How the Pandemic Influenced Recruitment in 2021

Despite what seemed likely a year ago, the coronavirus pandemic did not turn the labor market dynamics of recent years on their head. After a temporary halt in recruitment and the lay-offs (or in some cases, furlough) in 2020, most companies returned to hiring in 2021.

And not just one or two positions, but employing in large numbers, where they were able to. That is because they not only had to take on the figures planned for this year but also had to make up for the hires they did not make in 2020.

Considering the acute labor shortage that has returned, this has been challenging, to say the least. That is particularly so in sectors such as IT and engineering, where the market was candidate-driven well before the COVID outbreak and where, due to digitization, the demand for professionals has only been rising during the pandemic.

“In IT, the market needs roughly 8,000-9,000 professionals,” Tamás Farkas, division head at Grafton, tells the Budapest Business Journal. “Here, the competition for good candidates is huge. Experience measured in years is becoming less important. Much more emphasis is placed on technological knowledge and project experience,” he adds.

Impact on Wages

This rising demand for professionals has impacted wages. Since candidates with little or no experience know they are needed, they ask for much higher salaries, and companies have no choice but to pay. That means, however, that the salary of an entry-level engineer is not much less than one with three or four years of experience.

And not just in IT. In the case of engineers and logistics professionals, the wage difference between those with zero years of experience and those with three, say, is around 50%, while between three years and five-to-seven, it is 10-15%, Farkas says.

The increase in wage demand among juniors is related to the high demand for less-skilled labor. The wages of skilled manual workers (for example, technicians) have caught up with entry-level engineering. Young graduates are aware of that, of course.

“In addition, the significant increase in the cost of living and even the news of a potential increase in the minimum wage and skilled minimum wage were enough to set the wage demand of graduates soaring,” Farkas adds.

The tension between senior professionals and those with less experience can only be mitigated if employers increase the more experienced workers’ salaries. Whether they can keep up with rising wages, or for how long, is yet to be seen.

Key Trends of 2021

The Year of Counter Offers

There are too many jobs and not enough candidates, which has resulted in companies competing for top talent offering potential candidates a higher salary. This phenomenon existed before, but it has become rampant this year, and Hungary has been no exception. Professionals in accountancy, engineering, IT, logistics and any skilled blue-collar position where there is a shortage have been given offers by firms. This has eroded the “pull” of loyalty and many have chosen to leave. Even those who stay often do so because their existing employer will offer a raise.

Perks and Pre-requisites

The uncertainty of 2020 led to employees valuing aspects of their jobs other than just their monthly wage. Even more so for Gen Z, as 29% said their salary was crucial to their engagement compared to 49% for those over 55, according to a study by the IBM Institute for Business Value. Companies are looking at how they can not only attract but also retain employees to positively influence a potential candidate’s decision to join or stay with the company. Among perks job seekers value are home office opportunities, although this has become more of a pre-requisite than a benefit for most. So is subsidizing the commute when workers do travel to a central office. The coronavirus has also highlighted the importance of health; many companies now offer private healthcare packages to their employees. Personal and professional development are also in focus; besides professional training, a growing number of firms claim they care about the mental health of their employees.

Online Interviewing

Although it has its downsides, many firms decided not to part with online interviewing. It is more time-efficient and, combined with other digital tools, can lift some of the burdens from the HR department. Online interviewing makes it is possible to shorten the pre-selection process and devote more time and human resources to the shortlisted candidates. This option may not work so well, for example, in manufacturing, where touring the site or checking the skills of a machine operator are essential.

Online Training

Evermore firms have to rely on training their own supply of workers, be they pilots or shop assistants. What is common is how many approach training these days. Rather than in-person education, instruction is online, and they also provide employees with tools (for example, a tablet). The courses are short, interactive, and exams are also many times are taken online.

This article was first published in the Budapest Business Journal print issue of December 17, 2021.