Labor shortage, emigration, and the economy

A couple of weeks ago Hungary’s National Association of Employers and Manufacturers (Munkaadók és Gyáriparosok Országos Szövetsége/MGYOSZ) sounded the alarm about the acute labor shortage in the country. If the government, which is currently busy turning the population against “economic migrants,” does nothing, the country’s economy will be in big trouble. Even now, it is almost impossible to find skilled blue-collar workers and qualified white-collar employees.

The Orbán government’s response was indicative of the total confusion that must reign within Fidesz and the administration in general. It seems that politicians like János Lázár, head of the prime minister’s office, are restrained by the ideological straitjacket imposed by the all-powerful prime minister. The official line is that Hungary doesn’t need immigrants, that the devastating demographic figures can be improved by a higher birthrate. But, as is becoming patently obvious, Hungarian men and women are not in the mood to have larger families. And even if they were, it would not make any difference for another two decades. This attitude of “we are going to deal with the problem ourselves” is now coupled with a vicious anti-refugee campaign. It was inevitable that Lázár would have to toe the party line even though he undoubtedly understands that without immigration the situation will only worsen. Mihály Varga, minister of economics, who is less of a party politician, reacted to MGYOSZ’s cry for help with some sympathy. The result was the confused message typical of this government.

The labor shortage, caused by the low birthrate, is aggravated by the massive exodus of Hungarians, which has been going on for years. According to the latest figures, only last year close to 50,000 people left to find a better life elsewhere.

A recent study by the staff of the International Monetary Fund addresses the economic impact of this emigration. Although the IMF study is titled “Emigration and its Economic Impact on Eastern Europe,” the paper covers Central, Eastern, and Southeastern Europe (CESEE ). The numbers are staggering. In the last 25 years approximately 20 million people left this region and moved to better-off areas of the European Union. Many of the emigrants are well educated and young, and their exodus accelerates the adverse demographic trends. East Europeans moving westward “benefited the receiving countries in the European Union and, therefore, the EU as a whole.” The study views this “migration … as an indicator of success of the EU project, which sees freedom of movement as necessary for achieving greater economic integration, and ultimately, higher incomes.” But migration had a negative impact on the “sending countries” where it “slowed per capita convergence, reduced competitiveness and increased the size of government.” Apparently, the situation is worst in the Baltic countries and in Southeastern Europe, i.e. the Balkans.

So, Hungary is not in the worst shape, but in comparison to earlier years the current situation is different in two important ways. First of all, the number of people who get on a plane to seek their fortune elsewhere has been growing rapidly. Here are a few numbers. Just in one year, during 2015, the number of Hungarians living in other EU countries grew by 15%. Since 2010 the number of Hungarians living in Norway has tripled, in Germany it has doubled. Unfortunately, the United Kingdom, where the number of Hungarians is very high, didn’t report its statistics to Eurostat. According to Eurostat, in 2015 563,00 Hungarian citizens lived outside of Hungary as opposed to 108,000 in 2010. Add to that the estimated 200-300,000 Hungarians in the U.K. and those in Austria, a country that still hasn’t reported, and the picture is even grimmer.

Another difference between those who are now looking for jobs abroad and those who left a few years ago is that the earlier emigrants, at least initially, were not planning to live outside of Hungary permanently. They were thinking of a temporary stay, just long enough to save some money to start a business, buy an apartment in Hungary, or pay off their Swiss-franc loan or perhaps long enough to perfect their German or English. All that has changed. People today who are seeking jobs abroad plan to become permanent residents.

Several employment agencies in Hungary cater to those looking for jobs abroad. One of them, Euwork, specializes in healthcare but has job opportunities for unskilled workers as well. The agency told HVG back in April that a member of Euwork’s staff will ask applicants at their interview why they want to leave. Nowadays, the most frequent answer is that the Hungarian situation is “hopeless.” It is hopeless not just because their own career seems to be going nowhere but also because they think the country itself is going to the dogs. They don’t believe there will be any change for the better in the near future. These applicants increasingly complain about the general state of affairs and politics. They don’t necessarily limit their complaints to the government or Fidesz but talk about the political situation in general. These people, even if they don’t speak the language well and know relatively little about the country where they are heading, plan to stay there permanently. Apparently western companies welcome these determined immigrants because they are more eager to fit in and will more readily integrate.

