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Hungarian Production Lines Wouldn't Start Without Foreigners

There is high turnover in domestic factories, with workers going where higher salaries are offered - reports Ákos Jáhny, the Strategic Director of the Get Work Group, based on his experiences. The readily available reserves in the Hungarian labor market have been depleted, making it inevitable to bring in workers from third countries. Blue-collar factory recruitment trends as of August 2022.

"Several of our partners have reported that a significant portion of blue-collar workers entering their companies leave during the probation period; the turnover is substantial," Ákos Jáhny begins his assessment. One reason for this, according to the HR expert, lies in the formation of a wage spiral. When a worker hears that a neighboring factory has raised wages by 10%, they switch. And it's increasingly observed that factories are luring workers away from each other with such raises, which can quickly set off a wage spiral. The workers, meanwhile, are not afraid of crises or disappearing jobs and are boldly - sometimes irresponsibly - switching jobs.

This has a negative impact even on the remaining, experienced, loyal workforce. More tasks fall on them, and those responsible for training are faced with the realization that the process called onboarding in the multinational jargon was pointless. These factors can lead to decreased motivation, burnout, and ultimately resignations even among senior employees.

Currently, the gross base pay for an entry-level worker ranges from 250,000 to 450,000 Hungarian forints, which with allowances and bonuses can go up to 300,000 to 550,000 forints. In this context, a 10% raise could mean an additional 40,000 to 50,000 forints per month. "There are still companies that don't realize the labor market has changed," Ákos Jáhny continues. They still speak from a position of high ground during interviews, although they should be competing for workers, fostering enthusiasm for the job and the work environment. Companies that excel in recruitment and train middle management to treat employees as partners gain a competitive advantage.

Reserves in the domestic job market are depleted

Where are the reserves in the Hungarian labor market? According to yesterday's report by the Central Statistical Office (KSH), the unemployment rate is 3.5% (173,000 people), which is practically near full employment.

The involvement of retirees is only theoretically feasible. While motivation might not be an issue, physical condition and health could hinder a large number of retirees from returning to physical factory work. There have been successful projects targeting the Roma population, but for this to grow on a larger scale, greater openness from companies would be required. The neglect of Roma employment is due to comfort, prejudices, and unfortunately, negative discrimination.

Until autumn, factories will face competition from agriculture, which absorbs many seasonal workers. Some hoped for the employment of Ukrainian refugees. Despite state incentives and efforts by intermediary companies, only a fraction (a few thousand) of the nearly 1 million Ukrainian refugees who arrived in our country have taken up jobs.

Supply comes from abroad

Orders are increasing, and companies are submitting larger workforce demands. In this situation, staffing agencies are turning even more towards foreign workers from third countries. The government eased regulations for 9 countries last year (Mongolia, Vietnam, Philippines, Indonesia, Kazakhstan, Belarus, North Macedonia, Bosnia and Herzegovina, Montenegro), and in July of this year, added 6 more countries (Colombia, Brazil, Venezuela, Russia, Georgia, Kyrgyzstan). Certified staffing agencies with state and national security approval can bring in guest workers. Get Work was among the first to receive this status, and they now have over 400 workers from third countries in their ranks. Blue-collar workers from Vietnam and Mongolia are already working, and the first ones from the Philippines and Kazakhstan will arrive soon, while negotiations with potential local partners are ongoing in Brazil, Colombia, and Russia.

Ákos Jáhny said that their clients have had very positive experiences with the arrivals. Some are brought into their own workforce after six months. He added that recruiting, interviewing, and selecting a 100-person contingent takes about a week. Then, it takes 5-6 weeks to handle paperwork with local and Hungarian authorities. Attrition is very low: out of 100 selected workers, 99 arrive in Hungary. "The possibility of working in Europe is so attractive to them that they seize every opportunity; they are highly committed."

The expert highlighted some advantages from different countries: Filipinos speak excellent English, so there's no need to introduce a new language in a manufacturing company. Kazakhs' knowledge of Russian could be an advantage for companies that have previously employed Ukrainians, as this eliminates the need for learning another foreign language. Mongolians plan for the long term. If they stay, they don't want to move on to Western Europe. The HR expert dispels a misconception: foreign workers earn the same as Hungarians - there might be minimal differences during the probation period - so they don't lower Hungarian wages. Their arrival also saves Hungarian jobs because if there weren't enough workers, employers could easily move the manufacturing unit to another country.

In the opening picture Ákos Jáhny, Strategic Director of Get Work Group



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