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Hungarian labor crisis prompts fears of lost business, jobs

The ongoing labor shortage in Hungaryʼs industrial sector could force multinationals to postpone capacity expansions or take some production elsewhere, union and business leaders warned in Thursdayʼs issue of conservative daily newspaper Magyar Idők.

Zoltán László, the deputy head of metalworkersʼ trade union Vasas, told the paper that one multinational recently laid off more than 500 workers at bases in Gyöngyös (NE Hungary) and Gödöllő, some 30 km northeast of the capital, because it could not find sufficient labor. The union has learned of other production units facing the same dilemma, he added.

László estimated that 2,000-3,000 jobs have been lost as companies take capacity elsewhere, while shelved investments have prevented job creation. He urged immediate government intervention and negotiations with interested parties to find rapid solutions to prevent more firms from shifting production away from Hungary.

Magyar Idők notes that production units most seriously affected by the shortage of workers are assembly lines with low added value, with some companies shifting these manufacturing phases to countries like Ukraine and Serbia, or even the Far East. Not only are skilled workers in short supply, but there is also a dearth of engineers and other highly qualified experts.

Ferenc Dávid, general secretary of the National Association of Entrepreneurs and Employers (VOSZ), said that while nobody expects a big pullout of companies from the country because of the labor shortages, the possibility that some production could be moved elsewhere cannot be excluded. The postponement of investments, on the other hand, is a real problem, he added.

Reintegrating as many as half a million inactive Hungarians or workers on low-paid government work schemes into the primary labor force, as well as offering incentives to Hungarians working abroad to return home, could ease the problem, Dávid said. However, he added, changes would need to be made to continuing education programs while other labor market policy programs would need to be introduced.  Foreign guest workers could provide a temporary solution, he noted.

Dávid also warned that almost 200,000 Hungarians will reach retirement age this year and the next, exacerbating the labor shortage even further than at present.