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Significant wage increase required

According to industrial actors interviewed by Magyar Idők (Hungarian Times) newspaper, the severe shortage of labour will probably lead to a limited amount of wage increase but the problem can only be solved by urgent and dedicated governmental measures, adjustment programmes and new wage and contribution policies. Several companies are ready to recruit foreign workers while others halt their investments. Basic services are also jeopardised by the lack of human capital.

The lack of qualified labour force compels enterprises to hire migrant workers from Eastern Europe; other companies delay their investments although with adequate, quick and efficient training programmes domestic labour would also become available, said Imre Palkovics, President of Workers’ Councils to the newspaper. He mentioned the example of an enterprise in Mór where shortage of labour is such a serious problem that the management also asked the assistance of the trade union in hiring foreign workers. Given the favourable economic environment, the enterprise has recently received many orders but in order to perform them they need workers.

Retraining public workers and unemployed people could alleviate the present labour and skill shortages.

Mr Palkovics also mentioned another example of labour shortage in Western Hungary. Due to serious shortage of bus drivers in the area of Győr, meeting the timetable has become problematic and the existing employees have to work overtime on Sundays and holidays. Enterprises in the county of Veszprém announced that they would immediately hire 2000 new employees irrespective of their domicile and qualification. The trade union leader emphasized that the cause of the out-migration of workers and the resulting labour shortage is the low level of wages. Today no influx of workers is expected from the Visegrád countries as wages are 15% and 30% higher in the Czech Republic and in Slovakia respectively.  According to Mr Palkovics, labour shortage, which negatively affects the economy as a whole could be relieved if well-capitalised and primarily foreign large companies significantly increased wages forgoing part of their profit.

To enhance the efficiency of SME-s technological developments and the improvement of business and organisational strategies are required. According to Mr Palkovics common market will force the necessary efficiency gains and wage increases whereby the economic decline of companies could be avoided.

Companies may increase wages by 15-20% maximum two times - as is already the case in the field of trade – but only reductions in social security costs can close the gap in wages - said Ferenc Dávid, Secretary General of the National Association of Entrepreneurs and Employers (VOSZ). He pointed out that in the past few years more than half a million Hungarians started to work abroad. The number of public workers and job seekers is also around half a million while 100-120 thousand people are not covered by the statistics as they do not have job search or employment status. Thus, on the basis of the figures stated above we can conclude that there is no demand for foreign workers as the shortage of labour could be relieved by retraining the existing public workers and unemployed.

The public work scheme alone is not sufficient; either before and during or after the programme public workers should be trained. VOSZ cannot agree with the government’s intention to call for foreign workers, said Mr Dávid, who also pointed out that the war-affected Eastern Ukrainian region is the most suitable area for consideration as from here appropriately qualified workers could be culturally integrated. However, as long as there are adequate human resources available in Hungary, it is unnecessary to fill the job vacancies with migrant workers.

According to the Secretary General governmental support is needed, especially in the field of income policy, training and adjustment programmes. The 5-8% increase of the minimum wage will not halt out-migration or remedy the present labour shortage. Urgent measures are required including reductions in social security contributions or at least the commitment of the government to implement the required reductions within a few years. If the situation remains unchanged, Hungary will lose its competitiveness.

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