Summer Work, Pensioner Jobs, Disappearing Teachers and a Lack of Innovation

Summer has kicked in, not only with extreme temperatures but with school holidays too. A well-deserved rest for the children but often a difficult period for teachers.

A roundtable held by the Teachers’ Union revealed that about 16,000 professionals are missing from public education in Hungary, a situation that has not arisen since World War II. Moreover, the average age of pedagogues is now 53, meaning that in 12 years, half of the teachers will retire, and there is no resupply in sight, mainly because of the low wages.

After finishing school administrative work, many teachers search for temporary jobs until September to compensate for their low wages, the union says. Working in discount retail chains, some earn more in their part-time jobs than they do as full-time teachers.

The problem is also seen in the decreasing numbers of students applying for pedagogical studies. In 2019, they totaled 17,400, compared to just 11,978 this year. Less than half of those admitted graduate, and many of those who do leave teaching shortly afterward. According to the union, 8,000 teachers will retire within five years, and there will not be enough young career starters to replace them.

The aging of the Hungarian population is already a heavy burden for pension financing, and it will only worsen. Also, the economy is struggling with a labor shortage; therefore, the system encourages men and women to keep working, even after retirement age.

Life Expectancy

But their working abilities are, naturally, worse than in their younger years, Mihály Karácsony, the president of a pensioner association, says. He points to Eurostat statistics showing that the healthy life expectancy for Hungarian boys is now 61.6 years and 63.5 years for girls. This means that more than one-third of Hungarian men, 38% die before retirement age. Those who do not are in poor health. The solution would be a flexible retirement, Karácsony says.

For those already retired, life is not easy either. One million are living on a pension of HUF 120,000 a month, continuously eroded by inflation. Any raise in the state pensions is unlikely to compensate for a 30% rise in food prices; therefore, some kind of allowance, such as food coupons, will be needed soon, Karácsony suggests.

However, there is little chance that pedagogues or pensioners will get a rise in the near future. The state budget lacks resources so much that, back in May, the government halted all investments and announced significant layoffs in the public administration, aiming to save HUF 30 billion.

The total headcount in the public administration is 37,000. According to information released by left-leaning daily newspaper Népszava, layoffs will target not the central administration but rather offices in rural areas.

As for the private sector, research conducted by Big Four consultancy PwC indicated that two-thirds of Hungarian employees are unhappy with their work. The international study, conducted in 44 countries, revealed that this is an extremely high rate, compared to 71% worldwide satisfied with their employment.

However, only 16% of Hungarian employees plan to leave their current job within one year. This confirms the very high rate of immobility, which has been characteristic of the Hungarian labor market for 30 years. According to HR experts, one of the reasons is that Hungarian employees are uncomfortable competing in the labor market; therefore, they prefer to stay in their current jobs, even if they are frustrated.

Frustrated Workers

The cause of frustration seems to be the perceived low wages. An overwhelming majority, 86%, responded that a higher salary is the most crucial driver in looking for a new job. Interestingly, only 27% said that they plan to ask for a raise within a year, which means that for some reason, employees prefer to quit rather than communicate with their employers.

One reason for quitting may be to become their own boss. The Global Entrepreneurship Monitor (GEM), partnered in Hungary with the Economic University of Budapest (BGE), showed that more than 10% of the adult population in Hungary plans to start a business or at least become self-employed in the next three years.

Surprisingly, the typical startuppers are not the youngest adults but in the 25-44 age range. This is probably related to another finding: a majority think they lack the knowledge and competencies for starting a business. Those who do take the plunge tend to be slightly higher educated than the average population, but in itself, this is not a catalyst for becoming an entrepreneur.

The percentage of women graduates among entrepreneurs is higher (36.2% compared to 30.2% in the total population), but women overall are less likely to start their own businesses. Nevertheless, very few new businesses are technology-intensive, that is, producing added value. Hungary’s early-stage companies often offer services like hairdressing, manicure, or massages. As for companies already established on the market, only 5% have a profile that can be regarded as innovative.

The government already views the issue as one of the most pressing challenges it faces. Minister of Culture and Innovation János Csák recently quoted European statistics, noting that Hungary is in the bottom quarter of EU member states in terms of added value businesses. An improvement requires more researchers, higher spending on R&D relative to GDP, and a “growth of innovative culture.”

Also, businesses and employees need to be “innovative, flexible and cooperative” to ensure competitiveness in a fast-changing international environment, the minister said.

The Most Influential HR Managers in Hungary

Hungarian site hrportal.hu has narrowed a list of 100 HR managers to 20. Their companies are not necessarily the largest employers; hrportal.hu rather focused on the skills of those selected. The final list is:

• Klára András, Egis Gyógyszergyár

• László Bajor, Flex

• Dávid Bauer, MOL

• Imre Bertalan, OTP

• Gertrúd Csoknyainé Horváth, dm

• Katalin Erdei, Richter Gedeon

• Benedek Fluck, MVM Csoport

• Balázs Fremda, Morgan Stanley

• Zsuzsanna Friedl, Magyar Telekom

• Ákos Kalmár, Continental Csoport

• Kinga Németh, Audi Hungaria

• Ildikó Ráczné Szőke, European Central Bank

• Csilla Simon, Magyar Posta

• András Somogyi, Bosch Csoport

• Zoltán Széni, Epam

• Barbara Szigeti, Tesco-Global Áruházak

• Ildikó Szijjné Kállai, SPAR Magyarország

• László Szőcs, bp

• Csaba Tóth, Lego

• Zsuzsanna Tóth, Vodafone Magyarország

This article was first published in the Budapest Business Journal print issue of July 1, 2022.