A decade or so ago, Hungary would have topped few professionals’ lists of desirable places to work overseas. But times are changing and the Central European nation’s fortunes appear to be on the rise. While its economy has lagged behind others in the Central and Eastern European region to date, recent government figures show a country that is now getting on top of the challenges it has faced since leaving the Soviet Union. But what are the things to keep in mind if setting up shop here?
The Hungarian economy grew by between 1.5% and 2% in the second quarter of 2016, around double the pace of the January to March quarter when things looked dismal. This growth surprised many in the country unimpressed by Prime Minister Viktor Orban’s so-called ‘Orbanomics’ approach, which has raised money through a number of unorthodox taxation measures. But there are signs that the economy is improving and the latest government predictions are very optimistic.
One of the reasons behind this growth is that huge talent shortages are resulting in workers benefitting from a rising wage situation, which means that they have more disposable income. This consumer spending, in turn, boosts the economy. But these talent shortages have got consistently worse over recent years and have led to a number of projects being put on hold. Overseas employers have even withdrawn some major investments altogether. Jaguar Land Rover, for example, is just one large organisation that has chosen to base its €1.4bn factory in Slovakia, rather than Hungary, because of this very issue.
As a result, you could say that a lack of skilled professionals is the major problem facing Hungary today. Outside of key industries such as vehicle production and manufacturing, there is also significant demand for skills within other major sectors such as pharmaceuticals, mining and construction.
The country is also home to a number of mobile technology and information security service centres. But while its economy is already relatively diversified, the aim is to make it even more so in the future and to become less reliant on European Union funding in the process.
Skills shortages
These skills shortages are creating undoubted opportunities for overseas workers, however, with domestic firms almost constantly on the lookout for skilled talent willing to make the move. This means that individuals themselves can often pick and choose between roles while benefiting from rising wages.
But while a lack of skilled labour is seen as a major threat to both growth and future external investment in the country, it appears that little can be done in the short term. It is not practical to simply make people on government welfare schemes work in the private sector - where they are needed most urgently - and plans to encourage Hungarian expats to return have largely failed.
This scenario has led many in the country to push for improvements in education and for businesses to bolster the learning and development activities they offer, particularly as demand is expected to grow significantly over the next few years. According to recent statistics, between 40,000 and 50,000 people leave Hungary each year, which means that unless something happens to reverse current migration trends, there will be a shortfall of nearly half a million skilled professionals in a decade’s time Even today, unemployment is incredibly low - in areas where the automobile industry is based, it amounts to under 1%. The relatively cheap cost of living and affordable rents also contributes to making Hungary a popular destination for large multinational corporations, which regularly choose to base at least part of their operations there. Daimler, for example, plans to invest €1.6bn into expanding its current plant in the country and will require more than 2,500 new employees to do so. But there is obviously a lot of uncertainty over where all of these workers will come from.
“You could say that a lack of skilled professionals is the major problem facing Hungary today.”
Pros and cons
Despite the huge shortfall of talent, or perhaps because of it, there are a lot of positives for working and living in Hungary. Most foreign workers are based in or near the capital Budapest, a city split into two areas Buda and Pest, which are separated by the famous Danube River.
Amazingly for a country of its size, Hungary has also consistently been voted the world’s 13th most popular tourist destination over the course of the last decade. Much of its appeal is owed to its amazingly diverse architecture, historic castles and beautiful lakes - along with the fact that your money goes a lot further than in many other parts of the world.
One challenge that many visitors do face, however, is the language. The Hungarian tongue, magyarul, is notoriously difficult for non-natives to speak because of its complex grammar. But if you are considering working in the country, it might be worth at the very least picking up a phrase book at the airport as not everyone will speak English, particularly outside of Budapest.
Partly as a result, managing taxes and remaining on the right side of domestic legislation can prove challenging. Therefore, any organisation operating in the country would be advised to take on a local expert to avoid the potentially huge fines imposed for non-compliance.
Nonetheless, Hungary is a fantastic country in which to live and work - and once the language is mastered, ex-pats will find their stay enjoyable - and highly profitable.
Michelle has more than 18 years unrivalled experience of managing compliant contingent workforce solutions in more than 50 countries. She joined CXC Global, a leading provider of contractor and workforce management services, in 2009 to set up its operations in Europe, the Middle East and Africa (EMEA) and is currently CXC Global EMEA’s chief executive.