Randstad, an American employment agency with an office in Hungary, conducted a survey recently on Hungarian young men’s willingness to go abroad for a good job. The findings were astounding. Eight out of ten men under the age of 34 would pack up and leave for employment opportunities abroad. Instrum Justitia, an organization studying the state of the consumer industry, reported that most young parents (between the ages of 20 and 25) are in serious financial trouble. Only 25% of these families can pay their bills on time. So it is not surprising that 44% of them have already contemplated emigration, which is much higher than the average of 35%.

The trend will continue and the gaping differences in living standards between East and West will not be narrowed any time soon. Unfortunately, in the last 25 years Hungary’s economy has stagnated. Or, to be more precise, after a few years of economic growth, bad government policies caused a relapse, followed by some improvement, which was soon enough killed by the next administration. The latest such setback occurred after 2010 when the new Fidesz government’s policies tossed the country into recession, wiping out the heroic efforts of the Gyurcsány and Bajnai governments, which had succeeded in putting the country’s economic house in order, surviving a worldwide recession, reducing the deficit, and achieving modest economic growth by 2010.

Propaganda is not enough

Current government propaganda may laud its great achievements, but the numbers don’t lie. Under the present circumstances more and more people will pack up and leave for places with greater opportunities. The country where they settle will benefit from their presence and so will the immigrants themselves, who make double or triple what they could in Hungary.

As for Hungary’s labor shortage, for the time being the Hungarian government isn’t worrying about it. But let’s assume the Orbán government changes its mind and recruits workers from, let’s say, the Balkan countries. Will these people stay in Hungary? I’m afraid the future is bleak in this respect.

 July 21, 2016
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petofi
Guest

Working out Orban-speak: “labour shortage”…the economic situation in Hungarian is vastly improved; a boom is in place; workers have a hay-day with high wages. What a splendid place is this!

Hajra Magyarok!

NWO
Guest

My wife is a Hungarian Mrdical Doctor who graduated from SOTE in mid 1990s. Literally, every one of her close friends/colleagues from Med school save 1 lives and works abroad (mainly in US but also Canada, UK and Germany). She also trained and worked in the US for yrs and only returned to Hungary because of my work. This group of Drs were really the “best and brightest” of their generation (university professors before leaving) and they will NEVER move back to Hungary. And this example is not at all exceptional, and is being repeated in profession after profession. The country without substantial inflow of migrants and finding some way to keep the young is screwed.

Member

Unfortunately until the money that arrives from the EU or created by the Hungarian economy is spent on enriching the circle of Orban versus improving the wages and opportunities for “workers” in general, this trend will continue. I am not sure if Orban is truly that stupid that he does not see that robbing the country blind will truly backfire very shortly or simply he already has something set-up if Hungary will collapse? There is no person with any intelligence who cannot see the exodus. Even though Orban and their supporters love to call this freedom of movement and not immigration, it is in deed immigration, that will leave the country empty. Jobbik’s nationalistic approach can also sucks, and I have no idea how they would plan to pay for the retirement of millions for the next few years w/o sufficient planning.

bimbi
Guest

A clarification. “Immigration” is an inflow of people. “Emigration” is an outflow.

Guest

This Magyar apparent refusal to accept realities astounds me. I do not understand why the current government does not seem to address itself forcefully in assuming responsibility and acting on trying to engender a better quality of life in the country. It’s like a crime in broad daylight. Can’t comprehend the apparent aversion to superb health care, top education and developing good jobs. The Magyars have sure lost the plot.

From the looks of it the only way to give the country a step up is to ‘gentrify’ it where ‘outsiders’ in the community do the developing. Orban would be happy then since he can keep the bulging pockets full as others go into theirs. But that won’t happen under this abject watch. And the country continues on sliding into the sinkhole.

