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Varga: Conservative Budget and Partnership on Offer

The Hungarian government is open to the idea of allowing foreign workers to fill employment gaps, Minister of Finance Mihály Varga has told members of the American Chamber of Commerce in Hungary.

The minister has been a regular guest of AmCham over the years. Friday, June 7, was his first meeting with the chamber since being reappointed to head the renamed Ministry of Finance (formerly the Ministry for National Economy), and he used it to outline past successes and detail the future policy path.

Perhaps recognizing the general level of concern among chamber members at the labor crisis, Varga spent some time on employment issues. He pointed out that these are not unique to Hungary, saying peers such as Czech Republic and Poland also “suffer from a lack of sufficient skilled workers”. In part he blamed this on the educational curriculum not keeping pace with the changing needs of the younger generations.

Having successfully boosted the ratio of employed people to almost 70%, Hungary would have to find ways to mobilize reserves, Varga said “not only from the public workers scheme but also pensioners and women. […] Where no other labor is available, we will allow job permits for foreign labor,” he told members.

But total employment remains a government goal, he said. “As long as there is one person looking for work, we will have work to do.” 

Wage Momentum

He believes there is still “momentum” for wage growth in Hungary, but added the government would have to look “very carefully at the minimum wage figures for next year. I think we will have to look at competitiveness and improvements in parallel in defining the wage increase.”

Addressing recent forint volatility, Varga said he was not unduly worried, believing it was still moving within an acceptable range. Noting oil prices had normalized he said “I think FX rates will become more stable.”

He predicted FDI rates would continue to grow “driven by automotive, also pharmaceuticals and food processing”.  

He described the budget as a “conservative” plan: “As long as one reason for vulnerability in the country is the high debt ratio, we have to decrease debt.” It is also framed with one eye on global uncertainties such as Iran’s nuclear program, and possible trade wars between Europe and the United States or China and the United States. One key, he said, would be to “use resources in an even more efficient way”. There should be a focus on quality, but there are also “some reserves in whitening the economy”.  

He acknowledged the role organizations like AmCham have played in the past, and hoped it would continue. “I am confident we can be partners in reaching these goals,” he told members.

According to figures released by the Central Statistical Office on Friday (the same day Varga spoke at AmCham), the number of vacant jobs has been rising in Hungary at an accelerated pace in the past five quarters; the year-on-year pace of increase had reached 33% by the first quarter of 2018, Hungarian news agency MTI reported. The annual rise was 13% in Q1 2015 and has been accelerating every quarter since Q1 2017. There were a little more than 79,400 vacancies overall in Q1, up by more than 6,000 from Q4 2017, and up by almost 20,000 from a year earlier, the data shows. Some 31% of all vacant jobs were in the manufacturing sector, 11% in administrative and service support jobs, 10% in human, health and social services, 8% in public administration, defense and social security, and 4% in professional, scientific and technical activities and education, MTI reported.