Snapshot of the Hungarian labor market and related issues


The Budapest Business Journal polled senior HR executives to get a snapshot of the Hungarian labor market and related issues. The findings paint a fascinating picture. 

Market surveys normally target corporate decision makers in the C-suite to gain a general idea about prevailing conditions and trends. The BBJ decided instead to pick the brains of senior HR executives in search of their impressions of the labor market, the level of independence from their foreign parent companies and the prestige of their own profession.

High-ranking specialists working at large corporations in Budapest and the countryside were approached and with yearend around the corner their input might deliver a lesson or two for those employed in other key corporate positions.

Not surprisingly, the gloom over the dire lack of supply on the labor market was widely confirmed as a total of nearly 84% of respondents said current conditions have a negative or a very negative impact on their firm.

“This is a truly stunning figure,” commented Csaba Szabó, CEO of training, coaching and consulting company Develor Zrt. “When we started talking about bottlenecks in terms of skilled labor around two years ago, many just shrugged it off, saying it was a problem in the Western regions of Hungary. Since then the phenomenon has swept the entire country.”

Indeed, for ever more Hungarian professionals, the labor market is turning truly global, with remote locations such as Singapore or Shanghai now on the map, among others. “Even more oddly, in 2017 it is a completely realistic scenario that workers from India, Indonesia and Pakistan could soon be imported to work at construction sites and in assembly plants in Hungary,” adds Szabó.

The Emigration Question

Neighboring regions with large Hungarians communities such as Transylvania in Romania, Transcarpathia in Ukraine and Novi Sad in Serbia, can no longer supply enough working hands, since people from there prefer to go further West. On the other hand, whole crews from various CEE countries operate in Western Europe on a permanent basis, another indication that cross-border supply-demand rules prevail in the European labor game.

The BBJ survey underlines the impact of emigration as well: some 55% of respondents said that it concerns them either to an average or substantial extent.

Another related hot topic, wage pressure was also addressed in the poll, and only some 20% of the surveyed HR execs agreed with the statement that the matter doesn’t concern them. Interestingly, in spite of all those bumps in the road, some 77% of the firms polled have plans to expand their work force in the next one or two years.

This figure sounds particularly ambitious in light of the already record low unemployment rate, which was at 4.1% in September, according to data published by KSH, the Hungarian Central Statistical Office.

“Everybody is eager to grow, but they keep hitting barriers,” notes Szabó, who believes that a healthy competition has been evolving where wages are only part of the equation. “Employer branding is gaining in importance, but that has many components.” Workers simply move on if they get disillusioned or believe they were fooled in a job interview and find reality doesn’t live up to their expectations.

“What used to be cool to show off with, like having foosball tables at the workplace, is losing its appeal,” adds the expert. “Factors such as career development training and professional improvement outshine facility-related assets by far.”

Therefore, as Szabó explains, the key is to work on the so-called employee journey design and make its initial stage as memorable as possible. If orientation and the whole introductory process is perceived in a positive way, it has the potential to significantly boost employee engagement − a key for long-term emotional attachment.

Prestige

Questions were asked about the prestige of the HR profession in the survey as well. As the statistics show, about half of the respondents believe it has improved in the past three years, but it still lacks an adequate level of credit. At the same time, nearly the same ratio of respondents described their area of expertise as strategic. According to Szabó, the latter is more likely wishful thinking.

“Many senior human resources professionals would like to be in the board room and have their say. But if their area was really of strategic importance, they would be capable of making executives realize what they are expected to do for the sake of genuine results such as employee retention and improving employee engagement. As long as this is not the case, though, HR will remain to have a predominantly or solely service function.”

It was also interesting to find out more about the level of independence the polled firms have from their foreign parent companies. Some 80% said they have partial autonomy in general and just 16% said autonomy was subject to no restrictions. More than half of them, in turn, had no discretion over wage issues, whereas free choice seems to be biggest in terms of training, with 90% of respondents claiming they have a free hand regarding such decisions.

“The overall moral of the story is simple,” Szabó concludes. “The economy can no longer continue to focus on low-added value processes. An ultimate shift is needed towards less labor-intensive production using cutting-edge technology and towards offering jobs creating high added value and attracting R&D activities. Shared service centers and IT services can play a crucial role in this process.”

Levente Hörömpöli-Tóth – Budapest Business Journal