Cees Verharen
Guest

Randstad is to my knowledge a Dutch employment agency. I would be interested to know more about Dutch – Hungarian labour links. Estimations speak of 100.000 Hungarians in The Netherlands. And also more about Dutch and Belgian pensioners buying houses in Hungary and retire there. Estimations speak of over 10.000 houses sold to EU citizens in the last 10 years.

Observer
Guest

Off the top of my head:

100 000 Hungarians in NL seems too high, even half of that would be too much.
The number of houses sold to foreigners may be close.

Observer
Guest
In June this year László Paragh, Chariman of the Hungarian Chamber of Commerce delivered a scathing criticism of the vocational and labor training. The report says that “In his opinion what’s missing is a choice-of-trade guidance system, plant visits, the worker with extensive basic knowledge who can be employed in modern production; he thought the vocational training structure inefficient, trade knowledge uncertain, the acquired basic knowledge weak, the higher education system rigid, the lifelong learning untypical.” and more. http://24.hu/fn/gazdasag/2016/06/21/parragh-tobb-szakmunkast-a-gyarakba-a-foldekre/ While his findings are correct, the criticism seems very thick of him since Paragh has been close to Orban and has directed or participated in the “reforms” in the mentioned systems (incl. higher education ! ) for years. Back in February 2014 Paragh stated that the “commenced structural alterations have to be completed, the EU funds have to be invested in the economy”. Still earlier, the Orban government made all sorts of statements: like envisaging 6-7% growth, becoming the “manufacturing engine” of Europe and other fantasies. There was an almost idiotic program, among others, run by Fidelitas, the Fidesz youth organization, aimed at luring back young Hungarians living abroad – the enticements included “the Hungarian girls are pretty” and the Túró… Read more »
Observer
Guest

Two more, conflicting trends:

Analysts see a possibility of vicious circle in the labor market/economy: the more people leave the worse the economy, the worse the economy the more they leave. E.European has “lost” 20 million citizens to Western Europe over the last 20 years, which has thrown back the EE growth by 7%.

The latest stats in Hungary show more than 6% growth in wages, primarily due to the scarcity of qualifies labor. Projected, such trend would lure back some Hungarians, or attract guest workers. Problem with this trend is that many local businesses are not competitive and are kept afloat by very low wages. They would collapse in case of higher labor costs and throw more job seekers onto the market.

A solution would be if gov does something to alleviate the very high, 50+% , labor imposts on employers. Blatant “communication” aside, the Orban regime has actually increased taxation.

Guest

Even with a 50% growth in wages Hungary could not compete on the labour market with DACH where wages are at least 3 or 4 times as high for qualified jobs!

Only if you consider lower costs of living (and family ties, houses available so you don’t have to pay rent etc) people are persuaded to stay in Hungary-

Observer
Guest

Correct, but these factors, and more, are always there, they have been accounted for. Hence real income doesn’t have to even approach the foreign one in order to stem emigration.

bimbi
Guest

“Labour shortage”? No, it is a willingness shortage and an intelligence shortage among the upper echelons of Fidesz. They simply have no clue as to how to build the economy – look at the 6-year figures.

Their sole skill is in theft. Let me repeat that. Their sole skill is in theft.

Now the “castles” and “mansions” restoration business is an open invitation for them (which is why it was set up) for massive theft, particularly of EU resources, even though this means – like the construction of football stadia – massive theft from the pockets and mouths of their “beloved” Hungarian people.

If theft is your principal aim, why on earth would you even want to try to improve the economy, employment or living conditions in the country when the EU money continues to flood in by the billions of euro? You would not, and they don’t.

As Petofi would put it, “Hajra Magyarok!” PS. When will the EU wake up?

Istvan
Guest

It is highly unlikely that the EU will wake up to address the corruption problems that plague not just Hungary, but numerous former Communist nations. The EU accepts this corruption as the cost of doing bussiness and having a massive pool of lower cost labor.

