Wage growth in lower-skill industries has outpaced that in high-skill ones, reducing the pressure on firms in high-skill industries.
Hungary’s growing labour market participation rates are a major driving force behind the fall in the country’s Overall Index score.
The rate of unfilled vacancies fell last year. This is consistent with employers becoming more flexible and recruiting staff who nearly match their precise needs and upskilling them into roles.
Managing Director, Hays Hungary
The domestic labour market showed intense growth in 2017 and the supply chain could hardly keep up with demand. Foreign investors verified the competitiveness and quality of the labour force in Hungary and have continued to shift operations with higher added value. The business services, engineering and manufacturing, and IT sectors are continuing to expand. Therefore, it is clear that the recruitment of technical professionals in the domestic white-collar labour market remains the biggest challenge in the market, followed by the increase in wages in most sectors. The internal mobility of the Hungarian labour force has improved and applicants are increasingly willing to move within the country for new job opportunities.
Tammy Nagy-Stellini, Managing Director, Hays Hungary
Due to the high number of job opportunities created in Hungary, which rose in 2017 to the highest on record, the jobs market was unable to keep up with demand, creating further skill shortages. This is particularly the case in the manufacturing sector, where vacancies climbed by 50% during the fourth quarter of 2017.
This is supported by the European Commission Business Survey on factors limiting production, where labour was cited by a net balance of +77% of firms in 2017 and an average of +83% of firms in the first half of 2018.
This scarcity of labour pushed up the growth in economy-wide earnings by 13%. With consumer price inflation slightly above 2%, employees in sectors where there are labour shortages are enjoying substantial real wage growth.