PwC reveals Hungarian CEOs’ mindset in sixth survey

The most recent pointer in that direction came less than a week before the publication, when Minister for National Economy Mihály Varga told an AmCham Hungary business forum there were 67,000 vacant positions countrywide, and problems affect all sectors from IT to cleaners. 

The annual PwC survey covers far more than this one subject, however. “This is the sixth occasion on which we have asked Hungarian CEOs to share their thoughts on growth, threats to growth, and on finding and retaining talent,” explained Nick Kós, PwC Hungary’s Country Managing Partner. “We also endeavored to discover what they think about managing the relationship between man and machine, and the pros and cons of globalization. Overall, this year’s survey shows that Hungarian and global CEOs are very much of the same mind on these issues. They are planning to increase headcount, while they continue to be challenged by skills shortages and overregulation. They are largely positive about the impacts of globalization, but many of them also say that globalization has not helped to close the gap between rich and poor,” he said in summary.

Some 186 Hungarian CEOs, representing seven different industries, took part in the survey, which involved a little less than 1,380 bosses worldwide. Asked what they were concerned about as a barrier to growth, a staggering 92% (up from 85% in 2016) of Hungarian CEOs listed skills shortages, which PwC says is an all-time high, and affects practically every business in Hungary.

The skills shortfall is also a rising concern globally with 77% of CEOs (up from 72%), but is still trumped by others concerns. The top challenge worldwide is uncertain economic growth (82%), a factor mentioned by only 42% of CEOs in Hungary. The number two threat, both globally and in Hungary, is over regulation (put at 80%, up from 79%, and 73%, on parity with the previous year, respectively). See F1 on following page.  

Effective Tax System 

Given those workforce concerns, it should perhaps be no surprise that, when it comes to businesses’ wish list from government, most Hungarian CEOs expect the government to ensure the availability of a skilled workforce (91%, up from 83%), some way ahead of the number two priority, a clearly understood, stable and effective tax system (69%, level with last year). See F2.

Despite those concerns, a slight majority (51%) expects to increase headcount in Hungary this year, albeit that is somewhat down from last year’s total of 54%. Globally, the figures have gone in the other direction, up to 52% this year from 48% in 2016. PwC has data-mined those headline figures deeper to reveal that, in Hungary, technology and telecom companies and privately owned businesses have the most ambitious plans to increase their staff numbers. Only 13% of Hungarian CEOs expect to cut headcount over the next 12 months. See F3.

Given the concerns over labor, it is little surprise that big firms are doing ever more in the field of talent retention. Some 70% of local CEOs say they promote diversity and inclusion, 69% that they seek out the best talent wherever it may be found; 62% say they are rethinking their HR function. See F4.

The skill set that is hardest to recruit, Hungarian CEOs say, is leadership, at 74% (a figure exactly matched by their global peers. But the skill sets they say it is most important to have are problems solving and collaboration (92%), neither of which are apparently especially hard to find. See F5.

Confident of Growth 

As far as growth is concerned, 89% of Hungarian CEOs are confident about their own revenue growth (slightly ahead of the global figure of 85%), are marginally less confident about Hungarian economic growth than last year (56% down from 59%), but markedly less confident about the global situation (where just 39% are confident of global economic growth, down from 54% last year). See F6.

When it comes to where the markets that will fuel Hungarian growth are to be found, Germany continues to be the most important for locally-based CEOs at 41% (up 4%). Perhaps picking up on improved political relations, the second most important market is the United States, up 15% to 23%. China, too, saw marked growth, rising 10% to 15% this year, moving it to seventh on the list. Most markets remained stable or saw some growth, but interestingly Czech Republic dropped in significance, falling back 3% to 9%, putting it tenth.

As in previous years, cost cutting continues to be a key priority 54%, but 60% of Hungarian CEOs expect to drive economic growth through organic growth.

Increasingly, continuous innovation and human capital development are seen as the key to the future, both globally and in Hungary. PwC says the importance of innovation was particularly underlined by financial and automotive CEOs, while human capital ranked higher than average in retail, technology and telecoms.

Technology a Game Changer 

Globally and locally, a massive majority of CEOs believe that technology will change competition in their industrial sector. In Hungary this is apparently especially so in the transportation, communication, and automotive industries. Hungarian CEOs give themselves relatively high marks when it comes to digital literacy and adoption, but they are markedly less active than global peers when it comes to social media, and the use of automation or robotics in the home.

When it comes to threats in the digital age, most companies in Hungary say they already have measures in place to address IT disruptions and breaches of cyber security and data privacy, although notably more global CEOs see the threat potential of cyber security.

Respondents have been largely positive about the impacts of globalization. More Hungarian CEOs, for example, think it has helped in harmonizing regulations (87%) than globally (80%). Far fewer here, however, believe it has helped close the gap between rich and poor (33% in Hungary to 51% globally). Over half of Hungarian CEOs also expressed doubts about the fairness and integrity of global tax systems, far more than globally.

To see the results of the full survey, contact PwC Hungary directly.