Birthrate Rising, but Demographics Continue to Look bad for Hungary
Aging is just one of the elements of the continuously deteriorating demographics in Hungary. This, combined with a slow recovery in the economy, results in significant changes in Hungarian society and working habits; the younger age categories earn more, and geographic mobility starts to gain speed.
After an 11-year gap, the Central Statistical Office conducted a new census last year. According to the preliminary count, the Hungarian population decreased significantly in the last decade by 334,000. During the decade between 2001 and 2011, the rate was slower at “only” 261,000.
While in 1980, the population was well above 10 million, by 2022, it had shrunk to just 9.6 million. The figure would have been worse had it not been for the 131,000 immigrants, mostly from neighboring countries.
The age composition has also deteriorated: between 2011 and 2022, the percentage of the population aged 65 or older grew by 19%, while those aged 15-64, that is, the active working population, saw significant shrinkage. The good news is that the birthrate has started gathering pace, with 0-14-year-olds now at 15% of the total population.
With a growing economy and a narrowing labor force market, the logical assumption is that the active population is in an increasingly better bargaining position when negotiating jobs and salaries. But surveys do not confirm this assumption. K&H Bank has published the K&H Youth Index for eight years, the latest released in December 2022.
According to this, marginally less than one-third (32%) of those in the young age category said they were satisfied with their life now, while those optimistic about the future were significantly more, at 60%. Looking at salaries, the current situation does not seem very bright: on average, the majority of those aged between 19-29 earn HUF 143,000 per month, about EUR 366. Only 11% said their revenues exceed HUF 300,000, around EUR 770.
Labor force services provider Trenkwalder surveyed an even younger age group, those in high schools. The data shows a sharp difference between those who wish to pursue higher education abroad and those who want to work beyond the borders.
While a mere 5% of those attending secondary school said they plan to continue higher education abroad, a much higher percentage, 37%, said they are looking at working abroad after finishing their studies. Slightly less, 35%, plan to work in Hungary. Those aiming for foreign opportunities indicated better living conditions as the main reason (56%) and better working conditions (24%).
Trenkwalder also measured the willingness to relocate among adults last year. Based upon the answers provided by 3,000 Hungarian employees, more than half are open to moving from their current location. This level is significantly higher than last year when only 35% of the respondents were considering mobility.
Not surprisingly, the highest levels, 64-65%, were measured in the least developed areas, in the northeast and the southwest. Here, the respondents would relocate domestically, while in Vas county, in the more developed area close to the Austrian border, people are looking for jobs abroad.
A vast majority, 69%, say they would move elsewhere for better living conditions, a more stable future (33%), or more work opportunities (32%). Two-thirds of respondents think that these can be achieved domestically.
As for where exactly, Trenkwalder compiled a satisfaction index. Overall, this year Hungary scored 5.9 points on a scale of 0-10, 0.5 points below the level measured last year. By region, satisfaction is highest in the areas neighboring Austria, with figures ranging from 6.4 to 7.1, compared to 4.6-5.5 in the east.
But what are employers’ plans for this year? In the first quarter, one-third of companies plan to reduce their workforce, while only 22% envisage hiring more, according to a survey conducted among 500 companies in Hungary by ManpowerGroup. However, no massive layoffs are expected in the labor market.
The recession outlook is inducing caution among employers and employees, who prefer to wait instead of searching for new opportunities. According to ManpowerGroup, the highest chances of layoffs are within the communication services and the manufacturing industry.
The next question is how families prepare for the worst while hoping for the best. A European survey conducted by Intrum shows that the average European consumer saves relatively little, less than 20% of his income.
In Hungary, one-third of the respondents said they could not save every month. Most can save 10% at most, and only 10% of the respondents can save more than 20% of their monthly income. The 31.4% of those unable to save at all is high compared to other countries; in Poland, it is 27%, in Romania 24%, in Slovakia 20%, while in the Czech Republic, 14% said they have nothing left to save at the end of the month.
As for the purpose of saving, the vast majority of Hungarians (42%) said they were preparing for unexpected expenses, some 2% more compared to the previous year. An even higher surge, from 4% in 2021 to 10% in 2022, are “preparing for the recession.”
Finally, regarding how long the savings can last, 35% said they have less than the equivalent of one month’s income. Somewhat less, 29%, said their savings would be sufficient for a month, while 19% said their savings would cover a maximum of three months, according to Intrum.
This article was first published in the Budapest Business Journal print issue of February 24, 2023.
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