Hungarian CEOs not Planning pay Cuts, Layoffs


Some 85% of Hungarian business leaders predict the local economy will decline in 2023, while 76% think there will be a global slowdown. According to PwC’s 12th annual Hungarian CEO Survey, officially launched on Wednesday (February 8), Magyar CEOs rank the energy crisis as the top threat to economic growth, followed by inflation and macroeconomic volatility.

Bosses’ predictions for 2023 include annual inflation at 15% and an exchange rate of 421 forints to the euro. Despite the headwinds, however, Hungarian CEOs are not planning to lay off staff or cut pay; instead, they see cutting operating costs and raising prices as possible solutions.

The PwC Hungary survey was conducted with the participation of 267 local CEOs between October and December 2022 in parallel with the international study. The expectations for a decline in the rate of global (76%) and Hungarian (85%) economic growth in 2023 is the gloomiest yet seen in the survey’s 12-year history.

PwC says the predictions of economic decline are not surprising given the highly volatile economic and geopolitical environment. However, in a break with recent tradition, Hungarian CEOs (along with their peers from the United Kingdom, France and Germany) see their country’s situation as more vulnerable than that of the global economy. Looking ahead to 2023, they forecast an average GDP growth of 0.5% in Hungary compared to the previous year.

Revenue Growth

Hungarian CEOs are less pessimistic about their own companies’ financial performance: although confidence in their company’s profitability has fallen from 75% last year to levels last seen in 2013, the majority (60%) are still optimistic about prospects for revenue growth over the next 12 months, and 78% are confident for the next three years.

Most Hungarian CEOs aim to reduce operating costs and raise the price of products and services to steer through the recession. Only a fifth of the companies surveyed are considering redundancies – 9% have already done so, and a further 11% are preparing to do so: 78% are not planning to reduce their workforce, while 97% have no plans to cut salaries. Both figures are higher than for CEOs globally. Meanwhile, the “Great Resignation,” which began with COVID, is expected to continue, with 20% anticipating a further increase.

Compared to last year’s survey, bosses believe companies’ exposure to health and cyber risks has eased. Unsurprising new threats have emerged to replace them: 69% of Hungarian CEOs are worried about the energy crisis in the short term, and 61% about inflation. These are followed by macroeconomic volatility (54%) and geopolitical conflict (53%). Cyber risks (39%) are still among the top threats over a five-year horizon.

The war in Ukraine, which 86% of respondents think could end in 2024, and growing concern about geopolitical conflicts in other parts of the world, have caused a rethink of some business model aspects. To mitigate the impact of geopolitical risks, company leaders are primarily focusing on expanding into new markets, investing in cybersecurity and/or data protection, and adjusting supply chains.

Renewable Energy

More than one-third of CEOs have already recognized the crucial role of adopting alternative energy sources. When asked about the forces most likely to impact their company’s profitability over the next 10 years, more CEOs cited the adoption of renewable energy sources than the potential for new entrants to their industry. At the same time, 80% of CEOs expect Hungary won’t switch to green energy before 2048.

To prepare for the future, 82% of companies say they will invest in upskilling their workforce in 2023; 79% will automate processes and systems; 66% will deploy technology; and 56% alternative energy sources. Most CEOs believe that almost all of these investments will help make their company future-proof.

Where companies and other market players cooperate, the aim is primarily to develop new products rather than solve societal issues. A quarter of respondents do not collaborate with anyone to address societal challenges.

Business-oriented partnerships are mostly made with governments (at the national or local level), academic institutions, and other companies. Where it does occur, collaboration towards societal ends is most common with NGOs. Indeed, some CEOs see this as a way to ensure companies’ future viability, with education the main area of focus (72%), followed by sustainable development (50%).

The full results are presented in detail on PwC’s Hungarian CEO Survey website:

“More than a third of Hungarian CEOs recognize that transformation will be necessary for future success: 43% think their organizations will not be economically viable in 10 years’ time if they continue on their current course,” says Barbara Koncz, partner at PwC Hungary’s Tax and Legal Services. “The proportion is similar globally, with 39% of CEOs worldwide saying the same. In Hungary, new technologies and skills shortages are the main factors CEOs think will affect their profitability in the coming years, followed by regulatory change and altered customer preferences. Globally, changing customer preferences are at the top of the list of factors potentially disrupting the market position of companies.”

According to Tamás Lőcsei, CEO of PwC Hungary, this year’s survey results also show that transformation is based on creating a corporate culture that puts equal emphasis on entrepreneurship and responsibility. Companies that have committed and empowered people are able to innovate and react quickly. The key to all this is trust, and most of the surveyed CEOs think that their employees almost always act in accordance with the company’s values. Moreover, three-quarters of CEOs feel their management encourages divergent opinions and healthy debate.

This article was first published in the Budapest Business Journal print issue of February 10, 2023.

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