The real question I think is what is the acceptable level of corruption that the EU can tolerate? Apparently the level is very high and when the professional money launder (the author of numerous Luxembourg tax haven laws) and alcoholic JC Juncker is at the helm of the EU ones expectations should be low.

Observer
Guest

This is how these regimes work, for the benefit of the few. Not only the EU, but the Homo Hungaricus has to wake up.
HAJRA MAGYAROK ! … fizetni

Joe Simon
Guest

If Mr. Trump gets elected, many of you at HS might leave the US. After all how could you live under a Super Jobbik President. Now this exodus just might alleviate the labour shortage here, should you all to come to Hungary. Hungary is a democracy, and if you flee from political persecution, this countrty would be a haven for you all.

Istvan
Guest
Joe if Trump gets elected as he told the NY Times yesterday Hungary will have to over double its defense budget immediately to be protected by US forces. Moreover, he has made it clear he plans to pull US bases from Europe, so in order to even defend those nations that do spend 2% of their GDP on Defense those troops would be deployed from the USA. By that time Putin if he so chose would be drinking champagne at the Ritz-Carlton admiring the view of Erzsébet Square. Good luck to Hungarians if Mr Trump is elected. By the way, amazingly, polling data from active duty US military appears to show increased support for Trump http://www.militarytimes.com/story/military/election/2016/05/09/military-times-survey-donald-trump-beats-hillary-clinton/84132402/ However, Officers were more likely to back Clinton than enlisted troops, though the officers still favored Trump by a 46 percent to 32 percent tally. Enlisted respondents broke 58 percent to 21 percent for Trump. This polling was done prior to Trump’s statements about NATO, it’s unclear if that will sober up the troops. I know officers were shocked by his comments on NATO because they know Europe and Korea are not defendable without forward deployment. But enlisted men might well like the idea… Read more »
Guest

You know I wish Mr. Trump would keep his mouth shut. With a probability that he potentially can be POTUS of America, leader of the ‘free world’, we can bet that Mr. Putin and his merry band will certainly test the measure of the man. He’s going to poke him like they do with that Pillsbury dough boy in their tv ad. Mr. Trump should think he’s not in some smoky back room where he can pop off anything from his mouth to make his ‘deal’. This fellow must learn to be circumspect.

‘Trump and Pence
Pence and Trump
My two cents
Is TrumpPence worth a tuppence?’

Observer
Guest

Hungary is a fascist / illiberal democracy, if there i such thing. Anyway it looks like a dictatorship. I don’t know how can one associate heaven with Hungary, but Hungarians are the most unhappy people in Europe with the Bulgarians and still in top of suicide stats.
Maybe this is what Fidesznik Joe and other perverts like for them.

Guest
London Calling! The ONS (=KSH + integrity) is unable to state the number of ‘Hungarians’ in the UK because these stats are not collected. However as at 2015 there are 3,000,000 immigrants living in the UK of which about 2,000,000 came from the EU So ‘Hungarians’ are a subset of 2m. During 2015 there was a ‘net Migration’ of EU citizens of 180,000 – that is, there were 180,000 more citizens who came from the EU than left the UK for the EU. Your post, Eva, rings so true not just for the present time but for when my partner came to the UK in 2005. She worked for three years in a bank in Hungary, collating management information – a responsible job which would attract a very good salary in the UK – and at 4pm most evenings worked late ironing in a laundry for 300 forints per hour (less than £1.00 per hour, $1 per hour at today’s exchange rate). Wages at this laundry are still the same today. She resolved to find a job abroad and managed to scrimp the money to pay for English lessons by rote at evening classes. (English lessons that seemed like old-fashioned… Read more »
Guest

I should add that this latest Hungarian leaving was earning just £350 per month as a fully trained nurse with 20 years experience – working in terrible hospital conditions and with patients popping off long before their time.

petofi
Guest

Charlies,

Your story about your partner is heart-warming…what a sterling individual! You’re a lucky fellow.

