Overall Score

6.1 in 2015 6.3
0 2.5 5 7.5 10

Key Finding

Behind the significant improvement in the overall Index score is a slowdown in industrial wage pressures and an improvement in mismatch (lower structural and long-term unemployment). On the other hand, a reduction in participation rates and increased vacancies did not allow the overall Index score to improve greatly since last year.

BREAKDOWN OF SEVEN INDICATOR SCORES

Scores
0 2.5 5 7.5 10
Education
flexibility
8.0
Labour market
participation
5.1
Labour market
flexibility
4.8
Talent
mismatch
9.6
Overall wage
pressure
3.9
Wage pressure in
high-skill industries
6.6
Wage pressure in
high-skill occupations
4.8

COUNTRY OVERVIEW

View from the ground

Hungary’s economy shifted into a lower gear during Q1 2016, with GDP decelerating sharply and recording the smallest annual expansion in three years. According to preliminary data, weakness in the construction and industry sectors caused the slowdown. While a breakdown by expenditure is still outstanding, a notable drop in investment due to lower absorption of EU funds was likely behind the disappointing result. Nevertheless, Q1’s dip was likely temporary and GDP growth is expected to pick back up in Q2. On a positive note, Hungary recovered its Fitch investment-grade status as the agency lifted the Country’s rating in May. Key reasons for the upgrade include a notable improvement in Hungary’s external balance sheet, reduced external vulnerability, a gradual decrease in public debt and a more stable banking sector.

Tammy Nagy-Stellini, Managing Director, Hays Hungary

Tammy Nagy-Stellini, Managing Director, Hays Hungary

Country Profile

The Hungarian economy has been growing robustly over the last few years. In 2015, GDP increased by 2.9 per cent driven by strong domestic demand.

The 2016 Q1 GDP figures were weaker than expected. The Hungarian Central Statistical Office cited slower industrial activity, especially construction, and lower automotive output as the key drivers of the decline. Consumer spending, meanwhile, is holding up well.

Retail sales growth accelerated, helped by continued tightening of the labour market and higher real disposable incomes, underpinned by rising wages, low oil prices and near-zero inflation.

Tammy Nagy-Stellini, Managing Director, Hays Hungary

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