COVID-19 Challenges Demand Flexible, Resilient Solutions

“The competitiveness of our workforce has always been high on AmCham’s agenda, it is one of the most important criteria for all potential and existing investors,” Írisz Lippai-Nagy, chief executive officer of AmCham, said at the event on June 1.

“But the disruption caused by COVID-19 changed our way of working, accelerated existing trends such as remote work, reskilling, automation, digital transformation and put issues such as work optimization, remote management, adaptability and resilience to the forefront,” she added.

In its long history, AmCham Hungary has always been focused on providing a forum for knowledge and best practice sharing, allowing members to work together and come up with solutions on issues of common interest. In conjunction with the Hungarian Investment Promotion Agency (HIPA), regular forums such as the Business Meets Government Summit and the Competitive Education Conference series have been established around the most pressing challenges businesses face.

“In the last 14-15 months we have faced an unprecedented challenge, and from the onset, AmCham has worked with the members to facilitate the exchange of information and best practices, and we also proposed countless recommendations to the government regarding the labor law, flexible working, kurzarbeit program, R&D subsidies, training and more to help businesses endure. And we endured,” AmCham president Zoltán Szabó said.

According to Szabó, the pandemic created an extraordinary environment that will catalyze reinvented structures, protocols, processes, and for the way people work.

“It is an opportunity to think and lead differently, to use our innate ability to change and move away from prescribed approaches and standardized solutions. We at AmCham want to provide a forum for these ideas and collaboration and support efforts to reignite the economy and the business community,” he added.

Last Hybrid Event?

Róbert Ésik, chief executive officer of HIPA, noted his hope that this AmCham conference would be the last hybrid event before people can, once again, start meeting each other face to face.

“Where do we stand, and what are our priorities before we start opening our economy again?” he asked.

“First of all, the pandemic has been a challenge both from a healthcare and an economic point of view. I would like to highlight that, at the moment, based on recent data, 53% of the Hungarian population is vaccinated, versus the European average of 37%. This is relevant from an economic perspective as the vaccination rate enables us to open up the economy,” Ésik said.

The HIPA CEO referred to the government’s economic action plan, which amounts to 18-20% of Hungary’s gross domestic product. It relies on four main pillars: protecting existing jobs, supporting company investments, introducing sector-specific measures to aid the hardest hit verticals, and ensuring liquidity to companies by providing loans and additional guarantees. Where do we stand now?

“We have 4.5 million people at work and paying taxes. It is the same amount as pre-COVID. Just yesterday [May 31], the OECD [Organization for Economic Cooperation and Development] increased its GDP forecast for Hungary from 2.6% in December to 4.6%, which shows that all the actors are now expecting the Hungarian GDP to perform between 4-6% until the end of 2021,” Ésik said.

He added that the investment rate in the Hungarian economy in the first quarter of 2021 amounted to +27%, which puts Hungary on the leaderboard of the European Union.

Key Priorities

Looking forward, the HIPA CEO outlined some key goals. The number one priority is the focus on relaunching the economy instead of protecting jobs. Further priorities are to move away from safeguarding liquidity to enhancing productivity and continuing to be competitive in reallocating of corporate capacities.

“These are the guiding priorities from an economic development perspective,” the HIPA CEO added.

As resiliency has emerged as a critical notion over the last year in business planning, its importance has been amplified by the environment.

“The COVID-19 pandemic was a wake-up call for all of us. [...] We cannot afford to be inflexible, to think only in the short or middle term. […] To me, resiliency is the power of foresight, flexibility, preparedness, and efficiency, translated to all parts of the business, from leadership and operations to finance and organization,” AmCham President Szabó said.

Has the pandemic changed the approach to foreign direct investment? Do investors think differently with resilience in mind in terms of FDI?

“In 2020, FDI was shrinking by 42% globally. In this context, in Hungary we had our third most successful year: We accumulated investments of more than EUR 4 billion. In terms of corporate decisions, companies start to take into account the stability of supply chains more,” HIPA’s Ésik said.

Today, proximity to customers and suppliers are factors that beat cheaper sourcing from the Far East. This attitude is opening up opportunities in Central Eastern Europe, the HIPA CEO added.

“From the workforce perspective, companies are not willing to make a compromise on the quality of the labor pool. Companies are looking forward to extending the addressable labor pool as a result of the pandemic, as remote working has become more of a standard. They see this as an opportunity for hiring individuals not just locally, but potentially from a wider geographical area,” Ésik concluded.

This article was first published in the Budapest Business Journal print issue of June 18, 2021.