be filled.

As for the manufacturing sector, the labor shortages have reached an all-time high. KSH figures show that the largest manufacturing operations in Hungary have labor shortages of some 2.1 per cent, around 14,000 vacancies, most of which are in the automotive manufacturing, where around 2,600 positions need to be filled. Retailing chains are also struggling to hire enough employees.  

Labor shortages have reached a point where Tesco invited trade union leaders to attend a crisis council to address the issue. The grocery chain reportedly intended to solve the situation by hiring temporary workers, which culminated in tensions as temporary workers were paid more than regular employees.

The analysis also reveals that most of the unfilled jobs are in the country’s most developed region, Central Hungary, while the Central Transdanubian region takes the second place on the list in this regard.

According to the Hungarian Academy of Sciences’ (MTA) recently published economic study, The Hungarian Labor Market 2015, rising labor migration is a reason for concern, as it is “threatening the proper functioning of services in Hungary,” and several sectors “are likely to face labor force shortages in the future.”

Looking for a solution

As a solution to the escalating problem, National Economy Minister Mihály Varga has supported a proposal put forward by national business association MGYOSZ to ease labor shortages in the country by inviting some 250,000 “culturally adaptable” foreign workers from outside of the EU. Varga added that nobody should be worried about losing their jobs, as the proposal affects only those professions in which there are not enough qualified Hungarian labor force to fill in.

The Hungarian government will launch a new economic strategy this autumn, involving the amendment of several pieces of legislation, a government official said in comments published on August 4^th.

Hungary has said it will also aim to reduce its dependence on EU funds and diversify the economy, Varga suggested to local weekly Figyelo.

“A new situation is beginning to take shape in employment. From now on the objective is not only to promote new jobs but also to keep the existing ones,” Varga says. „In view of the current manpower situation, the new direction will be to lengthen value chains,” he added. That suggests Budapest could seek to adapt the series of „cooperation agreements” it has pushed on battered foreign investors over the past couple of years.

Varga noted that the lack of labor already derailed Hungary’s efforts to win one major investment in the automotive sector. The minister did not name the company involved. The most visible major auto investment on which Hungary has lost out in recent years is that of Jaguar Land Rover. The Indian-owned carmaker announced in August 2015 that it will build a new EUR1.4bn factory in Slovakia.

Varga admitted there was an ongoing dispute within the government about employing migrant workers.

The highest number of vacancies in the country’s labor market are in the IT and communications sector, where the shortages are more than double the private sector average. Companies in this sector are looking to fill some 2,900 vacancies. According to Világgazdaság, these shortages are likely much higher in reality because a study commissioned last year by the Ministry of National Development showed that Hungary’s IT sector had 22,000 vacancies. The large discrepancy between the two figures stems from the labor projections of companies anticipating state subsidies to bolster employment.

Estimates of just how many Hungarians have left to seek employment opportunities outside the country since 2010 range from 350,000 to 500,000. A failed attempt to lure working-age Hungarians back from the UK as part of the government’s “Come home, youngster” program was ended in June.

Budapest, Hungary (Charles Sayer, CC BY-NC-ND)

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