To the dismay of some industries, the government has stopped accepting applications for guest worker residence permits. This closed the main legal route for bringing in new third-country workers. Existing permit holders can generally continue working and renew their permits under certain conditions, but no new applications are being accepted.
With this decision, the Tisza government follows a principle promoted by Viktor Orbán’s Fidesz cabinet, which argues that Hungarian workers should primarily fill Hungarian jobs and that excessive reliance on low-cost foreign labor suppresses wages and discourages employers from investing in domestic recruitment and training. How does this impact employers and HR?
• Companies can no longer rely on recruiting large numbers of new guest workers through this channel.
• HR departments must place greater emphasis on recruiting and retaining Hungarian employees.
• Labor-intensive sectors such as manufacturing, food processing and logistics may face renewed recruitment difficulties.
• Companies are likely to increase investment in automation, training and employee retention.
On June 5, Hungary stopped issuing work visas to citizens of the Philippines, Georgia and Armenia, describing the move as the first step in a broader review of the guest worker system. The government says the measure is intended to regulate labor migration better and ensure that employers first seek Hungarian workers before recruiting abroad. It also responds to public concerns over immigration, another main pillar of the previous government. How does this impact employers and HR?
• Many manufacturers had increasingly relied on Filipino workers because of domestic labor shortages.
• Recruitment agencies specializing in Asian labor have seen their business model disrupted.
• Companies with expansion plans may experience delays if they cannot replace foreign workers with local staff.
• HR managers may face higher recruitment costs and stronger competition for domestic workers.
Beyond the specific visa restrictions, the government announced a broader policy shift away from the previous administration’s relatively open approach to importing labor. The stated objective is to regulate guest worker inflows more strictly and reduce long-term dependence on foreign labor. Under the previous government, many large investors, including automotive manufacturers and suppliers, relied heavily on foreign workers because of persistent labor shortages. How does this impact employers and HR?
• Employers may need to redesign workforce planning strategies.
• Greater emphasis is expected on workforce productivity, reskilling and retention.
• Wage pressure could increase in occupations where domestic labor remains scarce.
• Business groups warn that the restrictions could limit growth in sectors already struggling to recruit enough workers.
Hungary must adapt its legislation to comply with the revised EU Single Permit Directive, whose transposition deadline was May 21. Legal experts expect changes to both the single-permit procedure and aspects of the guest worker framework. The directive aims to harmonize procedures for third-country nationals across the EU, strengthen their employment rights and simplify administrative processes. How does this impact employers and HR?
• Companies employing non-EU nationals should expect changes to immigration and work-authorization procedures.
• HR departments will need to monitor legislative amendments and update compliance processes.
• While the directive strengthens workers’ rights, it also requires employers to adapt their documentation and administrative practices.
Based on the above, we can conclude that compared with previous years, the dominant labor-market policy theme since May has been immigration rather than employment law. The government’s principal objective has been to reduce dependence on foreign labor and encourage employers to recruit Hungarian workers, even at the risk of aggravating labor shortages in certain industries.
According to PwC experts, tensions on the market stem from structural mismatches among available skills, wage expectations, and regional disparities. While employment is high and unemployment is low (currently at 4.5%, though it has been rising since May), companies struggle to hire because the wages and working conditions they offer often fail to attract suitable candidates, especially in sectors such as automotive, logistics, and manufacturing.
Demographic decline is reducing the working age population by tens of thousands each year, pushing firms to rely on foreign labor. Hungarian companies typically spend 20–35% of revenue on wages, below the EU average, yet rising labor costs and shrinking labor reserves are making the low-cost labor model unsustainable.
PwC argues that long-term competitiveness depends on automation, higher-added-value production, and productivity growth, especially as the next 5–10 years are expected to bring the most severe shortages in the automotive, supplier, and logistics sectors. The experts warn that the real risk is wages rising faster than productivity, which could erode profitability and reduce future investments.
However, the near-term outlook is not so gloomy. In a survey released on June 9 by workforce solutions provider Manpower, employers are optimistic about the coming months, as reflected in their hiring plans. In the third quarter of 2026, one-third of Hungarian employers plan to increase their workforce, while 18% expect to reduce headcount.
Based on responses provided by 550 employers in Hungary, the Net Employment Outlook (NEO), calculated as the difference between the percentage of employers planning to hire and those planning to reduce staff, stands at +15%.
Although this is three percentage points lower than in the previous quarter, it is 10 percentage points higher than a year earlier. Particularly strong recruitment activity is expected in construction and real estate, hospitality, public services, and financial services. On the other hand, companies operating in the automotive industry continue to expect further deterioration, according to the survey.
This article was first published in the Budapest Business Journal print issue of July 31, 2026.
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