I might add that the gumption and stick-with-it-ness of your partner may single-handidly begin the resurrection of a good opinion within me of Hungarianism.

But then, could we still say that she is ‘Hungarian’?

Guest

I was thinking on similar lines, congratulation, Charlie!

My wife also had dificult experiences with people in Hungary and the state, but she managed somehow – and when she was already over 60 years old she was introduced to that crazy German bloke and they fell in love instantly …

Istvan
Guest
Charlie that was a powerful story similar to those of my grandparents generation here in the USA. At a certain point just like in the USA the Hungarians in the diaspora come to see Hungary in a more nostalgic light, and want to downplay its faults. Even the Hungarian spoken becomes antique because it does not evolve as it does in Hungary. Eva is incrediably exceptional because she is a scholar of virtually all things Hungarian. Overwhelmingly the offical bodies of American Hungarians are Fidesz apologists, which is actually a big improvement over the Arrow Cross sympathizers in the USA of the past that used anti communism as an ideological cover for their perverse vision. Hungarians who came to the USA prior to WWII are very similar to the EU open border emigrants. They have for the most part an incrediable work ethic and accumulate capital primitively at amazing rates. But there were also those we generally do not celebrate, particularly amongst the men who became chronic alcoholics with serious depression that died in obscurity leaving their families with little or no economic legacy. Before 1920, about 30 percent of all Central Europeanimmigrants to the United States later returned to… Read more »
Roderick Beck
Guest

So the country is losing 5% of its population every ten years. That is a devastating loss.

petofi
Guest

re: “..losing 5%..”

With the great degree of moronicity…that may be a long-term advantage-

Guest

You are Shakespeare. You can create new words to enrich the English vocabulary.

petofi
Guest

re: Shakespeare

Jean,
Having studied and pondered the life of Shakespeare for
roughly 50 years, I do know a lot about the fellow. A book, (“Shakespeare: A Man Apart”) and possibly a movie is downstream.

But yes, I do like to coin words. and why not? Language is a living, malleable thing. Words carry meaning even when they’re dressed up a touch…

tappanch
Guest

Official statistics.

series A.
May 2016:

Employed in enterprises with at least 5 employees: 1973.0 thousand
Employed by the state: 694.7
Employed by non-profits: 120.9
Fostered workers: 218.0

series B.
March-May 2016 average:

Employed or self-employed in Hungary: 3971.3
Employed abroad but counted in the Hungarian statistics: 118.2
Fostered workers: 224.3

tappanch
Guest

Turkey:

“According to the decrees published in the [official] gazette, 35 health institutions and organizations as well as 1,043 private education institutions, organizations, dormitories, and hostels were closed.[…]
A total of 1,229 foundations and associations,19 unions, federation and confederation and 15 foundation schools were also closed.”

http://aa.com.tr/en/todays-headlines/turkey-shuts-down-over-2-000-gulen-linked-institutions-/613991

Parallel Zeitgeist in Turkey and Hungary.

The governments use nationalistic and religious [Islam or Christianity] slogans and dictatorial measures to cover their criminal acts channeling public money into the hand of friends and family.

PALIKA
Guest
I enjoyed the erudite comments. Many thanks. They do highlight a number of problems with Europe. When the Common Market was just six countries they were more or less of similar wealth and performance. The idea of free movement of people did not present a problem until the admission of countries which are in a different phase of development. This discrepancy is an open invitation to migration to the richer countries. It provides cheap and willing labour to the West and income support for the poorer countries. I believe it to be a short sighted approach. It produces brain drain in the east and tensions in the West. See the underlying issues in the Brexit debate. Does it, combined with the generous payments made from the cohesion fund, produce any lasting improvement in the economies of the poorer countries? In Hungary’s case it has not, though it has helped to ease tensions that might have developed if so much of the Hungarian labour force stayed at home and became unemployed. The undiluted free movement principle exacerbates the migrant issues caused by the arrival of millions from the Middle East and Africa. It is difficult to disagree with the latest statement… Read more »
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