Businesses' Employment Intentions Have Strengthened

The employment intention of businesses has strengthened in Hungary, with around a quarter of firms planning to hire staff, while the share of those thinking of making redundancies is again below 10%, according to the K&H bank’s latest SME confidence index research.

The statement highlights that companies are preparing for an average 11% salary increase, while an improvement is also visible in the planned fringe benefits, with employees at one in two companies expecting the latter.

The head of SME marketing and sales support at K&H, Zoltán Rammacher pointed out in the statement that compared to the rather gloomy picture of the previous quarter, an improvement in the willingness of SMEs to hire is now visible. The proportion of firms considering hiring people has increased from the previous quarter’s 16% to 23% in, and the proportion of firms considering making redundancies has fallen from 11% to 8%. However, the redundancy rate is still high compared to the last ten years. The vast majority of firms, 68%, do not plan to change their workforce, he added.

According to the statement, employment growth is expected to be more spectacular in the services and industry sectors, while more modest increases are expected in trade and agriculture.

In terms of firm size, one in four small firms and one in five micro and medium-sized enterprises plan to hire new staff. 73% of firms plan to increase wages, compared with 66% in the previous quarter. On average, workers in SMEs can expect to see an 11% increase in pay over the next 12 months, the release says.

The statement also points out that the top fringe benefit continues to be the 13th month salary, bonus or bonus, followed by transport reimbursement and SZÉP cards. The latter's popularity could increase further with the abolition of sub-accounts, as this would reduce administration for employers and simplify use for employees, according to the statement. 

K&H has been producing a quarterly SME confidence index in Hungary since 2004. In the latest survey, business decision-makers from 400 Hungarian-based companies with annual sales of less than HUF 2 billion were interviewed between November 7 and 25 last year.