Foreign Labor Force Needed to Sustain Investments

As a result of a government decree, since July last year, workers from already eleven non-EU countries can come to work in Hungary on simplified terms. The relevant provision expectedly will be maintained after the end of the pandemic emergency, since in order to keep Hungarian jobs, maintain the investment rate and the operation of production companies, workers arriving from third countries within a regulated framework are required.

That was the finding at a recent professional event about the shortage of skilled labor and the employment of foreign workers, organized jointly by WHC Group and the German-Hungarian Chamber of Industry and Commerce (DUIHK).

Employment in Hungary is close to 4.7 million people, which amounts to almost a 74% rate. In parallel, unemployment rate has fallen to a record low of 3.5%. One of the most crucial problems of the Hungarian economy has been the lack of skilled labor force for years. There was some reorganization in the labor market during the coronavirus epidemic: some sectors, such as hospitality and tourism, have stalled and workers have migrated to other sectors, thus temporarily reducing labor shortages. However, by the beginning of 2021, the situation of the labor market had almost returned to pre-pandemic levels, labor shortage reappeared, which was then aggravated by the Russian invasion in Ukraine that erupted in February this year.

“Workers from Ukraine have been able to come to work in Hungary on simplified terms since 2014, because the inhibitory effect of labor shortage on economic growth was already felt in several areas. Hungarian companies, especially production companies, took advantage of this opportunity, as there are now about 54,000 Ukrainian employees working in Hungary. However, due to the war, this source of labor has become vulnerable and insecure, so it is an economic necessity that other non-EU workers could get jobs in Hungary on simplified terms,” the CEO of WHC Group Péter Berta pointed out at the event.

At the workshop organized primarily for member companies of the German-Hungarian Chamber of Industry and Commerce, Barbara Zollmann, Member of the Executive Board of DUIHK highlighted in her welcome speech, that the shortage of skilled labor is present in all segments, is a lasting challenge and has a significant impact on the day-to-day operation of companies. Therefore, DUIHK itself has launched several initiatives to ease the problems of supply of professionals – for example, they have introduced a dual vocational training system at several of their member companies, based on the German model.

Representing the corporate side, Ákos Kalmár, the national HR director of Continental Group, said that as a first step, Continental recruited labor from Ukraine to Hungary in 2017, relying also on WHC Group, then not long afterwards, they started to employ workers arriving from the Philippines as well, in some respects, as a pioneer in our country.

“When we recruited Philippine workers four years ago, we took advantage of our global organization, as at that time Continental decided to close its plant in Manila. In the first round of a pilot project, we took over 30 employees from the local colleagues working there. We started this process in order to protect Hungarian jobs, as due to the already tangible domestic labor shortage at that time, it would have been difficult for our Hungarian production units to serve customer needs without third-country workers. It must be acknowledged that this is also in the basic interest of Hungarian employees, since a production company can only operate successfully in Hungary if its capacity is adequate, now this can only be achieved with foreign employees,” Ákos Kalmár added.

In addition to Ukraine and Serbia, the Hungarian government decree allows the employment of workers from nine other non-EU countries (from Belarus, Bosnia and Herzegovina, Northern Macedonia, the Philippines, Indonesia, Kazakhstan, Mongolia, Montenegro and Vietnam) on simplified terms, even after the end of the coronavirus emergency as well.