“There’s been a lull [in work] which started in January,” McAlister tells the Budapest Business Journal in an interview, citing amendments to employment legislation that have vastly restricted the nationalities who may be employed for lower-level categories of jobs.
“I imagine there were people in the recruitment pipeline who multinationals were planning to hire for certain positions, and […] those people were suddenly excluded. It was ‘back to the drawing board, guys.’ There is a lot of confusion, particularly among foreign-owned companies,” he says.
And not only companies seeking to recruit. Even experienced staff at Inter Relocation have been left dismayed by the changes.
“I had my colleague saying: ‘I’ve had 20 years experience in immigration, and I feel I’m back in kindergarten. Everything that we knew has gone,’” McAlister recalls. He adds that he’s employed a second Hungarian lawyer to navigate the new regulatory minefield better.
However, to best unpick the current legal and bureaucratic tangle, he returns to January 2024, when what used to be the combined work and resident permit system was replaced by a range of work-based or employment-type permits.
“This was a massive change. It starts with the ‘guest-worker’ [category]. This doesn’t require professional qualifications; it could be for working on a farm or in a hotel. Critically, it is limited to three years, and there is no opportunity to apply for permanent residence and nor for accompanying family members to join the worker,” he says.
The next level up is the so-called “employment permit,” which can be issued for more technical jobs specified by their FEOR codes, the Hungarian designation for the job description (see box.)
These permits, which typically pertain to sectors with labor shortages and do not require a university degree, are also limited to three years. In addition, like the guest-worker permit, they do not allow permanent residence upon expiry nor for family members to accompany the employee.
Next up the list are positions for which a European Union “Blue Card” may be issued. This EU-specified permit can be issued for four years and lead to permanent residence.
“The conditions depend on the position, but at the very least specify a bachelor’s degree, though more likely a master’s, and in most cases there is a minimum salary requirement of HUF 883,671 gross per month,” McAlister notes.
These permit types are complemented (and somewhat complicated) by two special categories, namely the so-called “Hungarian Card” and “National Card’” (see box).
So, what changed for the worse, from the employer’s standpoint, from New Year’s Day 2025?
“For the two lowest categories of employment, only citizens of ‘qualifying nations’ may apply for these types of permit, and only two nations were designated originally, Armenia and Georgia, joined later by the Philippines,” says McAlister. “We thought others would be added by now, but so far, not one.”
Such a drastic reduction in source nations has, naturally, caused recruitment problems, McAlister says, citing “a couple of clients” involved in engineering maintenance work in a key transport sector.
“They have particularly struggled because they were hiring people who had professional qualifications from countries which don’t qualify for the lower-type of permit, nor do they align to any position in the Blue Card sphere,” McAlister says.
The result of this labor bottleneck is unclear, but expensive assets may be lying idle awaiting maintenance.
“I don’t know how they are resolving this,” comments McAlister. “And I don’t know if we are rapidly draining the brains of Georgia, Armenia and the Philippines […], but we may ask our lawyers to enquire when other countries are likely to join this scheme. The severe limitations on bringing in labor from non-EU/EEA states is definitely challenging.”
Described by Inter Relocation’s Stuart McAlister as a “weird anomaly,” the “Hungarian Card” is issued for specified, usually professional positions in certain industries where there are labor shortages. It is not, as he has had to explain to various confused clients, anything to do with the possible Hungarian ethnicity of intended recruits.
Adding to the perplexity, though the conditions require the cardholder to have at least a bachelor’s degree, qualifications awarded by a Hungarian university are not accepted. This means in many cases that, when a student has worked for a company part-time during their studies, the same student cannot be seamlessly transitioned into a full-time employee after graduation.
“So, say you are a Chinese citizen, and you’ve got an economics degree on a scholarship from Corvinus University, you cannot qualify for the Hungarian card! I can attempt an understanding of the overall philosophy, immigration-wise, of the Hungarian government these days, but that part confuses me,” he freely admits.
Finally, there is the so-called “National Card,” which McAlister describes as “somewhat controversial” because it applies to citizens of designated “neighboring” countries, including Serbia, Russia and Belorussia, for whom “a slightly easier process [is applied] for certain gaps to be filled.”
A report from the American Chamber of Commerce in Hungary is critical of the rules introduced in 2024 governing the employment of foreign nationals in the country.
The report, entitled “Cooperation for a More Competitive and Sustainable Hungary,” published in April last year, welcomes the new legislation regulating employees with different qualifications but states bluntly: “In many cases, the regulation imposes disproportionate burdens on both employees and employers.”
It argues that the rules, which (mostly) prohibit foreign employees from settling permanently in Hungary, disincentivize investors from coming to Hungary for the long term.
Seemingly frustrated with a lack of awareness in political circles regarding commercial realities, the report notes that companies need to ensure a constant labor supply, which requires significant resources, both in terms of time spent on training and the cost of intermediaries.
As a result, “The model is still feasible in low value-added sectors, in terms of physical labor, but not in jobs requiring high qualification[s] or special knowledge,” it states. It concludes that, without adjustment, “This regulation could put Hungary at a competitive disadvantage in the long run.”
The report, available on the AmCham website, was written before the amendments to the employment rules in force since January.
The BBJ asked AmCham and the British Chamber of Commerce in Hungary to comment on how these changes have affected member companies but had received no by the time we went to print.
This article was first published in the Budapest Business Journal print issue of April 22, 2025.
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