A decade or so ago, Hungary would have topped few professionals’ lists of desirable places to work overseas. But times are changing and the Central European nation’s fortunes appear to be on the rise. While its economy has lagged behind others in the Central and Eastern European region to date, recent government figures show a country that is now getting on top of the challenges it has faced since leaving the Soviet Union. But what are the things to keep in mind if setting up shop here?
The Hungarian economy grew by between 1.5% and 2% in the second quarter of 2016, around double the pace of the January to March quarter when things looked dismal. This growth surprised many in the country unimpressed by Prime Minister Viktor Orban’s so-called ‘Orbanomics’ approach, which has raised money through a number of unorthodox taxation measures. But there are signs that the economy is improving and the latest government predictions are very optimistic.
One of the reasons behind this growth is that huge talent shortages are resulting in workers benefitting from a rising wage situation, which means that they have more disposable income. This consumer spending, in turn, boosts the economy. But these talent shortages have got consistently worse over recent years and have led to a number of projects being put on hold. Overseas employers have even withdrawn some major investments altogether. Jaguar Land Rover, for example, is just one large organisation that has chosen to base its €1.4bn factory in Slovakia, rather than Hungary, because of this very issue.
As a result, you could say that a lack of skilled professionals is the major problem facing Hungary today. Outside of key industries such as vehicle production and manufacturing, there is also significant demand for skills within other major sectors such as pharmaceuticals, mining and construction.
The country is also home to a number of mobile technology and information security service centres. But while its economy is already relatively diversified, the aim is to make it even more so in the future and to become less reliant on European Union funding in the process.
Skills shortages
These skills shortages are creating undoubted opportunities for overseas workers, however, with domestic firms almost constantly on the lookout for skilled talent willing to make the move. This means that individuals themselves can often pick and choose between roles while benefiting from rising wages.
But while a lack of skilled labour is seen as a major threat to both growth and future external investment in the country, it appears that little can be done in the short term. It is not practical to simply make people on government welfare schemes work in the private sector - where they are needed most urgently - and plans to encourage Hungarian expats to return have largely failed.
This scenario has led many in the country to push for improvements in education and for businesses to bolster the learning and development activities they offer, particularly as demand is expected to grow significantly over the next few years. According to recent statistics, between 40,000 and 50,000 people leave Hungary each year, which means that unless something happens to reverse current migration trends, there will be a shortfall of nearly half a million skilled professionals in a decade’s time Even today, unemployment is incredibly low - in areas where the automobile industry is based, it amounts to under 1%. The relatively cheap cost of living and affordable rents also contributes to making Hungary a popular destination for large multinational corporations, which regularly choose to base at least part of their operations there. Daimler, for example, plans to invest €1.6bn into expanding its current plant in the country and will require more than 2,500 new employees to do so. But there is obviously a lot of uncertainty over where all of these workers will come from.
“You could say that a lack of skilled professionals is the major problem facing Hungary today.”
Pros and cons
Despite the huge shortfall of talent, or perhaps because of it, there are a lot of positives for working and living in Hungary. Most foreign workers are based in or near the capital Budapest, a city split into two areas Buda and Pest, which are separated by the famous Danube River.
Amazingly for a country of its size, Hungary has also consistently been voted the world’s 13th most popular tourist destination over the course of the last decade. Much of its appeal is owed to its amazingly diverse architecture, historic castles and beautiful lakes - along with the fact that your money goes a lot further than in many other parts of the world.
One challenge that many visitors do face, however, is the language. The Hungarian tongue, magyarul, is notoriously difficult for non-natives to speak because of its complex grammar. But if you are considering working in the country, it might be worth at the very least picking up a phrase book at the airport as not everyone will speak English, particularly outside of Budapest.
Partly as a result, managing taxes and remaining on the right side of domestic legislation can prove challenging. Therefore, any organisation operating in the country would be advised to take on a local expert to avoid the potentially huge fines imposed for non-compliance.
Nonetheless, Hungary is a fantastic country in which to live and work - and once the language is mastered, ex-pats will find their stay enjoyable - and highly profitable.
Michelle has more than 18 years unrivalled experience of managing compliant contingent workforce solutions in more than 50 countries. She joined CXC Global, a leading provider of contractor and workforce management services, in 2009 to set up its operations in Europe, the Middle East and Africa (EMEA) and is currently CXC Global EMEA’s chief executive.
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