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Labor Shortage Focus for Cautiously Optimistic CEOs

PwC Hungary, in association with Confederation of Hungarian Employers and Industrialists (MGYOSZ), unveiled the eighth Hungarian CEO Survey, which revealed that while 92% of Hungarian company heads had more issues regarding the availability of key skills compared to last year, most are still cautiously optimistic about the success of their own companies.

From left, Tamás Lőcsei, Barbara Koncz, and Péter Futó.

“Everybody can see the storm clouds,” said PwC Hungary CEO Tamás Lőcsei. “CEOs think that the time has come to focus on their own company, and ride out this still calm period.”  

Some 90% of the 236 surveyed Hungarian CEOs expected the revenue of their own firms to grow, yet only 35% expected the growth of the Hungarian economy to accelerate, and 30% thought the same about the world economy. The vast majority of CEOs in Hungary (87%) consider making their own operations more efficient in the upcoming year a key to growth, largely in line with global trends (77%).  

As conflicts escalate around the globe, Hungarian company heads are wary of both an EU-U.S. (65%) and a China-U.S. (63%) trade war, while globally CEOs are more worried (88%) about the latter. Still, domestically some 34% of company leaders do not plan to alter growth strategies or operational models.  

Some 48% named Germany as the major target market, followed by Romania (26%), the United States (20%), and Slovakia (18%). The top ten target markets included Czech Republic (16%), Poland (12%), and Austria (11%).  

“Due to trade conflicts, companies focus on their own markets, which in the case of Hungary means that the Visegrád countries are gaining importance,” Lőcsei explained.

Trending Trio

About 87% of CEOs in Hungary named technological development as one of the three most important trends affecting their company in the past five years. Some 76% also named demographic changes in that trio, which is 19% more than the rate of CEOs globally. The third most popular choice (57%) was a shift in global economic power.  

After the availability of key skills, the second most common for concern was the change in workforce demographics (83%). Rising employee benefits and pension costs ranked third at 72%. Regarding the recent strikes at several companies in Hungary, PwC Hungary tax and legal advisory director Barbara Koncz said, “Strikes show that wage hikes proposed by company boards are well under what employees want. They want a double digit increase.”

Contrary to global trends, only 23% of CEOs in Hungary think that retraining is the most important method to combat the labor shortage; world-wide, the figure is double the Hungarian rate. About 27% of those surveyed in Hungary believe that establishing a direct pipeline from education is the way to tackle the issue, making it the most popular option.

“Hungarians have been facing the problem since 2014, and have realized they want to handle it this way instead of retraining,” said Koncz.

PwC’s global survey reveals that there is a lingering data gap between the information that companies desire and what they actually get, with company heads in Hungary also showing that there are things to be improved here as well.

About 48% of the respondents said that poor data reliability is the chief cause of the gap, followed by an unwillingness of clients to share information (38%), and the inability to quantify external information (33%). Only a little more than half of respondents in Hungary (54%) thought they might fall victim to a cyberattack.

AI Unease

Contrasting with the international picture (40%), only 22% of CEOs in Hungary strongly agreed that AI will change the way they conduct business in the upcoming five years, while 25% disagreed, and 9% strongly disagreed.

“We gleaned from our discussions with [Hungarian] CEOs that they feel uneasy about AI. I don’t share that sentiment, but I do agree that AI-based decisions need to be transparent and explainable in order to be trusted,” added Lőcsei.

MGYOSZ president Péter Futó emphasized that quality education is indispensable for future success.  

“Children need to be taught that life is full of changes. With God’s help, they will spend 50-60 years in the workforce, which will include at least four changes,” he said. Furthermore, Futó added that mathematics, English, and IT should be the cornerstones of business education.  

Regarding those gathering clouds, the experts at the conference were not so quick to draw definitive conclusions. “Crisis? The CEOs think not yet,” said Lőcsei.

“What does the gravestone of the pessimist say? ‘Told you so!’,” joked Futó, while warning against self-fulfilling prophecies.