What is the Hungarian word for unemployed

The shortage of skilled workers endangers Hungary's economic boom

In a suburb of Budapest, Gergely Falusi Toth dips body parts in a hot salt bath. "There's a lot to do. I regularly work overtime," says the 23-year-old, who has been with Techniques Surfaces for a year and a half. Another 26 employees work with him to coat or package car parts. 'Techniques Surfaces' is a Hungarian subsidiary of the French HEF Group, which specializes in surface technology. Above all, auto suppliers belong to her customer base.

The company started in 2008 with only eleven employees. Between 2011 and 2017 it tripled its turnover in Hungary. Now "we need more employees to meet the increasing demand," explains her Budapest manager Gyula Juhász. But he has big problems finding them. "In 2011, 50 to 100 people applied for each of our job advertisements," recalls Juhász. "This year I wanted to hire three new employees, but only six applicants came forward. Three of them were paid too badly. I hired the other three, but I had no choice at all," complains Juhász.

The pitfalls of full employment

Since the end of communism in 1989, and even more so since joining the EU in 2004, Hungary has been an attractive country for foreign investment. The shortage of skilled workers began to become a problem around five years ago. Today it has reached a critical stage. In September 2017, authorities listed fewer than 50,000 vacancies across the country. Audi, Bosch, Continental, Lego, Mercedes, Opel and Samsung are among the large foreign companies that employ thousands of people in Hungary.

Despite the shortage of skilled workers, Hungary's Prime Minister Orbán has an extremely restrictive immigration policy

Since taking office in 2010, Prime Minister Viktor Orbán has pursued a consistent policy of industrialization. "Of course we are happy that foreign companies are setting up branches with us. They help our Hungarian economy, but the investments that are more important to us are those made by the Hungarians themselves," he said at the end of March Inauguration of a new Hungarian factory in the east of the country.

His re-election did not change anything about this point of view. "[Our] goals include economic growth, solid finances and the continued pursuit of full employment - a goal that is within our grasp," Orbán said in an interview in late April. According to the latest government statistics, unemployment at the end of 2017 was just 3.8 percent. Hungary has just over 4.5 million employable people, of whom only 280,000 are registered as jobseekers.

Higher wages, lower profit margins

The government has repeatedly raised the minimum wage over the past three years, this year alone by eight percent. The general wage level has also been rising steadily since 2015. This trend will continue, says Laszlo Parragh, director of the Hungarian Chamber of Commerce and Industry. In an interview with the Hungarian daily newspaper Magyar Idok, he assumes an annual increase in wages of around twelve percent.

In Gyula Juhász's factory, employees now receive around 40 percent more wages than in 2011. A technician earns around 170,000 forints (around 550 euros) a month. "The Hungarian wages had to be adjusted," emphasizes the manager. "But we cannot raise the prices of our products any further." As a result, Techniques Surfaces' profit margins have continued to shrink. If Hungary can keep the unemployment rate below four percent again this year, then it is not least because many Hungarians are leaving the country in search of work, said Juhász.

Many companies in Hungary have great problems finding skilled workers

According to various sources, up to half a million Hungarians work abroad - that is more than 10 percent of the country's total working population. Whether cleaning staff or educators, bus drivers or IT developers, industrial workers or harvest workers - Hungary has problems finding skilled workers in all sectors. "In Germany or the Netherlands you can earn three to five times as much," explains Juhász.

"Hungary has around 50,000 cleaning workers. Actually, the country would need 10,000 more," says Zoltan Paar, head of the Hungarian cleaning workers' association MATISZ. "Even if we continue to raise wages, we will not be able to compete with the Austrians. Their cleaning industry itself complains of a shortage of skilled workers," said Paar. "We are now in the same situation as the countries of Western Europe 20 to 30 years ago, but here in Hungary it is particularly precarious."

"Without workers, companies will also migrate"

But Budapest has no plan B. Hungary has not managed to position itself as an attractive location for cheap and flexible workers from abroad - for example from Poland or the Ukraine. In earlier times, some ethnic Hungarians came to the country from Romania, Serbia or Ukraine, but many of them took the opportunity to obtain a Hungarian passport in order to find work in other EU countries within the framework of the European free movement of workers. In addition, the Orbán government has drastically tightened immigration rules since the 2015 refugee crisis.

"We would have no problem integrating immigrants into our labor market," says Joachim Rilling, General Director of the Hungarian subsidiary of Axon 'Cable France. In the company's own factory in Kecskemet, around 300 employees produce high-tech cables for the automotive industry. Here too, wages have risen with sales - by five to ten percent annually since 2013. The company "almost only finds young professionals who are further qualified in the factory," says Rilling. "But if the situation doesn't change, many companies will have to consider leaving the country after all."