Hungarian Workers Not Competitive Even Locally Due to Emigration, Not Money but Orbán Regime Blamed
The lack of a return program to lure emigrated Hungarians back adds to the issue.
The number of Hungarians living abroad currently stands at 770,000, representing a significant labor reserve for the economy from a labor market perspective. The return of these individuals would not only alleviate labor market tensions but also bring other national economic benefits. Following their joint research, the Balance Institute and the National Association of Entrepreneurs and Employers (VOSZ) have compiled a policy recommendation package that could assist in attracting some of the Hungarians working abroad back home. At present, neither the Hungarian government nor any other EU country in a similar situation has a unified program to facilitate the return of their citizens working abroad.
The goal of VOSZ's research was to maintain a balance between emigration and return migration, as currently, nearly as many people leave the country each year as those who return, stated Attila Gazsi at a press conference presenting the report. According to the VOSZ vice president, migration brings benefits, as young people go abroad to study and work, and if they later return home (if they return at all), the economy can benefit from their acquired knowledge. With an appropriate government program, it is believed that about 10 percent of Hungarians living abroad could be addressed by VOSZ.
The government faces a tough challenge in wanting to attract Hungarian workers back from abroad, as the reasons for emigration, mentioned in personal interviews,
Are precisely those problems poisoning everyday life in Hungary, with the current government and political system being mostly to blame. Thus, until these issues are resolved, it is difficult to lure Hungarians back or to increase the number of returnees. However, researchers believe the situation is not hopeless.
According to research and estimates based on UN data by the Balance Institute, around 400,000 Hungarians lived abroad at the time of the 1990 regime change, a number that has risen to 770,000 by 2023. Currently,
Said Ákos Kozák, co-founder of the Balance Institute. The most popular countries for employment are Germany, with 220,000 Hungarians, followed by Austria and the United Kingdom, each hosting 80,000. The return of these workers is complicated by the fact that the majority 72 percent feel comfortable in their new countries, whether as workers or citizens. Researchers found that older workers, not bound by their children to their chosen countries, could successfully be enticed back home if they see opportunities to work and advance their careers in Hungary.
The research firm's trend analysis suggests that the current number of 770,000 will decrease to 750,000 within the next five years, but for this to happen, researchers have made several recommendations to the government. Approximately one fifth of those living abroad do not consider returning home soon, if at all, yet about 15-17 percent are planning or considering moving back within the next 5-10 years. Financial incentives will also be necessary, as it is one of the main reasons Hungarians decide to work abroad.
According to the Balance Institute's survey,
Only among those considering such a move. The recommendations include one-time return or wage supplement support for companies employing Hungarians abroad in shortage professions, provided these individuals commit to working in Hungary for a specified period. The state should also encourage the employment of returning Hungarian workers by domestic SMEs through tax incentives, suggests the Balance Institute.
For more effective communication, experts recommend involving organizations and associations of Hungarian communities in major target countries in the return programs. The government's call-back communication should meaningfully respond to the needs of Hungarians working abroad instead of general country image campaigns.
This would not be a wasteful expenditure, as researchers estimate that the return of 10 percent of the working-age citizens who emigrated for work purposes by 2028 could result in a 0.02–0.12 percentage point increase in GDP over four years, and a 25 percent return could lead to a 0.05–0.3 percentage point GDP gain.
The Hungarian Labor Market Transforming: Hungary is losing its international competitiveness and even domestically is not always the most competitive, leading to the employment of foreign workers in Hungarian industry an unavoidable wage convergence may align with productivity growth in the Hungarian economy.
The role of work will gain importance in the 21st century, as indicated by Csaba László, an economist and professor at CEU, at the Hungarian Economic Association's labor market conference. However, a shift is expected where fewer people will have quality jobs, with many settling for low or poor-quality employment. This transformation will necessitate a change in the Hungarian labor market, as the roles of intellectual and manual labor, dominant in the economy for the past 2-3 decades, are set to diminish. This process is already underway, with about 1 million workers entering the labor market over the past decade, though the national income they generate remains constant, indicating a decline in economic and labor productivity in Hungary. This raises questions about the sustainability of living standard improvements based on an increasing workforce.
The labor market will undergo changes while the real wage level rises, ideally supported by productivity growth. The regional presence of foreign companies makes wage level convergence inevitable, forcing a shift to a new growth model that departs from relying on low wages.
Peter Mihályi, a professor at Corvinus University of Budapest, offered a more pessimistic view on the potential of the Hungarian workforce and economy. Recent debates, especially concerning battery factories, have highlighted another issue: the belief or even myth that Hungary's well-trained workforce is a competitive advantage is no longer true. The quality of labor available in Hungary is not sufficient for modern industrial work, not in terms of education or specialization, but because it is not suitable for modern factory work. This issue became apparent during debates on guest workers, revealing that although employing workers from the Far East might be more expensive than Hungarian workers, they are more reliable in terms of availability for work, including weekends and night shifts. This questions the competition viability of the Hungarian workforce both abroad and domestically.
Translation:
Translated by AI
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