Professionals With a ‘Very Particular set of Skills’

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Hungary ranks 47th of 141 countries in this year’s edition of the Global Competitiveness Index, recently published by the World Economic Forum. That is one position up from last year, which is good news. But a more detailed look at the country profile shows several other areas where things are not so happy, especially related to the labor force.

At first sight, being the 47th most competitive country out of 141 is a decent result, especially moving one position higher from the previous year. But from a regional perspective, we see a different picture. Basically all the other countries are ahead of Hungary: the Baltic states, the Czech Republic, Slovenia, Poland, Slovakia. Lagging behind are Romania and Bulgaria, and also Croatia, which made with a huge leap forward of five positions compared to last year.  

The study also presents a very detailed Performance Overview for each country, based on the indicators of 12 pillars, each compared to a Europe and North America average. Hungary performs very well looking at infrastructure and macroeconomic stability, but poorly in terms of skills, labor market and innovation capability.

This is also reflected in regional figures: on a scale of 100, all the Central and Eastern European countries scored above 60 in the labor market category, with Hungary 57.8. Breaking down the skills and labor force categories further reveal even more dramatic realities.

Of 141 world countries, Hungary ranked 100th or worse in the following areas: extent of staff training (100); pay and productivity (112); labor tax rate (122); and ease of finding skilled employees (138). These are directly impacting the country’s innovation capability, resulting in a significantly lower level than the Europe and North America average.

István Dervenkár

Working Abroad From Home

One important segment of the labor market affected by these shortages is information technology and communications. While all players agree that the labor shortage is significant in this area, it is hard to quantify exactly how many professionals are missing here. That is because the information technology itself expanded so fast, with new technologies and services emerging every day, that is hard to define what exactly we refer to as ITC labor force, István Dervenkár, editor-in-chief of technology news site bitport.hu says.

Digitalization has started in basically all sectors of the economy, from agriculture to services, increasing the demand for IT labor force with various levels of skills. According to data released by Hungary’s Central Statistical Office (KSH), about 60,000-65,000 are missing from the private sector and 20,000-21,000 from the public sector.

But it is difficult to estimate how many of these open positions are related closely to ITC, that is, that can be filled by trained IT professionals only. One thing is clear: the IT labor shortage measured by KSH increased exponentially in the last four-five years, Dervenkár says.

There are two reasons why the technology expansion is having such a huge impact on finding suitable labor force on the IT market. György Strausz, president of the Hungarian CIO Association (Magyarországi Vezető Informatikusok Szövetsége, or VISZ) identifies them as the penetration of IT into all levels of business processes and the profound changes in how professionals work today.  

Business processes adopted information technology at a pace that no one foresaw or prepared for, and generated a demand for skilled labor that had been insignificant not long ago. On the other hand, remote work technologies have developed to a level where IT professionals can work for Western companies from their home in Hungary. This led to the absorption of Hungarian IT professionals by Western companies on a local market which was already short of skilled labor force, Strausz explains.

There is also another development which complicates things further, Strausz adds. The expansion of modern technologies is so immense, with new areas emerging, like cloud, data mining, and information security, that no one is able to be universally proficient in all them, which leads to specialization.

IT professionals inevitably focus on niche areas to be able to oversee it safely. Which means that employers increasingly need to find specialized individuals for each area in their company, and this does not make recruiting any easier, Strausz notes.

György Strausz

Good News for SMEs

There is research that sheds some light on the specific demands on the IT labor market, Dervenkár says. A study released in January this year by the Szent István University shows that the most difficult positions to fill are those requiring an engineering degree. Finding the suitable candidate can take as much as eight-to-10 months on the Hungarian market, while finding a person with special skills can easily take more than a year.

Companies in the private sector are struggling especially hard to find employees who match information technology skills with experience in that specific sector, Dervenkár says. Looking ahead, it becomes clear that the market will increasingly require employees with complex knowledge, which includes engineering and IT (or IT engineering) skills, but, equally important, experience in the area related to the employer company profile, Dervenkár concludes.

However, there are differences between multinational companies and local SMEs, Strausz adds. Everyone is struggling, regardless of whether it is a large company, an SME or the state administration. But the chances of successfully finding staff are not the same.

A multinational company has much wider technical opportunities to offer for someone looking to work remotely, from home, be it a country resident of someone from abroad. Hungarian SMEs have narrow possibilities, they are limited only to the Hungarian market to find the much needed employees. And that is before we even mention salary levels, where SMEs have even less space to compete with the multinationals.

The good news is that employees are looking not only at salaries when searching for a new job, but also for flexible work hours, sports opportunities and other incentives, Strausz notes.

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